T.N. Lucas Pty Ltd v Centrepoint Freeholds Pty Ltd [1984] FCA 5

IN THE FEDERAL COURT OF AUSTRALIA VICTORIAN DISTRICT REGISTRY GENERAL DIVISION

AND: CENTREPOINT FREEROLDS Pty. LTD. Respondent CORAM: Jenkinson J. PLACE: Melbourne DATE: 3 February, 1984

2. Ttoolis Neophytou Lucas is a pastry-cook, born in Cyprus 56 years ago, who settled here in 1949. He worked as an hotel waiter, bought and conducted and then sold a suburban milk bar. In 1954 he bought a business in North Balwyn : cake shop and bakery, with a dwelling upstairs. The price he paid fell a little short of $7,000. He sold the business in 1971 for $40,000. In

the yéar before sale the assets of Mr. Lucas and his wife, other than the assets of the business, exceeded their liabilities by

more than $100,000. The surplus had been achieved by employing

the profits of the business in the acquisation of real property. Mr. and Mrs. Lucas had also discharged out of those profits the expenses of rearing, and educating at private schools, their four children. In 1974 Mr. Lucas bought a similar business at "the Doncaster Shopping Town" for $8,000. He sold the business in November 1977 for $45,000. Mr. Lucas learnt the pastry and bakery erafts from tradesmen he employed at North Balwyn. All the stock

of both businesses was manufactured in the shops : nothing sold

was bought in. He and his wife worked in the shops, making and selling. 3. Mr. Lucas and his wife have at all material times been

the only members, the only beneficial owners of the issued

capital, and the directors, of the applicant T. WN. Lucas Pty. Ltd. The activities of the applicant with which this proceeding is concerned were in execution of a trust, accepted by the applicant in March 1979, of a fund for the benefit of Mr. and Mrs. Lucas and certain relatives of theirs. The powers conferred on

the applicant by the trust deed authorised those activities.

By a deed dated 16 May 1979 the applicant and the respondent agreed for a lease by the respondent to the applicant of certain premises in the basement of a building in Bourke Street, Melbourne, known as the Centrepoint Mall, for a term of 4 years from a date to be ascertained in accordance with provisions

of the deed. Pursuant to the provisions of the deed the applicant

tcok on 10 October 1979, and fer about 15 weeks retained,

possession of the premises, and conducted therein a retail cake shop and bakery. Then the respondent excluded the applicant from possession of the premises, which the applicant has not re-taken. In this proceeding the applicant claims against the respondent damages in respect of conduct proscribed by s.52(1), s.53(aa) and s.53A(1) of the Trade Practices Act 1974, and constituting fraudulent misrepresentations, which 3s alleged to have caused tho applicant to execute the deed, and damages in respect of breaches alleged of warranties, which the same conduct was said to have constituted, collateral to the execution of the deed, ind damages for negligence in respect of the same conduct. The several statements of which the impugned conduct consisted are alleged in sub-paragraphs, alphabetically designated, of paragraph 4 cf an

amended statement of claim which was filed on 19 October 1982.

Paragraph 4(a) of that amended statement of claim alleges that 1t was said on behalf of the respondent that "the Centrepoint Mall would be open for trading in June 1979". Such a statement was made on behalf of the respondent to the applicant, but I am not persuaded that when the deed was executed either director of

the applicant thought that the prophesy might be fulfilled, nor ai I persuaded that when the deed was executed either director was at all influenced to cause the applicant to execute the deed by

reason of the circumstance that the statement had been made.

Paragraph 4(b) alleges that it was said that "there would

be only one bakery and cake shop in the Centrepoint MajJl". I find

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that Craig Robertson, who was the respondent's leasing agent at all material times, did make that statement to Mr. Lucas. I find that the statement was not at any relevant time falsified in the event. Mr. Lucas gave evidence that some kinds of cake made and sold by the applicant in its premises were made and sold, only for consumption on its premises, by a tenant of other premises in the basement of the Centrepoint Mali. That tenant traded under the name "The Pancake Parlour". I am not persuaded that those circumstances falsified the assertion alleged in paragraph 4(b) of

the amended statement of claim, or justify a conclusion that the

Sub-paragraphs (c), (d) and (e) of paragraph 4 allege

the Centrepoint Mall specially designed for use as a bakery and cake shop in a manner which complied with all health and building

(d) Shops B.Ol and B.02 had been specially designed and did comply with -

(i) all relevant building regulations; (121i) all relevant health regulations; and

(i21i) all other relevant municipal and statutory requirements;

so as to enable the applicant to use the said Shops for the purpose of canducting a bakery and cake shop for the duration of its lease and any renewal thereof;

(e) the applicant's proposed occupation and use of the Shops was lawful and would remain lawful for the duration of the lease and any renewal thereof."

The expression "Shops B.0l and B.02" designates the

In October 1978 Mr. Robertson stated to Mr. Lucas that the premises of which a lease was later agreed to be taken by the applicant would "comply with all the regulations". I am not persuaded that by any other communication any of the representations and warranties alleged in sub-paragraphs (c), (d) and (e) of paragraph 4 was made or given. The statement by Mr. Robertson was made in a conversational context which gave to the expression "the regulations" a meaning which would comprehend the

Uniform Building Regulations 1974, made under the Local Government

Act 1958. I find that in several respects the premises failed to comply with those Regulations. I am not otherwise persuaded that any of the representations or warranties alleged was falsified or

breached. In so far as there might be said to have been

constituted a contract concerning compliance with the Uniform Building Regulations, no damage was proved to have been caused by any breach. In so far as the statement might be said to have been negligent, no damage was proved to have been cansed thereby. The conduct which the statement constituted was not, as I find, misleading or deceptive or likely to mislead or deceive; nor was

the statement "false", in the sense in which that word is used in

Where a prophetic statement, not held to be a contractual

promise, is made about the physical] characteristics of part of a building then being constructed or - if the maker of the statement is to be credited with advertence to the mutability of enacted law

• about those physical characteristics and the future content of whatever the expression "the regulations" might comprehend, the statement should ordinarily be understood as an expression by the maker of his belief and, in certain circumstances, of the intention of the maker of the statement or of some other person as to those physical characteristics. I am not persuaded that Mr. Robertson misstated his belief, or that, if and in so far as his

statement might be understood as a representation of the

respondent's intention in that regard, the statement was false or likely to mislead or deceive, or was negligently made. 'The proved instances of failure to comply with the Uniform Building Regulations 1974 were not serious, and were of a kind which might well have occurred in consequence of accidental oversight in the course of executing a large construction project, such as the respondent and persons assoc1rated with it were undertaking in order to create the Centrepoint Mall, when Mr. Robertson's

Paragraph 4(f) alleges that the following statements were

"(f) The shops initially requested by the applicant being Shops B.30 and B.O7 were not available to the applicant because only Shops B.0O1 and B.02 had been specially designed for a bekery and in any event they had already been leased to Gilbertsons butchers."

