The second letter was dated 2 February 1993 and was also written to the vendors' solicitors. It contained the following passage:
"I do not, with respect, agree that the implication you seek to read into our correspondence as detailed in your letter under reply can be made. At no stage has our client agreed to provide an easement over the subject property nor indeed was it a condition of the contract for sale."
Mr Motbey submitted that the first letter did not show that
the purchaser never intended to co-operate with the vendors. He pointed out that it was literally true that the purchaser did not intend, at the time of signing the contract, to execute any documents relating to an easement. At that stage it was contemplated by the parties that the vendors themselves would execute the documents prior to completion of the sale. Had that occurred, there would have been no need for the purchaser to execute any documents creating easements over the corner lot.
The trial judge accepted that this was a possible construction of the letter. However, he thought that the letter was also open to the construction that the purchaser's attitude, throughout the period from the time of signing the contract until the writing of the letter, was that it would not co-operate with the vendors. In the absence of any explanation from an officer of the purchaser, or from the solicitor who had written the letter, his Honour thought that the inference could more readily be drawn that the letter referred to an attitude held by the purchaser throughout the period: Jones v Dunkel (1959) 101 CLR 298.
We see no error in his Honour's approach in the first letter. The letter is ambiguous. It can be read as an admission that the purchaser never intended to co-operate with the vendors. It was open to the purchaser to adduce evidence to clarify its intended meaning or to shed light on the instructions that lay behind the letter. The purchaser did not do so. Mr Motbey explained the absence of any such evidence, on the ground that the case advanced by the vendors departed from the pleadings. Whether or not this was so, a reading of Mr Aldridge's opening at the trial makes it abundantly clear that the letter was to be relied upon in order to establish the falsity of the representations alleged. It cannot be said, therefore, that the purchaser did not have notice of the significance of the letter, which in any event was annexed to an affidavit filed on behalf of the purchaser. Accordingly, in the circumstances of the present case, we think it was open to his Honour to infer that the purchaser's attitude, as disclosed in the letters, had existed at all times since contracts were exchanged.
If there were any doubt about the matter we think it is dispelled by the second letter. That letter stated unequivocally that the purchaser "at no stage...agreed to provide an easement over the subject property". This statement is plainly inconsistent with the purchaser's own interpretation of its solicitor's letter of 8 December 1989. It will be recalled that Mr Motbey conceded that that letter conveyed that the purchaser would co-operate with the vendors, by creating easements over the corner lot, as required by Condition 2 in its unamended form and Mr Motbey's concession was limited to accepting that the letter represented that the purchaser would co-operate for a period of six months after completion. Even so, if the purchaser's view at all times was that it had never agreed to provide easements over the corner lot, its intentions were inconsistent with the representations conveyed in the letter of 8 December 1989.
Accordingly, we reject Mr Motbey's contention that his Honour was in error on this aspect of the case.
3. Was it Open to Find that the Vendors had Suffered Loss or Damage by Reason of the Misleading and Deceptive Conduct?
In considering this issue, the trial judge recognised that a difficulty had been occasioned by the course of the trial. At the point when his Honour considered what he described as the "causation" issue, the vendors had not adduced admissible evidence sufficient to permit an assessment of the quantum of any loss sustained by them. However, his Honour pointed out that the issue before him at that stage was whether the vendors had established, on the balance of probabilities, that they had suffered some loss or damage by reason of the purchaser's misleading and deceptive conduct.
His Honour referred to Sellars v Adelaide Petroleum NL (1994) 179 CLR 332. The judgment of the majority in that case summarised the applicable principles in this way (at 355):
"On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable."
Although this passage may not be part of the ratio decedendi of the case, this statement of the law has been followed and applied by appellate courts: see Daniels v Anderson (1995) 13 ACLC 614 (NSW CA), at 683; Bailey v Namol Pty Ltd (1994) 53 FCR 102 (FC), at 109.
