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[2001] NSWCA 337
Court of Appeal (NSW)
2001-04-10
Mason P, Beazley JA, Davies AJ
Original judgment source is linked above.
CITATION : Semrani v Manoun; Williams v Manoun [2001] NSWCA 337 FILE NUMBER(S) : CA 40200/00; 40206/00 HEARING DATE(S) : 10 April 2001 JUDGMENT DATE : 4 October 2001
Paul Joseph Semrani PARTIES : William Noel Williams Khalil Ibrahim Manoun JUDGMENT OF : Mason P at 1; Beazley JA at 2; Ipp AJA at 117
LOWER COURT JURISDICTION : Supreme Court - Equity Division LOWER COURT 4564/96 FILE NUMBER(S) : LOWER COURT Davies AJ JUDICIAL OFFICER :
Semrani: D K Jordan COUNSEL : Williams: N G Rein Manoun: R S Gibb SC/R Weaver Semrani: Reedmans SOLICITORS : Williams: Tress Cocks & Maddox Manoun: H K Husseini & Co CATCHWORDS : Misleading and deceptive conduct - Silence - Causation - Damages LEGISLATION CITED : Fair Trading Act 1987 (NSW), ss 42, 68 Trade Practices Act 1974 (Cth), ss 52, 82 March v Stramare (E. & M.H.) Pty Limited (1991) 171 CLR 506 Chappel v Hart (1998) 195 CLR 232 Wardley Australia v Western Australia (1992) 175 CLR 514 Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR 46-054 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Winterton Constructions Pty Ltd v Hambros Australia (1992) 39 FCR 97 Warner v Elders Rural Finance (1993) 41 FCR 399 Yorke v Lucas (1985) 158 CLR 661 CASES CITED: Puxu Pty Ltd v Parkdale Custom Built Furniture Pty Ltd (1982) 149 CLR 191 Gurr & Gurr v Forbes (1996) 80 ATPR 41-491 Jones v Dunkel (1959) 101 CLR 298 Holloway v McFeeters (1956) 94 CLR 470 Millicent District Council v Altschwagen (1993) 50 ALR 173 State Rail Authority of New South Wales v Earthline Constructions Pty Limited (1999) 73 ALJR 306 Henville v Walker [2001] HCA 52 Como Investments Ltd (in liq) v Yenald Nominees Pty Ltd (1997) 19 ATPR 41-550 Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 DECISION : Appeals dismissed with costs
IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40200/00 CA 40206/00 EQ 4564/96 MASON P BEAZLEY JA IPP AJA
Thursday, 4 October 2001 WILLIAM NOEL WILLIAMS v KHALIL IBRAHIM MANOUN PAUL JOSEPH SEMRANI v KHALIL IBRAHIM MANOUN & ANOR
FACTS The respondent (Manoun) was the business partner of one of the appellants (Semrani). The other appellant (Williams) had acted from time to time for Semrani as his accountant. He was also the accountant for the venture between Semrani and Manoun.
Semrani was in the business of steel frame manufacturing and house construction. He had previously been in partnership with Nowra Aboriginal Land Council. That partnership failed, resulting in a receiver/manager being appointed to sell the assets of the partnership other than those in dispute.
The assets in dispute included the plant and machinery by which the steel frame members were formed. Semrani claimed that he was the owner of the machinery and the inventor of the method of manufacture of the steel frames. However, at the time of trial his patent application was still pending.
Williams, acting on instructions from Semrani, had offered to purchase the disputed machinery from the receiver/manager for under $60,000. In the meantime, Semrani had interested Manoun in forming a new venture to carry on the business. Semrani represented to Manoun that the machinery had a value of over $1million and that the business was viable with many potential customers. In reliance on these representations Manoun was prepared to invest approximately $200,000.
Williams was approached by both Semrani and Manoun to advise on the appropriate structure. At a meeting attended by both Manoun and Semrani, Williams drafted an expression of agreement outlining Semrani's and Manoun's contributions to the proposed venture. In the agreement the machinery was valued at $1million. Williams said nothing at the meeting as to the value of the machinery.
The business failed and Manoun brought proceedings against Semrani and Williams under s 42 of the Fair Trading Act 1987 (NSW), seeking to recover the amount he had invested. He also alleged breach of duty by Williams.
HELD (per Beazley JA, Mason P and Ipp AJA agreeing) Semrani Appeal (i) There was no error in the trial judge's finding that Semrani's misrepresentation as to the value of the machinery and the prospects of the business was a cause of Manoun's loss.
Williams Appeal There was no error in the trial judge's finding that:
(i) Williams' silence was an endorsement of Semrani's misleading statement as to the true value of the machinery. Manoun had a reasonable expectation that Williams' knowledge about the true value of the machinery would be disclosed to him. He therefore engaged in misleading and deceptive conduct in contravention of s 42 of the Fair Trading Act : Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31;
(ii) Manoun's loss was causally related to Williams' conduct;
(iii) Williams' breached his duty of care to Manoun by failing to advise him of the true value of the machinery.
Damages (i) There was no error in the trial judge's assessment of Manoun's damages under s 68 of the Fair Trading Act being the amount of his investment. His loss was caused by the conduct of Semrani and Williams: Henville v Walker [2001] HCA 52.