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Il find that in January 1979 Mr. Lucas suggested to Mr. Robertson that he would be interested in taking a lease of premises which may be identified on the plan forming part of the deed by the expressions "B.30 and B.07". I find that Mr. Robertson responded by saying that those premises had already been taken by a butcher, Gilbertsons, and that only the shops known as B.Ol1 and B.02 had been specially designed for a bakery business. By the assertion that those premises had been taken by Gilbertsons Mr. Robertson intended, and was understood by Mr. Lucas, to assert that agreement had been reached for a tenancy of B.30 and B.07 between the principal on whose behalf Robertson was then acting and a person entitjJed and intending to carry on a butchery in the basement under the well known butchery business name Gilbertsons. From the circumstance, which was proved, that no such a business has been conducted in the Centrepoint Mall I infer that no such an agreement had in fact been made. I am encouraged to make thet inferred finding by the absence of any evidence on behalf of the respondent that such an agreement had been made or had been contemplated and by the evidence of the credit manager of the

group of companies which included the respondent, Paul Powderly,

that "Gilbertsons" was never a tenant in the Centrepoint Mall. The statement by Mr. Robertson, who died before trial, was a

misrepresentation of fact. I am also persuaded that the

misrepresentation was fraudulently made by Mr. Robertson. Io am

encouraged to make that inferred finding by the absence of auy

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evidence on behalf of the respondent that there were circumstances from which 1t might have been inferred that Mr. Robertson believed what he said to be true. I am persuaded that the statement by Mr. 'Robertson constituted conduct which was misleading and that it misled Mr. Lucas into the belief that such an agreement had been made; and I find that the belief influenced Mr. Lucas to cause the

The assertion that only the shops of which the applicant

took a lease had been specially designed for a bakery business was

not shown to have been false. The statement concerning Gilbertsons will be further considered with those alleged in

"(g) Shops B.21 and part of B.22 had already been leased to Macdonalds (sic).

(h) the shops already leased in the basement included: :

(i) a continental delicatessen; (i2) a fruit shop; (i2i) a fresh fish shop;

(iv) a large number of shops each selling food from various countries."

I find that in the first week of October 1978 Mr. Robertson told Mr. Lucas, while they were discussing the possibility that Lucas might take a tenancy of premises in the basement of the Centrepoint Mall, that "McDonalds" had agreed to

occupy premises in the basement. And I find that by the word

"McDonalds" Robertson intended to designate, and Lucas understood him to designate, a person or persons entitled, and intending, to trade in the basement under that name as one of a very popular chain of restaurants, all of which traded under that name in Melbourne and elsewhere in the world. On the same occasion Mr. Robertson told Mr. Lucas that "Gilbertsons would be there", by which, as I fina, Robertson intended to be understood and was ° understood by Lucas, as asserting that a butchery under that well known retail butchery trade name would be conducted in the basement. In January 1979 Mr. Robertson told Mr. Lucas, in response to questioning by Lucas as to whether he was sure that

McDonald's and Gilbertson's would be trading jn the basement, that

Even if those lattezr statements, considered alone, might be taken, not as representations that an agreeement had been entered into by each of the persons who fell within the description expressed by the words "McDonalds" and "Gilbertsons" respectively for a tenancy of premises in the basement, but only as representations of Mr. Robertson's belief that each of them

would take such a tenancy, each statement was, considered with

reference to the other statements about those persons, an affirmation of each of the representations that each had agreed to

The evidence that no business under the name "McDonalds"

has been conducted tn the basement justifies the inference, which

I am not persuaded that either of the representations

pleaded induced the making of the agreement for tenancy. The view which the drawing represents is of a part only of the shop front, glimpsed through a transparent vertical screen bordering an escalator and supporting, it 1s to be supposed, one of the

escalator's running handrails. I think it improbable that Mr.

Lucas supposed that much notice would be taken from the ground floor of anything which he might have thought would be visible of his shop. Nor do I think it probable that the width of the escalators descending to the basement much concerned him. What

may have had an influence on his mind is the impression the drawing creates of spaciousness in the approaches to the escalators, and of a vistaed prospect of food shops in the basement : an impression induced by perspective technique and owing little to the depicted width of the escalators, but a good deal to the width and length of the floor area which the artist has depicted as excised from the ground floor. That impression 1s certainly misleading to one naive enough to rely upon the drawing as a representation of what would meet a pair of eyes looking into the Centrepoint Mall from Bourke Street. That impression is not the subject of complaint in the amended statement of claim. But 1£ it were, I would not find an intention on the part of anybody for whom the respondent might be legally responsible to mislead by means of the drawing any prospective tenant into a mistaken belief as to what such a pair of eyes would see. Nor do I think the

drawing at all likely thus to have misled such a person.

"Section 52 does not expressly state what persons or class of persons should be considered as the possible victims for the purpose of deciding whether conduct is misleading or deceptive or likely to mislead or deceive. It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct. Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as_ the experienced, and the guliible as well as the astute, the section must, in my opinion, be

regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests. What is reasonable will of course depend on all the circumstances."

(Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd.

(1982) 42 A.L.R. 1 at 6, per Gibbs C.J.). I would not expect to find in the class of persons for whom a tenancy in the Centrepoint Mall may be contemplated one who would take a drawing of the kind reproduced in this brochure as a reliable representation. And, whatever subliminal impression the drawing and the statements of Robertson may have made on Mr. Lucas's mind, I am not persuaded that he was influenced to cause the applicant to take a lease by any belief he entertained about the visibility of a part of the shop front From the ground floor, or about the width of the escalators, or about the extent to which a view might be had of

Of the representations alleged in paragraph 4 of the amended statement of claim, or treated in submission as 1f alleged, I have found that Mr. Robertson represented to Mr. Lucas that leases of premises in the basement of the Centrepoint Mall to "McDonalds" and to ""Gilbertsons" had been agrecd upon; and that, notwithstanding the terms of the deed presented by the respondent

for execution by the applicant, the respondent's intention was to

treat the applicant's tenancy as upon the terms, including the

terms as to rent, specified in the written application for

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tenancy. I have also found that other unidentified officers or agents of the respondent made the latter representation by presenting that application to Mr. and Mrs. Lucas with the letter dated 5 February 1979 and by abstaining thereafter from drawing attention to the differences, as to rent, between the application and the deed. I have found those representations to be false and the representations concerning McDonalds and Gilbertsons to have been fraudulently made, as well as constituting conduct done in contravention of s.52(1) of the Trade Practices Act 1974. And 1 have found that each of those representations which were made by Robertson induced the applicant to execute the deed dated 16 May

1979. I turn now to the question of damages, in the first

The applicant's claims foc damages, for deceit and under Part VI of the Trade Practices Act 1974, were of two kinds

first, the aggregate of the amounts expended and the liabilities incurred in fitting the leased premises for use as a bakery and cake shop, in advertising the business to be conducted there, in conducting the business, and in extricating the applicant from contractual obligations undertaken to establish and conduct the business, less the aggregate of the amounts received or likely to be received on disposal of what had been acquired in fitting the premises for use, and less the receipts from the conduct of the business; second, the amount of the profit which the applicant

would, if it had not taken the lease, probably have derived from

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the conduct of a bakery and cake shop in the Melbourne metropolitan area during the period when the applicant was engaged in the enterprise into which it had been induced to enter by the fraudulent misrepresentations and the misleading conduct for

which, as it was alleged, the respondent was liable in damages.

