Keen Mar Corporation Pty Ltd v. Labrador Park Shopping Centre Pty Ltd & Anor Coomber, T.Mc. & Ors v. Labrador Park Shopping Centre Pty Ltd & Anor Palleson, C.J. & Anor v. Labrador Park Shopping Centre Pty Ltd & Anor [1988] FCA 88

BUILDING CONTRACTS - Certificate of Classification - validity - effect on recoverability of rent.

MONEY COUNTS - money paid under unlawful contract - whether recoverable.

Keen Mar Corporation Pty Ltd v. Labrador Park Shopping Centre Pty Ltd Qld G119 of 1984

Trevor McDougall Coomber & Ors v. Labrador Park Shopping Centre Pty Ltd & Anow Qld G144 of 1984

Colin James Palleson & Anor v. Labrador Park Shopping Centre Pty Ltd & Anor Qld G145 of 1984

TREVOR McDOUGALL COOMBER, GREGORY DESMOND KEILY and CAMERON GREGORY GODDEN

Applicants LABRADOR PARK SHOPPING CENTRE PTY LTD First Respondent HERSFIELD DEVELOPMENTS CORPORATION PTY LTD

TREVOR McDOUGALL COOMBER, GREGORY DESMOND KEILY and CAMERON GREGORY GODDEN

BETWEEN: COLIN JAMES PALLESON and BETTY RUTH PALLESON Applicants AND: LABRADOR PARK SHOPPING CENTRE PTY LTD First Respondent AND: HERSFIELD DEVELOPMENTS CORPORATION PTY LTD Second Respondent AND: LABRADOR PARK SHOPPING CENTRE PTY LTD Cross-Claimant AND: COLLIN JAMES PALLESON and BETTY RUTH PALLESON Cross-Respondents MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 11 MARCH 1988 WHERE MADE: BRISBANE THE COURT:

1. orders that 1n the matters of G119/84, G144/84 and G145 of 1984 -

(b) the cross-claimant pay the cross-respondents' costs attributable to the cross-claim, to be taxed;

3. orders that in the matters of G144/84 and G145/84 there be no order as to costs;

4, directs that the aforesaid orders as to costs not be perfected for fourteen (14) days.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

TREVOR McDOUGALL COOMBER, GREGORY DESMOND KEILY and CAMERON GREGORY GODDEN

Applicants LABRADOR PARK SHOPPING CENTRE PTY LTD First Respondent

TREVOR McDOUGALL COOMBER, GREGORY DESMOND KEILY and CAMERON GREGORY GODDEN

QLD G145 of 1984 COLIN JAMES PALLESON and BETTY RUTH PALLESON

These reasons relate to three applications which were

heard together. They had in common that all the applicants were

tenants of the Labrador Park Shopping Centre, within the area of

the Gold Coast City Council. Certain legal questions common to

Each application was founded in large part upon allegations of misleading conduct said to be in breach of 558.52 and 53A of the Trade Practices Act 1974; I shall sometimes refer to these as the s.52 claims. In the first application, the applicant, Keen Mar Corporation Pty Ltd, did not pursue its claim

under the Trade Practices Act, but the other two sets of

applicants, in what I shall cali the Coomber (G144 of 1984) and

Palleson (G145 of 1984) cases, pursued s.52 claims.

Of the three respondents, the third, a firm called Jones Lang Wootton, disappeared from the litigation in consequence of a decision I gave in its favour at an interlocutory stage: the case is reported in 61A.L.R. 504; after that hearing the applicants discontinued against that firm. Of the other two respondents, the first (Labrador Park Shopping Centre Pty Ltd) was the landlord of each of the applicants. It instituted cross-claims against all of them for moneys said to be due under the leases and also, in the

Keen Mar case, sued cross-respondents as guarantors of obligations

In the Coomber and Palleson cases, the claims under s.52 were rather similar, and it 1s enough, to indicate the scope of the dispute in a preliminary way, to refer to the Coomber statement of claim. It complained of the content of a brochure sent in mid-1981 with reference to the then proposed Labrador Park Shopping Centre, and a letter sent with the brochure. It said that those documents contained misrepresentations which induced them to execute a lease of 5 October 1981, as tenants. The

statement of claim also said that one Wakeham, a real estate agent

employed by the third respondent, made representations to the applicants in mid-1981 with the same result - i.e. causing them to Sign the lease in October and act under that lease. They claim to

The pleading then turned to a _ separate subject, discussed in detail below, namely a "Certificate of Classification" made under by-laws pursuant to the Building Act 1975-1981 (Q.). The pleading said that the occupation of the demised premises was at all material times illegal because of the absence of a necessary Certificate of Classification. As a consequence, it was said that the leases were void on the ground of illegality. In the result, that assertion was abandoned, but the marrower argument was advancec that because of an illegality arising in the course of performance, the lease was unenforceable during the period when no Certificate of Classification authorising occupation existed. Further, the applicants asserted,

they were entitled to recover the moneys they had valid.

The Certificate of Classification was also relied on in the pleading in quite another way. It was said that, by various acts and omissions, the applicants were misled about the Certificate of Classification, that the respondents should have positively informed the applicants of the illegality to which I have referred, and the respondents were guilty of further breaches

of s.52 with respect to the Certificate of Classification issue.

misrepresentations related to statements made by one Mickles on

behalf of the respondents in 1982, after the applicants went into

The applicants claimed substantial damages under all

In the Palleson pleading, the same basic structure is found and that makes 1t unnecessary to analyse the pleading in detail. However, in many respects the specific allegations of

As appears from what has already been said, the allegations of misrepresentation are based on events which occurred before the leases were executed, as well as on some

events which occurred after that. One importance of the distinction 1s that, as to the former class, questions arose about

the time bar in s.82(2) of the Trade Practices Act, and they are

dealt with below. As to the latter, not all were pressed. The

allegation in the Palleson case concerning the statements made by Mickles in 1982 were struck out by consent during the course of the hearing and, in his address, counsel for the applicants, Mr

Macklin, abandoned the similar claim in the Coomber case,

That left, as the only allegation of misrepresentation after the execution of the leases, those concerning the Certificate of Classification. The argument was, in substance, that I should find that the tenants had suffered loss by not being told about the difficulties about Certificates of Classification,

which are set out in detail below. Mr. Macklin's submissions

appeared to recognise that there were problems in connecting the Certificates of Classification with any loss suffered by applicants; despite the earnest arguments directed to that point, the difficulty seemed to me plainly insuperable, and it is my view that the s.52 case based on the Certificates of Classification has no substance. I have held, however, for the reasons set out below, that the absence of the Certificates of Classification defeats cross-claims made for rent and other moneys due in respect of

In the result, the substantial misrepresentation case advanced in the Coomber application, as well as that in the Palleson application, was that oral and written statements made before the leases were entered into were misleading. I have set out my views about that below and have found in favour of the applicants on the question whether misleading statements were made inducing them to enter into the leases. I have, however, heid as a matter of iaw that the case based on those statements fails because of the three year time bar in s.82(2) of the Trade Practices Act. I have also rejected the applicants' claim for return of moneys paid on the ground that the leases were illegal; for convenience that 1s dealt with under the heading "Illegality",

The somewhat unusual result, then, is that both the claims and cross-claims fail, for reasons I have just outlined and which are explained in more detail below. These reasons also deal

with a contention, which has been upheld, that the evidence

adduced in support of the cross-claims was, quite apart from the

illegality question, insufficient. The reasons do not deal with some other legal questions which were raised, and, more importantly, do not touch on the subject of damages for breaches of s.52; were 1t not for the time limitation defence, I would have assessed damages in favour of the applicants in the Coomber and

The term "misrepresentations" refers to both the allegations of conduct that is "misleading or deceptive or is likely to mislead or deceive" under s.52 and allegations of misrepresentation in respect of land, in breach of s.53A. Despite my conclusion that these claims must fail as being time barred, 1t seems to me right to set out my findings on those of them which appear to have substance; I have not dealt with those which either seemed clearly not to have had an inducing effect or were for

other reasons not such as to require separate discussion.

