Willmott, R.G. & Anor v. Dora Banks Pty Ltd & Anor [1985] FCA 158

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NEW SOUTH WALES DISTRICT REGISTRY ) No. G267 of 1983

• ) GENERAL DIVISTON )

RICHARD GEORGE WILLMOTT and ELIZABETH MARY WILLMOTT

Applicants AND: DORA BANKS PTY LIMITED and ANOR. Respondents CORAM: SHEPPARD J. DATE: 29 APRIL 1985 . REASONS FOR JUDGMENT

HIS HONOUR: In this action the applicants sue the first respondent ("the respondent") for damages under the Trade

Practices Act 1974, ss. 52, 53 and 59, and for damages in respect

of a number of common law causes of action. They also seek

relief pursuant to s. 87 of the Trade Practices Act. Originally

they sued the second respondent, James Thomas Hickey, but did not proceed against him because he is an undischarged bankrupt. It may be that they could have proceeded on the causes of action relied upon, or most of them, without the leave of the Court, but in the result the action against Mr. Hickey was abandoned. He

did not appear in the proceedings except as a witness on behalf

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In a cross-claim the respondent has sued the applicants for

Until some time in the month of March 1983 the respondent carried on a business in the Gold Coast area of Queensland. The business consisted of placing a number of video games in various locations in the area. There were 30 games in all. At the time of the negotiations which I am about to recount 11 of these were in what is known as Putt Putt which is a miniature golf links at Mermaid Beach. Others were in various places of amusement, fast

food shops, milk bars and the like. The respondent had no firm arrangement with any of the proprietors of the businesses where the machines were placed as to the length of time the machines might remain with the result that any proprietor could require the removal of a machine on short notice. The machines were operated by customers of the various businesses where the machines were. In order to play a game a customer inserted the requisite number of coins into a slot. At regular intervals Mr. Hickey or his son collected the proceeds and divided them equally

between the proprietor of the business and the respondent.

The business of the respondent began when a number of machines were purchased from a Mr. Finnemore about the end of 1981. Mr. Hickey was then at Moama in south-west New South

Wales and the business was operated by Mr. Hickey Junior. These

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arrangements continued until about the middle of 1982 when Mr. Hickey came to the Gold Coast to manage it. He said that he did so because his son had a full time job and running the business as well was too much for him. About this time, so the Hickeys said, they had a burglary in the flat which they occupied. Records of the business which had been kept up to that time were either destroyed or damaged. This was why, so the Hickeys said,

Thereafter Mr. Hickey senior kept a record in a diary. The record consists of a note of the takings from each machine each week. It commences on 21 August 1982 and concludes on 10 March 1983 when the business was sold. It is common ground that the record shows that takings over the period August 1982 to March 1983 averaged $750 per week. It is also conceded by counsel for the applicants that the takings for that period did in fact average $750 per week. Counsel made the concession because of

some independent evidence from the company operating Putt Putt

which confirmed the takings recorded in Mr. Hickey's record.

There are no other records available. No books of account were kept. No formal accounts were prepared and no income tax disclosing the receipt of the moneys appear to have been lodged. I should say in passing that because there appears to have been a flagrant breach of the respondent's obligations under the Income

Tax Assessment Act 1936, a copy of this judgment will be sent to

the Commissioner of Taxation and his attention drawn to this

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The other activity of the respondent is the carrying on of a property in the Moama district. Mr. Hickey said that his wife became ill whilst he was away in Surfers Paradise and that it was for that reason that he decided that either the property should be sold or that the business should be sold. According to his evidence both were put on the market. When the business was sold, the property was withdrawn from sale and he returned to Moama to be with his wife. That explanation for the sale of the

business is not accepted by counsel for the applicants.

The applicants became interested in the business when Mr. Willmott saw an advertisement in a newspaper and called on Raine & Horne, estate agents, in Tweed Heads. That occurred in February 1983. He there met a Mr. Cotterill, who managed the business of Raine & Horne, and Mr. Hickey. Mr. Willmott was accompanied by Mrs. Willmott. Amongst other things Mr. Willmott said that Mr. Hickey said to him, "You will get $750 a week the

« year round from the machines and ail that is required is a day and a half a week to get that". Mr. Hickey said that maintaining the machines was not difficult. He also said, "We operate a universal harness which means that you can just change boards to alter the games". The universal harness is apparently a mechanism which enables games to be changed from one machine to another or new games substituted for old or out of date games

without the need to engage in any complex operation.

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There was further discussion to which it is unnecessary to refer but which apparently took place in the presence of Mr.

After the conversation Mr. Willmott accompanied Mr. Hickey on a visit to a number of the sites where the machines were. During these visits Mr. Willmott said that he was again told that he would receive $750 a week. He said that he said to Mr. Hickey, "Well, the time factor is important. You said that you would only work a day to a day and a half per week to do your round, and the machines have all been upgraded, the latest games are in them, and you won't have to touch any of them for twelve months."

Mr. Hickey apparently assented to the fact that he had said words to this effect.

Mr. Willmott described the visit to various sites. Whilst they were at one site known as the Snack Shack Mr. Willmott said that he asked Mr. Hickey again about the takings and was told that he would definitely receive $750 per week "year round" average from the machines. He said that he was shown an exercise book which recorded the takings. He said that it was an ordinary lined Pencraft type exercise book written in pencil. Mr. Willmott said, "I noticed that it was sort of to do with the end of the year. It was November, December, January, and I sort of - I had a look at' that". He said that the book showed weekly takings written in pencil added up to show monthiyv returns. Mr.

Willmott said that Mr. Hickey did not want to give him the book.

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He just let him have a very quick look at it and told him that it

was the only record kept. He said, "We don't keep records in this business. This is ali I have". Mr. Willmott said that he remembered some amounts of $500 and $600 a week. One week was $900. That was the Christmas week.

After the inspection of the book they continued to visit other sites. At one Mr. Hickey reiterated how simple maintenance was. At another he told Mr. Willmott that the machines were all in good order and were valued at $2,000 each. Of the machines at Putt Putt he said that they were all upgraded and had the latest games available in them. He added "... it is the best site and that is what is how all the top machines are there." Subsequently they visited Putt Putt but Mr. Willmott was not sure whether that was on the same day or later in the week.

The following evening Mr. Hickey rang Mr. Willmott and said that he had worked out that each machine would take $27 per week "and that was what I would get from them, $27." Mr. Willmott

said that he remarked that that was just over $800 a week.

Later the two met again. They went to Putt Putt which Mr. Hickey said was the key site. He said all his best machines were

there. According to Mr. Willmott, Mr. Hickey said, "...it is the

key site and it never drops below $400 a week, that is gross,

that is $200 each ... I will not introduce you to the manager.

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He is a bit toey. I will make out that you are looking after the business for me while I am in Melbourne." Mr. Willmott asked Mr. Hickey why he needed to do this. Mr. Hickey said, "... he wants

everything his own way and we do not do it that way; we do what

Although Mr. Willmott had not mentioned it up to that point in his evidence, he said then that Mrs. Willmott was with him during the visit to Putt Putt. Whilst there Mr. Hickey again said that the machines "were all upgraded and... we have the latest games available in them and... it is the best site and

Mr. Willmott said that there were another four machines on the site. He was told that these belonged to Putt Putt itself. His evidence continued:-

that they were getting rid of them and I would get the sites."

"And did you say anything to that?" I said, "that is fine, when would it be?"