It was the submission of Mr. Goldberg Q.C., who appeared »

with Mr. Finkelstein for the respondent, that, because the lease

had been affirmed by the applicant, what was recoverable in damages, whether at common law or pursuant to Part VI of the Trade Practices Act 1974, was the difference between the real value of the leasehold interest enjoyed by the applicant and the amount payable by the applicant to the respondent under the lease in respect of the short period during which that interest had been enjoyed. Mr. Goldberg founded that submission on a careful] and comprehensive analysis of many authorities. For an example of the actual computation of damages in accordance with what he submitted

was the applicable measure he referred only to Trivett v. Hurst

[1937] St.R.Qd. 265. Under the inducement of a fraudulent misrepresentation of takings the plaintiff in that case took from the tortfeasor a lease of an hotel for a term of one year. Having gone into possession and having complained of the fraud, the plaintiff was given notice to quit for failure to pay the rent. On the day she received the notice to quit her action for damages for fraudulent misrepresentation was commenced in a Magistrates

Court. Later a judgment for recovery of possession of the hotel

was obtained by the tortfeasor and the plaintiff went out of

possession less than three months after the commencement of the term. On appeal to a judge of the Supreme Court by the plaintiff against the judgments of the Magistrates Court on her claim for damages and on the counterclaim for arrears of rent and double rent for holding over, the plaintiff contended that the damages were inadequate and the defendant contended that they were

excessive. Blair C.J., observed ([1937] St.R.Qd. at 269, 270):

"It 1s admitted that she (the plaintif£) elected to affirm the contract with full knowledge of the alleged fraud ......

First, then, as to the Magistrate's finding of fraud on the part of the respondent. No one disputed his jurisdiction to decide that it was established. In the result, he reduced the rent to

£2 10s. and the premium to £20. It was open to him as a reasonable man, properly directing himself as

to the law, to find as he did upon the evidence before him, and I think therefore that his decision was not manifestly wrong.

It is true that the appellant had paid only £20 premium and £12 rent under the lease and had also defaulted in due payment of her rent. She had not been called upon to pay that rent and was still holding over. But that holding over had not been declared 'contumacious' at the time she brought her action for deceit. In this case the tort, that 1s, the misrepresentation, also preceded the notice to quit.

The measure of damages in such an action is the difference between the value of the premises at the

time of the execution of the lease in question and what the lessee paid or had made herself liable to

(1907) 4 C.L.R. 1692; Hardman v. McLeod (1926) 26 S.R. (N.S.W.) 578).

By his findings the Magistrate inserted new terms in the original lease. He reduced the rental from

£3 10s. per week to £2 10s. for the period, and the

premzum from £30 to £20, that 1s from £212 to £150, and awarded the appellant the difference between these two sums, namely £62 as damages."

The judgment on the plaintiff's claim was not disturbed on the

appeal. Nothing else appears in the reasons for judgment

concerning that judgment in the plaintiff's favour.

It will be observed that the calculation of damages was in respect of the whole term of the lease granted, not of the period during which the tenancy endured. But the contrast betwcen that mode of calculation and the measure suggested by Mr. Goldberg was not considered in argument. It is to be noted also that the

report of Trivett v. Hurst contains no information as to what

other measure of the plaintiff's damages than that adopted in the

The reasoning of Mr. Goldberg's submission concerning the measure of the applicant's damages commences with the proposition that, if a contract to purchase a business, the making of which was induced by fraudulent misrepresentation, be affirmed, loss

sustained in carrying on the business 1s, except in certain

exceptional circumstances, irrecoverable in an action for damages by the purchaser for deceit. The next step in Mr. Goldberg's argument is the submission that the suggested irrecoverability of such a loss is a consequence of the breaking of the legally significant causal connection,, between the tortious act and the loss, which in his submission the affirmation of the contract effects. The final step in the argument is the submission that,

since irrecoverability of the loss is a consequence of a breaking

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of the causal nexus between the inducing conduct and the loss,

recovery of the loss is also to be denied in an action upon the cause of action conferred by ss. 52(1) and 82(1) of the Trade Practices Act 1974, and is to be denied whether the contract 1s for the purchase of a business or merely for a lease of premises

in which a business is to be commenced by the lessee.

Mr. Goldberg relied upon obiter dicta of Jordan C.J. in

McAllister v. Richmond Brewing Co. (N.S.W.) Pty. Ltd. (1942) 42

"BR person who has been induced to purchase property by the deceit of the vendor, upon discovering the fraud can, as a general rule, at his election, either rescind the purchase, or affirm it and recover the amount of any damage occasioned to him by the fraud.

The former course is available only if the parties ean be restored substantially to their former position - as 1f the fraud had never been perpetrated or acted on. For this purpose, the defrauded purchaser must return the property to the vendor, and is entitled to recover from him so much of the price as he has paid. Alli other adjustments must be made which are necessary to restore the parties to the status quo ante. The vendor must pay interest on any purchase money which he has received. The purchaser must account for the rents and profits or the value of the use of the property whilst he had it. Any Joss directly occasioned tc the purchaser by the fraud must also be made good to him, as part of the process of restitutio in

integrum. The vendor must, for example, recoup to him any expenses incurred in effecting the purchase. He must recoup the value of any improvements reasonably made to the property by the purchaser before notice of the fraud : Brown v.

Smitt 34 C.L.R. 160; 9 Austn. Digest 291. "He must also make good to the rescinding purchaser any other detriment which he has suffered as the direct consequence of the fraud. As 1s pointed out by Bowen L.J., in Newbigging v. Adam 34 Ch. D. 582 at

'Common law recognised a rescission if the case shaped itself so that a Court of Common Law had jurisdiction to decide whether there should be rescission or not, but, besides this, the common law gave damages for deceit, and in my opinion gave them, not as an alternative remedy, but as an alternative or cumulative remedy as the case might be. The Court of Chancery had a concurrent jurisdiction, and in cases of fraud, so far as I know, there can be no doubt that complete indemnity could be given by a Court of Equity to the person who had been defrauded, so as to protect him as fully in equity as he could have been protected in law.

But it is only if the purchase has been induced by deceit as contrasted with innocent misrepresentation that the process of restitutio in antegrum can include damages: Whittington v.