Mr Callinan Q.C., who led Messrs Myers and Perry for the respondents, pressed the argument that the applicants 1n both the Coomber and Palleson cases made their own assessments of the prospects of the proposed new shopping centre. I accept that to a considerable extent that submission is correct, particularly with respect to the applicants in the Coomber case. Further, it is my view that an important reason for the losses suffered by the applicants during their periods of trading in the centre was simply that its location was not such as to draw the public as

well as had been hoped; that, of course, was a matter which the

applicants were in as good a position to gauge as were the respondents. IT am satisfied that, at material times, business done by the specialty shops at the centre was disappointing, and in that sense the centre was unsuccessful. I reject the evidence

of Mr A.R. Pearce, on behalf of the respondents, suggesting the

Although the simple fact of the centre's location was a substantial cause of losses sustained, I am satisfied that the applicants in the Coomber and Palleson cases were misled in respects I shall discuss, and that the misleading statements contributed to their respective decisions to take space in the

Looking at the matter broadly, i1t was not really surprising that these applicants were misled. Presumably because of doubts about 1ts location, the centre did not prove to be very attractive to prospective tenants and Wakeham had trouble filling it; naturally, the applicants sought information about their likely co-tenants, but Wakeham was disinclined to tell them the rather depressing truth on that subject. He also laboured under the difficulty that the landlord told him little about the

intended nature and physical characteristics of the centre.

Mr and Mrs Palleson leased shop numbers 11 and 12 as a

restaurant and take-away shop. I set out hereunder my findings on

the most substantial allegations of misrepresentation made by

(i) Chicken Shop. Palleson said that Wakeham told him that there would be a "national chicken take-away" operating three shops; that conversation 1s not precisely dated, but apparently took place in May or June 1981. In cross-examination 1t was suggested to Palleson that what Wakeham said was that there were discussions with a national chicken take-away and he was hopeful of securing them. When Wakeham gave his evidence, however, he said he believed about June 1981 that the national chicken chain were going to proceed. He said, "They had given me indications

Palleson's version 15 similar to that of one of the apolicants in the Coomber case, Mr Keily, who was told much the

same - "There would be a national take-away chicken food there ...

comprising three shops, and also that they had been committed".

The matter 1s discussed in the correspondence Wakeham had with his principal. His letter to Pearce dated 3 August 1981 says that a large chicken operator had made a "tentative offer of $600.00 per week for the three tenancies". That had been rejected. On 17 August the "Chicken Spot" chain were said to have increased their offer to $675, on the basis that the landlord paid to fit the shops out; that was apparently unacceptable. On 16 October 1981, Wakeham wrote to say that "Chicken Spot" had

I have no doubt that Wakeham discussed the matter with

prospective tenants and used the prospect of the presence of such a shop as aeselling point, and am sufficiently confident of Palleson's recollection of what Wakeham said to make a finding in favour of the applicants on this point. That is, I am satisfied that Wakeham overstated the position, and that his having done so

(ii) Fifteen Other Prospective Tenants. Palleson said

that Wakeham told him that there were "fifteen prospective tenants that were interested in the take-away food shop. He said if we

wanted the shop, we would have to make a very quick decision and decide whether we wanted them or not." Wakeham said on that point, when asked by junior counsel for the respondents, that he could not be specific, but may have told Palleson that at the time

there were "several commitments and strong enquiry".

In answer to me, Palleson said that fifteen seemed a lot

Having 1n mind Wakeham's response to this point, I have concluded that the representation in question was made. Clearly enough 1t was untrue. Despite the answer given to me just mentioned, I am of opinion that the misstatement had some inducing

effect. It contrasts sharply with the tone of the correspondence

between Wakeham and the respondents, which is fairly consistently pessimistic; for example, on 16 October 1981 Wakeham wrote to say

that there had been little success with fast food operators.

(ili) Rental. It is clear, and not disputable, that Palleson was misled by Wakeham as to the rental required, but

since there is a question whether, even so, this statement may be

relied on, it is desirable to set out the facts in some detail.

Palleson gave evidence that he said the rental of $300 per week asked seemed very high and asked whether rentals were

negotiable. He received the answer, "No, they are not negotiable.

All rentals are fixed." Wakeham gave evidence that he told Palleson the rentals were fixed and that that was not true. He said that to say so was "normal commercial practice ... not lying

It 1s important to note that not only were the rents unfixed, but the truth was quite otherwise. The agents for whom Wakeham worked were free to negotiate such rental as they could get; the higher the rental, the higher their commission. One Tormey wrote on behalf of the agent on 21 May 1981 setting out the fee income, namely $20,000, based on $200 per week per _ shop, increasing to $25,000 if they achieved $250 per week and $30,000 if they achieved $300 per week. The letter made clear that for intermediate levels of income there would be an intermediate figure - e.g. $275 per week was to bring $27,500 fee to "ensure that we fight for every last dollar of income". The agent wrote

to Palleson on 3 June 1981 (less than a fortnight later) saying

It may be that it is difficult, in practical commerce,

for an agent to answer such a question as Palleson asked and it

may seem odd for an agent to evade it. Yet here the statement that the rentals were fixed was simply a lie and was an inducment

to Palleson to contract as he did; cf. Nicholas v. Thompson £19241

(iv) Single Shopping Level. There was a representation

that the centre would be constructed on a single shopping level; that has not been shown to be false. The expression "single shopping level" in my opinion means, at least prima facie, that there is no difference between levels of the various shops. That

The applicants sought to make the case that the statement meant that there was no step-un from the carpark to the

(v) Ease of Access. Counsel for the applicants said in

his address that particular reliance was placed upon a representation as to ease of access to the centre. However, it does not appear to me that these applicants can make out the case pleaded, that they were induced to sign the lease and enter into possession by a statement as to the access provided. The lease was not executed until December and, at that time, the general

nature of the access provided must have been obvious enough.

(vz) Level of Carpark. This allegation was based on the brochure referred to above, which appeared to depict the line

of shops as being at the same level as the carpark; in the

result, it was not. Palleson complained of the difference between

the level of the shops and that of the carpark. He said that he

became aware of the difference in level "a few days prior to the opening" or "within a week prior to opening". In

cross-examination he agreed that he wanted to go into the centre

One could not be satisfied, on that evidence, that he was unaware of the difference between the level of the carpark and that of the shops on 2 December 1981 when these applicants executed the lease. It is not alleged in the pleading that they came under any obligation to take space in the centre before 2

Although I think, on balance, that the brochure us misleading 1n the respect alleged, it does not seem possible to find for these applicants on the basis being discussed. I reach that conclusion with some regret, because of two circumstances.