And he said, "Well, its soon; you will keep in touch with them and you will get the sites soon."

As it turned out, the manager was not present at the time of the visit. During the visit moneys were collected and divided

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During the return journey Mr. Hickey reiterated that the Willmotts would always get $200 a week from Putt Putt. He also- repeated what had been said about the likelihood of the Wililmotts obtaining the four additional sites. He again said that he could collect all the takings from the round in a day anda half. Mr. Willmott asked at what point machines were changed. He was told that when "the take" from a machine dropped below $20 it should be moved. Mr. Hickey said this was about every six weeks. Mr. Hickey repeated that all the machines were in excellent order and said that about $18,000 had been spent upgrading them. The

The two met again in Raine & Horne's office on 22 February when the contract was signed. Also present were Mrs. Willmott and Mr. Cotterill. The contract is dated 1 March 1983. It is expressed as being made between the respondent as vendor and the applicants as purchaser. By clause 1 it is provided that the vendor agrees to sell to the purchaser and the purchaser agrees to purchase from the vendor for the price of $75,000 all the right, title and interest of the vendor in and to a certain "Amusement Machine Run business carried on on premises and situated at various sites" as shown in a schedule together with the goodwill of the business and the vendor's fixtures, plant and equipment set forth in the schedule. By clause 3 a deposit of $2,000 was required. This was to be paid to Raine & Horne (who were described as "the agent"), "as Real Estate Agent for the

Vendor." By clause 4 the balance of the purchase money was to be

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paid as to $43,000 on 9 March 1983 and as to the remaining $30,000, on 10 June 1983. Clause 4 continued, "The vendor agrees that the purchasers shall have the benefit of the income from 9 March 1983 subject to the purchasers paying interest at the rate of 10 per cent per annum for the period from 9 March 1983 to 10 June 1983 on the sum of $30,000." Clause 6 provided for the transfer of possession on 9 March 1983. Clause 12 of the

"12. THE Purchaser acknowledges that no representations in connection with this sale have been made by the Vendor and that he, the Purchaser, has completed the said purchase after satisfactory personal inspection and investigation of the said premises and business and the said fixtures, fittings, plant, trade utensils, implements, stock and licences and has perused such records of financial transactions

relating to the said business as he has desired to inspect."

Clause 16 is an arbitration clause but clearly its provisions have been waived. Clause 17 provides that the vendor and the

purchaser agree that the price of $75,000 is to be apportioned as

to "Plant," $60,000 and as to "Goodwill," $15,000. Clause 24 provides that the vendor warrants and assures the purchaser that all plant and equipment will at the date of possession be in good working order and condition. Clause 26 says, amongst other things, that the vendor "recognises and admits the agency of Raine & Horne, Tweed Heads, as his agent responsible for the

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It is unnecessary to refer to any other part of the agreement except to note that appended to the agreement is a_ schedule described as an inventory of machines and sites. Thirty machines

are referred to including the 11 at Putt Putt. The other

The balance of Mr. Willmott's evidence in chief dealt with the completion of the contract on 1i March 1983 and with the applicants' experience of the business after they took over. An average of $750 was never achieved. Records which were produced showed that in the Easter week $772 were taken, but in no other week did the takings amount to $750 or more. In the early months the range was more in the vicinity of $400 or $500. Later the takings became even less. Records kept by Mrs. Willmott showed that by the end of the year they were often little more than

$200. In the early months of 1984 they were under that figure.

On 23 May 1983 (not 23 May 1982 as appears in the handwritten copy of the letter) the applicants wrote to Mr. Hickey a letter

which was prepared by Mrs. Willmott. The letter was as follows:-

Since taking over the video machine business in March we have been increasingly concerned by the low level of takings, which consistently fall well below the figures we were led to expect.

As it was quite clearly stated to us on a number of occasions by yourself & Raine & Horne, that the business takings averaged $750.00 per week, we have been most disappointed to find that the average is in fact $493.00, so far below the

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quoted figure that it is a matter of economic necessity that we now reconsider our position.

Consequently we feel it is essential to enter further negotiations with you in order to determine a more realistic purchase price commensurate with the actual returns of the business. To this end will you please give this

matter your urgent attention & contact us as soon as possible."

Mr. Hickey did not answer the letter in writing but some of

his records were produced in answer to the applicants' complaint.

A reason for the fall off in takings after June 1983 is provided by the decision of Putt Putt to remove all the

applicants' machines and replace them with its own machines.

Mr. Willmott said that he did not meet the Putt Putt manager, a Mr. Norton, until 2 or 3 weeks after the business had been taken over. He asked Mr. Norton about the four sites which were occupied by Putt Putt machines. Mr. Norton said that the company ran an operation in Sydney at Pier One where they had 100 games. He mentioned that some were to be-sent from Sydney to the Gold Coast and told Mr. Willmott that some of his machines would have to be moved. Mr. Willmott at that time did not know when that would happen. There was a further conversation about the matter

in June. According to Mr. Willmott Mr. Norton said:-

"ETThat he would notify me if the machines were to be brought up and I would have to move mine

and relocate them and all the operators had been told that Finnemore was the man that started the

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basis. He said that he told Finnemore that all their machines would be replaced in time and he told Jim Hickey who bought the machines from

Finnemore that his machines, in time, would be replaced with their own machines."

Mr. Willmott said he removed the first 3 machines from the Putt Putt site in June under Mr. Norton's directions. The

balance had to be removed in September. A week's notice was

Mr. Willmott was cross-examined at length. It was revealed that he had not had any previous experience of video machines or games. It appeared to me that he had had little experience of business affairs. Mr. Hickey showed him what was necessary in order to maintain the machines but how much of this he really took in is open to question. The probabilities are that he had

to learn the hard way, that is, by personal experience.

Mr. Willmott was cross-examined extensively concerning his recollection of the exercise book which he had seen during the negotiations. It was suggested to him that the book he had seen was the diary which is in evidence. Mr. Willmott firmly denied this. He said that he had not seen the diary during the course

of negotiations or as a result of the letter which was sent on 23

The cross-examination elicited some further evidence about

the discussions concerning takings prior to the contract being

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entered into. Amongst other things Mr. Willmott said that Mr. Hickey said, "Well, ... lets call it $750 a week because that is a figure we can guarantee." Later he agreed that Mr. Hickey had toid him that the takings had averaged $750 a week for the 24 or 26 weeks before February 1983. It was strongly suggested to him that that was all that was said, but Mr. Willmott remained firm that in addition Mr. Hickey had told him that he would receive

A number of questions were asked Mr. Willmott as to what enquiries he had made concerning the security of tenure of the sites. Some of these questions were asked by me. The questions arose after Mr. Willmott had said that each machine was worth $2,000 "and the site $500. That is how he broke it up." Mr.

Willmott was asked what he meant by the site. He said:-

"Well, the site, the siting of the machine, the site; the fact that you had that site was worth $500. He also told me that the registration ensured that that site was yours, which is not exactly correct."