If the purchaser, instead of rescinding the contract, elects to affirm it and recover damages for the deceit, he is entitled to recover from the vendor the amount of any damage which in fact directly results to him from the deceit, irrespectively of whether it was intended or probable; any resulting damage which was intended, whether direct or not; and any resulting damage which was natural and probable and ought to have been contemplated, whether direct or not. 'This is the measure of damages in tort generally and in deceit in particular; and there is no reason in principle why it should not be applied to deceit inducing a contract of purchase as well as to any other form of deceit: Clarke v. Urquhart [1930] A.c. 28 at 67-8. A rule of practice is, however, now well established that where a person complains that he has been induced by deceit to buy something and pay more for it than 1t was worth, the amount of damages which he is entitled to recover is restricted, prima facie at any rate, to the amount by which the price which he has paid exceeds the true value of the thing bought at the time when he bought it: Potts v. Miller 64 C.L.R. 282; Austn. Digest (1941) 179. The rule is well settled, and exceptional circumstances are necessary to justify an award of anything more by reference to the general principle, but such circumstances may occur. Thus, in Mullett v. Mason L.R. 1 C.P. 559,

the buyer-plaintiff£ recovered from the seller not only the price paid for the diseased and therefore valueless cow which he had been induced to buy by the seller's deceit, but also the value of five other cows which the purchased cow had infected: cf. Cooke v. Caldwell's Wines Utd. 25 S.R. 161 at 168-9, 173; 9 Austn. Digest 277; Selman _v. Minogue 37 S.R. 280 at 284; Austn. Digest (1934-1939) 903. 'The measure of damages ought never to be governed by mere rules of practice, nor can such rules override the principles of law on this subject': Admiralty Commissioners v. S.S. Chekiang [1926] A.C. 637 at 643. In order, however, that anything

emay be recovered over and above the price paid, less the value, if any, of the thing bought, it is necessary to show that it is a loss which is properly referable to the deceit complained of and not to something else: Potts v. Miller 40 S.R. 351 at 362-3. Where the thing bought is a business, and the buyer claims to recover also the amount of losses sustained in carrying 1t on before discovery of the fraud, it may not unfairly be said, if he elects to keep a business which he could have rejected by rescission, that if it had some value at the date of purchase, the probability of such losses must be taken to be allowed for in that value: Selman v. Minogue 37 S.R. 280 at 285; Austn. Digest (1934-1939) 503, whilst if it then had no value there 1s no reason why he _ should be compensated for losses which he could have thrown upon the seller by rescission and which were incidental to the carrying on and retention by him of a business which~he has preferred to retain. Different considerations would arise when, as a result of deceit, the purchaser has been led to have dealings with a third party which made rescission impossible. In such a case, the circumstances might be such as to entitle the buyer to recover by way of damages any unavoidable loss which was fairly referable to the deceit."

Those observations were made upon a complaint of misdirection by the trial judge. The plaintiff had purchased the

lease, licence, fixtures, goods, stock in trade and goodwill of an hotel upon a fraudulent misrepresentation as to the takings. The plaintiff claimed, in a common law action for deceit, in addition

to the difference between the true value of what she had purchased

and the price she had paid, the amount she had lost in conducting the hotel. damages was restricted to the amount by which the purchase price

exceeded the value, if any, of the property bought. Davidson J.

"The remaining question as to damages arises from the plaintiff's claim that the contract of purchase into which she was induced to enter was so onerous that it was found not only that the property she acquired was valueless but also that she lost the sum of approximately £137 whilst conducting the hotel before she could reasonably conclude that she had been deceived.

Apart from a recent remark by Lord Atkin that he still considered the matter is open for argument:

upon which damages in an action for fraud should be assessed have generally been regarded as finally

settled. The measure of damages usually is the difference as at the date of the contract between the market value of what was purchased and the price that was actually paid: Holmes v. Jones 4 c.L.R. 1692; 9 Austn. Digest 273; McConnell v.

the subject however it has mostly happened that the property taken under the contract was of some value in the market. If the value having regard to all the circumstances is nothing then the damages recoverable are represented by the amount of the purchase money: Twycross v. Grant 2 C.P.D. 469 at 504; Selman v. Minogue 37 S.R. 280; Austn. Digest (1934-1939) 903. Ordinarily in arriving at an estimate of value as at the date of the contract if the business had since been conducted by the purchaser at a loss this fact would be taken into account in the valuation: Selman _v. Minogue 37 S.R. at 285. Evidence of such a fact would be relevant to the same degree that it would be in a lawsuit referable to the verity or otherwise of the original representations. But a further question could arise if whilst the value of the business and its assets would be nothing the plaintiff could also prove that by reason of the contract she was fettered with a financial burden from which she could secure no release without payment of damages. Having instituted proceedings at Common Law he

The trial judge directed the jury that the measure of

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would be debarred from equitable relief in the form of rescission of the contract: cf. Fuller's Treatres v. Musgrove 31 C.L.R. 524 at 544-5; 19 Austn. Digest 67; and in any event the purchaser although defrauded 1s entitled in any circumstances to retain the property and ask to be compensated in damages for her loss: Derry v. Peek 37 Ch. D. 541 at 593; Selman v. Minogue 37 S.R. at 285. In such circumstances it is difficult to see why compensation should not be recovered as in the case of other torts for a loss beyond the amount of the purchase money provided that such extra loss arose directly from the wrongful act if found to have been committed: In re Polemis and Furness Withy & Co. Ltd. [1921] 3 K.B. 560; Cooke v. Caldwell's Wines Ltd. 25 S.R. 161 at 168; Selman v. Minogue 37 S.R. at 284.

The plaintiff could not claim the sum of £137 as representing the amount of damage she suffered because the losses indicated might properly be reflected in an assessment of nothing as the market value of the premises. But I can see no sound reason to prevent the plaintiff from proving 1£ possible that even if she were awarded the full amount of the purchase money as damages she could still incur a further loss. In the present case for instance the evidence of Ellsmore, an expert, was given that if the takings were £120 per week the property would have no value on the market. Consequently if the plaintiff could prove further by proper evidence that the actual takings were really only £80 a week in my opinion she could lay the basis for the award of additional damages beyond the amount of the purchase money she had paid."

The other member of the Court, Halse Rogers J., declined

to express an opinion on the complaint of misdirection.

The observations of Jordan C.d. upon which Mr. Goldberg

relied were in exposition of the working out of a "rule of practice" governing the assessment of damages upon purchase for a price, and may have been intended to have no wider application.

Cf. Yorke v. Ross Lucas Pty. Ltd. (1982) 45 A.L.R. 299 at 316.

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Further, the observation by the learned Chief Justice, that there is no reason why a plaintiff should be compensated for losses, incurred 1n carrying on the business purchased before discovery by him of the fraud, which he could have thrown upon the seller by rescission and which were ancidental to the carrying on and retention by him of a business which he has preferred to retain,

is in my opinion to be understood as the product of a reasoning J

upon the principles relating to mitigation of damage. Jordan C.J. may have had in contemplation a purchaser who chooses to make his election at a time when there is available to him information which would indicate to a plaintiff acting reasonably that the loss caused and to be caused to him by the tort is best mitigated

by his then rescinding the contract. The reference by the learned Chief Justice to the throving of losses upon the seller by rescission seems to be a reference to the indemnification of a plaintiff purchaser, upon rescission, against expenses and liabilities incurred pursuant to obligations imposed by the contract of sale or, in the case of a sale of a business, necessarily incurred as incidents of the continuing existence of the subject of sale. That was one of the means which equity had, and the common law lacked, "to ascertain and provide for che adjustments necessary to be made between the parties in cases where a simple handing back of property or repayment of money would not put them in as good a position as before they entered

into their transaction" (Alati v. Kruger (1955) 94 C.L.R. 216 at

224. : see Halsbury (4th ed.) vol. 31, para. 1115, note 10;

Spencer Bower and Turner : Actionable Misrepresentation (3rd ed.)

paras. 255, 256 and note 4. Losses incurred by a purchaser in carrying on a business before discovery of the fraud which induced its purchase would after rescission be compensable by means of those adjustments effected in exercise of equitable jurisdiction, or by means of a common law judgment for damages awarded concurrently with rescission, or partly by the one means and partly by the other. (See the exposition of the concurrent remedies in Salmond and Williams on Contracts (2nd ed.) pp.