One 1s that the correspondence between the agent and the principal does not suggest that any trouble was taken to ensure that the

brochure accurately represented what was proposed. Secondly, Wakeham himself, in his letter of 16 October 1981 to the

respondents, expressed the view that the difference in levels

(vil) Access Directly into a Shop. In this heading I

include the representations in paragraphs 16(c) and (d) of the statement of claim, which are to similar effect. Unfortunately for the applicants, I think the answer to this allegation is the

same as to that last discussed - that is, it is not shown to my

satisfaction that before entering into the lease Palleson was unaware of the substantial step-up from the carpark to the shops;

the presence in that difference of level necessitated that there

These applicants executed a lease on 5 October 1981; their task in showing that some of the statements made about the character of the centre misled them is inherently easier, because they committed themselves earlier than did the Pallesons. Nevertheless, there was much made of the point that they had

opportunities to observe the nature of the centre during the

applicants in this case, gave evidence that Wakeham said, in June

1981, that one would "virtually be able to drive up to ... whichever shop the shopper wanted to shop at and go in quite

easily and go out quite easily." These applicants also rely, of course, upon the brochure as suggesting the same. In cross-examination, Ke1ily gave evidence that he visited the building two or three times a week during the course of construction, but he claimed that the difference in levels was only apparent when the carpark was sealed. He also said that the fact that the shopping centre and the carpark would all be on the

same level was a matter he took into account in agreeing to enter

It is not easy to determine when it was, or should have been, evident to Keily that there was a substantial difference in levels. He expressed the view that it was not until about three weeks prior to the opening (i.e. three weeks prior to December 8 1981) that it was evident that the external carpark level was

going to be different from that of the shopping level.

Godden, another of the applicants 1n this case, said that he visited the site during the course of construction a number of times, so he presumably also had opportunity to notice the difference in levels. In his opinion, the "main thing" was

Coomber said he expected there would be no impediment from the carpark to the shopping. His evidence was to the effect that, although he noticed during the course of construction that there was an apparent gap between the carpark level and that of

the shops, he thought the difference could be overcome by filling.

It has to be said that the allegations made about access from the carpark to the centre gain strength from the evidence of Wakeham. He said he himself believed at the time he was negotiating with Keily that the shopping centre would be at the same level as the carpark. He was not prepared to deny the

possibility that he communicated that belief to Keily.

I have already referred to Wakeham's letter, expressing,

on 16 October 1981, his concern about the difference between the

levels. It seems to me that the letter assists these applicants in two ways. Firstly, 1t increases the probability that Wakeham communicated to Keily the idea that access from the carpark to the shops was immediate and direct. Secondly, it diminishes the

likelihood that these applicants were aware of the true situation at any date significantly earlier than 16 October 1981. I reiterate that they executed their lease on 5 October 1981. It is, of course, possible that by that date it must have been obvious that there was a substantial difference in level, but in

I therefore find that the combination of the brochure and what Wakeham told Keily about 1t gave Keily the impression (which was also Wakeham's) that one would be able to walk directiy from the carpark to their shop; that was an important attraction to these applicants. The means of access in fact available, and

always intended, was significantly less convenient.

(11) Ease of Access from the Gold Coast Highway. The

brochure says that: "A high proportion of Brisbane holiday makers could be expected to stop at the centre due to ease of access and convenience of shopping." The expression "Brisbane holiday makers" must mean people coming from Brisbane for a holiday or returning to Brisbane after a holiday - presumably including those coming down only for a day. Obviously, a high proportion of those people would be unlikely to shop at the centre if 1t were hard to get to from the highway. Keily gave evidence that he asked Wakeham about access, and was told there would be a slow-down lane

coming from Brisbane and also in the other direction. That turned

out not to be so. He told counsel for the respondents that he quizzed Wakeham about access. Godden said that at a meeting with the manager after they took possession, there was a suggestion that lights would be installed at the corner of Babbidge Street and the highway. Godden claimed that people coming from Brisbane were apprehensive about stopping to turn in. Traffic lights were

installed at the corner after these applicants vacated.

When Wakeham was asked about it, he said that he understood that the developer had been seeking Department of Main Roads approval, apparently for a slow-down lane, but that had not been given. He believed that the developer was attempting to

achieve the installation of slow-down lanes but "at that point in

Wakeham said, and I believe him, that he did not recall

I have had some difficulty in coming to a conclusion on this aspect. I found Keily an impressive witness, but have been concerned about the difficulty of his distinguishing between features of the centre said to be in prospect and those said to be definite. On the whole, I have not been able to feel myself sufficiently satisfied that the slow down lanes were said to be in

(iii) Chicken Shop. Keily said in his evidence that, in a conversation with Wakeham in June 1981, the latter told him that

a national take-away chicken food store would be in the centre,

comprising three shops, and that "they had been committed". Pressed on the subject in cross-examination, he at first suggested

that Wakeham had claimed the chicken chain had "signed", but then reverted to "committed". In this case also, the question arises whether one could be sure enough about what Wakeham said on the point. The account of the dealings with the chain in question given above, in discussing the Palleson case, makes 1t clear that

it would not have been right at any stage to suggest that the

On the whole, I am satisfied that Wakeham misled Keily in the respect alleged and that his having done so was a cause of these applicants executing their lease. It may not seem a very large point, but 1s to be considered against the background that, as the correspondence amply shows, Wakeham was having difficulty getting tenants to commit themselves. That, in the judgment of a national chain of speciality shops, the centre was one in which 1t

was worth taking space was, I think, a significant inducement.

For the reasons just given, I find that the applicants

in the Coomber and Palleson cases were induced by misleading conduct; but in all three suits, i1t was pleaded against the

applicants that their claims under the Trade Practices Act were

As to the claim by Keen Mar, no limitation question

arises because, as I have said, the Trade Practices Act claim was

abandoned during the hearing. As to the Coomber and Palileson claims, it is necessary to consider whether they were brought in

Both applications were filed on 7 December 1984 and the

respondents contended that the claims are barred by s.82(2) of the

Section 82(1) vests ina person damaged by conduct in

contravention of (among other provisions) s.52, a right to recover

the amount of the loss. Section 82(2) reads as follows:

"An action under sub-section (1) may be commenced at any time within 3 years after the date on which the cause of action accrued."

On the face of 1t, these claims fall within s.82(1) and it was therefore necessary to begin them within three years after

The first question 1s whether the limit prescribed by s.82(2) 1mposes an absolute bar, or whether there is a discretion to grant relief not subject to any time limit, under s.87. That provision has been amended several times. When these applications were instituted, the section was in the form set out in the 5th edition of Mr. Miller's book, Annotated Trade Practices Act. At the date of occurrence of the events in question, it was in that form but for the opening expression, "Without limiting the

generality of section 80", appearing at the beginning of both

subs.(1) and subs.(1A): see the Statute Law (Miscellaneous

Provisions) Act (No. 1) 1983 Sessional Volume 1, p.524.