Counsel for the respondent remarked that Mr. Willmott had not

given evidence about this before, a matter on which counsel was

Clearly correct. Mr. Willmott's evidence continued:-

"What do you mean, the registration? --- Well, each machine is registered in Queensland with the Justice Department and I understood that

registration to be something that guaranteed me that site; but that was not the case really, it

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given at that time about conversations with Mr. Hickey. She was still in chief at the end of the day and the matter adjourned. When she returned to the witness box on the next day the matter was in the list, her attention was directed to what Mr. Hickey had said about the income of the business. Her evidence was that there was a conversation in the car when the sites were being visited. She said that Mr. Cotterill, Mr. Hickey and Mr. Willmott were present. Her evidence continued, "I said to Mr. Hickey, 'Will this business take an average of $750 each week all year?' and Mr. Hickey said, 'Yes' and I said, 'All year? I wish

to emphasise that point.' And he said, 'Yes, all year.'

Mrs. Willmott's attention was again directed to the matter of the exercise book. She said it was a lined exercise book, rather battered inside, with written columns in pencil and in biro. There was one column for each week. Each column was totalled. The four columns for each month were totalled into monthly figures. She repeated that she did not actually see the cover but only the opened book and also that it was the ordinary size of a school child's exercise book. She said the records were for a period of 4 months and that they stopped in February 1983. She was again asked her recollections of the figures and repeated what she had earlier said, again mentioning that Mr. Hickey said that the takings never fell below $500.

Mrs. Willmott gave no evidence about any conversation with

Mr. Hickey in which he said that it was likely that four further

17. ' machines could be placed at Putt Putt, nor about anything said by

She, like her husband, was extensively cross-examined. She

had kept the records and she was asked about these. She was asked about her own background. She is a graduate in Arts from the University of Melbourne and was for some years a_ school

teacher and a school librarian. She is far more intelligent than

She, too, was asked about the security of tenure which the applicants would have over the sites after they took over the

business. Part of her cross-examination on this matter was as

"Mrs. Willmott, you are not an unintelligent woman, are you; you would agree with me, would you not, with all due modesty? --- Yes.

And I want to put to you that the question of how long you could keep these machines on these sites would have been a matter of great importance in considering the purchase of this business. Now would you agree with that? --- Yes, I assumed I could keep the machines on these sites. It was important and that is what I assumed.

Why did you make that assumption? --- Because we were told they were registered sites and registered machines.

But you know that whatever you were told about registration was cleared up later on before you signed the contract, do not you? --- It was cleared up later on?

I want to suggest to you that there was a discussion either with Mr. Hickey or Mr. Cotterill in which it was made perfectly clear to

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18, you and your husband that registration, as you put it, had nothing to do with making these sites permanent for you? --- That was not made clear before we signed, definitely not.

And anybody who said that it was would be in error, would they? --- Yes, it was not made clear to me."

It is to be observed that Mrs. Willmott is in conflict with her husband because she maintains that she remembered only after the contract was signed that the machines were secure because of their registration. This matter arose in her evidence only in

cross-examination as was also the case with her husband's

The only other matter arising out of Mrs. Willmott's cross-examination that I should mention is that she, as did her husband, denied ever having seen the diary prior to the signing of the contract. She stated categorically that the exercise book

she had seen during the negotiations was not the diary.

Other witnesses called in the applicants' case were Mr. Norton and Mr. Tester. I shall refer to their evidence in the course of dealing with the submissions made by counsel in

Mr. Hickey gave evidence of the negotiations leading up to the making of the contract. He deposed to the fact that the

respondent had acquired the business towards the end of 1981 from

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Mr. Finnemore. There were then 40 machines. He paid $90,000. He referred to the way records were kept up to August 1982 and then referred to the diary which I mentioned at the outset of the

judgment. The diary was produced and identified. He described

how he collected the moneys and how he kept the record.

He said the decision to sell the business was made in December 1982. He retained H.P.C. Real Estate to act. A Mr. Santilla of H.P.C. Real Estate apparently decided to act in conjunction with Raine & Horne. Some time in February 1983 he first met the Willmotts in Raine & Horne's office at Tweed Heads. He said that in addition to the Willmotts, Mr. Cotterill was present. He could not remember whether Mr. Santilla was also there. He said that there was a general discussion about the business for 20 minutes. He could not recall the detail of the conversation. He did not recall an inspection of the machines on that day but said that a time to do that was fixed. He said that the inspection took place a day or two later. Present were the Willmotts and Mr. Cotterill. All drove in Mr. Cotteriil's car. He recalled that 10 sites were visited and he described what the procedure for collection was. He also showed how the games were rlayed. At one point he said that he told the Willmotts that the nature of the business was seasonal. School holidays, Christmas and Easter were the best periods. He said that one of the down periods was from the end of January to Easter. Another was between the end of the May holidays and the beginning of the

September holidays. He emphasised the importance of regular

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maintenance and explained about the siting of the machines and the switching of the machines from site to site. Mr. Hickey was asked whether he had said anything about the takings of the . business. He is recorded in the transcript as having said, "I told them the average takings for the last 2 weeks had been about $750 - that was over the whole 30 machines - and they said that sounded pretty good." Counsel for the respondent suggested that Mr. Hickey did not say, "2 weeks" but either 24 weeks or 26 weeks

which is the period for which there is a record. Neither counsel for the applicants nor myself had any recollection one way or the other of this and my own note of the evidence did not help resolve the question. Nevertheless I think counsel for the respondent is right and that the evidence ought to be read as if the period were of the order of 6 months. Counsel for the

Mr. Hickey said that he told the Willmotts that it was a low

period in which the inspection of the machines was being carried

After the inspection they returned to Raine & Horne's office. Mr. and Mrs. Willmott accompanied Mr. Hickey to his van and he said that he showed them the book which is in evidence. He said, "I showed them the diary, opened it up and flicked through the pages and came up to an entry I made there of $807 average for I forget how many weeks." He indicated the page on which this was

done, it being the page containing the entries for 17th and 18th

February. He said that he showed that page to the Willmotts but not any other particular page. They themselves looked through

the diary, but he could not remember how many pages they looked at.

A week or so later he met them again and took them ona collection round. The inspection began at Putt Putt. The total collections were under $500. Mr. Hickey said that it was the

As they went round he described how general maintenance was

done and he introduced them to site owners. He said there was a

Mr. Hickey denied that he told the Willmotts that the business would average $750 per week throughout the year. He was firm in saying that he had told them no more than what' the takings had been while the respondent had the business. He said

that he did not go into what was going to happen in the future. He denied saying that the turnover would never be less than $500

He was asked what was said about maintenance. He said, "I used to do it in two big half days and do the general

Maintenance; the more that you did the general maintenance the

less time maintenance took if anything happened. We went around

and I showed them how to clean coin chutes and check your wiring

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on your boards and things like that." He said that he did not say anything about the length-of time the Willmotts could expect to spend on running the business overall on a weekly basis. He said that it used to vary and "I never knew." He described the detail of the maintenance which needed to be done. He also said that major problems would be attended to by a firm, Amusement

Mr. Hickey deposed to a conversation with Mr. Norton, the manager of Putt Putt, in December 1982. Mr. Norton told him that he had been rung by a superior in Sydney who told him that he was sending four machines of their own so that Mr. Hickey would have to remove four of his. This occurred shortly afterwards. He said that when the business was originally advertised in December the advertisment said that there were 15 machines on the Putt Putt site. In fact the number was reduced to ll. The four

machines were put in storage while he looked for other sites.

He said that he did not have any conversation with anyone from Putt Putt about the need to remove any other machines. He

denied telling the Willmotts that he had approval to locate a further four machines on the Putt Putt site.