The trial judge formulated the causation question as follows:
"In my opinion the conduct of the [purchaser] can only be said to have caused the [vendors'] loss if they can demonstrate that they would have satisfied the original condition by building the access road and car park had the representations not led them to settle on 8 December 1989. It is necessary for the [vendors] to prove what they would have done on the balance of probabilities."
His Honour accepted that the access way would not have been completed for at least 12 months after 8 December 1989, because Mr Sawtell was not co-operating at that time. Nonetheless, he concluded that the probabilities were that the vendors would have satisfied the terms of Condition 2 by mid-1993. The Council had been co-operative during the period leading to the calling up of the guarantee, and his Honour inferred that that co-operation would have continued until mid-1993, had the vendors remained the proprietors of the corner lot.
In our view, his Honour somewhat overstated the burden that the vendors had to discharge on the causation issue. Sellars v Adelaide Petroleum demonstrates that the vendors did not have to establish on the balance of probabilities that, had the representations not been made, they would have been able to satisfy the terms of Condition 2. In Sellars v Adelaide Petroleum itself, what was lost was the opportunity to conclude a particular agreement. While the probabilities were that the agreement would not have been concluded, the loss of the opportunity constituted compensable loss or damage under s.82 of the TP Act: see 179 CLR at 356.
It follows that in the present case it was sufficient for the vendors to establish, on the balance of probabilities, that the purchaser's contravening conduct caused the loss of a commercial opportunity that had some value. The vendors discharged that burden if they established, on the balance of probabilities, that, had the representations not been made, they would have had a commercial opportunity to comply with the terms of Condition 2 in its unamended form and therefore to avoid the Council calling up the bank guarantee.
In our view, it flows from his Honour's findings that the vendors did demonstrate, on the balance of probabilities, that they had lost such a commercial opportunity. As his Honour found, the vendors would not have completed the sale had they known that the purchasers did not intend to co-operate in relation to the access way. The vendors had successfully requested the Council to amend Condition 2, because they thought they would be able to undertake the necessary work and complete the required documentation within a period of six months (with the co-operation of the purchaser). The inference is clearly available that, had the misrepresentations not been made, the vendors would have delayed completion of the sale in order to attempt to satisfy Condition 2, thereby avoiding the need for the Council to require a bank guarantee or call up such a guarantee.
Of course, as his Honour recognised, the value of the commercial opportunity depends on an assessment of the degree of probabilities and possibilities. On that question, such matters as the likelihood of the contract remaining on foot for a sufficient period to enable the vendors to comply with Condition 2, must be weighed in the balance. But the evidence clearly justified the conclusion that the vendors had lost a commercial opportunity, and that that opportunity was of more than merely negligible value to them.
4. Did His Honour Err in Assessing the Quantum of Damages?
The trial judge recognised that, in assessing the value of the vendor's lost opportunity, it was necessary to do so by reference to probabilities and possibilities, as required by Sellars v Adelaide Petroleum. In assessing damages, his Honour found that, had completion not taken place on 8 December 1989, the applicants would have been likely to apply themselves more diligently than they did in fact to the task of gaining the consent of all adjoining owners. On this basis, he thought it probable that the consent of all owners could have been secured "in the early months of 1990". He therefore concluded that the vendors would probably have been able to comply with the terms of Condition 2 in its unamended form while the agreement for sale remained on foot.
His Honour acknowledged that events may not have turned out this way. For example, there may have been delays in obtaining the necessary consents. Moreover, the purchaser may have sought to rescind the contract in view of the delays (although any attempt to rescind may well have raised difficult questions as between the vendors and the purchaser).
His Honour considered it appropriate to make some allowance for these contingencies. The damages claimed by the vendors amounted to $63,493, being the difference between the amount of the bank guarantee, ultimately called up by the Council (which his Honour rounded off at $79,500), and the cost of constructing the access way and car park (found to be $15,757). He discounted the figure of $63,493 by $8,493, or approximately 13%, to reflect the various contingencies.