269-270, to which reference is made in Alati_v. Kruger (1955) 94

C.L.R. 216 at 222.) i1t is in my opinion impossible to regard the purchaser's election to affirm rather than to duisaffirm the purchase as in itself affecting the legal conception or characterisation of the causal relationship between the fraudulent misrepresentation and the losses. Before election is made the causal connection is regarded as sufficient in law to justify an award of damages 1n respect of the losses. If the election is to rescind, those damages are rendered irrecoverable, or the quantum of the damages 1s reduced, only because the equitable processes of adjustment have included a complete or a partial compensation for those losses. If the election is to affirm the contract, the damages will be rendered irrecoverable as a separate item if the mode of assessment for the tort is in accordance with the "rule of practice" to which Jordan C.J. refers and if the susceptibility to the losses in fact sustained has augmented the award of damages

through the allowance made in respect of that susceptibility in

the estimation of the true value at the date of purchase of the

business. The damages are rendered irrecoverable as a separate

IOP per ag cere atte ment sree ee et tr mee te tare me - 8 em eee ee

we ER ee ae et ee ee eee bene Lane hed UY smn al Amen ee eter

atem, not because any significance has been attached to the affirmation of the contract in relation to causation of damage, but because those damages are regarded as having been comprehended in application of the measure adopted under that "rule of practice". To the extent that those damages are not comprehended un the application of that measure, they are in my opinion recoverable, as Davidson J. asserted. If the observations of Jordan C.J. upon a business of no value contradict the assertion, those observations may have been based on two assumptions : first,

that restoration upon rescission to the vendor of what had been

sold under the contract (the business and whatever other property was sold with it) would confer a benefit on the vendor, which was to be taken into account in considering whether the purchaser had acted reasonably to mitigate the damages flowing from the tort; and, second, that at the time when the contract was affirmed there was available to the purchaser information sufficient to require a person acting reasonably to conclude that rescission then was the course by which the damages could best be mitigated. If those assumptions are made, the observations of Jordan C.J. may perhaps be reconciled with the observations of Davidson J. But what for present purposes 1S in my opinion important is to insist first, that the observations of Jordan C.J. were made in relation to the assessment of damages according to a "rule of practice" for deceit inducing the purchace of something for a price; and, second, that, even in relation to such an assessment, those observations ought

not to be taken to attribute to an election to affirm such a

contract the necessary effect cf precluding recovery of tradine

losses, but only such an effect, if any, as the application of established principles concerning mitigation of damages to the particular circumstances may require. I think that the latter observation 1s supported by the reasoning of Asprey Jd., in which

Sugerman and Walsh JJ. concurred, in S. Gormley and Co. Pty. Ltd.

v. Cubit [1964-65] N.S.W.R. 557. And in my opinion the reasoning

of Barrowclough C.J. and of F.B. Adams J. in Canavan v. Wright

[1957] N.Z.L.R. 790 also supports that obseryation. Mr. Goldberg

sought support for his submissions in so much of the reasoning of Barrowclough C.J. as was avowed by that learned judge to follow

the judgment of Jordan C.J.. But an examination of the whole of

the reasons for judgment in Canavan v. Wright demonstrates, in my

opinion, that none of the judges in that case gave any support to

the contention that a plaintiff's election to affirm a contract induced by deceit necessarily precludes recovery by him of losses sustained in carrying on a business purchased under the contract or a business conducted on land in which he has acquired an estate

Barrowclough C.J. observed ([1957] N.Z.L.R. at 799-800) that the incurring of losses (which he described as "something in the nature of a loss of profits") as a result of performing " an obligation which is entered into as part and parcel of the contract which was fraudulently induced" fell within the "exceptional circumstances" to which Jordan C.J. referred in the

passage I have quoted from the judgment of the Chief Justice in

McAljister's Case; and he justified on that ground the award of

ed aedadinemnen Lcheeanael Leeda cat) a cee me re ee oe we-e - ----

damages - in addition to any award which might have been based on

the difference between the true value of what was bought and the price paid - in respect of those losses after affirmation of the contract. Without expressing any opinion on that reasoning of Barrowclough C.J., I observe that the lease which the applicant in this proceeding agreed to take from the respondent included a covenant by the applicant that it "shall keep the demised premises fully stocked and will operate the demised premises during the entire term of this Lease with due diligence and efficiency and in a proper and businesslike manner and as proper in a high class shop or establishment of the type specified in Part V of the

Schedule hereto". Part V of the Schedule specified "Bakery and Pastry Cook". There was also a covenant that the applicant would not without the respondent's consent use or permit use of the demised premises for any purpose or activity other than that specified in Part V of the Schedule.

It is, I think, clear that - as Jordan C.J. pointed out - to measure damages for deceit inducing a purchase by the

difference between the price and the true value of what was purchased is to apply a rule of practice which must yield to the

principles governing the assessment of damages; and that the

application of the rule of practice is likely to offend those

principles in a wide variety of commercial circumstances: Clark v.-

Urquhart [1930] A.c. 28 at 67-68; Potts v. Miller (1940) 64 C.L.R.

282 at 297-300; Hornal v. Neuberger Products Ltd. [1957] 1 Q.B.

247 at 259-260, 264, 267; Doyle v. Olby Ltd. {1969} 2 Q.B. 158.

It is true, as Mr. Goldberg pointed out, that in South Australia

v. Johnson (1981) 42 A.L.R. 161 at 169-170 there occurs

following unqualified statement by the High Court of the measure

"The principle which underlines the award of damages in tort 1s, generally speaking, that of restitutio in integrum. The object is to restore the plaintiff to the position in which he would have been placed if the wrongful act had not been committed. The measure will vary as between deceit and negligence. In deceit, the plaintiff recovers the difference between the amount paid and the value of the property acquired, the object being to place him in a position equivalent to that which he would have occupied had the transaction not taken place. The defendant being guilty of a deliberate wrong, the damages will ainclude the whole loss directly flowing From the fraudulent inducement because, as Lord Denning MR declared in Doyle v. Olby (Ironmongers) Ltd. [1969] 2 Q.B. 158 at 167, "it does not lie in the mouth of the fraudulent

person to say that they could not reasonably have been foreseen'.

It is otherwise in cases of negligent misrepresentation. Although the wrongdoer is

liable for the damage which flows directly from his wrongful act or omission, the plaintiff's damages are limited to that which was reasonably foreseeable. This limitation applies in accordance with the general principle in negligence.

Subject to this limitation, the consequence is that if the effect of the negligent misrepresentation 1s that the victim has lost profits or income which he would otherwise have earned, he should recover damages in respect of them. We are speaking here, not of loss of profits under a contract into which the plaintiff enters by reason of the misrepresentation, but of profits which the plaintiff would have made had he not acted on the misrepresentation. Sa, in Hopkins v. Butts (1968) 65 D.L.R. (2d) 711 there was included in the damages assessed an amount for loss of profits, the misrepresentation having caused a delay in the commencement of the plaintiff's rooming-house operation. And in Esso Petroleum Co. Ltd. v. Mardon [1976] Q.B. 801 the plaintiff's damages

generat ener een emer pie ey mem ee com eer eS nee ee - -

included his capital loss, the overdraft which he incurred in running the business, loss of earnings

The measure of damages recoverable in the United States for negligent misrepresentation is similar. There the plaintiff recovers what 1s necessary to compensate him for the pecuniary loss caused by the misrepresentation, including (a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and (b) other pecuniary loss suffered as a consequence of the plaintiff's reliance upon the misrepresentation: see the Restatement (Second), Torts; para. 552B.