ORDERS Both appeals are dismissed with costs. ******** IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40200/00 CA 40206/00 EQ 4564/96 MASON P BEAZLEY JA IPP AJA
Thursday, 4 October 2001 WILLIAM NOEL WILLIAMS v KHALIL IBRAHIM MANOUN PAUL JOSEPH SEMRANI v KHALIL IBRAHIM MANOUN & ANOR JUDGMENT 1 MASON P: I agree with Beazley JA. 2 BEAZLEY JA: There are two appeals before the Court brought by the unsuccessful defendants in proceedings heard by Davies AJ in which his Honour held both defendants had engaged in misleading and deceptive conduct in contravention of s 42 of the Fair Trading Act 1987 (NSW) and one defendant, Williams, had breached his duty of care to the plaintiff. 3 The appellant in appeal no 40206 of 2000 is Paul Joseph Semrani (Semrani). The trial judge held that Semrani had made false and misleading statements to Manoun, the respondent in each appeal, relating to the value of certain machinery and the potential of a steel frame manufacturing business in which Manoun, at Semrani's invitation, had invested. The appellant in appeal no 40200 of 2000 is William Noel Williams (Williams). Williams is an accountant. He had from time to time acted as Semrani's accountant or for businesses conducted by Semrani. He became the accountant for the new business. Williams was found by the trial judge to have, by his silence, engaged in misleading and deceptive conduct in relation to the value of the machinery and also to have breached his duty of care to Manoun. Williams is also a respondent to Semrani's appeal, although no order is sought against him. 4 It is necessary to deal with the facts in the appeals in some detail. Unless otherwise indicated, these are taken from the facts as recorded or found by the trial judge. 5 In 1991, Semrani had developed an interest in producing steel frames for houses and other buildings. He had built machinery to manufacture the steel frames. Semrani had, through a company called Quimbton Pty Limited, entered into partnership with the Nowra Local Aboriginal Land Council (the Land Council) to carry on the business of steel frame manufacturing and house construction under the name 'Armourframe'. That business failed after about two years. The partnership was dissolved by order of the Supreme Court on 17 February 1994 and a receiver and manager appointed. The receiver and manager was authorised to sell the assets of the partnership other than those in dispute. 6 The assets in dispute were the plant and machinery by which the steel frame members were formed (the machinery). The machinery became a central feature of the present proceedings. In the partnership proceedings Semrani had laid claim to the machinery, contending that it was built to his design and specifications, although the Land Council had provided funds of $173,000 for the purchase of materials for its construction. In mid 1993, before the partnership proceedings were resolved, Semrani removed the machinery into rented premises, on the understanding with the receiver/manager that he would not make any substantial use of it until the ownership issue had been resolved. 7 On 9 November 1993 Semrani applied for a patent in respect of the steel frame members and their method of manufacture. The patent was later granted on 16 October 1997. A divisional application was filed on 6 March 1997 and accepted on 1 December 1999. That application was still pending as at the date of his Honour's judgment. 8 Also sometime in 1993, Semrani established a new company, Steel Frame Connections Pty Limited to manufacture steel frames. At this time, Semrani wanted to use the machinery from the Armourframe partnership for the purposes of conducting the same type of manufacturing business. He interested a Mr Matouk in the venture. Mr Matouk was issued with one of the two issued shares in the company and was made a director. He contributed sums to the company totalling about $140,000, nearly all of which went to pay the rent on the premises housing the machinery and on costs incurred in relation to the application for a patent. However, there was little or no business activity as the machinery could not be used because of the ownership dispute with the receiver/manager. A further injection of capital was also needed. Matouk was unable to provide further funds and Semrani sought out another investor. 9 In early 1994 the receiver/manager obtained a valuation of the plant and equipment of the Armourframe partnership. A value of $164,280 was placed on the plant and equipment on the basis of a sale as a going concern, with an auction value of $58,365. The machinery to which Semrani laid claim and which was listed in section 3 of the valuation, was valued at $123,250 on a 'going concern' basis and $44,300 on an auction basis. 10 On 17 August 1995, Williams wrote to the receiver/manager on behalf of Semrani (but without identifying him as the client), offering to buy the plant and equipment of the partnership as listed in sections 1, 2, 3, 4 and 5 of the valuation for $58,365, that is, at auction value. There was evidence which indicates that the receiver/manager knew this offer in fact came from Semrani. 11 The receiver and manager, by Notice of Motion, sought the leave of the Court to sell the plant and equipment of the partnership, which included the machinery. On 9 February 1996, Semrani through his solicitors consented to the orders sought. However, on 27 February 1996, Semrani made an offer to buy the machinery in section 3 for $25,000 or the whole of the assets of the partnership for $30,000. 12 Eventually, on 26 July 1996, Terms of Settlement were filed in respect of the Notice of Motion proceedings whereby the machinery listed in section 3 was declared to be assets of the partnership and the receiver/manager empowered to sell them. A Deed of Agreement was entered into at the same time, whereby B.O.N.I.S Steel Constructions Pty Limited, a company which Semrani had caused to be incorporated, was nominated as the purchaser of the machinery at a price of $50,000, of which $1,500 had already been paid. Clause 8 of the Deed of Agreement provided: "The Receiver/Manager, Ron Dean-Willcocks … acknowledges that upon payment [of $48,500] … by B.O.N.I.S Steel Constructions Pty Limited the disputed assets becomes the sole property of B.O.N.I.S Steel Constructions Pty Limited." 13 There was no evidence that Williams had ever seen the Terms of Settlement or Deed of Agreement. The only evidence of the extent of Williams' knowledge about their terms was a conversation deposed to by Williams that Semrani's (or possibly Quimbton's) barrister said to him on about 13 June 1996: "The machinery will be released upon payment of $48,500 subject to the filing of the Terms of Settlement and payment of my fees." 14 That conversation was confirmed in a letter from the barrister dated 14 June 1996 in these terms: "I refer to our telephone discussion yesterday and confirm that as of late today I have not yet received notice of listing date for filing Terms of Settlement in court from Mr Michael Solari solicitor. I anticipate that some confirmation of the date should be forthcoming within next week. Meantime, I confirm that you hold the sum of $48,500 in trust for settling the machinery plus $3,000 in payment of some fees as agreed with Mrs Semrani some two weeks earlier." 15 Prior to Semrani entering into the Terms of Settlement and Deed of Agreement, Manoun had been introduced to Semrani as a potential investor in the steel manufacturing venture, Mr Matouk not having any further funds to invest. Mr Manoun was prepared to invest $200,000 if satisfied with the venture. 16 Manoun alleged in the proceedings that during the course of discussions relating to his potential investment, Semrani represented to him that:
(v) the patent rights were worth about $5million. 17 Semrani did not dispute that he had made representations to such effect. 18 Also during the course of these discussions, Semrani gave a booklet to Manoun containing technical and other information describing the potential of the patented steel framing system of Steel Frame Connections Pty Limited. It appears the booklet was prepared in 1993. 19 The booklet described the machinery as being patented, which, at that time, it was not. There was also attached to the booklet a letter from Inteq Limited, an investment and advisory house which included the statement: "After seeing the machinery, we place a value of approximately $2.2million of [sic] the machinery and are of the opinion that the patents are valued at between $4-5 million." 20 Inteq was not a valuer. His Honour considered it probable that Semrani was responsible for the statement in the Inteq letter. 21 The booklet also contained statements as to the projected market share that the business was likely to acquire. For example, it stated: "The proposed venture will manufacture and supply steel wall frames and roof trusses for houses - primarily for New Single Dwellings in the eastern states of Australia. … Market size for the Eastern States (NSW, QLD, VIC) is 70,000+ for new single dwellings per year. The dollar value of this market is approximately $450m. … The product … is likely to generate a significant market share. Conservatively, projections have been based on achieving a 9% market share of eastern states in three years. The potential may be much higher than this." 22 His Honour stated that these projections "had no basis in business reality and were quite inconsistent with the results of the Armourframe partnership". 23 Semrani also made a number of statements to Manoun during the course of their discussions as to the potential of the business. He told Manoun: "I have more than 100 prospective customers who are very interested in the product … I have letters of intent for contracts. One of those letters is from a Mr Mouawad for partitioning a seven storey building … [w]hen the automation is completed and we are ready for production all I need is a couple of weeks on the road to review the contacts with people interested in the product. Within a couple of months of that we should make enough money to recover your investment." 24 Semrani showed Manoun a letter from Mouawad accepting a quote for the supply and installation of steel wall studs for partitioning the seven storey building. His Honour found, and it is not challenged, that: "Manoun read that letter and was justified in reading the letter as concluding a contract, rather than as a letter of intent." 25 Semrani had also made statements to Manoun about the partnership proceedings from which Manoun understood that although Semrani owned the machinery, the partnership had contributed some funds to its development and Semrani had to pay $60,000 to the receiver/manager for its release. His Honour accepted Manoun's evidence on this matter. 26 Semrani also recommended to Manoun that the machinery ought to be owned by B.O.N.I.S rather than Steel Frame Connections which, he said, might have old claims outstanding. Manoun agreed, but was unaware at that point that Matouk owned 50% of the shares in Steel Frame Connections. However, nothing appears to turn on this. 27 His Honour found that after Semrani and Manoun "had come to a general understanding" they saw Williams on 11 April 1996. Semrani told Manoun that Williams was aware of the position in relation to the machinery and could ask him questions about it. There was no evidence that Williams knew that Semrani had said this to Manoun. 28 In the meeting on 11 April, Manoun outlined the general arrangement that had been reached. He also told Williams that Semrani claimed the machinery was worth more than $1million but he was willing to sell it to the new venture for $1million only. Semrani agreed that this had been said. Although Williams did not recall that such statements were made he did not deny they had been. His Honour found that Williams received this information without querying or contradicting it. His Honour also found that Williams had been told at this meeting that the sum of $60,000 had to be paid for the release of the machinery. 29 His Honour found that Williams advised that the business should be operated by a company and it was agreed that B.O.N.I.S would be an appropriate vehicle for this purpose. Williams was asked to be the accountant for the new enterprise. During the course of the meeting, Semrani and Manoun requested Williams to write out a form of agreement for them. He did so and discussed it with them at a further meeting on 17 April 1996. The document, which was handwritten, stated: "EXPRESSION OF AGREEMENT BETWEEN PAUL JOSEPH SEMRANI & KHALIL IBRAHIM MANOUN DATED 17TH April 1996 WHEREIN BOTH PARTIES INTEND TO BE DIRECTORS OF B.O.N.I.S PTY LTD, A COMPANY IN WHICH THEY WILL EACH HOLD SHARES. K.I.MANOUN WILL PURCHASE 20,000 SHARES AT $1 & P.J.SEMRANI WILL PURCHASE 80,000 SHARES AT $1. B.O.N.I.S PTY LTD WILL PAY TO P.J. SEMRANI THE SUM OF $1,000,000 FOR THE PURCHASE OF EXISTING MACHINERY FOR PRODUCTION OF STEEL FRAMES FOR HOUSING CONSTRUCTION.
BOTH PARTIES HAVE AGREED THAT THE BALANCE OF PURCHASE PRICE WILL BE LOANED BY THEM TO THE COMPANY IN THE FOLLOWING MANNER K.I.MANOUN $180,000 CASH P.J.SEMRANI $920,000 IN KIND BY PROVISION OF MACHINERY
LOAN FUNDS ARE NOT IMMEDIATELY REPAYABLE & INCUR NO INTEREST. IT HAS BEEN AGREED THAT P.J. SEMRANI WILL REDUCE HIS LOAN ACCOUNT BY $200,000 IN INSTALMENTS ONLY WHEN COMPANY HAS WORKING CAPITAL IN EXCESS OF $50,000 & AFTER ALLOWING FOR ANY AMOUNTS PAID BY THE COMPANY TO AUTOMATE MACHINERY, RELEASE MACHINERY & OTHER LOAN REDUCTIONS.
P.J. SEMRANI HAS REPRESENTED THAT HE HOLDS THE PATENT ON THE SUBJECT MACHINERY & HAS AGREED THAT B.O.N.I.S PTY LTD WILL EXCLUSIVELY ARRANGE SALES OF PRODUCTION MACHINERY & WILL HAVE ALL RIGHTS TO PRODUCTION INTERNATIONALLY INCLUDING WITHIN AUSTRALIA.