Ido not here set out the provisions of s.87; it is enough for my purposes to summarise them, so far as relevant. The section says that where in a proceeding instituted under Part VI of the Act, the Court finds that a party to the proceeding has suffered loss or damage by contravening conduct, the Court may, whether or not it makes an order under s.82, make such order or

orders as it thinks appropriate against the contravenor if the

Court considers that the order or orders will compensate the party for the loss; subs.(1A) says the Court may, on the application of a person who has suffered loss, make appropriate orders, including an order directing the contravenor to pay the amount of loss

The question is whether, since the applicants in the Coomber and Palleson cases suffered loss by reason of such contraventions as are mentioned in s.87 and there was, when these apolications were filed, no explicit time bar for claims under s.87, they may take advantage of the bar-free provision, rather than relying on s.82(2). The contention is that s.82 and s.87 are simply alternative avenues whereby the applicants may obtain relief, the latter having the critical advantage of having no time

It should be noticed that applications under subs.(1A) are, by Act No. 168 of 1986, made subject to subs.(1CA) which imposes a time limit of three years from the date of accrual of

the cause of action, but if the present proceedings (begun in

1984. were begun in time, they were not retrospectively barred by

The question I have just mentioned - whether the applicants in the Coomber and Palleson cases may take advantage of the absence of any express time limit 1n s.87 - depends for its

The first 1s the decision of the Full Court in Fenech v.

Sterling (1984) 57 A.L.R. 98. The Court there had to consider the

"l.. whether the three-year limitation period prescribed by s.82(2) applied directly or at all to the apolication under s.87(1A)."

It was accepted in argument that an appiication under s.87 "does not have to be founded upon any other proceeding" (p.103) and the Court held that "s 87(1A) 1s free of any prescribed period of limitation" (p.104). However, the Court went on to hold that the remedies under s.87(1A) are discretionary; the Court said in effect that the fact that the time limit prescribed by s.82(2) had

elapsed could justify an exercise of discretion against allowing

Toohey J. in James v. Australia and New Zealand Banking Group Ltd

(1986) 64 A.L.R. 347 at p.395. There his Honour, acting on the

Full Court's reference to the exercise of discretion just

"It would, in my view, be a curious and unexpected result that a person whose claim is barred by reason of s.B2(2) may nevertheless recover

precisely the amount claimed merely by invoking para.(d) of s.87(2)."

His Honour declined to exercise in favour of the applicants, who had sued beyond the three year time limit

prescribed by s.82(2), the discretion referred to by the Full

The last case to which it is necessary to refer under this heading 1s the decision of the High Court in Sent v. Jet

Corporation of Australia Proprietary Limited (1986) 160 C.L.R.

540. In that case, the correctness of the concession made in

Fenech v. Sterling was challenged, and successfully; the Court

-.. compensatory relief under sub-s.(1A) can be applied for and granted only if a proceeding is instituted or has been instituted under or for an offence against a provision of Pt VI other than

s.87 in respect of conduct engaged in in contravention of Pt V." (p.545)

As to the question of a time limit, the Court said at

"Although s.87 contains no time limitation, the proceeding on which the power to grant relief under s.87 depends will be barred if it is instituted outside the time, if any, limited for instituting that proceeding."

Read in the context, that would seem to imply that the

s.87 proceeding is also barred, if that on which it depends is

barred. However, in the next paragraph the Court said:

"The question whether, if the amended claim were supported by s.87(1A), the time limited by s.82(2) would apply does not arise."

It is necessary to decide whether, the foundation of the Fenech case having been destroyed by the High Court's decision in

Sent, the view taken of the time limit in the earlier decision has

any residual authority. It appears to me that it has not; the conclusion about the time limit there stemmed from the view which the Sent case held to be wrong, that claims for orders under s.87(1A) are independent of, and need not be ancillary to,

proceedings brought under other provisions of Part VI. In my opinion, although the High Court left open the question of a time limit for claims under s.87, the tendency of the decision is against holding that this Court has a discretion to grant, under s.87, relief commensurate with that which could have been obtained (but for the time bar) under s.82(1), after the prescribed time has expired. That was described by the High Court (p.544) as being "more curious" than conferring a "right to compensation under s.82 and quite independently, a right to the discretionary grant of compensation under s.87(1A)", and the latter was held by

It follows that the applicants in the Coomber and Palleson cases can, in my opinion, gain no advantage by relying

upon s.87; they must meet the contention that they are barred

under s.82(2). I should add that the pleading does not express any reliance on s.87, but I have dealt with the case as if it did

My conclusion to this point is that, if the claim for the amount of loss or damage 1s barred by s.82(2), the same money

may not be claimed under the ancillary provisions of s.87(1A).

In the Coomber case, the agreement for lease (exhibit 21) is undated, but the lease itself was executed on 5 October 1981 - 1.e. more than three years before the institution of the proceedings. In the Palleson case, the lease was executed on 2

December 1981, again more than three years before the institution

The damages claimed are, of course, related not only to the leases but also to events which occurred within the three year period; the losses claimed to have been suffered are 1n each case measured by expenditures which took place wholly or in part within the three year period. They include rentals paid, trading losses

Although other possible dates may be arguable, it appears to me that the choice of the date of accrual of the cause of action is to be made between three possibilities only: the date of execution of the leases which committed the applicants;

secondly, the date of occurrence of the various losses constituted

by expenditure of moneys; thirdly, the date upon which the

The authorities relevant to this problem are now rather numerous. The most recent case I shall mention is the decision of the New South Wales Court of Appeal in Hawkins v. Clayton (1986) 5 N.S.W.L.R. 109; that is also potentially the most important, since

1t has gone on appeal to the High Court, but has not yet been

English Court of Appeal in Forster v. Outred & Co. £1982] 1 W.L.R.

86. That concerned, among other things, the time limit for institution of proceedings against a solicitor for negligence. The plaintiff's complaint was that the solicitor gave bad and insufficient advice concerning the execution of a mortgage by her, as a result of which she was obliged, some time later, to pay tne

amount of the mortgage out. The Court held that the plaintiff had

".,. the effect of which has been to encumber her interest in the freehold estate with this legal charge and subject her to a liability which may, according to matters completely outside her control, mature into financial loss - as indeed it did ..."

The analogy between execution of the leases here and execution of the mortgage in the Forster case seems to me reasonably close. Although until registration each lease was

ineffective in law (as opposed to equity), the lessees had by

execution of it committed themselves and undertaken obligations. If the Forster case is right and its principle is to be applied to

suits under s.82, there was a cause of action in existence more than three years before the filing of the applications, because

there was then, as to each group of applicants, a "quantifiable

loss" - p.100 of Forster's case. I observe that the Forster case has recently been followed by the English Court of Appeal:

D.W. Moore and Co. Ltd. v. Ferrier C1988] 1 W.L.R. 267.