In Shaddock, as no question of loss of profits arose, it was appropriate to award the plaintiff compensation by reference to the difference between the amount paid by the plaintiff for the property and its actual value plus other incidental cxpenses.

The precise application of these principles will depend on the circumstances of the case."

But the High Court was not dealing in that case with any cause of action but negligence and breach of contract, and the reference to deceit appears to me to have been occasioned by the circumstance that the tortious conduct under consideration was a statement which was untrue, and by the circumstance that the Court was concerned to insist that the damages recoverable for negligent misrepresentation were limited, unlike damages for deceit, by reference to what was reasonably foreseeable. Considered in its context, the statement of the measure of damages for deceit ought

not in my opinion to be regarded as intended as an exhaustive

statement on that subject. That statement ought, as I think, to

be understood as subject to the same qualificaticn as was

expressed by Gibbs J. in Ted Brown Quarries Pty. Ltd. v. General

on rennet meet pet ee ee ane oe te eee te ee em ae ae a et - 1

Quarries (Gilston) Pty. Ltd. (1977) 16 A.L.R. 23 at 31 ("the

normal measure of damages in an action for deceit, where the plaintiff has been induced by the fraudulent misrepresentation of the defendant to enter into a contract of purchase, is ...") and by Dixon J. ain Toteff v. Antonas (1952) 87 C.L.R. 647 at 650.("When what he has been induced to do is to make a purchase from the defendant and part with his money to him in payment of the price, then, if the transaction stands and is not disaffirmed or rescinded, what is recoverable is ..."). C£. Frith v. Gold

Coast Mineral Sprinas Pty. Ltd. [1983] A.T.P.R. 44072 at 44085.

Late in October 1979 the applicant received a statement by the respondent of its account with the respondent in respect of the tenancy. The rent was charged at a rate increased in accordance with the provisions of the agreement for the lease which I have quoted in paragraph ll hereof. Charges were raised un réspect of the ""Apportionable Outgoings" to which I have referred in paragraph 12 hereof and in respect of the applicant's membership of an association of tenants for which that agreement also provided. After allowing the applicant credit 1n respect of $2,306.66 previously paid, as Mr. Lucas believed for the first month's rent, and in respect of a proportionate part of the "advertising allowance" (to which reference is made in the letter dated 5 February 1979 from the respondent to Mr. and Mrs. Lucas), the respondent asserted that the balance due in respect of the

period from 10 October 1979 until 30 November 1979 was $4,433.81.

By a summons issued out of the County Court of Victoria

on 14 November 1979 the respondent sued the applicant as lessee

and Mr. and Mrs. Lucas as guarantors for that balance (in the summons stated to be $4,457.47), together with interest on that sum at a rate of $1.82 per day from 14 November 1979 until payment or judgment. The evidence does not disclose when that summons was

A letter dated 16 November 1979 from the applicant's

solicitors to Centrepoint Custodian Pty. Ltd., a company

associated with the respondent, was in these terms:

"We act for T.N. Lucas Pty. Ltd. ("the compaay") which is in occupation of the abovementioned shops and which executed a lease document with Centrepoint Freeholds Pty. Ltd. 1n respect thereof. We also act for Vasiliki Lucas and Ttoolis Lucas.

Our clients relied upon representations made and warranties given by Centrepoint representatives that the Centre would open at a specified time which (in the event) was significantly earlier than the date upon which the Centre in fact opened. Indeed, as late as February 1979, letters to our clients confirmed that the Centre was to open in March 1979. When the Centre did not open in March, our clients were given further assurances as to an early opening date and were induced thereby to act to their prejudice.

Further, representations were made and warranties were given to our clients as to the nature of the

other tenancies in the Centre, and these representations have now been discovered to be demonstrably untrue and the warranties have been breached.

The next matter concerns proceedings in the County Court at Melbourne $931016 by Centrepoint Custodian Pty. Ltd. against "B. & T. Lucas". Agreoment was reached in negotiations with the lessor of tne shops that all costs associated with the provision

of three phase power and as much electricity and other requirements as were needed for the establishment of the bakery and cake business to be established at the shops would be met by Centrepoint. In any event, it is noted that, on no view of the facts, are Mr. & Mrs. Lucas the occupants of the shop nor the proprietors of the business conducted thereat. The proceedings which have been instituted will be strenuously resisted.

The company has received from Centrepoint Custodian Pty. Ltd. a letter dated the 24th October 1979 requiring payment of what are alleged to be "apportionable outgoings" under the Jease document that has been executed. Whilst the company would join issue in any event with its liability to pay all or any of the items which are claimed to be "outgoings" and to contest the amount thereof, it is observed that the whole of those "outgoings" are stated to relate to an assessment "for the period to 30 June 1979". The whole of the period to which the "outgoings" relate therefore antedates the commencement date stipulated by your letter dated

3rd August 1979. On no view of the matter, therefore, can the company be liable for any part of those "outgoings". Accounts rendered in

reliance upon the same are manifestly without foundation, and the company denies liability to pay any part thereof. The company also disputes the purported increase in rental above the level of $2,3066-66 per month.

In the circumstances, our clients have an entitlement to rescind and determine any tenancy or other transaction into which they or any of them may have entered and to claim damages from Centrepoint. They are, however, prepared to abstain for the time being from exercising their various rights pending your response to this letter. Their abstentation is, however, not to be construed in any way as derogating from or an abandcnment of the rights that they have or may have. Falling a response satisfactory to our clients within seven days, we are instructed that, without further notice to you, we are to take such steps as may be necessary to protect the position of our clients.

We should be pleased if you would bring the contents of this letter to the attention of the various Centrepoint companies, including Centrepoint Freeholds Pty. Limited, the lessor of the premises.

The foregoing 1s not to be taken as an exhaustive statement of the matters of which our clients complain and they reserve to themselves the right to raise such other matters (including, for example, the flooding of the shops by the sprinkler system) as they may be advised."