..." 30 A typed version of this document came into existence although it was unclear who prepared it. His Honour thought that of no significance. What he did consider to be of significance was the reference to "EXISTING MACHINERY". Davies AJ considered that the reference to B.O.N.I.S Pty Limited was probably a reference to B.O.N.I.S Steel Structures. This was not in issue on the appeal. His Honour also noted that the relationship between B.O.N.I.S and Steel Frame Connections was never clarified. 31 After attending upon Williams on 17 April, Manoun and Semrani went to Manoun's accountants who prepared a letter of instructions to solicitors, which, in substantial measure, replicated the terms of Williams' handwritten document. In particular, the letter specified that Semrani was to contribute machinery, fully patented and valued at $900,000 (the reason for the value of $900,000 being specified rather than $1m was not relevant to any issue in the proceedings). The letter of instructions was signed by both Semrani and Manoun. 32 The letter informed the solicitors that the company was to be structured as follows: "B.O.N.I.S Structures Pty Ltd is a newly formed shelf company which was established for the purpose of having sole and exclusive world wide rights for the sale of manufacturing equipment and manufactured products of structural steel frames of which a patent is owned by Mr Paul Semrani. … The Company will be structured as follows: 1) Both Mr Semrani & Mr Manoun to be directors of the company. 2) All company cheques have to be signed by both directors. 3) The company to have issued shares of 100,000 fully paid up with Mr Semrani having 80,000 shares while Mr Manoun holds the remaining 20,000 shares. 4) Shares in the company are to issue so as to have equal voting rights of both shareholders irrespective of their share holdings. 5) Mr Semrani is to be in charge of manufacturing operations while Mr Manoun will be responsible for general administration." 33 A formal agreement was drawn up by the solicitors and forwarded to Semrani on 21 June 1996. Manoun was also sent a copy. It is not clear from the evidence or from the findings of the trial judge whether the agreement was ever executed, but that is of little moment. The shares were allotted, and Manoun contributed his money. Meetings of B.O.N.I.S were held on 13 and 28 June 1996 and formal minutes prepared and signed by Semrani, Manoun and Williams. In addition, at a shareholders meeting of Steel Frame Constructions on 28 June 1996 one ordinary class share in the company was allotted to Alaten Pty Limited and Manoun respectively. Alaten Pty Limited was the corporate vehicle for a Semrani family trust. 34 The business began operations and over the succeeding months Manoun contributed a total of $251,750 to the venture. However, no formal arrangements were entered into between Steel Frame Connections and B.O.N.I.S and their funds were hopelessly intermingled. 35 By early October 1996 Manoun wanted to end the relationship with Semrani. On 27 October 1996, B.O.N.I.S and Steel Frame Connections ceased trading. On 22 November 1996 a provisional liquidator was appointed to both companies.
Essential Findings of the Trial Judge 36 Having reviewed the facts thus far, his Honour expressed the opinion that "the business was bound to fail". Neither Semrani nor Manoun had the capacity to develop and manage the new business. Neither did things in a business-like way and neither appeared to have understood, soon enough, what was necessary to establish the business. The venture was also "hopelessly undercapitalised". 37 His Honour found that Semrani had engaged in misleading conduct in making the positive statements referred to in para 16 and by his failure to disclose that he proposed to purchase the machinery of which he spoke for less than $60,000. He also found that he had made representations as to the potential of the business and that "[t]he substance of the message conveyed by these communications was that Steele Frame Connections had a business ready and waiting to commence". He found that Manoun was induced by these representations "to invest funds in what he thought was a venture having value in it" and that he would not have done so had he been aware the machinery had been on offer to Semrani for less than $60,000 and that no patent had issued. 38 His Honour reiterated and expanded upon these findings at paras 56 and 57: "56. The representations which Mr Semrani made with respect to potential customers were not significant matters in themselves, but the overall picture that Mr Semrani presented was that of a business which was in a position to make substantial profits within a short time of an investment by Mr Manoun of his $200,000. That picture was untrue as a matter of substance. There was no existing business ready to start and a great deal more capital and expertise was required than could be provided by Mr Semrani and Mr Manoun.
Semrani Appeal 43 Three issues arose on the Semrani appeal. First, it was submitted that his Honour applied the wrong legal test in respect of causation. Secondly, it was submitted that his Honour erred in concluding that Manoun had, in fact, suffered loss and damage due to Semrani's misleading and deceptive conduct, rather than by undercapitalisation and mismanagement of the venture. The third issue related to damages. Both Semrani and Williams submitted that Manoun had completely failed to prove any loss. 44 Manoun had based his claim in respect of misleading and deceptive conduct on the provisions of ss 42 and 68 of the Fair Trading Act. Section 42, which is contained in Pt 5 of the Act, provides that a person shall not engage in misleading and deceptive conduct. Section 68 of that Act then provides: "(1) A person who suffers loss or damage by conduct of another person that is in contravention of a provision of Part 3, 4, 5 (section 43 excepted), 5A or 5B may recover the amount of the loss or damage by action against the other person or against any person involved in the contravention." 45 Sections 42 and 68 mirror the provisions of ss 52 and 82 of the Trade Practices Act 1974 (Cth) respectively. An entitlement to damages for breach of s 42 is limited to a case where the plaintiff suffers loss or damage "by" the conduct of the defendant. It was necessary therefore, for Manoun to show that his loss was causally related to Semrani's contravention of s 42. 46 Counsel for Semrani submitted that his Honour erred in determining that Manoun's loss was causally related to Semrani's misrepresentations by wrongly applying the "but for" test of causation: see March v Stramare (E. & M.H.) Pty Limited (1991) 171 CLR 506; Chappel v Hart (1998) 195 CLR 232. In Chappel v Hart, McHugh J said at 243: "In March this Court specifically rejected the 'but for' test as the exclusive test of factual causation. Instead the Court preferred the same common sense view of causation which it had expressed in its decision in Fitzgerald v Penn. There, the Court said that the question is to be determined by asking 'whether a particular act or omission … can fairly and properly be considered a cause of the accident '." (emphasis added) 47 The same test of causation applies, effectively, in relation to s 82 of the Trade Practices Act, and, it follows, to s 68(1): see Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 where Mason CJ, Dawson, Gaudron and McHugh JJ stated at 525: "The statutory cause of action arises when the plaintiff suffers loss or damage 'by' contravening conduct of another person. … s 82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v Stramare (E & M.H.) Pty Ltd, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so." 48 In relation to a breach of s 52 of the Trade Practices Act (or in this case s 42 of the Fair Trading Act), constituted by misrepresentations their Honours said at 525-526: "In this situation, as at common law, acts done by the representee in reliance upon the misrepresentation constitute a sufficient connexion to satisfy the concept of causation. And, if those acts result in economic loss, that is, loss other than physical injury to person or property, that economic loss will ordinarily be recoverable under s 82(1)." 49 None of this is contentious or in dispute. However, counsel for Semrani submitted that his Honour found that the business failed and was bound to fail because of the partners in the venture being unable to manage the undercapitalised business and realise the extent of their undertaking. It followed that his Honour must have applied the "but for" test of causation in awarding damages to Manoun. In other words, he must have found that but for the representations as to the machinery, Manoun would not have invested in the venture. 50 It is necessary to revisit his Honour's precise findings to determine whether his Honour did err in finding that Manoun's loss of his total investment was causally related to Semrani's misrepresentations. 51 The first plank of Semrani's submission on this point is easily dealt with as his Honour at para 62 expressly rejected the submission that the venture failed because of mismanagement. Rather, he found: "The enterprise did not have the character which had been represented. It was not backed by valuable assets and it was not in a position to make substantial profits within a few months. In my view, Mr Manoun's money was lost the minute he invested it. He suffered loss because he trusted Mr Semrani and Mr Williams and made the investment." 52 The effect of his Honour's findings was that Manoun's money was lost as soon as it was put in because (i) the so called valuable machinery was not valuable and (ii) the representations that the business was "ready to go" had no substance. In other words, as Ipp AJA pointed out in argument, Semrani was not being held liable for the losses caused by trading, but rather for the fact it was a worthless venture to start with, because it did not have assets of worth and had no substantial prospective business. 53 Counsel for Semrani sought to counter this formulation of the effect of his Honour's finding. He said that the essential finding was that because the business was undercapitalised and neither Semrani nor Manoun had the necessary skills to run it, the business was bound to fail. He further submitted: "… there must be a causal effect between the money going in as a result of the representations and the loss of that money. Now, the [money] isn't lost as soon as it went it, because it was still there."
