Lord Buddha Pty Ltd v Harpur [2013] VSCA 101

Lord Buddha Pty Ltd v Harpur [2013] VSCA 101 - VSCA 2013 case summary — Zoe

[85]

(a) they involved conduct that is misleading or deceptive or is likely to mislead or deceive within s 52 of the Trade Practices Act 1974 (Cth) (or s 11 of the Fair Trading Act 1999 (Vic));

(b) Harpur suffered loss or damage by that conduct within s 82 of the Trade Practices Act 1974 (Cth) (or s 159 of the Fair Trading Act 1999 (Vic)) in making payments under a contract, as varied, for the sale of the Portland land;

because:

(1) there was no, or no adequate, evidence upon which to find that Harpur had relied on and been misled by those four representations, or upon which any finding could be made as to what Harpur would have done or not done if the true position with respect to the subject of those four representations had been known to him;

(2) the primary Judge considered that it was open to infer that Harpur had entered into the contract and paid the deposit moneys because of the four representations that were found by the primary Judge to have been proven despite:

(A) having earlier found that Harpur was not a reliable witness, that he had failed to adequately explain why he bought the land, that if Lord Buddha had, through Forevale, made all of the 13 representations alleged by Harpur, and Harpur believed them, that did not explain why he behaved as he did, that Harpur was not being fully frank with the Court in saying that he bought the land because he believed and trusted the maker of the representations, and that the explanation probably lies in his own evidence that he expected the land to be acquired through his overseas partner;

(B) the primary Judge rejecting Harpur's claim that he had believed what Mr Turner (deceased) of Forvale had told him in the terms of the 13 alleged representations and had trusted Turner because he suffered health disabilities of which Turner was aware, the Judge having found, in that respect, that Harpur exaggerated his disabilities;

(C) evidence by Harpur that he had relied on, and signed the contract quickly because of, and would not have entered the contract had he known the true situation with respect to representations he alleged had been made by Lord Buddha other than, or in terms different to, or not confined to, the four representations that were found by the primary Judge to have been proven;

(D) evidence by Harpur that he had entered into the deed of variation made on 1 February 2008 that altered the terms of the contract respecting the amount and time for the payments in circumstances where, on Harpur's evidence, by then he believed that he had been misled and he entered into the deed of variation in order to have more time to assess his position;

and the Judge failed to consider, or consider sufficiently, those findings and that evidence when holding that Harpur had relied on the four representations and had entered into the contract, as varied, and made the payments because of their making.

[140]

Excerpts of the Evidence of Mr Hutchins

3 to 11 December 2007

Mr Turner and I discussed the project and how the project would move forward after it was sold and what the opportunities were with it.

Can you be a bit more specific about perhaps what areas were talked about before you look at the document, sir, just from your own recollection to begin with?---Well, I asked Mr Turner what he thought of the project and he thought that it was a project that was going to take a good bit of time, maybe up to ten years and he said the project was zoned Business 4 which allowed for bulky goods and he thought that with that - it was his opinion that with that zoning you could start work subject to getting planning permits and building approvals but you could go on with a bulky goods centre pretty much[ly] straight away and then once you've started with the bulky goods - you do it in stages because most developers have got a limited amount of cash flow and they put the stages in place to develop the property. So you would commence with the bulky goods because it was zoned and ready to go with tenants that fitted [ing] into that zoning. Once you had that established and the next stage while you were doing that you'd go on and apply to council for the rezoning of part of the property to B1 and while that was taking place, Stage 1's in progress then you're going to attract a much stronger tenant to the B1 zone because it's now adjoining a bulky goods centre and then you would probably look to put a service station in it some time as Stage 2 or 3, whichever way they fell together.

........

Was there any discussion about tenants?---Yes.

What were those discussions?---Mr Turner told me that in his discussions with Mr Gibbs, Mr Gibbs had told him that there was prospective tenants that they'd been negotiating with over a period of time but there was no tenancies or anything in place with it, they were just perspective because at that stage you can't - you can't have a tenant until you can actually offer them something off their plans.

Do you recall whether he spoke about any particular tenants?---Ah yes Mr Turner said that Mr Gibbs had told him that they'd been talking to some hardware chains from memory Bunnings and Mitre 10 and I think there may have even been another one from a local guy.

So that was the particular type tenants, any other?---Yes they'd been talking to some bedding shops and I think it was somewhere at this stage Mr Turner also included that they'd had some talking with Cheap as Chips and that subject to a rezone they'd - they'd push hard to get Coles or Aldi or IGA on the site.

You mentioned earlier stores like Bunnings or Mitre 10, are they bulky goods stores?---Ah they fit into that category.[52]

[146]

Meeting of 20 February 2008

Approximately the 20th, did Mr Gibbs say something to Mr Harpur in relation to tenants?---To tenants?

Yes?---Yes.