The letter dated 24th October 1979, to which reference is made in the Jetter just quoted, was from Pacific Shopping Centres Pty. Ltd., another company associated with the respondent, not from Centrepoint Custodian Pty. Ltd., and it was posted with the

At the request of Mr. Powderly, the credit manager of the group of companies which included the respondent, Mr. Lucas called at an office 1n South Melbourne on or about 21 November 1979. Mr. Powderly asked him why he would not pay the rent of his premises

at the Centrepoint Mal]. Mr. Lucas asserted in reply that he had

already paid the rent for October ond that the amount claimed for rent was not "according to the original agreement" Mr. Lucas claimed to have with the respondent. During the conversation a Mr. Tallent, who was sworn by Mr. Powderly to be, at the time Powderly was giving evidence, the property manager of a company associated with the respondent, joined Powderly and Lucas. Mr. Tallent said something during the conversation which Mr. Lucas understood to be an expression of the respondent's willingness to accept, for the time being, rent at the rate of $27,680.00 per annum (the amount specified in the form of application for a lease), together with a promise to send Mr. Lucas the next day a

letter confirming what Mr. Tallent had said. No such a letter was

received. I am not persuaded that Mr. Lucas correctly reproduced

in evidence the words Mr. Tallent used, nor that Mr. Lucas correctly reproduced the conversational context in which Mr. Tallent's statement concerning the rent was made, nor that Mr. Lucas's understanding of what Mr. Tallent said was justified by the words Mr. Tallent spoke. It is not that I doubt Mr. Lucas's

veracity in relation to the conversation, but the evidence of é

Lucas and Powderly leaves me uncertain what was said.

On 27 November 1979 the applicant's solicitors received

from the respondent's solicitors a letter in these terms:

"Your letter to our client dated 16th Novemper, 1979 has been referred to us and is to be answered

In the interim kindly refrain from directing further correspondence direct to our client."

On or about 8 January 1980 the applicant received from

the respondent's solicitors a notice in these terms:

"PO: T.N. LUCAS PTY. LTD. of & The Moor, North Balwyn, being the Lessee of shops No. (B.01) and (B.02), Centrepoint Mall, Bourke Street, Melbourne, pursuant to a Lease dated 16th May 1979 made between you and Centrepoint Freeholds Pty. Ltd. of 158 City Road, South Melbourne.

BY THE ABOVEMENTIONED LEASE you the Lessee covenanted to (inter alia)

(1) Pay to the Lessor throughout the said term thereby created annual rental in the sums therein snecified by egqual calendar monthly instalments in advance.

Treasureway under the two bills of sale as being a direct consequence of the purchase of the business. They were the result of the decision, albeit obligatory in the circumstances, of Mr. Yorke to finance his purchase in this way. To some extent the interest component is partially compensated for by the interest allowed on the purchase price, and the balance interest was not a direct consequence of the purchase but of Yorke's lack of ready money."

Wich that may be contrasted what Fitzgerald J. had to say of

similar claims in Frith v.- Gold Coast Mineral Springs Pty. Ltd. &

"As a matter of principle , if borrowing or the termination of an investment occurs in reliance upon misrepresentations, I cannot perceive why the cost of those steps to the injured party ought not be recoverable."

That passage was preceded by a more general statement (47 A.L.R.

"The broad statement of the appropriate measure of damages in deceit which was adopted in Dolby's case, supra, accords with the statutory test, 1f, as I think, applicants who establish a cause of action under the Act are entitled to those losses which are the immediate result of the offending

sufficiently direct. It is on that footing that I proceed in this case.

There is a further matter to be kept in mind in some cases, and this is one, in which damages are sought under the Act.. A purchase of property may be one element in a course of conduct which is embarked upon in reliance on conduct which 1s misleading or deceptive or likely to mislead or deceive. The statutory entitlement to compensation is not restricted to losses involved in the single element constituted by the transaction of purchase.

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Applicants for relief under the Act are entitled to have each act or omission shown to have been taken in reliancee upon offending conduct considered for the purpose of a determination of whether they thereby suffered loss or damage.

In my opinion, therefore, irrespective of how the applicants' damages might have been calculated had their claim been made and pressed in deceit, it is appropriate, in the determination in these proceedings of the damages to which they are entitled under the Act, merely to seek to identify what were the immediate and what were the direct consequential losses sustained by the applicants by the conduct of the respondent. The operation of that test will, as in all cases, depend on the circumstances."

In Esso Petroleum Co. Ltd. v. Mardon [1976] 1 @.B. 801 at

"In addition to this loss of capital Mr. Mardon has lost the income which he could reasonably have expected to earn from the business, made up partly by loss of the use of his capital and partly by the loss of his time and cnergy in running the business. This head of loss, of course, continued after the closure of the business because Mr. Mardon no longer had the capital to reinvest in another business. A further source of loss is the interest which has accrued on the overdraft. vee een eee veeeeeeesne is entitled to recover his capital losses up to the time when the business finally closed.

The income losses present greater difficulties. There has been serious delay in bringing this action to trial which has made matters worse than they ight have been. On the other hand, the plaintiffs have had the use of the money representing Mr. Mardon's capital losses up to the present. It 1s, therefore, not unreasonable that they should be liable for the interest on the

The claim for loss of profits is, in my opinion, virtually incapable of proof, and I will not deal with that."

In what sense Ormrod L.J. conceived that Esso Petroleum Co. Ltd. had "had the use of" Mr. Mardon's money is not clear to me. Since it was that company's petroleum products which were sold at the service station, his Lordship may have thought of Mr. Mardon's money as forming part of the capital fund which yielded to Beso Petroleum Co. Ltd. the income which was measured by those

sales. Or he may have been adverting to a statutory provision

The applicant would, but for its involvement in the Centrepoint venture, have made profits capable, as I have found, of proof, by the expenditure of the "time and energy" of Mr. and Mrs. Lucas. The applicant's "capital losses", out of the funds Mr. and Mrs. Lucas supplied, have been compensated in the first four categories of damage considered. But the overdraft on which unterest was charged was not the applicant's, nor did the applicant incur, as I have found, a liability to pay interest on the moneys provided to it by Mr. and Mrs. Lucas. The respondent had not the use of the applicant's money, other than the $2306.66 for which it gave value, except in the metaphorical sense in which, between accrual of a cause of action and judgment thereon in a money sum, a defendant may be said to have the use of the

compensatory damages otherwise recoveraable from the time when

FN Re an ree perenne mre ernie ase oe eee eee Oe - -- --= - - - -

SN ee ted A ara Yt mel ol UN ted REA Rear eR RR I nr hae dm eee

each item of loss was sustained until judgment in the action. I have been considering, in relation to the assessment of damages, a judgment upon the cause (or, perhaps, causes) of action for deceit. In my opinion each of the fraudulent misrepresentations constituted also a contravention of s.52(1) of the Trade Practices

Act 1971. In the circumstances which the evidence in this

proceeding discloses there is in my opinion no difference in the amount of compensatory damages recoverable by the applicant upon those two different causes of action, unless it be a difference arising from an award of interest. Upon the cause of action for

deceit no allowance is made by the common law for interest on

damages between the time when the loss is sustained for which those damages are awarded and the time of judgment : see Simonius

Vischer and Co. v. Holt and Thompson [1979] 2 N.S.W.L.R. 322 at

339, 340, 362~367, and the cases there cited. In respect of that common law cause of action no statutory authority for such an allowance was suggested by counsel for the applicant, but it was submitted that sections 82 and 87 of the Trade Practices Act 1976 authorised such an allowance, without which, so it was submitted, the judgment for damages in respect of the respondent's contraventions of s.52(1) would not afford the just compensation

The rationale of the common law denial of interest on

damages for tort was stated py Latham C.J. (70 C.L.R. at 525) in

terms which were adopted by the Court of Appeal in Simonius

Vischer and Co. v. Holt and Thompson : "The loss of the use of the

NONI DE rm ne SN pe reer enre eee ee ee een cone oe wee

money ultimately awarded as damages is not part of the loss

occasioned by the tort or breach of contract. It is a loss due

entirely to delay in the payment of money ultimately held to be due, and is not recoverable as part of the damages." The verbiage in which causation of damage is expressed in ss. 82(1) and 87 - "suffers loss or damage by conduct" - does not suggest to me a

conception of causality inconsistent with the conclusion reached e

by the Court of Appeal. I do not think that either of those

provisions authorises the allowance of the interest claimed.