By this, counsel meant, I believe, that the business did not fail immediately. Counsel also argued that there was not any evidence before the Court that Manoun's shares in the company were valueless. He further submitted that the misrepresentation found by his Honour was in relation to the assets and not in relation "to the enterprise" . However, Semrani's argument on causation was dependent upon the effect of his Honour's central finding being that the failure of the business was due to what happened after the venture was formed. Counsel for Semrani conceded that unless he had made that point good, his argument on causation failed. 54 For the reasons already expressed, I do not consider counsel has made that proposition good. Davies AJ rejected the submission that the business failed because of mismanagement. The failure may have been accelerated by mismanagement by both Semrani and Manoun, but that is not the issue. His Honour clearly found there were representations as to the machinery and as to the potential customers for the business. Both were found to be misleading. His Honour then found that because of the lack of substance in both representations Manoun's "money was lost the minute he invested it". This finding was clearly open on the evidence. The causal nexus was properly found by his Honour on the application of correct principle. 55 Accordingly, Semrani's appeal as to liability should be dismissed. I will deal separately with his appeal as to damages as it is common to both appeals.
Williams Appeal 56 His Honour found Williams had acted in contravention of s 42 of the Fair Trading Act by his silence in relation to the machinery and had breached his duty of care to Manoun. 57 Section 42 is, of course, directed to 'conduct' not misrepresentations per se. Conduct is defined in s 4(4) of the Act to be a reference to, relevantly, "a refusal to act". "Refusal to act" includes "a reference to refraining (otherwise than inadvertently) from doing the act" (emphasis added). 58 It is well established that a party can engage in misleading and deceptive conduct through silence: see for example Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR 46-054; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; Winterton Constructions Pty Ltd v Hambros Australia (1992) 39 FCR 97; Warner v Elders Rural Finance (1993) 41 FCR 399. 59 In Kimberley NZI Finance Ltd v Torero Pty Limited (approved by the Full Federal Court in Demagogue Pty Limited v Ramensky), French J said at 53,195: "The cases in which silence may be … characterised [as conduct in contravention of s 52] are no doubt many and various and it would be dangerous to essay any principle by which they might be exhaustively defined. However, unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that that fact does not exist." 60 Silence may more readily lead to a finding of breach of s 52 or s 42 where there is a duty of disclosure: see Winterton Construction Pty Limited v Hambros Australia Ltd per Hill J at 114; Warner v Elders Rural Finance at 404-405. 61 Although an intention to deceive is not necessary for the purposes of s 42: see Yorke v Lucas (1985) 158 CLR 661, Puxu Pty Ltd v Parkdale Custom Built Furniture Pty Ltd (1982) 149 CLR 191, a person cannot engage in conduct in contravention of the section unless the person has actual knowledge of the matter said to be misleading or deceptive: see Gurr & Gurr v Forbes (1996) 80 ATPR 41-491. 62 The combined effect of the Act and the authorities therefore, is that for Williams' silence to be actionable, he must have had actual knowledge of a matter which he intentionally refrained from telling Manoun in circumstances where there was either a duty to disclose or where Manoun had a reasonable expectation that such information would be disclosed to him. 63 Davies AJ did not base his finding on duty but on the basis that Manoun had a reasonable expectation that he would have been told by Williams that the machinery which was being spoken about was not worth $1 million or that there were facts of which Williams was aware relevant to that question, namely, the "vital fact" that Semrani had offered to purchase the machinery from the receiver for less than $60,000. There was no direct challenge to his Honour's finding that Manoun had such a reasonable expectation and such finding was clearly open given the circumstances of the meeting of 11 April. 64 It was submitted however that his Honour did not make any finding about Williams state of knowledge, so that there was no proper basis for finding that he had breached s 42. It was also submitted that it was never put to Williams during cross-examination that he knew Semrani's statements to Manoun about the value of the machinery to be untrue. 65 In my view, these submissions do not succeed, as an examination of the evidence and his Honour's findings reveals. The question of the machinery and its value was central to the case being made on behalf of Manoun. Williams had denied he was aware that the machinery spoken of at the meeting of 11 April was the machinery in respect of which the receiver/manager had obtained a valuation. His Honour rejected this evidence. He said: "Mr Williams may not have had any precise knowledge of the machinery which was spoken of but he was aware in general terms of Mr Semrani's affairs and of the activities of the Armourframe partnership. Mr Williams was made aware that the venture with Mr Manoun was to undertake the activity of steel frame manufacturing. Although Mr Williams had not done the accounting for the Armourframe partnership and perhaps no accounting had been carried out for Steel Frame Connections, he knew sufficient of Mr Semrani's affairs to consider it probable that the machinery which was being spoken of in the conference was the machinery which his firm had offered to purchase for $58,365." 66 This is clearly a finding as to the state of Williams' knowledge. 67 Counsel for Williams then submitted that the evidence did not, in any event, support the finding against Williams under s 42. 68 What then was the evidence from which his Honour could determine that Williams had the necessary knowledge? 69 Williams had acted sporadically for various businesses of Semrani's over about a 15 year period. He had only acted in the capacity of tax accountant for those businesses but did not do so in every year. He said that in this way he "gained a general understanding of [Semrani's] business dealings". From discussions with Semrani he became aware in general terms of Semrani's involvement in the Armourframe partnership in about 1991 or 1992. He said Semrani sought his advice as to how he should go into the venture with the Land Council and he gave "some advice regarding the use of a company structure". He did not open a file in regard to this advice and did not charge a fee. He recollected that Semrani advised him he would use a company called Quimbton Pty Ltd. He said he did not provide any other advice in relation to that venture except when the venture failed. He did not prepare any financial or accounting records for the venture. He denied that he was "well aware of the nature of the venture". 