Mr. Hickey said that the price of $75,000 was discussed but that he did not tell the Willmotts that they were getting a bargain, or that the price was a good one or that the machines

were worth what he was asking. He was asked whether he had ever

told the Willmotts that the price he asked was equivalent to the value of the business. He said that he told the agents that, but was not certain whether he told the Willmotts directly. But he

He was asked whether his price was reduced once he realised that the number of machines at Putt Putt would be reduced by four. He said he put the price on 30 machines. He said the first advertisement said that there were 40 machines, some on site and some not. The price was then $95,000. He then decided that it was better to sell only the machines that were on sites

and the price of $75,000 was calculated accordingly.

He was asked whether he had said anything about any arrangements with site owners. He said that he told the Willmotts, "... we were there as guests of the owners and if you

looked after the machines and if you looked after the site owners, you usually retained the site but there was no guarantee

He agreed that he had told the Willmotts that most of the games were up to date games. He also told them that there were a lot of new machines coming. He said that the respondent had kept upgrading the machines. He said "All the machines were ina pretty fair condition, yes, good condition." They had up to date games in them. He said about half the machines had universal

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Mr. Hickey said that the machines were the same as those he had bought from Mr. Finnemore some eighteen months before but that he had bought new games which varied in price from $450 to $800. He said that new machines were then selling for between $2,500 and $2,800 or $2,900. It depended on the game. He said that he had noticed that over the period that he had the business the takings had dropped from $30 a machine to about $26 per Machine average per week. He said that there was a dramatic drop

in takings in this sort of business after March 1983.

Mr. Hickey was cross-examined. All the representations relied upon by the applicants were put to him. In some respects his memory was vague. He found it difficult to remember precisely what had been said but he remained firm that the only statement he had made in relation to takings was that the takings for the 6 months prior to the sale had averaged $750 per week. He denied making any representation as to what takings in the future would be. He was pressed on whether he had been told by Mr. Norton, prior to the contract being entered into, that eventually all machines at Putt Putt would be replaced by Putt Putt's own machines. He remained firm that he had no knowledge of this. He also denied leading the applicants to think that they had some hope or prospect of obtaining the four sites upon

He was cross-examined extensively as to records. He

maintained throughout that the only record, apart from dockets

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that had been kept by his son and, to an extent, by himself, was the diary. He denied that there was an exercise book of the kind that the applicants said they had been shown. He said that the

He denied that he had not introduced the Willmotts to Mr. Norton and said that it was his recollection that they were introduced to him on the first visit. At one stage of his cross-examination he remarked that the applicants had every

opportunity to contact Mr. Norton if they had wished to do so.

He was asked about what he told the applicants concerning the registration of the machines. He denied ever telling them that the registration of the machines gave some form of security over the sites. He said that he had explained precisely what was involved in registration of the machines by the Queensland Justice Department and also in the licensing of them, as I

He was asked in detail about the currency of the machines. He said that of the 30 which were the subject of the agreement for sale, only five were as they were when he had purchased them from Mr. Finnemore. The remaining 25 were either new or had been upgraded. Many were fitted with new boards or games. The

Finally, he denied saying anything about the value of the

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Mr. Hickey junior was called. He is a director of the

respondent. The other director is his younger brother. He was not present at any of the conversations between the applicants and Mr. Hickey senior leading to the signing of the contract. He did endeavour to explain to Mr. Willmott what was involved in the . cleaning, maintenance and changing over of games. There does not seem to be any issue about this part of his evidence. In his cross-examination he was pressed as to whether he knew that the Putt Putt machines would soon have to go because Putt Putt was installing its own. He denied knowledge of this. He was cross-examined ona number of other matters including prices obtained for the sale of machines not sold to the applicants and the currency of the games. I do not find it necessary to refer

The only other witness called in the respondent's case was

Mr. Finnemore to whose evidence I shall refer later.

It is to be observed that there are a number of conflicts in the evidence of the Willmotts and Mr. Hickey. In some respects the evidence of Mr. and Mrs. Willmott is not consistent. No other witness was called to give evidence about the conversations. In particular neither Mr. Cotterill nor Mr. Santilla was called. No evidence was elicited as to what

instructions Mr. Hickey gave either agent except as I have

indicated in the account of his evidence which I have given.

In their Statement relied upon. Not all of these were relied upon in counsel's

final address. Those upon which counsel then placed reliance

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That approval had been given by the proprietor of a site at Putt Putt, Mermaid Beach, Queensland, for the continued

period. That approval had been given by the proprietor of a site at Putt Putt, Mermaid

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(h) That the 30 machines to be allocated to the applicants had a current value of

These representations were said to be false with the result

that the respondent, through Mr. Hickey, had been guilty of_

conduct which was misleading or deceptive within the meaning of s. 52 of the Act. Reliance was also placed on ss. 53 and 59 but I donot think the provisions of those sections add to the

strength of the applicants' case under s. 52 of the Act.

In addition to the causes of action based on breaches of the Trade Practices Act, the applicants aliso relied on breach of a collateral warranty. They said that in each case the respondent by Mr. Hickey had warranted the truth of each of the statements above set out and that in consideration of his promises in this regard they had entered into the contract of 1 March 1983. Additionally, they relied upon a cause of action in fraud and a

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Both counsel were agreed that the Court had jurisdiction to entertain each cause of action. There was some discussion as to whether or not the claim was in respect of a transaction in trade or commerce for the purposes of the Trade Practices Act. I think that it was. I am in respectful agreement with what Wilcox J. said in Lubidineuse v. Bevanere Pty Limited £1984] A.T.P.R. 40 - 487. In my opinion the transaction here is of a similar kind to that dealt with by his Honour in that case. As to the common law causes of action, there is plainly a common substratum of fact underlying the questions which arise for decision whether under the Trade Practices Act or at common law. I propose to say no

Although there are conflicts in the evidence, there are some

matters of common ground. Firstly, there is no question but that there was a representation (I use the expression neutrally) about

takings and that the representation referred to the figure of

$750 per week. The difference between the parties is whether the

representation was as to the future and was that the applicants would take $750 on the average throughout the year (which is the applicants' case) or whether it was as to the past and was to the effect that the takings over the last 6 months had averaged $750 per week (which is the respondent's case). Secondly, there was a representation as to the time that the ordinary operation of the

business would take each week. The applicants say one and a half

days; the respondent says two "big half days." I would not

regard the difference as material. Next it is common ground

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that nothing was said concerning the length of tenure available on the Putt Putt site. Both parties are agreed that there was no express representation about this matter. Then it seems to me to be common ground that the words used did imply that both the machines and games were current. Finally, there can be little doubt that Mr. Hickey, either himself or through one of the

agents, did represent that the 30 machines had a current value of

(a) the substance of the representation about takings;

(b) whether there was a representation that the takings would

{c) what the content of the representation concerning the time needed to operate the business was. By that I mean whether the one anda half days or two big half days were to encompass all maintenance or only collections and rudimentary maintenance. It is the respondent's case that it was the latter;

(d) whether Mr. Hickey did tell the Willmotts that they might

look forward to siting a further four machines at Putt Putt.

Additionally there is a question as to whether the respondent, by its conduct, did not mislead the applicants into thinking that there was no impending risk of the immediate

removal of the machines at the Putt Putt site because of Putt

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Putt's wish to replace them with its own machines. This question is raised by the representation alleged by the applicants in para. (d) of those earlier quoted (p. 27). This is not referred to in the evidence because the applicants do not say that anything was expressly said about it. Their case was rather that they were led to believe that Putt Putt (and the proprietors of the other sites where machines were located) would allow the Machines to remain where they were indefinitely, provided, of course, that they were properly maintained, that games were

changed regularly and that the games were more or less current.