Nor do I think that the claim can be justified by reference to s.79 of the Judiciary Act 1903. In this proceeding the jurisdiction of the Court is being exercised in the State of

Victoria. Section 79A of the Supreme Court Act 1958 provides:

(1) The Judge upon application shall in all actions for the recovery of debt or damages give damages in the nature of interest at such rate not exceeding the maximum rate approved by the Australian Loan Council at the time the judgment is entered or the order made for long-term borrowinng for new public securities issued by semi-government

commencement of the action until the entry of the judgment unless good cause is shown to the contrary over and above the debt or

damages awarded by the court or jury. (2) Nothing in this section shall -

(a) authorize the granting of interest upon interest;

(b) apply in relation to any sum_ upon which interest is recoverable as of

eras eT ETS Omen Item a ree ene ce ee rene wre ee - soe

affect the damages recoverable for the dishonour of a negotiable instrument;

authorize the allowance of any interest otherwise than by consent upon any sum for which judgment is

apply in relation to any sum on which interest might be awarded by virtue of section seventy-eight or section seventy-nine of this Act; or

limit the operation of any enactment or rule of law which apart from this

(3) Where the damages awarded by the court or jury absolute discretion determines that the damages so awarded include any amount for -

compensation in respect of liabilities incurred which do not carry interest

compensation for loss or damage to be incurred or suffered after the date of

the Judge shall not allow interest in respect of any amount so awarded or in respect of so much represents any such damages.

(4) The Judge may if he thinks fit request a jury to specify in its verdict any amount included

Commonwealth and Anor. (1975) 6 A.L.R. 433 the plaintiff recovered

damages against the defendants for negligence causing damage to

SOR OA n ctn Totirme erimenniaee o cynn n n e noe or ae ee ee ee ee eee ee -

Re re we a cee a le an lee tenet hen ee Ne ee eee foe ee ced oe

exercising its jurisdiction in the State of New South Wales. The second defendant recovered damages against the plaintiff and the

first defendant for negligence causing damage to the second defendant's aeroplane, caused by collision with the plaintiff's

aeroplane. In his reasons for judgment the trial judge (Mason J.)

"Both the plaintiff and the second defendant claim interest on damages up to judgment. The claim is based on s.94 of the Supreme Court Act 1970, as amended, (NSW) which confers a power on the Supreme Court of New South Waies to award interest in respect of damages as part of the judgment, a power which is said to be applicable in these proceedings by virtue of s.79 of the Judiciary Act 1903, as amended. Whether this step in the argument is well founded is a familar question not without its difficulties - see John Robertson & Co. Ltd. v.

65 at 80~1, 84, 88, 94-5; Pedersen v. Young (1964) 110 C.L.R. 162; [1964] A.L.R. 798.

However, it is my view that s.79 does not operate to pick up and apply in proceedings in the High Court a provision such as s.94 which is contained in a statute designed to define and regulate the powers and procedure of the Supreme Court and which confers power on that court to order interest on damages in judgments entered by that court in proceedings before it. No matter how widely it may travel in some respects s.79 does not, in my view, pick up and apply in this court a provision which empowers a particular court of a State to make orders and enter judgments in proceedings in that court. The relevant powers of this court are conferred by the Judiciary Act and the High Court Procedure Act 1903, as amended; as I see it they are not to be supplemented by the operation of s.79 of the Judiciary Act in the manner suggested. Section 26A of the High Court Procedure Act, which provides that judgments of the court shall carry interest, should be regarded as a comprehensive expression of the entitlement in this court of a litigant to interest on damages to the exclusion of any provision in State law which would otherwise be made applicable by virtue of s.79."

FTR rene pe eye me ae een fo te eee ne eee see ener on ee nee eee es ee

Section 79A is in Part VI1l of the Supreme Court Act 1958.

"The several rules of law enacted by Part VII of this Act shall unless express provision 1s otherwise made be in force and receive effect in all Courts whatsoever so far as the matters to which such rules relate shall be respectively cognisable by such Courts."

Section 79A operates not only as "a provison which empowers a

particular court" of the State of Victoria "to make orders and

enter judgments in that court", but as a provision in force in all Victorian courts having jurisdiction to determine "actions for the recovery of debt or damages". But the conclusion of Mason J. that s.79 of the Judiciary Act did not make applicable in the High Court the provisions of s.94 of the New South Wales Supreme Court Act seems to rest, not on the circumstance that s.94 conferred a power to award interest only on a particular New South Wales court, but on the circumstance that what Mason J. called "the relevant powers" of the High Court had been conferred by Commonwealth statutes and were "not to be supplemented by the operation of s.79 of the Judiciary Act in the manner suggested". The Federal Court of Australia Act 1976 makes provision with respect to the powers of this court on most of the subjects with which the High Court Procedure Act 1903 deals. In particular, s.52 of the Federal Court of Australia Act makes a provision with

respect to interest on judgments which is very similar to the

provision made by s.26A of the High Court Procedure Act.

SF erp on ae gre me AT ROR SMe neem yn ree ome oe re etre emer oe ~

Applying, as I think that I should, the reasoning of Mason J., I reach the conclusion that s.79 of the Judiciary Act does not operate to make applicable in this proceeding the provisions of ss. 60 and 79A of the Supreme Court Act 1958. That conclusion comprehends both a claim for damages cognisable in the courts of the State of Victoria, such as the claim for damages for deceit, and also a claim for damages under s.82 of the Trade Practices Act 1974, which no Victorian court has jurisdiction to hear. In relation to a claim of the latter kind, the conclusion is

fortified by the reasoning of Walsh and Gibbs J.J. in John

Robertson and Co. Ltd. (in liguidation) v. Ferguson Transformers Pty. Ltd. (1973) 129 C.L.R. 65 at 81-85, 87-89, and by the

judgment of Lockhart J. in Hubbards Pty. Ltd. v. Simpson Ltd. (1982) 41 A.L.R. 509.

32 Exemplary damages were sought. Assuming, but without deciding, that exemplary damages might be awarded upon the causes of action held to have been established by the applicant, I do not consider that the conduct of the respondent, or of any person for whose conduct the respondent might be liable, has been shown by the evidence to merit an award of exemplary damages.

33. Claims for damages in respect of "physical inconvenience" and "mental distress" were advanced, but not pressed in

submission. Having regard to the applicant's incorporeity, I

Pete seg ermarr een enenenerrnmene ene mE mn eee ee wee ene eee fe ee -

34. No submission was advanced by either party in relation to . Fy) the causes of action pleaded in negligence, or, except concerning

the allegations discussed in patagraph 10 hereof, in relation to

breach of warranty. There will be a judgment for recovery of

damages in the sum of $51431.16,'to be pronounced on a later day.

I will hear submissions by the parties as to whether any other