Mr Motbey's major complaint on this aspect of the case was that the trial judge's finding, that the consent of all owners would have been obtained by early 1990, was inconsistent with his earlier finding that the access way would not have been completed for at least 12 months after December 1989. We
accept that the findings are not easy to reconcile. The difference appears to be that, in assessing damages, his Honour specifically took into account that, had completion of the sale been delayed because the purchaser's co-operation was not forthcoming, the vendors would have devoted themselves more diligently to the task of securing the necessary consents.
The precise time at which Mr Sawtell's consent could have been expected is not a matter that bears materially on the causation issue. Whether his consent would have been obtained in early 1990, or only after a period of at least 12 months, cannot alter the conclusion that the vendors had lost a commercial opportunity of more than negligible value. The real question, in relation to damages, is whether it was open to his Honour to make the finding he did concerning Mr Sawtell's consent. In our view, there was sufficient evidence to support this conclusion, particularly as Mr Sawtell had indicated after completion, in March 1990, that he was prepared to grant the right of way requested, subject to certain conditions that were not particularly onerous.
Mr Motbey also contended that the allowance made by his Honour for the possibility that Condition 2 could not have been complied with was insufficient. As McLelland C.J. in Eq. observed in Sussman v Symes (unreported, 4 July 1994 (NSW SCt, EQD 1780/90), at 17, the assessment of probabilities and possibilities, in relation to the happening of hypothetical events, is not generally a process that can be undertaken with anything approaching precision. While the allowance made by his Honour for what he described as "contingencies" is somewhat modest, we do not think that the overall assessment of the value of the lost chance is such as to justify the intervention of an appellate court.
5. Was the Action for Damages Barred by s.82 of the Trade Practices Act?
Section 82(2) of the TP Act requires an action for damages under s.82(1) to be commenced within three years after the date on which the cause of action accrued. In this case the proceedings were commenced by the vendors on 5 November 1993. This was more than three years after the date of completion of the sale, but within three years of the date the Council called up the bank guarantee and (if it matters) within three years of the purchaser making it clear to the vendors that it would not co-operate.
The purchaser submitted at the trial that the claim for damages was barred by s.82(2). His Honour rejected the submission. He did so on the ground that the vendors' cause of action did not accrue until actual loss or damage occurred. The vendors did not suffer actual loss until the bank guarantee was called upon, in about late January 1993. Mr Motbey repeated the submission before us, but did not elaborate upon it. We therefore deal with the issue briefly.
In Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, the majority (Mason CJ, Dawson, Gaudron and McHugh JJ.) pointed out (at 527) that detriment is not the same as the legal concept of "loss or damage". Thus, if a person is induced by a misrepresentation to enter into an agreement which ultimately proves disadvantageous, he or she does not necessarily suffer loss or damage at the point of entering the agreement. What is required is actual damage, not merely prospective loss. If the agreement exposes the person to a contingent loss or liability, he or she does not suffer an actual loss until the contingency is fulfilled. As the majority said (at 532) "until that happens the loss is prospective and may never be incurred". See also Karedis Enterprises Pty Ltd v Antoniou (1995) 31 IPR 393 (FCA/FC), at 401-405, per Burchett and Hill JJ; at 406-409, per Sackville J.
In the present case, the vendors suffered no actual loss upon completion of the sale, or upon procuring the bank guarantee. Until the guarantee was called upon its loss was prospective or contingent. It had sold a property for its commercial value. It was exposed to a risk that the Council might call upon the bank guarantee. Whether that would happen depended upon a number of factors. It was not until the Council called upon the bank guarantee that the vendors suffered an actual financial loss.
It follows that the proceedings were instituted by the vendors within three years of their cause of action accruing. Therefore, the proceedings claiming damages were not barred by s.82(2) of the TP Act.
Conclusion
The appeal should be dismissed with costs.