The question whether there was a cause of action immediately upon execution of each lease has an academic air about it, as 1t 1s unlikely, in a practical case, that a lessee induced to enter into a disadvantageous lease would immediately sue; he or she would be more inclined to refuse to proceed any further with the transaction. However, 1f a cause of action accrued more than three years before filing of the application, the respondents' right to rely upon the time bar cannot be defeated merely by satisfying the Court that the applicant would not have sued immediately the cause of action arose. By analogy with the Court of Appeal's decision if, as the applicants say, they entered into a disadvantageous lease as a result of misleading statements, their having accepted onerous obligations was itself a loss

In Hawkins v. Clayton (above), solicitors who drew up

and held a will failed to advise Hawkins (the executor and residuary beneficiary) of the testator's death and his rights, until some years after they should have done. One question was

whether the claim was statute barred, and the Court held that it

was; McHugh J.A. dissented on that point. The claim was based upon losses caused by deterioration of the principal asset of the estate during the time the beneficiary was unaware of the death, and on loss of rental. Kirby P. held that loss occurred when, but

for the breach, the beneficiary would have had access to the

property bequeathed and Glass J.A. agreed with that view, saying at p.123:

"The view that a tort liability accrues as soon as any damage is suffered and that the statute of limitation commences to run although the plaintiff is unaware of the damage has been unchallenged principle since Cartledge v. E. Jopling & Sons Ltd C1963] A.C. 758 was decided in the House of Lords affirming authority extending back almost one hundred years."

His Honour also rejected the suggestion that successive losses of

income each gave rise to a fresh cause of action, relying on the

--- damages must be assessed once and for all and further injury arising from the same cause of

action does not give rise toa further cause of action ..." (p.124).

Shortly after the decision in the Hawkins case, the Full Court of the Supreme Court of Queensland had to consider a similar

point in Gillespie v. Elliott £1987] 2 Qd.R. 509. The allegation

there was that solicitors had drawn up a lease negligently, in that part of it was uncertain. The lease was executed in 1975, but the loss as a result of the uncertainty did not crystallise until 1977, when a potential purchaser of the lease declined to

proceed because of the uncertainty. The losses claimed (as here)

included trading losses; in the Gillespie case the trading losses were said to be consequent upon the potential purchaser's declining to proceed. Since the writ was issued in 1983 and the time limit was six years, the plaintiff was out of time unless he

The Court unanimously held the claim to be statute barred. The case appears to me to be a strong one, in that the actual losses claimed were neither in existence, nor in

contemplation, nor reasonably able to be predicted, in 1975.

The principal judgment was written by Macrossan J. who followed, amongst other cases, Forster v. OQOutred & Co. (above).

""... the damage 1n the present case as having been

suffered and the relevant limitation period as commencing to run from the time when the plaintiffs entered into the contract by which they acquired their business or when they executed the leases pursuant to the provisions of that contract" (p.519).

Carter J., agreeing, analysed the position in 1975 as

"ae the appellants had acquired property significantly less valuable than that which they

had expected to receive. The loss thereby caused was quantifiable ..." (p.520).

The decision, like that of the New South Wales Court of

Appeal, assists the respondents in two ways: firstly, in declining

to defer the accrual of the cause of action until the plaintiff knew of its existence, and, secondly, in holding that claims for losses arising from events well within the limitation per1od - in the latter case, the lost sale and business losses following from that - could not be founded upon an allegation of a new cause of action, when a quantifiable loss had been sustained outside the

It should be mentioned that, in support of his dissent, McHugh J.A. relied particularly upon remarks made in the High

Court in The Council of the Shire of Sutherland v. Heyman (1985)

157 C.L.R. 424, as pointing in a direction opposite to that taken by the majority. While recognising, with respect, the force of the considerations to which his Honour referred, as also the practical difficulties referred to by Carter J. in the Queensland case, I am of opinion that I should accept the authority of these State decisions. It should surely be only in an unusual and clear case that a single judge of this Court would be justified in treating two recent decisions of Supreme Courts in appellate jurisdiction as incorrect, and I can see no good ground for

The applicability of time limitation doctrine under the

general law to claims under s.82 of the Trade Practices Act was

recently considered in Elna Australia Pty Ltd v. International

Computers (Australia) Pty Ltd (1987) 75 A.L.R. 271. There, Gummow

J. veferred to authority for the view that in s.82 claims there

"may be several distinct losses (and, semble, distinct claims)

flowing from conduct in contravention of a provision of Pts IV or

I agree that there may be several distinct losses and several distinct claims flowing from breaches of, for example,

s.52 of the Trade Practices Act. But it is my view that in the

ordinary case, where an applicant claiming relief on the basis of misleading conduct inducing him to enter into obligations under a contract points to a series of losses of various kinds flowing from the transaction, there are not as many causes of action as distinct losses. I think the cause of action accrues by the time the applicant has entered into the relevant transaction; where the applicant has taken a lease, that will be not later than the execution of the lease. In the second of the two cases to which

Gummow J. referred, James v. Australia and New Zealand Banking

Group Ltd (above), Toohey J. remarked at 64 A.L.R. at p.392:

"Once an applicant has suffered loss or damage relevant to his claim, time begins to run."

I should add that, in my view, the words "date on which

the cause of action accrued" in s.82(2) were intended to have a meaning akin to that worked out under earlier time limitation

Although the applicants' counsel spoke of fraud, there is no pleaded allegation, it should be said, that the misleading conduct alleged to have induced the applicants to have entered

into the transactions in question was fraudulent. Despite that, I

have given consideration to the question whether the doctrine of

fraudulent concealment should be held to apply. There used be a difference between the operation of this doctrine in equity and

its operation at law, but in Gibbs v. Guild (1882) 9 Q.B.D. 59, an

action in deceit, it was held that since the Judicature Act the plaintiff could defeat a plea of the Statute of Limitations by showing that the defendant's fraud was fraudulently concealed until a date within the limitation period. In Bulli Coal Mining

Company v. Patrick Hill Osborne [£18993 A.C. 351, it was held in

effect that the ruling in Gibbs v. Guild applies where the Plaintiff was unaware of his cause of action because of the original fraud, without active concealment later (pp.363, 364). These cases were decided on the old Statute of Limitations, which contained no specific provision for extension because of fraudulent concealment. The limitation in s5.82(2) contains no

There is authority 1n the High Court, namely The Crown v. McNeil (1922) 31 C.L.R. 76 tending to support the view that the

doctrine of Gibbs v. Guild 1s irrelevant in claims brought under s.82 of the Trade Practices Act or those dependent upon then. That case concerned a Western Australian statute providing for enforcement of claims against the Crown by a petition with a twelve month time limit. The High Court held that concealed fraud would not extend the time limit. That seems to have been based upon two grounds. The first was that the time limit in question was not like an ordinary statute of limitation, but was designed "to prevent a party resorting to the special statutory procedure

unless he comes within the time specified" - p.96; see also per

Isaacs J. at p.100. The second ground was that the Court had no power to disregard the words of the statute on the basis of an

A.T.P.R. 40-413, Davies J. held on the authority of this case that

the doctrine of Gibbs v. Guild is irrelevant in considering time

limits under s.82(2). The first ground of the High Court's decision appears inapplicable here, where the statute does not merely provide a special procedure, but creates new rights and obligations. However, the second ground is applicable; the foundation of Gibbs v. Guild was an equitable doctrine which

developed on the basis that equitable claims were not caught by

the Statute of Limitations. Claims under the Trade Practices Act,

on the other hand, are subject to such time bars as the Act

contains and I do not think it to be implicit in s.82(2) that

rules in equity shall be applied to relieve applicants against the

In the result, then, I uphold the plea of the limitation

in s.82(2); the claims under the Trade Practices Act cannot he

I should add that it does not appear to be right to express a view about a way in which the discretion referred to in Fenech's case would have been exercised, but for the conclusion just reached; no argument was directed to that. The limitation point was fought on the assumption, which I have held to he

correct, that the question is whether s.82(2) of the Act applies.