Your recollection is that he said what at that meeting?---At the meeting we - the discussion was there and there was you know, they - it was just a meeting where everybody was introduced. They talked - Mr Gibbs - sorry Mr Turner asked Mr Gibbs if he could explain where he was up to with the prospective tenants that Gordon had been quoting on the property and Mr Gibbs said that the - there'd been talks with a lot of tenants and he proceeded to tell us who they were in the Bunnings, the Cheap as Chips and so on with those. And he discussed it that they'd also had discussions with Coles, Aldi and IGA in regard to rezoning part of the complex. Mr Harpur and Mr Gibbs spoke about that in the view that - and Mr Gibbs explained to him that you'd never get the whole site rezoned to Business 1, it would only be a partial rezone and - - -

I'm just actually at the moment asking you about the tenant situation. You recall that Mr Gibbs told him that Lord Buddha had been in discussion with potential tenants including Coles, is that right?---Yes.

Including Aldi?---Yes.

Including IGA?---Yes.

Including Bunnings?---Yes.

Including Cheap as Chips?---Mitre 10, Cheap as Chips.

And other tenants as well?---I think BCF, boating and - - -

Did Mr Gibbs tell him then that he would give him his file in relation to the conversations with those prospective tenants?---Mr Gibbs told Mr Harpur that all the prospective tenants that he'd been dealing would be available to Mr Harpur when he paid the full deposit.

Did Mr Gibbs say to Mr Harpur at that meeting that there were tenants who were interested in taking leases at that property, once it was developed?---Yes, they were - there was an interest from these people to go to the site.

Did he say they were tenants who were interested in taking leases?---Yes.

Did he say he had a file of some sort in relation to his communications with the prospective tenants?---I don't believe he spoke about a file. But he just - he said all the tenants that he's been dealing with will be made available.

And what did you understand him to - when he said, "Would be made available", did you - did he say anything about how they'd be made available, what that encompassed?---Ah, I - I was of the opinion that - that on paying of the full deposit, ah, there'd - there'd be a - a meeting at some stage and Mr - Mr Gibbs would, ah, would tell Mr Harpur, ah, where he was up to and in - with - with the tenants that he was talking about.[59]

[148]

85 Examples of the evidence given by Mr Hutchins as to the making of the representations include the following: Hutchins said that all of the tenants listed in the misrepresentations found to have been made had been said by representatives of Lord Buddha to be 'interested in taking leases' [60] He said that at a meeting with Mr Turner shortly before the contract was signed, he and Mr Turner discussed tenants: 'Turner told me that... Gibbs told him that there was [sic] prospective tenants that they'd been negotiating with over a period of time.'[61] Mr Hutchins said that prior to the contract being signed, Mr Turner told him that Mr Gibbs had said that Lord Buddha had 'been talking to some hardware chains from memory Bunnings and Mitre 10.'[62] Mr Hutchins gave evidence that 'Turner spoke to [Harpur] about the prospective tenants that Gibbs had been talking to' at a meeting on the day after the contract was signed.[63] Mr Hutchins said that at that meeting he witnessed Mr Turner speaking with Mr Harpur. Mr Hutchins said, 'I know that the tenants [discussed at that meeting] were the likes of Bunnings, Mitre 10, Cheap as Chips...'[64] He said that at the meeting on 3 January 2008 'Gibbs said to Harpur that there were tenants who were interested in taking leases at that property'.[65] Mr Hutchins said that the mid-January 2008 meeting 'revolved around... Mitre 10... the likes of Bunnings... and Supercheap [Auto] for the bulky goods area and... Coles, Aldi and IGA'.[66] Mr Hutchins said that at the meeting in mid-January 2008, 'Turner asked Gibbs if he could explain where he was up to with the prospective tenants that Gordon [Turner] had been quoting on the property', including 'Bunnings, the Cheap as Chips and so on.'[67] Mr Hutchins said that all of these tenants were specifically mentioned by Mr Gibbs in that conversation, at which he was present.[68] At a meeting that took place at the Glassworks Café in later in January 2008, shortly before Mr Turner passed away,[69] Mr Hutchins said in cross-examination that Mr Gibbs was 'quite consistent in continuing to refer to these tenants as being potential tenants for the site over that period.'[70] Mr Hutchins said that these tenants were mentioned again on 1 February 2008.[71] Mr Hutchins witnessed Mr Gibbs speak with Mr Harpur about 'Bunnings, Mitre 10, Cheap as Chips'.[72] He said that at that meeting Gibbs said to Harpur 'you can have all the information relevant to Portland in relation to tenants when you pay the deposit'.[73]

[211]