70 In early 1993, Semrani sought advice as to how he could best protect himself following the failure of the venture. Williams provided a letter of advice which in substance provided a number of alternatives depending upon whether the Land Council could or could not pay him out. The letter was written on the basis of what he was told by Semrani and Semrani's wife and as such does not reveal any detailed knowledge of the venture. This is apparent from the following paragraph in the letter: "You have suggested that you would be prepared to conduct the business of Armaguard virtually under a licence agreement, either after having sold your share of the partnership or with you retaining your existing partnership share. From what you have told me, it appears that the only way in which the business will ever operate is going to be under such an arrangement and I understand your desire to be able to conduct the business without the restrictions of a committee and the need to continually compromise on what should be clear cut business decisions." 71 The next contact that Williams had with Semrani was in August 1995 when Williams wrote the letter of offer on behalf of Semrani for the machinery. That was written some 8 months before the first meeting with Manoun. Williams gave evidence that Semrani had left instructions at his office for that offer to be made at a time when he was absent from the office. His staff advised him of the matter. He said that he had then rung Semrani "and he quoted the sections to me that I was to refer to in the letter". Semrani had told him he wanted to offer what they said the scrap value was, namely $58,365. Williams said he had never seen the machinery and had never been to the Nowra factory. When cross-examined to the effect that he knew his letter related to all of the machinery of the partnership, he said: "I didn't understand it in any way. I had no way of knowing what those clauses describe." 72 There was no evidence that Williams had seen the valuation or was at any time provided with a copy of it. 73 The letter was written on 17 August 1995. Apart from that, and a conversation also in August 1995, when Semrani told Williams that "the Judge has said that the machine can only be sold to me at the value listed in the liquidator's report", Williams had no further contact with Semrani in relation to the steel frame manufacturing business until the April meeting. Indeed, there is no evidence of any contact in that period. Williams said that at the meeting of 11 April 1996, Semrani informed him that Manoun would be "paying $200,000 for 20% of the shares in the steel framing business" and that Semrani was "putting in the machinery and [would] get the other 80%". He did not deny that there was mention of the machinery being worth at least $1m. 74 Williams could not remember Semrani saying anything about having "one hundred customers out there" and his Honour made no finding that this had been said. 75 Williams was strenuously challenged in cross-examination in relation to the machinery. He was asked: "Q. … if you have a company that is based on a company or a type of business that had failed three years before, wouldn't it raise an inquiry in your mind that it is now undertaking something in which it will be loaned apparently material to the value of one million? A I had no way of knowing that. … Q. It didn't raise in your mind an inquiry or it didn't occur to you to be worth the inquiry that it was possible Mr Semrani was nominating a value for machinery of $920,000 which that was the same machinery he had asked you to try and purchase for $58,000? A. There would be no purpose to that inquiry. I was being asked on the manner in which the company structure would work for something that they were telling me - both parties were telling me that this was there(sic) decision. Q. But whether there was a purpose to it or not, it wouldn't have raised in a professional man such as yourself an inquiry? A. Certainly not. I have explained to you that they came to me with the proposition already agreed to. There would be no purpose for me to inquire otherwise." 76 This evidence should be read in the context of what Williams said Semrani told him about the failure of the Armourframe partnership. He said that he had one meeting with Semrani and his wife where Semrani had told him that the venture was unprofitable and had come to an end, that he could not get on with his partners in the Land Council because the wage bill was far too high and they were not getting the grants for the people they were employing. Williams had sent a letter confirming his advice in which he also recorded that there had been difficulties with decision making in the partnership because of the committee structure of the management of the Land Council. 77 It was argued on behalf of Williams that this evidence did not support the finding made by his Honour. In particular, it was submitted that Williams said he had no way of connecting the machinery for which he had made the offer with the machinery which Semrani was contributing to the venture. 78 It can be seen from this summary of the evidence that there was no direct evidence that Williams was aware that the machinery which was spoken of in the meeting of 11 April was the machinery which his firm had offered to purchase for $58,365. The question which arises is whether the evidence to which I have referred was sufficient for his Honour to draw the inference he did. In that regard it is sufficient if there were "circumstances raising a more probable inference in favour of what is alleged": Jones v Dunkel (1959) 101 CLR 298 per Dixon CJ at 304. It is not sufficient if the circumstances do no more "than give rise to conflicting inferences of equal degree of probability so that the choice between them is a mere matter of conjecture": per Dixon CJ at 304-305, quoting Bradshaw v McEwans Pty Ltd (unreported, High Court of Australia, 27 April 1951). Dixon CJ continued at 305: "… the law … does not authorise a court to choose between guesses, where the possibilities are not unlimited, on the ground that one guess seems more likely than another or others. The facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied." 79 Kitto J at 305 expressed the principle in these terms: "One does not pass from the realm of conjecture into the realm of inference until some fact is found which positively suggests, that is to say provides a reason, special to the particular case under consideration for thinking it likely that in that actual case a specific event happened or a specific state of affairs existed."