The cross-claims had a rather confused and unfortunate history. The two principal questions argued relating to them were the adequacy of proof of the cross-claims anda question of

As to the former point, in the end, counsel for the cross-respondents submitted the claims simply had not been proved. Counsel for the cross-claimant argued that if that was so, there might have been an "ambush" and leave should be given to reopen

Consideration of these points requires some account of

As originally pleaded, the cross-claims set out the effect of covenants in the leases requiring the payment of rental, outgoings, and interest, and alleged that the cross-respondent tenants terminated their occupation and failed to pay the rent. The pleadings alleged that loss and damage had been suffered and

claimed moneys described as being "for rent, interest and other

monies payable pursuant to the Lease together with damages for breach thereof." There were also, in the Keen Mar case, claims on

As first pleaded, the cross-claims did not clearly assert the basis of the claims for damages for breach. If a

tenant simply does not pay the rent, then the landlord may sue for

it, whether or not the tenant is in possession. To claim damages, however, appears to imply that there has been some breach other than non-payment. A claim for damages would be appropriate in such a situation if the landlord decided to treat the tenant's having given up possession, and declined to pay any more rent, as a yrepudiation. The landlord could decide to accept the repudiation (if the tenant's actions constituted one) and sue for

the loss of the benefit of the lease: Shevill v. The Builders

Licensing Board (1982) 149 C.L.R. 620, The Progressive Mailing

House Proprietary Limited v. Tabali Proprietary Limited (1985) 157

C.L.R. 17. The difference between these two courses is a familiar one; the advantage of acceptance of the tenant's actions as a repudiation 1s that the landlord may relet and sue for damages, being a sum equivalent to "the benefit of the bargain entered into with the lessee" - Shevill's case (above) 149 C.L.R. at p.632. If

damages are to be assessed on that basis, it 18 necessary to lead

evidence of the value of the "loss of the benefit of the covenant

to pay future rent and sutgoings" - The Progressive Mailing House

Proprietary Limited v. Tabali Proprietary Limited (above) at p.32.

In the result, the original claims I have mentioned were not pursued but were, towards the end of the trial, repiaced by rather different claims substituted by leave. The reason for that

change has some significance; 1t was apparently connected with

During the trial, counsel for the cross-respondents persistently complained that proper discovery had never been made

concerning the cross-claims. It transpired that the complaint

about discovery was well justified. Initially, the cross-claimant asserted that the material sought by way of discovery had been destroyed, suggesting, as I understood it, a practice of

destruction after three years. Later it became clear that there

was no truth in the story that there was such a practice, which was abandoned; likewise, the claim for outgoings, which was' the principal subject of the cross-respondents' complaint about discovery, were abandoned. It became necessary for the cross-claimant to reformulate its claims late in the trial which was, in other respects, a complicated and difficult one. In their final form, the claims were of the same general character as mentioned above - 1.e. they were for moneys said to be payable under the leases, and also for "loss and damage". In each of the three cases, as I understand the pleadings, the claim for loss and damage was connected with an allegation of inability to secure a tenant for the premises. It was not specifically pleaded whether (and if so at what date) the cross-claimant had elected to treat

the cross-respondent tenants' actions as repudiations, but' the characterisation of the claims as including "loss and damages"

made 1t clear that, in part, the cross-claim sought such damages as are referred to in the quotations from the two High Court cases just mentioned. In each of the Keen Mar and Palleson cases, it appeared that a substantial part of the claim consisted of damages

It 1s necessary to condescend to some detail as to the course of the evidence of Mr A.G. Jeffery; if it be anywhere, the proof of the cross-claims must be found there. It is true that

exhibit 54 contains, in a schedule to a valuation, some evidence

as to rentals negotiated for shops in the relevant shopping centre from time to time, including the shops in issue; however, it is plain that the schedule 1s insufficient to prove the

When first called, Jeffery set out to give evidence concerning the claims as originally formulated. That process was interrupted when it appeared that the evidence was directed to prove claims not yet pleaded. He later returned to the box and gave evidence concerning some, but not all, of the figures set out in the claims as finally pleaded. It should be added that Jeffery had no personal knowledge of the facts in issue, since he had entered the service of a company associated with the

cross-claimant only in 1986. What he did in his evidence was to

explain the content of certain schedules made up by another employee. No attempt was made to tender those schedules. However, I hold (1n accordance with the submission of counsel for the cross-claizmant) that 1t was clear at the trial that the

schedules corresponded to the deta1ls in the claims as finally

No objection was taken to Jeffery's evidence; although in other circumstances it might have been of little weight (since he was merely explaining the contents of a document prepared by another and had no relevant personal knowledge), I see no reason not to give full effect to his evidence; but giving it such

Although I urged the parties to reach agreement on the figures, it does not appear to me that they did. The closest counsel for the cross-respondents came to making an admission about them was to inform me that "there cannot be any dispute on

In the result, an analysis of Jeffery's evidence shows that he affirmed some, but not all, of the figures in the claims. Some figures were referred to ina general way without being

specified. Some were precisely stated and to others no reference

t would, as 1t seems to me, be possible to extract from Jeffery's evidence sufficient proof of certain of the = sums

claimed, but not all of them, were it not for two factors.

Of these, the major one 1s that alluded to above: that some substantial part of each claim ~ how much 1s unclear - 1s for damages, apparently on the basis of loss of "the benefit of the bargain" at some unspecified times. Counsel for the cross-respondents argued, in effect, that whatever the basis on which Jeffery''s evidence was heard, it could not be suggested that there was any concession made as to liability to pay the sums

To prove the value of the lost bargain, it was necessary to show the difference between what would have been paid and what, given due diligence on the part of the landlord, was actually paid

or likely to be paid by each tenant. As far as I can see, there

was no evidence directed to efforts to relet. To take an analogy, if the claim were a vendor's suit for loss of the benefit of a contract of sale, 1t would be necessary to show the market value; of course, the price achieved on resale may be evidence of that

value: see McGregor on Damages, 14th ed., paras.670 (as to goods)

and 745 (as to land). Where the sum actually achieved on resale is the only evidence of value, 1t would seem clear that it must be supported by sufficient evidence of the circumstances surrounding the resale. A similar principle appears to me to govern damages

A second difficulty standing in the way of adopting the

course being discussed - that 1s, holding certain of the sums claimed to have been proved - is the unresolved question of outgoings. While an occupation, each of the tenant cross-respondents paid contributions to outgoings. On the

original pleading there was a dispute about them, but, as has been explained, the cross-claimant's inability or unwillingness to give proper discovery resulted in abandonment of the claim for unpaid

outgoings. Nevertheless, 1t appears to me that to arrive at a

proper conclusion as to the net balance due by the tenant cross-respondents, outgoings paid cannot be ignored; a comparison between the entitlements of the cross-claimant under the leases granted to the tenant cross-respondents and the sums which were, or should have been, received appears to me to require consideration of the outgoings paid. On the original pleadings, the outgoings were distinctly placed in issue, and it would seem

to me pedantic to treat that issue as having disappeared from the

Putting this more shortly, if the outgoings were overpaid, the tenant cross-respondents were entitled to a credit.