In Gould v Vaggelas at CLR 236, Wilson J held that if a material representation is calculated (which is to say, objectively likely: Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd [1993] FCA 99; (1993) 41 FCR 229l 113 ALR 20; Henderson v Amadio Pty Ltd (No 1) [1995] FCA 1300; (1995) 62 FCR 1 at 166; [1995] FCA 1300; 140 ALR 391) to induce the representee to enter into a contract and the person in fact enters into a contract, a fair inference arises that the representation operated as an inducement, adding that it need not be the only cause. The latter point is now uncontroversial. It suffices for liability if a misrepresentation played some part in inducing entry into contract for the price agreed. That part of Wilson J's judgment was not stated to be an exhaustive rule, but is to be seen as a guide to a question of fact which may arise. A conclusion of inducement may then be reached where a combination of factors, including the quality of the representation itself, goes unanswered. In relation to the representation itself it would need to be of a kind likely to provide that inducement and such that: '...commonsense would demand the conclusion that the false representations played at least some part in inducing the plaintiff to enter into the contract' (per Wilson J at CLR 238), a statement regarded by the Full Court in Ricochet as providing a practical guide to the drawing of inferences in such cases.[118]

In Gould v Vaggelas the representations were of that kind and the inference, that the purchasers were thereby influenced, arose. Evidence to the contrary was considered not to negative the inference of reliance: see at CLR 236-6. In Sibley v Grosvenor [1916] HCA 14; (1916) 21 CLR 469 a conclusion that a representation had materially affected purchasers in the price they considered paying for land was reached because it was such as to 'naturally operate' on their minds. The Full Court in Ricochet pointed out that the fact the relevant misrepresentation might have had some such effect will not suffice. There would not be the level of certainty necessary to enable an inference to be drawn.[119]

In the present case, his Honour was invited to draw the inference that the contravening conduct of Jagar 'caused Hanave loss and damage' but considered that the '...direct evidence Burke gave makes the drawing of any such inference inappropriate' and that there was no relevant connexion between the damage Hanave may have suffered and the conduct in question.[120]

A statement to the effect that a principal and long-term tenant has been very satisfactory in meeting its lease obligations, which include the payment of rental, cannot in my view be regarded as uninfluential on the mind of a purchaser considering making an offer, even if a purchaser already has an understanding or opinion about their reputation as well established retailers. The statement of fact made not only supports a positive opinion otherwise reached, it adds to it something on a topic known to the landlord. Indeed, it seems likely that his Honour thought that to be the case, since it was only the direct evidence of Mr Burke, referred to above, which was pointed to as rendering a conclusion of inducement impossible. That is to say, it was seen as negativing that inference.[121]

[212]

It was submitted for Jagar that Hanave was itself obliged to present evidence of knowledge and reliance and failed to do so. The submission however overlooks the kind of misrepresentation involved and that a Court would, in the first place, draw such an inference. In any event it would seem to me that Courts ought to be, and no doubt are, cautious in accepting mere assertions of reliance as essentially self-serving: see Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd [1992] FCA 550; (1992) 38 FCR 471, 483 and will usually attempt to assess that prospect by reference to objective criteria. This will be so particularly where the misrepresentation is not necessarily likely to be recalled as having had a strong impact. Its message may be more subtle. Here Mr Burke read the report. Even allowing for views as to the creditworthiness of his evidence given at trial, there seems no reason to doubt that it would have conveyed to him what any reasonable reader would apprehend, namely that Barbara's Storehouse was an excellent tenant and that he ought then have no concerns about the figures put forward as rental payments to be made by it.[122]

The likelihood that Hanave felt assured about Barbara's Storehouse [the tenant in question] when it made its offer is strengthened by the further misrepresentation that no incentive payment had been paid to it. The combination of this misstatement of fact and Jagar's assurance about it as a tenant must be taken to have been of significance to any rational prospective purchaser and to operate as influential when considering an investment in the centre, or the price paid for it. His Honour's findings did not require or permit consideration as to whether they together operated as a factor in the purchaser making an offer for the property. Mr Burke had stated in evidence that the actions of Hanave would have been otherwise. In my view, that conclusion is inescapable, regardless of the view taken of his credit. There was no other evidence which would weigh against this conclusion.[123]

[228]

Counsel for the appellants cited Gould v Vaggelas also for the proposition that the trial judge was bound to infer, in the absence of contrary evidence, that the appellants had been induced by the representations to enter into the lease. Reference was also made to the judgment of Jenkinson J (Ryan J agreeing) in National Australia Bank Ltd v Cunningham [1990] ATPR 51,619 for the uncontroversial proposition that liability under s 82 of the Act for a contravention of s 52 can be established where the misrepresentation was but one of a number of factors which induced a loss-making decision. That case was also invoked, however, in support of a submission that liability can be established when it is shown that a person might have abstained from the course of action or inaction allegedly induced if the misrepresentation had been made.