In support of this aspect of this case, the applicants called the manager of the Putt Putt site, Mr. Norton. He was not called to give evidence of what was said during the negotiations or of Mr. Hickey's conduct during them. He was not present at the negotiations and, according to his evidence, learnt of the sale only after the contract was completed. Mr. Norton's evidence was designed to serve a different purpose. He was called to establish that Mr. Hickey knew that all the machines at the Putt Putt site were to be replaced with Putt Putt's own machines. if this were the case, it would tend to establish fraud on Mr. Hickey's part because it would be shown that he, by his silence, was leading the applicants to believe that there was no immediate risk of the sites being lost, whereas in fact he knew that that was not so. A further indication of fraudulent conduct on the part of Mr. Hickey would be disclosed if it were accepted that he

had said to the applicants that approval had been given by Putt

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Putt for the location of a further four machines or that it was likely that the applicants would be able in the near future to add a further four machines to the Putt Putt site; see the representation in para (e) above. Mr. Norton does not deal with this matter expressly, but the tenor of his evidence would suggest that there was no question of the four sites again

becoming available to the respondent or any purchaser of the

Close analysis of Mr. Norton's evidence is therefore required. He said that he was the manager of the Putt Putt site and had held that position since 1980. He said that each video machine had to be registered under some legislation which was administered by the Queensland Justice Department. He said that in February 1983 the Hickeys had between 12 and 13 machines at the Putt Putt premises. The arrangement was an indefinite one. He said that the supplier, that is, the Hickeys, was asked to provide games up to the standard that were available at the time and to keep the machines in working order. He summarised the agreement by saying, "... we would supply the site and the customers and the site licence and they would supply the machines

and registration of the machines." Takings were to be shared

Mr. Norton said that just prior to the Christmas holidays in

1982 Putt Putt had put four of its own machines on to the site.

At this time Mr. Norton spoke to Mr. Hickey and said that his

company had an overflow of machines from its establishment in Sydney and that four machines had been sent to him to install with the consequence that he would have to remove machines belonging to the Hickeys in order to keep within the 15 machines which Putt Putt was licensed to have. He said that the machines were removed almost immediately. He could not remember the number but, upon the basis of the evidence of the other

Mr. Norton said that he remembered seeing the applicants when machines were being cleared. He was vague about the conversation which then took place. About three weeks later, when he arrived for work one evening, he noticed the whole games room "seemed to be different." He noticed a bright yellow card on each machine. He then concluded that each machine had been sold by the Hickeys

• to someone else and rang the number on the card. He was not asked about what was said, perhaps because there may have been a a@ifficulty about the admissibility of his answer to such a question. He was asked again about his first meeting with the applicants and recalled that he was told that the applicants would be clearing the machines for a while. He was not asked expressly, but it is apparent from his evidence that the applicants were not introduced to him as potential purchasers of

In cross-examination Mr. Norton said that the machines were a

good standard all the time the Hickeys operated them. He said

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that he was happy with the return Putt Putt was obtaining from the machines. He referred to one game, "Space Invaders," which

had been there for a long time. He said that he wanted it

He was asked questions about the level of takings at different times of the year. It is not relevant to refer to that part of his evidence. He was questioned closely about his evidence that the first time he knew that the applicants had bought the business was when he saw the yellow cards on the machines. He denied that Mr. Hickey had ever told him that the

applicants had bought the machines or the business.

Mr. Norton said that after the applicants took over, he noticed a drop in takings. He was unable to say how long it was before that occurred. He said that machines were out of service for a period longer than they had been when the Hickeys had the business - sometimes for quite a long time. He said some of the

problems were minor and some not. He complained to the applicants about the state of the machines. He said that the problems were not being attended to by the applicants. He said that he spoke to Mr. Willmott on a number of occasions about the problem which was not getting any better. He said he was concerned about the position because his company's share of the takings was going down. He said that the problem was eventually solved because Putt Putt golf course in Brisbane were unable to

use some machines and sent them to his course. Additionally,

four machines arrived from the Canberra Putt Putt course with the result that eight machines arrived at his site to be installed. He agreed that this was a Godsend and also with a question from

counsel for the respondent that he had not expected that to

He agreed that he had told Mr. Willmott that he would have to take away eight machines because the company was installing its own. He was unsure when this happened but agreed that there had

He agreed that after the applicants had taken over the run they were not rotating the machines often enough with the result that some of the games were becoming less interesting to

He said that there had not been any discussion with either Mr. Finnemore or Mr. Hickey as to how long machines would be kept on the premises. There was no period agreed upon. The only terms of the agreement concerned the need to keep them up toa

In re-examination Mr. Norton said that at the time he asked the applicants to remove the machines he had received firm instructions from his head office that the company's machines were to be installed and that eventually the company would own

all their own machines on the site. His evidence continued:-

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"After you had that direction, did you say anything to Mr. Hickey about that? --- Yes.

Upon hearing Mr. Norton's answer to the last question counsel for the respondent said that he wished leave to cross-examine about the last answer. Counsel for the applicants continued with his re-examination. Ido not refer to the detail of the questions asked but they concerned the nature of the maintenance that needed doing, the problems encountered by the applicants after they had taken over the business and other similar matters. At one stage Mr. Norton said that the only change that came about after the applicants took over was that "one supplier had the knowledge to fix the problem, the other one did not." The one

I gave counsel for the respondent leave to cross-examine on

the matter raised by him. That cross-examination was as

"You told his Honour earlier that the question of

• the time or period for which the Hickey machines . would be allowed to stay on your premises was not discussed between you and the Hickeys. Do you

I will put it another way. You told his Honour there was no time limit discussed between you and the Hickeys concerning the siting of the

You have since said, as I understand your evidence, that you told Mr. Hickey at some stage

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that he would have to remove all of his machines from your premises? --- No. You never said that, did you? ---No."

I confess that it is difficult to reconcile what Mr. Norton said in his cross-examination with what he had said earlier in re-examination. But Mr. Norton seemed to have difficulty in understanding some questions. On a number of occasions he asked for questions to be repeated or rephrased. My observation of him was that he is a slow and ponderous man who sometimes does not understand what is put to him. Those considerations would suggest to me that the answers given in re-examination were given under a misapprehension. He had said nothing of the kind in his evidence in chief. The evidence that I think I should accept is that given in the later cross-examination to which I have

Even if I had some reservation about adopting that course, I would be reluctant to accept at its face value Mr. Norton's earlier answers that he had told Mr. Hickey that eventually the company would own all the machines on the site. That is because the acceptance of such evidence would tend to establish fraud on Mr. Hickey's part. That is, of course, a most serious allegation and although the standard of proof is upon the balance of probabilities, I have to bear very much in mind the seriousness of the allegation which is made. There is no other evidence of

it, and, in the light of Mr. Norton's further cross-examination,

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it would be quite unsafe to find fraud established on the basis

only of Mr. Norton's answers given in re-examination.