Whether or not they were overpaid was incapable of proper

investigation because of the absence of proper discovery.

That there may have been overpayments is not a merely theoretical point for consideration. Mr Wakeham, acting for the cross-claimant's agent, said towards the end of the hearing, in effect, that he was told to make a false calculation of the proportion of outgoings due by each individual tenant. The various percentages should have added up to 100, but Wakeham was told to make them exceed that by 10%. He made 1t clear to me that

he regarded this as improper, as 1t indeed seems to have been; Wakeham's evidence in this respect was supported by a document

(exhibit 51) and remained unchallenged. Mr Macklin suggested that there was fraud, which gave his clients some positive rights. It 1s unnecessary to determine that, but as the deception appears ta have been carried through into the claims made in this Court, the possibility occurred to me that the Court should notice the point as an 1llegality, and as one requiring no pleading: cf. Lindgren

et al. Contract Law 1n Australia, para.1705 and, a case with some

resemblance in principle, Miller v. Karlinski (1945) 62 T.L.R. 85.

It 15 unnecessary to consider that point further as, for the reasons I have explained, I am not satisfied that the cross-claimant has proved its claims. In submissions made in reply, counsel for the cross-claimant suggested that if the Court were not satisfied with the evidence adduced in support of the

cross-claims, leave should be given to reopen; that does not seem

to me the right course. Counsel used the expression "ambush"" in making this submission, apparently intending to suggest that the

cross-claimant was taken by surprise by opposing counsel's stance.

In many cases, it would no doubt be right to allow a reopening of the evidence to enable proper proof of missing elements of a claim. Here, however, a number of circumstances combine to influence me against allowing reopening, one of which

was the unfortunate way in which the claims came to be presented;

I intend no criticism of counsel, who were helpful throughout. In exercising my discretion against reopening, I can take into account, in particular, the absence of proper discovery, the late reformulation of the claim, and the element of deception in the

apportionment of outgoings, to which I have referred.

Having determined that the cross-claimant's damages are not sufficiently proved, 1t 1s unnecessary to proceed further. But 1t appears desirable, in the circumstances, to deal with the defence of illegality, which was elaborately argued. The 1llegality alleged was not one that appeared on the face of the proceeding, but depended upon extrinsic facts. The Court was

therefore not obliged to notice it, except to the extent that it

was alleged. In the end, no contention was advanced that any of the leases or agreements for lease was, in its origin, unlawful. The contention merely was that an illegality arose in the course of performance (as in cases such as Marles v. Philip Trant & Sons

Ld £19543 1 Q.B. 29), which illegality subsisted from the date of

possession. In consequence of the illegality, counsel argued, no

It should be added that, as originally put forward, the 1llegality argument attributed an unlawful intention to the respondent at earlier points of time. That was abandoned, and the

Under the Building Act 1975 (Q.) there were made the Standard Building By-laws 1975, which divided buildings and parts of buildings into various classes. On 7 December 1981, a certain Certificate was issued, subject to two conditions, of which the second was "Completion and certification to Council satisfaction of the items listed in its defect notice dated 4th December, 1981, within TWENTY-EIGHT (28) DAYS of the date hereon". That purported to be granted under cl1.6.3(1) of the By-Laws which reads as

"Where approval is given for any building work, the Local Authority shall -

(a) on substantial completion of the building concerned; or

(b) where 1t consents in writing to the occupation of portion of the building concerned before the completion of the entire building concerned,

duplicate, 1n or to the effect of the form set out in Appendix 2."

It is umnecessary to set out the whole of the form,

which begins: "This is to certify that the Council has approved

of the use of the building as a building of the Class or Classes detailed below ..." What the Council purported to do was to issue a conditional Certificate subject to completion of certain items within 28 days; presumably, the intention was that if that was not

It was argued, and in my view the argument is correct, that the Certificate was invalid. The effect of a Certificate of

Classification is to enable the building to be used; under

c1.6.3a: "No person shall occupy any portion of a building of Class II, I1fI, IV, V, VI, VII, VIII or IX until a certificate of classification has been issued in accordance with these By-laws." The building here in question was of some of the classes mentioned.

The local authority 1s given express power under c1.6.3 to issue a Certificate enabling occupation of the building before it is finished. It as not given any power to issue such a Certificate on condition, for example, that the building be finished within a certain time. The effect of such a condition, 1f 1t has any, must be that 1f it is not satisfied, then the Certificate fails or becomes void; it thereupon ceases, retrospectively, to authorise occupation of the building. This is quite remote from the scheme of the by-laws. The Certificate was

After various further exchanges, which it is unnecessary to mention at this point, a further Certificate was issued on 14 April 1982, subject to "Retaining of excavation to eastern adjoining property and completion of adjacent stormwater drain within TWENTY-EIGHT (28) DAYS of Council's approval of proposed design". Again, for the reasons I have given, the Certificate was in my opinion void. Under the relevant By-law (cl.6.3(1)), the local authority is given a perfectly adequate power to prepare a Certificate of Classification, the issue of which will permit occupation of all or part of an uncompleted building. Those who made the by-laws might have, but have not, allowed uncompleted buildings to be dealt with in the way this Council has chosen to deal with them - that 1s, by issuing a Certificate conditional upon the performance of further work. I can see no sound reason

A separate, but related, point about the Certificates was also taken. Consideration of 1 makes necessary some

In November, the tenants were told that the centre was to open on 8 December 1981. However, on 4 December 1981 a building inspector employed by the local authority gave a notice under the Building Act (referred to above) to the effect that an inspection had revealed certain defects; of those, the only one of substance appeared to be a complaint about a sewer main which, according to the inspector, was supposed to be relaid. On 7 December 1981, there was issued the first of the Certificates I

have mentioned above. On its face it related to, so far as

relevant, "Unit one/Supermarket and Variety Shop on Ground Floor". There was some debate as to the meaning of "Variety Shop" but I agree with Mr Macklin's contention that it has no reference to the shops in issue in this case; one reason for that conclusion 15 that the heading "Class or Classes" in the Certificate refers to

classes of user including some only of the speciality shops.

On 14 December 1981, architects on behalf of the developers wrote to the Council asserting that items listed on various defects notices had been completed and requesting a further inspection. On 17 December Wakeham wrote to the tenants, saying in effect that tenants were required to comply with certain requirements of the local authority and asking that they do s50 urgently. further defects notice was issued on 18 December, and on 31 December the Town Clerk wrote to the architect saying that a "final building Certificate" would not be issued until certain

On 31 December, the architects wrote to the Counciij

again, in terms which made it clear enough that they had noticed that the Certificate of Classification issued earlier in that month covered only part of the building; they made proposals as to further work to be done to satisfy the Council and obtain a

On 11 February 1982, the Council wrote to the architects saying, among other things, that "a Certificate of Classification for the remaining shops" could not be issued for reasons there set

out. The letter specifically drew attention to the provisions I

have mentioned, making occupation without a Certificate unlawful,

and noted that the "said shops and basement carpark is heing

occupied without a Certificate of Classification ..."

On 10 March 1982, the architects wrote to the Council referring to a meeting whose purpose was "to clarify the remaining

items delaying the issuing of a Certificate of Classification ..."