Gould v Vaggelas lays down no exhaustive rule for the approach to evidence of inducement in misrepresentation cases. In particular, it lays down no rule in claims for damages under s 82 of the Act for contravention of s 52, where the gist of the conduct complained of is the making of misrepresentations. On the question of proof of inducement, the judgment of Wilson J in Gould v Vaggelas makes the point that a combination of factors may, if unanswered, lead to the conclusion that a person was induced by the representation of another to make the relevant decision. Where, for example, it is shown that a false representation has been made which the representor intended should induce the representee to enter into a contract, and where it is shown that the representation is of a kind likely to provide such an inducement and that the representee entered into the contract, then, as Wilson J said (at 238):

... common sense would demand the conclusion that the false representations played at least some part in inducing the plaintiff to enter into the contract.

The statement provides a practical guide to the way in which inferences can and should be drawn in such cases. It remains for the tribunal of fact, as his Honour pointed out, to determine, when all the evidence has concluded, whether the misrepresentation in question contributed to the decision to enter the contract. The unremarkable logic of these propositions is more likely to be obscured than illuminated by reference to notions of presumptions of fact or the incidence of the evidentiary onus. [138]

[239]

Using tools of analysis drawn from the common law of deceit (misrepresentation and reliance) within the statutory framework provided by ss 42 and 68 of the Fair Trading Act may sometimes be helpful in identifying contravening conduct and deciding whether loss or damage was suffered by the contravention. But as McHugh J pointed out v Lachlan Elder Realty Pty Ltd, the 'conduct' with which s 52 of the Trade Practices Act 1974 (Cth) deals is not confined to 'representations', whether they be representations as to matters of present or future fact or law'. This proposition applies with equal force to s 42 of the Fair Trading Act. References to misrepresentation or reliance must not be permitted to obscure the need to identify contravening conduct (here, misleading or deceptive conduct) and a causal connection (denoted by the word 'by') between that conduct and the loss and damage allegedly suffered. As McHugh J also pointed out in Butcher, with particular reference to s 52 of the Trade Practices Act, but with equal application to s 42 of the Fair Trading Act:

The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document. (Emphasis as in original.) [147]

[247]

In cases of deceit or cases brought under s 52 and s 82 of the Act (or under equivalent State legislation)[152], if a material representation is made which is calculated (which is to say, objectively likely[153]) to induce the representee to enter into a contract, and where the representation is of a kind that it is likely to provide an inducement, and that person in fact enters into the contract, an inference may be drawn that the representation operated as an inducement for the person to do so.[154]
However, an inference of inducement is no more than an inference of fact, which may be rebutted on the facts of the case. In order to rebut the inference, the representor assumes an evidentiary onus to point to facts inconsistent with the inference arising.[155] Those facts, when weighed alongside the inference which is otherwise open to be drawn, may be sufficient to rebut it. For example, a rebuttal may be established by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation.[156] A possible inference may also be rebutted by the direct evidence called, for example, where the direct evidence is inconsistent with the inference of reliance which may otherwise have been open to be drawn.
The representation need not be the sole inducement. It is sufficient so long as it plays some part in inducing the representee to enter the contract, thereby acting as a real inducement, or one of the real inducements to him to do what caused his loss.[157]
The inference may be drawn where commonsense would demand the conclusion that the false representation(s) played at least some part in inducing the representee to enter into the contract.[158]
The drawing of the inference, on application of these principles, is but part of the fact-finding which must be undertaken on the whole of the evidence to determine the ultimate question on the issue of material inducement leading to reliance, namely whether or not the representee has satisfied the trier of fact on the balance of probabilities that the representation(s) in question contributed to the representee's decision to enter into the contract such that, whether alone, or with or notwithstanding other things that accompanied it, the representation(s) operated as a real inducement or one of the real inducements, to the representee to do so. The task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct.[159]
The fulcrum of the inquiry in relation to misrepresentation and reliance is the need to identify contravening conduct (the making of the misrepresentation) and a causal connection between that conduct and the loss and damage allegedly suffered, in the sense that the representation(s) played at least some part in inducing the representee to enter into the contract. This must be found on the balance of probabilities before liability can be established. The mere possibility that a misrepresentation might have induced a course of action by the representee is not sufficient to attach liability under s 82 to the making of it.[160]
In the application of these principles, the drawing of inferences pursuant to Gould v Vaggelas, is not per se precluded because there is no direct evidence as to reliance upon the alleged representation, nor is it precluded by reason that direct evidence was called, even if the thrust of the direct evidence is rejected.[161] An inference as to reliance may be open to be drawn,[162] or it may not.[163] In each case the totality of the evidence in its context, including any possible inference to be drawn when assessed against the effect of any direct evidence, needs to be examined.

At a glance

Court

Decision date

Before

Source

Judgment (382 paragraphs)

Lord Buddha Pty Ltd v Harpur [2013] VSCA 101 (9 May 2013)

Parties

Legislation Cited (5)

Cases Cited (20)