In reaching my conclusion I have taken into account the conflict in the evidence which there is about whether the applicants were introduced to Mr. Norton prior to the signing of the, contract. Mr. Hickey is clear that they were introduced to Mr. Norton as a prospective purchaser. Mr. Norton agrees that they were introduced, but says that he was told that they would be clearing the machines for the time being. He did not take them to be prospective purchasers and was surprised when he found the yellow cards on the machines after the sale. The applicants say that they were not introduced to Mr. Norton, but that Mr. Hickey did tell them that he would introduce them, not as prospective purchasers, but as people who would be temporarily clearing the machines. The evidence I accept is that of Mr. Norton. His evidence is in accordance with what the applicants expected to happen, except for the fact that according to then, Mr. Norton was not present at the time of their visit. I think their recollection is erroneous and that they were introduced, but not as prospective purchasers. It follows that Mr. Hickey's

If there were more evidence to support the applicants' case on fraud, I think that this finding would tend to strengthen it. But there is no other evidence which, in my opinion, establishes

a case in fraud and the finding I have made is not sufficient, of

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itself, to establish it. Furthermore, as Mr. Hickey himself said, there was nothing to stop the applicants seeing Mr. Norton independently and making their own enquiries. It would have been foolish of Mr. Hickey to act upon the basis that this was

The evidence given by Mr. Willmott that Mr. Hickey told him that he could expect to be able to site a further four machines at Putt Putt because the Putt Putt machines were not in good order ought not, I think, be accepted. The evidence is denied by

Mr. Hickey. There is no objective evidence which points to one version or the other being correct. The probabilities tend the other way because Mr. Norton's evidence inferentially makes it clear that there was no prospect of the four sites being regained by the respondent or any purchaser. More importantly, Mrs. Willmott gave no evidence about this matter at ail. She did not corroborate her husband in relation to it and she was not asked about it either in her evidence in chief or in cross-examination;

yet it plainly appears from Mr. Willmott's evidence that she was

present during the relevant conversations. In those

circumstances I reject Mr. Willmott's evidence about this matter.

My acceptance of Mr. Norton's evidence that he did not tell Mr. Hickey that Putt Putt would eventually take over all the sites, my consequent acceptance of Mr. Hickey's evidence on this question and my rejection of Mr. Willmott's evidence concerning

the likelihood of regaining the four lost sites leads to the

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conclusion that the applicant's case based on fraud, at least so far as concerns the representations relied upon in paras. (d) and (e), must fail. The applicants may have believed that the Putt Putt site would continue to be available to them indefinitely, but they were not deliberately misled by Mr. Hickey into thinking that this would be the case. Nor were they led to believe that

they had some prospect of gaining four additional sites.

Is there any room for the view that Mr. Hickey's conduct, although innocent, was nevertheless misleading or deceptive

within the meaning of s. 52 of the Trade Practices Act? This was

not a matter expressly relied upon by counsel for the applicants, but it requires consideration. I have already referred to the fact that the applicants do not allege any express statement by Mr. Hickey as to the length or security of the tenure which the respondent had at the various sites, including Putt Putt. Nothing was said about it except that there was apparently some statement made by Mr. Hickey that a loss of sites was unlikely except to the extent of one or so a year and then from a comparatively unimportant location such as a milk har. It follows that there was no statement made by Mr. Hickey which could be relied upon as misleading or deceptive. Ought I nevertheless infer that he so conducted himself as to lead the applicants to'think that the machines would remain where they were for an indefinite period when in fact that was not the case? If there were clear evidence from Mr. Norton that at the

time of negotiations for the contract the sites were to be taken

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over by Putt Putt itself, I think, notwithstanding that Mr. Norton had not communicated this fact to Mr. Hickey, there may have been a case, based on Mr. Hickey's general conduct, for saying that the applicants were misled into believing that all the machines could remain where they were indefinitely, when that was not the case. But my understanding of Mr. Norton's evidence is that the decision to replace the applicants' machines with Putt Putt machines was made after the applicants took over. The decision was made because of some problem that had arisen in Brisbane and Canberra some time after March 1983. I have earlier referred to Mr. Norton's evidence on this matter. He agreed that it was a Godsend and also that he had not expected it to happen. It follows that Mr. Hickey did not unwittingly mislead the

I therefore reject the applicants' case based on the representations alleged in paras. (d) and (e) in so far as that case depends upon s. 52 of the Trade Practices Act. Sections 53 and 59 of the Act do not provide the applicants with a better case than they had under s. 52. No cause of action in negligent statement can succeed because there is no statement, and there is

Before leaving this part of the case, I should say that I have not overlooked the evidence which the applicants gave concerning what they had been told by Mr. Hickey about the

significance of the registration of the machines. I think it

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was, to say the least, strange that this evidence should emerge for the first time in cross-examination. No representation to

this effect was relied upon, nor was any submission eventually

put based upon the evidence as an independent matter. This may have been because of Mr. Willmott's evidence that he learnt from Mr. Cotterill before the contract was signed that registration did not mean that the sites were secure. That is a sufficient reason for putting the matter aside. I do not say more about it, except that I think that the evidence bears, to a degree, on the

general question of credibility which arises and with which I

The applicants case based upon the representation alleged in para. (a) (supra) should be considered next. There is no issue

that a figure of $750 per week was mentioned by Mr. Hickey. But he says that he said no more than that the turnover or takings had averaged $750 per week during the previous 6 months. There is no contest that that statement was made and was true. However, the applicants say that he said more than this. He represented or warranted that the takings would average $750 per week in the future. The question is whether I should accept the applicants' evidence in this regard rather than that of Mr. Hickey. If I were to accept their evidence, there would bea number of legal questions which would arise for consideration and also a question of whether or not supervening events, including the loss of the Putt Putt sites through no fault of Mr. Hickey,

might not explain the reduction in takings that occurred.

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I confess that I have found the question of whose evidence I should accept not without difficulty. A starting point is to consider the evidence of the parties about the diary and about the exercise book which the applicants deposed to having seen. It may be thought that there could be no question that the book was the diary which was in evidence, but they were both adamant, when shown the diary, that it was not the record which they had

Having reflected on the matter I find that there was no other record apart from the diary and that the diary was shown to the applicants. I think their recollection of some other record is erroneous. Notwithstanding their description of the book as an exercise book, brown or multi-coloured as the case may be, battered or not as Mrs. Willmott says and written in pencil or biro, too much of their evidence is in fact an account of what is in the diary. In broad terms their recollection as to the period covered tends to accord with that for which the diary was kept even though the diary spans a period somewhat longer than the three or four months to which they deposed. The book is a record

of takings, although not of monthly takings. But monthly takings

In a sense the question of whether there was an exercise book as well as the diary is not critical. If the exercise book did exist, it, along with the diary, would have disclosed takings for

only the latter months of the business. It is common ground that

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the diary does accurately record the takings received by the respondent during those months. On the other hand, the issue has r¥elevance because its resolution does bear on the reliability of the recollections of the parties. Nevertheless the fact that the applicants are erroneous in their recollection of the diary is not conclusive on the question of whose evidence is more reliable in relation to what was said about takings and $750 per week. The applicants could be quite correct about the substance of their case in this regard even though they were wrong about their assertion that they had not previously seen the diary and had seen an exercise book. But the fact that I reject their evidence about the diary tends to establish that Mr. Hickey's recollection

Another matter which it is relevant to take into account is the letter of 23 May 1983 written by the applicants to Mr. Hickey. I have earlier set out the text of it. Amongst other things it says, "As it was quite clearly stated to us on a number of occasions by yourselves and Raine & Horne that the business takings averaged $750 per week, weal That statement of what the applicants were told tends to be more in accord with what Mr. Hickey has said than it does with what the applicants have said the position was. To a degree the letter is equivocal and I would not regard it as conclusive, but it does tend to support

the respondent's case rather than the applicants' case.