See also Holloway v McFeeters (1956) 94 CLR 470 and Millicent District Council v Altschwagen (1983) 50 ALR 173 80 I have not found the question whether the inference drawn by his Honour was available to be drawn an easy one, although the evidence would certainly give rise to a suspicion that the matter must have at least crossed his mind. I should also state that my difficulty is not with his Honour's adverse credit finding against Williams on this issue. No basis has been established to interfere with that finding: see State Rail Authority of New South Wales v Earthline Constructions Pty Limited (1999) 73 ALJR 306. It is simply whether the evidence enabled an inference to be drawn. I think it has to be said at the end of the day that the inference was open and this Court should not disturb it. His Honour having rejected Williams' denial was left with the fact that Williams knew that the machinery used in the Armourframe partnership was being purchased by Semrani for less than $60,000. That was the 'vital fact' which his Honour found was not disclosed. That knowledge was sufficient, in my opinion, to satisfy the test stated in Jones v Dunkel. 81 I also consider that his Honour's finding must be read as meaning that Williams' omission was advertent. That finding was also open, given Williams' concession that he presumed that the machinery spoken of included the equipment from the partnership. 82 That leads directly to the question of causation. His Honour came to the same conclusion on causation as he did in relation to Semrani -that Manoun's loss was caused by Williams' misleading and deceptive conduct. There was, of course, an important difference in his Honour's s 42 findings in respect of Williams, in that it was limited to contravening conduct constituted by silence in respect of the machinery. There was no finding that Williams was involved in any misleading or deceptive conduct in relation to the potential of the business. 83 That raises the question whether Manoun's loss was causally linked to Williams' contravening conduct, when that conduct was not the only operative factor. This question was recently reviewed by the High Court in Henville v Walker [2001] HCA 52. McHugh J, having discussed, inter alia, Wardley Australia Ltd v State of Western Australia, stated at para 106: "If the defendant's breach had 'materially contributed' to the loss or damage suffered, it will be regarded as a cause of the loss or damage, despite other factors or conditions having played an even more significant role in producing loss or damage. As long as the breach materially contributed to the damage, a causal connection will ordinarily exist even though the breach without more would not have brought about the damage. 84 His Honour continued, at para 107, in a passage apposite to this case: "Of particular importance to the present case is the long-standing recognition of the possibility that two or more causes may jointly influence a person to undertake a course of conduct. In separate judgments in Gould v Vaggelas, Wilson and Brennan JJ emphasised that a representation need not be the sole inducement in sustaining loss. If 'it plays some part even if only a minor part', in contributing to the course of action taken … a causal connection will exist." 85 His Honour further endorsed the statement of the Full Federal Court in Como Investments Ltd (in liq) v Yenald Nominees Pty Ltd (1997) 19 ATPR 41-550 at 43-619: "The law does not consider cause and effect in mathematical or in philosophical terms. The law looks at what influences the actions of the parties. Acknowledging that people are often swayed by several considerations, influencing them to varying extents, the law attributes causality to a single one of those considerations, provided it had some substantial rather than negligible effect." 86 McHugh J also referred, at para 126, to the statement of Hayne J in Chappel v Hart at 282: "… the search for a causal connection between damage and the breach of a legal norm requires consideration of the events that have happened and what would have happened if there had been no breach." 87 In my opinion, Manoun's loss was causally related to Williams' conduct. His silence in relation to the machinery was, in effect, an endorsement of Semrani's representation as to the machinery and as such "play[ed] some part" in contributing to Manoun's investing money in the business. His Honour's conclusion therefore that Manoun's loss was "attributable to, was caused by" Williams' misleading and deceptive conduct was correct.
Duty of Care 88 His Honour held that Williams had a duty of care to Manoun and that he breached that duty. Strictly, it is not necessary for this Court to determine the correctness of this issue, having upheld his Honour's decision in relation to s 42 of the Fair Trading Act. However, as the matter was argued and as the s 42 issue was not without its difficulties, it is appropriate to deal with it. 89 Davies AJ held: "By advising the two men as to aspects of their proposal and by agreeing to act as accountant for the enterprise, Mr Williams put himself in the position where he acted for both. He so acted in a professional capacity. When he knew of a fact which was inconsistent with what he was told and inconsistent with the agreement between Mr Semrani and Mr Manoun, he had a duty to raise the point, if he was to continue to act. He did not fulfil the duty of care which he owed to Mr Manoun." 90 His Honour expressly rejected the proposition that Williams role was limited to giving advice on the structure of the venture. He said (59 pink highlight): "In the first place, he had had, and was understood to have had, an involvement with Mr Semrani's affairs and with the machinery. Secondly, probably before the document had been prepared and in any event before Mr Semrani and Mr Manoun went elsewhere, he had agreed to be the accountant for the venture. Mr Manoun expressed the representation as to ownership of the machinery and of the patent in such a way as should have evoked a response from Mr Williams if he knew facts to the contrary. Note the recording in the document of Mr Semrani's representation that he owned the patent. A similar representation with respect to the machinery is not expressed in the handwritten document but it is plainly implied and I accept the evidence of both Mr Semrani and Mr Manoun that it was made. By doing nothing, Mr Williams conveyed that these representations were not inconsistent with his knowledge." 91 Manoun's evidence as to his contact with Williams was in his first affidavit in which he stated: "19. Later that week [of 15 April] I went with Semrani to the office of his accountant Mr Bill Williams at Picton.
100 Williams said that during the meeting Manoun told him he was "a Harvard graduate in accounting [and had his] own accountant and legal advisers". Manoun disagreed that he had said he was a Harvard graduate. Rather, he said he told Williams he had studied at Harvard Extension School and did courses in computers. I think little turns on that in this case. Nor do I consider that, in the circumstances here, the fact that Manoun had his own accountant and solicitor impacts on the question whether Williams had a duty to Manoun to disclose what he knew about the machinery. That is because Williams said that he considered that his advice in relation to the appropriate structure for the proposed enterprise was directed to both Manoun and Semrani. Williams also agreed that if the matter proceeded he understood he was to act as the accountant for B.O.N.I.S. 101 There can be no doubt, given Williams' evidence that he considered that he was advising both Manoun and Semrani in respect of the corporate structure, that he owed a duty of care to Manoun. The next question is whether he breached that duty. Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642 provides some guidance on this question. There, a solicitor acted for various clients involved in a joint venture. The solicitor assisted two of the joint venture partners to mortgage land in which a third partner had an interest. The land was mortgaged for a purpose unconnected with and of no benefit to the joint venture. The third partner had no knowledge of the transaction. Kirby P found that the solicitor had breached his duty of care. He stated at 655: "That duty imposed upon [the solicitor] the necessity, simple in execution, to check with [his client] of whose interests he was aware, before taking a step so potentially damaging to those interests." 102 In my opinion, Williams has failed to demonstrate any error in his Honour's finding as to breach of duty. Manoun approached Williams with Semrani for the purpose of advising in relation to the structure of the business. Williams advised on the structure, knowing, on the findings made by his Honour, that the underlying asset stratum of the business, supposedly to be contributed by Semrani and to be reflected in share allocation and loan accounts, was virtually non-existent. In that situation, he had a duty to disclose what he knew about the machinery.