The next relevant event was that there issued the second Certificate of Classification, that of 14 April 1982, which was, for the reasons I have explained, not such a Certificate as the by-laws contemplated. For reasons which it is unnecessary to go into, it did not appear to cover the whole of the building; it

was, however, apparently intended to cover the shons in issue in

There was no direct evidence on which to base a finding as to what the landlord (the cross-claimant) thought about all this, or whether it believed that either Certificate was sufficient to authorise occupation. In view of the correspondence referred to, however, there is little room for doubt about' the first Certificate; no one could have thought that 1t authorised

I have been referred to a variety of authorities concerning sorts of illegality. Many of those concern breaches of proscriptions directed against matters incidental to the

performance of a contract; here, the illegality was at the very

heart of the transaction; cf. Haddin v. Le Feuvre [19693 2

N.S.W.R. 32 at pp.38, 42. As a matter of substance, what the tenants were paying for was their occupation, which was expressly

prohibited by the statute; see T.P. Rich Investments Pty Ltd v.

Calderon [1964] N.S.W.R. 709, a case with some factual

Counsel for the respondent argued, in answer to the illegality point, that the leases were not void; that seems to me

to have been conceded. He also contended that, at least from the

time of the second Certificate, all was in order. JI have held to

Many of the authorities evince a strong reluctance to destroy civil remedies on account of breaches of provisions of this sort. On the basis of the legal conclusions referred to, it seems clear enough that the cross-claimant landlord had no right to performance of the tenants' obligations under the leases based on the first Certificate of Classification; the correspondence positively indicates an awareness on the part of the landlord's

A more difficult question, to my mind, is whether the second purported Certificate saved the situation. Given D.C.J., in Burns Philp Trustee Company Limited v. Farmers Market Woodridge Pty Ltd (unreported, 23 August 1985), discussed the operation of these provisions in similar circumstances. His Honour took a view of them consistent with the submission made by Mr Macklin in this case, that although the leases were not illegal in their

inception, nevertheless during occupancy in breach of cl.6.3a -

1.e. without a Certificate of Classification - rental was not recoverable. His Honour did not appear to base that, at least expressly, upon a view as to the landlord's state of mind. Here, that is not known with any certainty, but the correspondence before 14 April raises a positive case of knowledge of illegality at that stage, and I am not prepared to hold, since those who might have known the facts have not ventured into the witness box, that the landlord thought the second conditional Certificate solved the problem. In my view, the illegality point succeeds and, in the circumstances, the absence of any valid Certificate of Classification constitutes a defence to the claims under the

As mentioned above, 1t 1s my view that the applicants'

success on this aspect, by way of resistance to the cross-claim

does not enable them to recover sums paid under the leases. In general, money paid in such circumstances 1s irrecoverable: The Law of Contract by Greig and Davis, pp.1159, 1160. Ido not

believe Mr. Macklin asserted otherwise, but 1t was not clear tc me in what way he claimed this case to be excluded from that general

principle. He relied upon Hughes v. Liverpool Victoria Legal

Friendly Society £1916] 2 K.B. 482, but there fraud was pleaded and proved; see pp.486, 487, 492. He referred to Refuge

Assurance Company, Limited v. Kettlewell £1909] A.C. 243; that was

Simply a case of recovery of money obtained by fraud.

In J. & S. Holdings Pty Ltd v. N.R.M.A. Insurance Ltd (1982) 61 F.L.R. 108, the Full Court dealt with a claim of this

sort, for moneys paid under a contract illegal as performed, as

one for moneys paid under a mistake of law. Their Honours said:

"Particular grounds, such as a complete failure of consideration, or abuse of a fiduciary relationship (for example, undue influence), or the particular situation of the payer (trustee or personal

representative) or recipient (an officer of a court), or mistake of fact, or involuntariness, or unequal responsibility for the mistake of law must be shown to exist before a recipient of money which was paid, under mistake of law, to him for his own use can be held to have received it to the use of

Of these exceptions, the only one requiring discussion is the last, that is, the case in which the parties are not equally responsible for the mistake of law. In my view, the notion that the party who is innocent in this sense has a special position has no reference to claims of this sort, but permits suits on a contract vitiated by illegality, as in Victorian

Daylesford Syndicate, Limited v. Dott £19051 2 Ch. 624. It is

true that in Kiriri Cotton Co. Ltd v. Ranchhoddas Keshavji Dewan

[19607 A.C. 192, broad statements are to be found suggesting that payments made under illegal contracts are recoverable by persons not in pari delicto with the payee, but 1t 1S important to notice that there the claim was treated as one in restitution: p.204. The case must be explicable as dependent upon the particular

nature of the statute in 1ssue; Lindgren et al in Contract Law in

Australia, treat it as being in the category of a "statute protective of a class": para.1720. Here, the statute appears to be one for the protection of the public generally, and there is no reason to think that its breach made any practical difference to

the applicants. In those circumstances, it would, in my opinion,

be stretching the principles of the law of restitution beyond

reasonable bounds to hold that the applicants are entitled to

It follows that the claims and cross-claims fail; in

1. The respondents were guilty of misleading conduct, inducing the applicants in the Coomber and Palleson cases to enter into their respective leases.

2. That conduct was productive of loss, but the claims are statute barred.

3. The evidence did not establish the cross-claims which would, had they been sufficiently proved, have been defeated by a statutory illegality.

4. That illegality did not, however, justify an order for repayment to the applicants of the rent and other' sums paid.

I have been somewhat troubled as to the proper course to take with respect to costs. The case appears to me to be one in

which it would be wrong to ignore the parties' respective success

on issues and the time and cost involved in those issues;

however, to work the matter out in that way would plainly be very

complex. Much of the evidence of the trial was, of course, concerned with the question of the allegations of misleading conduct, on some, but by no means all, of which two of the three applicants succeeded. They were defeated by the time limit, that being a point which occupied very little time at the trial. It also appears orthodox to take into account against the respondents

some unsatisfactory features of their conduct of the litigation,

referred to above; again, I intend no criticism of counsel.

applicants, as to costs. The most substantial point in the Keen

Mar claim - the misleading conduct case - was simply abandoned. It 1s in general desirable to deal with costs in a way which does not create unnecessary difficulty at the taxation stage, but it appears to me, that that principle 1s difficult to apply to the Keen Mar case. The reason for abandonment of that claim was not disclosed, but I cannot assume i1n favour of the applicant that the claim was ever reasonably brought; 1t may have been frivolous from

the outset. As between the applicant in the Keen Mar case (G119

of 1984) and the respondents, it will be ordered that the applicant pay the respondents' costs of and incidental to its claim to be taxed, and that the cross-claimant in that case pay the cross-respondents' costs attributable to the cross-claim, to be taxed. In the other two cases I propose to make no order as to costs. These orders are, however, provisional only, as the parties may seek to persuade me that my initial views, as to what

It will further be directed that the orders as to costs

not be perfected for fourteen days, to allow the various parties

costs, 1f they consider that doing so would be likely to be to

Mr. R.S. O'Regan, Q.C. with Mr. A.J. Macklin Hempenstall O'Donoghue & Co.

Mr. I.D.F. Callinan, Q.C. with Mr. R.A.I. Myers and Mr. R.A. Perry