A matter which has caused me concern is the absence from the

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witness pox of both Mr. Cotterill and Mr. Santilla. It is clear from the evidence of the parties that, at least Mr. Cotterill must have been present during some of the more important discussions leading to the signing of the contract. Raine & Horne, of which he was the manager, was the respondent's agent. That is made clear by clause 26 of the contract earlier referred to. There appears to me to be strong reason for saying that Mr. Cotterill was a witness whom the respondent might reasonably have been expected to have called. No explanation for his absence from the witness box was given. It seems to me that in those circumstances I should take the view that nothing he could have said would have materially assisted the respondent's case. Nevertheless, I must decide the case on the evidence which has

been led, giving weight to the fact that Mr. Cotterill was not

The case is one where no documentary evidence other than the applicants' letter of 23 May 1983 assists, where no independent witness has been called, where one has no satisfactory evidence ef the instructions given by Mr. Hickey to the agents and is thus one where one has to make an assessment of the probabilities based largely on one's observations of the witnesses, the evaluation of their evidence and the inherent probabilities which

Mr. Willmott appeared to me to he very naive, comparatively

uneducated and neither astute nor particularly intelligent. His

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wife is well educated, intelligent and, to a degree, astute but her profession is teaching and I think she plainly lacked business experience. I know nothing about Mr. Hickey's education, but I think he was a very astute man, used to doing business at least at the level of the transaction in question and well able to look after himself. Those assessments of the witnesses do not provide substantial assistance in the resolution

I did not find anything in the demeanour of Mr. Willmott or Mr. Hickey which assists in the resolution of the problen. I thought that each gave his evidence straightforwardly and to the best of his ability. Neither was shaken in cross-examination on any matter material to the general thrust of his evidence. I was impressed by Mrs. Willmott as a witness, but having considered some of the things she has' said and the way in which some of her evidence came out, I have misgivings about the reliability of her

I have earlier mentioned that her evidence in chief commenced one afternoon and continued on the morning of the next day when the matter was listed for hearing. On that day she was taken back over some of the earlier ground and gave answers which were much more forthright and detailed than had been the case during the afternoon of the earlier day. That, of itself, is nota matter upon which I would place great stress. It would not have

been improper for counsel to seek to elicit from her matters

which he thought she had not covered sufficiently. But her evidence did come out in that way and it is a matter to be borne

Then there is her evidence concerning her understanding of the effect of the registration of the machines. She is in conflict with Mr. Willmott, she saying that she continued to believe that registration did give some security of tenure over the sites and he saying that, although he was of that view originally, he learnt the true position from Mr. Cotterill. The evidence about this matter was not led in chief, but emerged only in cross-examination. It was not the subject of any specific

allegation in the particulars furnished by the applicants' solicitor. All in all the evidence, and the way that it emerged, has left me with a feeling of disquiet. If there were some misunderstanding concerning the effect of registration of the machines, it seems to me that it was plain that it was cleared up before the contract was signed. Otherwise the matter would have

been relied upon by the applicants as a separate representation.

I have weighed the various matters I have mentioned and some others as best I can. Some favour the applicants; more, so it seems to me, favour the respondent. On balance I have reached the conclusion that I should prefer Mr. Hickey's evidence on the question of the representation as to takings. Certainly I am not satisfied, even on a balance of probabilities, that the

representation as to takings was as alleged by the applicants.

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I take the same view in relation to the representation that the takings had never fallen below $500. - I should add that if such a representation had been made, it would not have had significance for the outcome of the case because the figures in the diary, which are accepted by the applicants as accurate, disclosed that except in the last week or so the takings did in

It follows that I reject the applicants' case in so far as it

is based upon the representations set out in paras. (a) and (b)

The next representation was that the business operation would take no more than one and a half days' per week. I am satisfied that a representation to this effect was made, but I am not satisfied that it was false. The evidence of the Hickeys establishes that that was the time which the operation of the business occupied then. I think the trouble was that Mr. Willmott was inexperienced in what had to be done. He was not familiar with video games at all. Additionally he seems to have neglected to visit the various sites as often as he should. Certainly that is the effect of Mr. Norton's evidence which I accept. I therefore would dismiss the application insofar as it is based upon any cause of action dependent upon the representation alleged in para. (c) above.

I have already dealt with the representations alleged in

paras. (d) and (e). That alleged in para. (f) is that the Machines were current models. It is convenient to deal at the same time with the representation alleged in para. (g) that the games in the. machines were current games. I find that these representations were made but were not false. The evidence of Mr. Norton and of Mr. Finnemore corroborates that of Mr. Hickey. According to Mr. Finnemore, to whose evidence I shall refer in more detail ina moment, Mr. Hickey spent $9,000 in upgrading machines during the sixteen months or so which he operated the business. I see no reason not to accept this evidence. Furthermore, Mr. Norton had no complaint about the currency of the machines or the games at Putt Putt. It is obvious from the tenor of his evidence that he would have insisted on current machines and games being on the site. If any was out of date, Mr. Hickey would have been told to remove it. Mr. Hickey's evidence was that only five of the 30 games purchased by him from Mr. Finnemore remained when he sold the business to the applicants. One of these was Space Invaders which has apparently had continued popularity over many years. I therefore reject the case of the applicants insofar as it is based upon

representations contained in paras. (f) and (g) above.

That leaves their case based on the representation alleged in para. (h), namely that the 30 machines to be allocated to the applicants had a current value of $60,000. I find that there was a representation that the machines were worth $2,000 each. Mr.

Hickey denied making any statement to the applicants along these

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lines, but he agreed that he had told the agents that the business was worth the $75,000 he was asking for it. There is no direct evidence that the agents passed this on to the applicants but I think I should infer that they did. I further think that I should accept Mr. Willmott's evidence that he was told that the machines were worth $2,000 each. I do so, not unmindful of the

absence of any evidence about this matter from Mrs. Willmott.

In support of their case that the representation was false the applicants called a Mr. Tester. Mr. Tester is an amusement machine operator in Sydney. He has been the chairman of the New South Wales Amusement Machine Operators' Association for 6 years. He is also a director of the National Amusement Machine Operators' Association. He has had 40 years experience in the amusement machine industry. He said that he was experienced in operating machines, repairing machines and "consultancy." By consultancy I take him to mean that he was experienced in advising others about aspects of carrying on an amusement machine business. Mr. Tester said that the New South Wales Association represented 80 per cent of operators in New South Wales. The National Association had 1500 members. He said that the Association was in communication with all other states.

Conventions were held and information was exchanged. ~

Mr. Tester -said that the price range for a new machine in March 1983 was about $1,000. That was for a sit-down 14 inch

screen game. For a similar upright machine the price was $1,200

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or $1,300. 'The prices he mentioned were wholesale and not retail prices, that is they were prices that would be paid as between

dealers. Prices for 20 inch machines were somewhat higher.