Damages 103 That leaves the question of damages. 104 His Honour awarded Manoun the sum of $209,516 by way of damages. Manoun had already obtained $42,234.08, having altered a cheque drawn in the sum of $2,234.08 to that amount. Manoun altered this cheque without authority. His Honour was not unduly concerned about this and little point was made about it on the appeal. The effect of his Honour's award, therefore, was to permit the recovery by Manoun of the full amount he had invested. 105 Semrani and Williams both contended, however, that Manoun had completely failed to prove his loss. In particular, they submitted that as the transaction into which he entered was for the purchase of shares, it was necessary for him to adduce some evidence of the value of the shares at the date of acquisition, so as to enable an assessment of the difference between that value and the purchase price. 106 The proper measure of damages under s 82 (and therefore s 68) has been considered by the High Court in a number of cases. In Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494, McHugh, Hayne and Callinan JJ pointed out at 509 that, under s 82: "the loss or damages that may be recovered by action is the amount of the loss or damage suffered 'by conduct of' another person that was done in contravention of Pt IV or Pt V. It contains no stated limitation of the kinds of loss or damage that may be recovered." 107 Their Honours added at 510 and 512: "… there is nothing in s 82 … which suggests … that the amount that may be recovered under s 82(1) … should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Indeed, the very fact that [s82] may be applied to widely differing contraventions of the Act, some of which can be seen as inviting analogies with torts such as deceit (eg s 52) … but others of which find no ready analogies in the common law or equity, shows that it is wrong to limit the apparently clear words of the Act by reference to one or other of these analogies. … … the damages for deceit will be the sum representing the loss suffered by the plaintiff because the plaintiff altered its position in reliance on the defendant's misrepresentation. But the analogy cannot be pressed too far. It should not be pressed to the point of concluding that the only damages that may be allowed under s 82 are those that would be allowed in an action for deceit. The question presented by s 82 is not what would be allowed in deceit, it is what loss or damage has been caused by the conduct contravening the Act.
See also Gaudron J at 503 and Gummow J at 525-529. 108 The assessment of damages under s82 was also considered in Henville v Walker. That was a case where there were two effective causes of the loss. 109 In dealing with the question of the assessment of loss where there were multiple factors operating, Gaudron J said at 66, 67 and 70: "… the task under [the] subsection is to ascertain the loss suffered by the contravening conduct and to assess the amount necessary to compensate for that loss. … However, that does not mean that, where the loss is the result of two or more acts or events, causation is irrelevant to the task of identifying the loss or the amount of the loss recoverable. To treat causation as irrelevant would be to ignore the requirement in s 82(1) that a person suffer loss or injury by contravening conduct.
… The precise question is whether, in a case where loss results from two or more acts or events, s 82(1) requires a claimant to prove only the total loss that he or she suffered leaving it to the person whose conduct is in question to prove that some aspect of that loss is referable to other acts or events or whether, on the other hand, it requires a claimant to prove that a particular component or particular components of his or her loss are referable to the contravening conduct in question.
… under s 82(1) of the Act, it is for the person whose contravening conduct materially contributed to the loss or damage to establish what component of that loss or damage is referable to some act or event other than his or her contravening conduct and not for the person who suffers loss or damage to establish the precise component or components …" 110 McHugh J at 132 said: "In this case, the most appropriate approach is to identify what Mr Henville has suffered by way of prejudice or disadvantage in consequence of altering his position by reason of the breach of the Act. … If Mr Walker had not made representations in breach of the Act, none of this loss would have occurred. The loss suffered is therefore directly attributable to a contravention of the Act even though other factors played their part in bringing about the loss." 111 His Honour added: "If the action were one of deceit at common law, I see no reason why, subject to the issue of remoteness, the whole of the loss … would not be recoverable. At common law, the established rule is that in an action for deceit, the plaintiff 'is entitled to recover as damages a sum representing the prejudice or disadvantage he [or she] has suffered in consequence of … altering his [or her] position under the inducement of the fraudulent misrepresentations'. In an action for damages for deceit, the damages are measured by reference to how much worse off the plaintiff is as a result of being fraudulently induced to take the course of action that he or she did." 112 McHugh J said at para 148: "Arguably, once a plaintiff demonstrates that a breach of duty has occurred that is closely followed by damage, a prima facie causal connection will be established. It is then for the defendant to show that the plaintiff should not recover damages. In the words of Dixon CJ in Watts v Rake, it is the defendant who must disentangle, so far as possible, the various contributing factors."
See also Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1978) ATPR 40-096 per Gummow J at 418-419. 113 Davies AJ found that Manoun's money was lost as soon as he invested it. The finding was, on the evidence, inevitable. His Honour found that at all times the machinery had a relatively modest value as represented by the valuation obtained by the receiver. His Honour was confirmed in his view by two factors: that the records of Armourframe showed that $173,000 had been spent on the machinery; and that a sale took place at that value. And, the business had no realistic prospects. 114 In the case against Semrani, it can readily be seen that Manoun's damage was his lost investment and that it was caused by Semrani's contravening conduct, which related both to the value of the machinery and the potential of the business. However, Williams was found liable only because of conduct which related to the value and ownership of the machinery. Can it be said in that case that the conduct was a cause of the loss? 115 The answer to that question is to be found in the passages from Henville v Walker to which I have referred. Williams' contravening conduct contributed to Manoun's loss, which was the amount of his investment. Because of Williams' conduct he invested in a business with no underlying assets of substance and no business potential. The onus was upon Williams to show that the loss or part of it was not caused by his conduct. He did not do so. Because of this conclusion, it is not necessary to consider the question of damages arising from Williams' breach. In my opinion, his Honour's judgment against Williams should stand. 116 Accordingly, both appeals are dismissed with costs. 117 IPP AJA: I agree with the reasons of Beazley JA. ********
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(1991) 171 CLR 506
(1998) 195 CLR 232
(1992) 175 CLR 514
(1992) 39 FCR 31
(1992) 39 FCR 97
(1993) 41 FCR 399
(1985) 158 CLR 661
(1982) 149 CLR 191
(1959) 101 CLR 298
(1956) 94 CLR 470
(1993) 50 ALR 173
(1999) 73 ALJR 306
(1989) 18 NSWLR 642
(1998) 196 CLR 494
(1983) 50 ALR 173