Mr. Tester was shown a document which is in evidence. It had four columns, the first being, "Machine," the second "Description," the third "Age as at 1 March 1983" and the fourth, "$s" which was intended to represent the value of the machines. The machines were those listed in the schedule to the agreement for sale. Their descriptions indicated whether they were sit-down or upright machines and whether the machines were 14 inch or 20 inch. The age was shown for a number of them but not for all. The ages varied from 6 months to 4 years, that being the age of the Space Invader game. Most were said to be 1 to 2 years old. In Mr. Tester's opinion no machine was worth as much as $1,000, let alone $2,000. Some were valued at figures as low as $350, others at $450, $500 and $600. The most valuable machines were "Mr. Du" and "Galagar 234" which were said to be worth $700. The total value of the 30 'machines at 1 March 1983 was $13,100.

If this evidence were accepted, it would indicate that the applicants had paid $60,000 for machines worth $13,100. Mr. Tester was cross-examined. He admitted that he had not seen any of the machines in question and that he had never carried on

business in the Gold Coast area. He also agreed that the sites

where he operated were, for the most part, not tourist sites, but

arcade sites in various suburbs of Sydney. I found some of his evidence difficult to follow because I do not think he himself drew the same distinction at all points of his evidence between what he meant by wholesale prices and retail prices. Nevertheless, I accept that Mr. Tester gave his evidence honestly

and did his best to give the Court assistance on the question of

The respondent called Mr. Finnemore to counter Mr. Tester's evidence. Mr. Finnemore is a comparatively young man who has a close knowledge of the amusement machine industry in the Gold Coast area. He sold a video game machine business to the respondent in November 1981. Forty machines were sold; the price was $90,000. In September 1981 he sold 10 machines to Lepp Enterprises for $25,300. An invoice for the sale was produced. The machine sold to the respondent were sold on site. The majority of the machines had been purchased within a year or 18 months prior to the sale to the respondent. Some had older cabinets which had been refurbished inside with new electronic

After the sale to the respondent, Mr. Finnemore's firm serviced the respondent's machines and upgraded some of them. Mr. Finnemore described the upgrading as continuous and said that a little over $9,000 had been spent on it during the period the respondent had the business. Mr. Finnemore was asked whether he

was familiar with prices of machines comparable to those sold to

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the respondent, but at March 1983 rather than November 1981. He said that he was and that the value of the machines was $2,000 to

He agreed that Mr. Willmott had rung him prior to buying the machines from the respondent. Mr. Willmott asked about service but he did not remember telling Mr. Willmott anything about the value of the machines. There was some discussion about takings,

Mr. Finnemore was shown Mr. Tester's valuation and said that he did not agree with Mr. Tester's figures. He said that he thought they were well below the market value. He repeated that he thought the machines were worth $2,000 to $2,300 each on

Mr. Finnemore agreed that he knew the Hickeys but more so Mr. Hickey junior than Mr. Hickey senior. In cross-examination he remembered that Mr. Willmott had asked him whether the respondents asking price, that is $75,000, was a reasonable price. He agreed that he had said that he would not disagree with the price. It was then suggested to him that he had not really expressed any opinion -as to the price. His evidence then became somewhat difficult to follow but eventually he said that he remembered saying to Mr. Willmott that a price of $75,000 was

Mr. Finnemore deposed to the fact that there had been a substantial falling off in demand for video games during 1983.

People had become disinterested in them, perhaps because of the

increased availability of home videos and perhaps because of over familiarity with them. By 1984 Mr. Finnemore had all but rid himself of video games and was operating juke box videos instead.

He said that there had been no sign of a revival in the market

The evidence of Mr. Tester and Mr. Finnemore is in substantial conflict. I bear in mind that Mr. Finnemore was known to the Hickeys and may have had a sympathy for them. Nevertheless he is vastly experienced in the video machine industry in the Gold Coast and I feel persuaded to accept his evidence. Mr. Tester is no doubt very experienced in the industry in Sydney. But he did not see the machines in question and he has no real knowledge of the industry in the Gold Coast

Even if I were to accept Mr. Tester's evidence which I do not, there stands inthe path of the applicants a difficulty which I do not think they could surmount. It is clear from the evidence of both Mr. -Willmott and Mr. Finnemore that Mr. Willmott sought Mr. Finnemore's advice on the question of the value of the

machines. Mr. Finnemore confirmed that the price being asked was

reasonable. It was Mr. Finnemore's statement which in my opinion

led the applicants to purchase the machines. Thus, as regards

value, no statement made by Mr. Hickey induced the contract. It follows that the applicants' case based on the representation as

to value alleged in para. (h) of the particulars earlier set out

In the resuit I have reached the conclusion that the applicants' case must be dismissed partly because some representations upon which they relied were not established to have been made and partly because other representations which were made were not false. My conclusion in that regard makes it unnecessary to deal with a number of submissions made on behalf of the respondent, including a submission based on clause 12 of

the agreement for sale; see page 9 (supra). In relation to that

submission I would say in passing, however, that I would not have thought the clause could have operated to overcome the provisions

of the Trade Practices Act nor a cause of action based on fraud.

The failure of the applicants' claim means that there is no defence to the respondent's cross-claim. The respondent is entitled to judgment on that claim in the sum of $30,000, that

being the balance of purchase money which remains unpaid.

The respondent makes a claim for interest. This is nota case in which it is necessary to consider at length the power of this Court to award interest before the coming into force of s. 51A of the Federal Court of Australia Act 1976. That is because

this case falls within a narrow class of cases in which interest

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was always allowed by way of damages at common "law. The principal authority is Cook v. Fowler (1874) L.R. 7 H.L. 27 which decided that where a defendant promised to pay a sum certain ona certain day with interest at a fixed rate until then, damages would be awarded for non-payment of the sum on the due date. Reference should also be made to McGregor on Damages, 14th edition, para. 451, p. 331. In ordinary circumstances the measure of damages will be the amount of interest which would have been earned between the due date and the date of judgment. The agreement itself entitles the respondent to interest down to

Accordingly, the respondent is entitled to interest at the rate of 10 per cent per annum on the sum of $30,000 from 11 March 1983, when the transaction was settled, down to the date of

Before concluding I wish to say that I think that this is a most unfortunate case. The applicants entered into a most unwise transaction which may well have quite disastrous financial consequences for them. I am afraid, however, that they have no one to blame but themselves. They were naive in the extreme. They made no proper enquiries to ascertain what the future of the video game business was likely to be nor what security they could expect to have over the various sites where the games were placed. They said that they had consulted a solicitor, but, of

course, I do not know what his retainer was nor what advice he

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gave them. I am afraid the indications are that the applicants succumbed to the lure of easy money - money which would be paid in cash for one and a half days work per week. This led them to shut their eyes to reality and to overlook taking even the most

Undoubtedly the loss of the Putt Putt sites was a major factor in the run of events which led to the substantial drop in takings that occurred. But this was not fully felt until about September 1983. The business had been taken over in March. I think the fall-off in the period up to September is explained by the general deterioration in the video game business, the fact that the winter months, apart from school holidays, were not as profitable as the summer months and Mr. Willmott's inexperience and perhaps, indolence, in maintaining and servicing the machines. Whether those or other reasons accounted for the drop in takings which occurred after the applicants took over the business, I am satisfied that the failure of the business to live up to the applicants' expectations was not due to any conduct of the respondent for which the applicants have legal redress against it. TheeS plight is due to their inexperience and their

neglect to take proper steps to protect themselves.

In the result the application will be dismissed. There will be judgment for the respondent on its cross-claim in the sum of $36,402.74. The applicants must pay the respondent's costs of

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{ certify that ¢hie-amctthe S'7 preceding pages are a true copy cf the reasons for judgment herein of Tha Honourable