Alex Ciobo & Sons Pty Ltd v Yatdale Pty Ltd

[1989] FCA 569

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IN THE FEDERAL COURT OF AUSTRALIA	1
QUEENSLAND DISTRICT REGISTRY	1 QLD G79 of 1989
GENERAL DIVISION	1

BETWEEN: ALEX CIOBO AND SONS PTY LTD

Applicant

AND: YATDALE PTY LTD

Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:  PINCUS J .

DATE OF ORDER:	7 SEPTEMBER
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1.   the injunction granted on 14 August 1989 and extended on 21 August 1989 be discharged;

2.    the application for an interlocutory injunction be dismissed;

3.   the applicant pay the respondent's costs of and incidental to the application for injunctive relief, including the costs of the hearing on 21 August and today's costs, to be taxed;

October 1989;

4.    taxation take place no earlier than the making of a general order for costs in the proceedings, unless the Court otherwise orders;

THE COURT DIRECTS THAT:

5.    the applicant either deliver an amended statement of claim or deliver particulars of the present statement of claim on or before 21 September 1989;

THE COURT ORDERS THAT:

6.    the respondent deliver its defence on or before 19

7.     discovery take place on or before 31 0ckober 1989;

8.    inspection take place by 7 November 1989;

9.    the matter be listed for further mention on Friday, 10 November 1989 at 9.30 a.m.

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

IN THE FEDERAL COURT OF AUSTRALIA	1
QUEENSLAND DISTRICT REGISTRY	) QLD G79 of 1989
GENERAL DIVISION	)

BETWEEN: ALEX CIOBO AND SONS PTY LTD

Applicant

AND: YATDALE PTY LTD

Respondent

PINCUS J. 7 SEPTEMBER 1989

EX TEMPORE REASONS FOR JUDGMENT

This is an application for a Mareva injunction. On 14 August 1989, such an injunction was granted, expiring on 21 August, on which date the injunction was extended so as to expire at 4 p.m. today. The applicant has appeared, by counsel (Mr D.J.S. Jackson), to argue that, perhaps with variations, it should be extended until trial.

The applicant's claim relates to a contract made on 5 September 1988 for the sale by the respondent to the applicant of eight townhouses at Spring Hill, Brisbane for a price of $2.04 million. The applicant's principal complaint is that it was induced to enter into the contract by a misleading statement; it says it is entitled to damages under the Trade Practices Act 1974. In addition, there is a small claim for damages for breach of contract, unconnected with the misleading conduct claim.

According to the applicant's case, the misleading statement which induced it to enter into the contract was to the effect that one of the townhouses would be completed for use as a display unit, to enable the applicant to pre-sell the townhouses. The making of that statement is disputed by the respondent. The applicant further alleges that, when on 12 May 1989 townhouse number 5 was being prepared for display, the respondent declined to allow its use for that purpose unless the applicant settled the contract for sale early.

The applicant declining to vary the contract for sale, the intended display unit was not made available, and the applicant says it lost sales as a result.

It is rather puzzling, whether or not use of a display unit was promised, that the respondent declined to allow that to occur. It may be that the respondent took the stance that it did for no reason other than to force the applicant to pay the price ahead of time. However unusual it may be not to permit the use of

the display units, I am not concerned with what might be called	the commercial morality or fairness of the respondent's position,
but merely its legality.
It appears to me that there is a prima facie case that a misleading statement was made along the lines alleged by the applicant. Mr OIShea, for the respondent, pointed out that the statement of claim which has been delivered does not make it clear in what respect the statement was misleading, and I agree with that criticism of the pleading. Nevertheless, it appears to me that the affidavits make a prima facie case; whether it is likely to be held that the applicant's version or the respondent's version of the facts is correct is, of course, something which cannot presently be predicted.
Mr OVShea's principal argument was that, on orthodox principles, the applicant was unlikely to recover any damages under s.52 of the Trade Practices Act and that submission makes some discussion of the figures necessary. The statement of claim says that the applicant borrowed money to fund the purchase and that it has lost interest on the money borrowed, plus $375,000 "being the diminution in value of the townhouses consequent upon the refusal by the Respondent to permit access to a display unit and the preselling of the townhouses ..." The figure of $375,000 is arrived at by comparing the value "prior to 13 July" of $3.05 million with the "current value" of $2.675 million. The significance of the date 13 July appears to be that on 12 July, settlement took place and, of course, the units became readily available for display.
Some evidence is put before me to justify these figures and it is said that the present value (four weeks after delivery of the statement of claim) of the unit is even lower. Hr Richard Ciobo's affidavit, filed in Court today, says that the prices of the townhouses presently total $2.595 million.

Mr OIShears argument is that if the figures given by the

applicant are right, then the misleading statement has caused no

I

loss. ~t appears that the adjusted contract price was a little over the initial sum of $2.04 million, but nevertheless, there is a handsome gap - over half a million dollars - between that price and the current price of the units.

I am prepared to take judicial notice of the fact that there has been a considerable slowing of sales of residential real estate in Brisbane. It seems to me likely that, if the applicant had been able to get the townhouses on the market two months earlier, its chances of selling them for a good price would have been enhanced and in that sense the respondent's refusal of access to the display unit probably caused the applicant loss. But Mr OrShea says that is of no real consequence, because the prima facie measure of damages in a case of this sort is not the contractual measure, but the difference between the value of what was purchased and the price paid for it.

It is true, as is contended for the applicant, that the
Court will not necessarily use the tortious measure. In my

opinion, however, in the practical operation of the Trade

Practices Act, it appears to be quite unusual to depart from the	tortious measure and give what might be called reliance damages.
It may be that, in the end, the units are sold for less than the amount expended to acquire them, including in the latter sum the interest charges against the applicant, but there is an onus on an applicant in these circumstances to produce some evidence that it is likely to obtain an award of damages. Over the objection of the respondent, I let in rather informal evidence of value, partly because I am doubtful whethe; the specialist expertise of a qualified valuer will necessarily give a more accurate prediction of prices likely to be obtained than the day to day experience of a real estate agent working in the market. The estimate of $2.595 million recently placed on the total unit block by L.J. Hooker Toowong and referred to above would, if attained within a reasonable time, plainly be sufficient to reimburse the applicant for its total outlay.
I must take into account against the applicant the fact (emphasised by Mr Ofshea) that in essence its claim depends upon the proposition that values dropped sharply in the period of two months during which, according to the applicant's case, it was wrongly prevented from selling. It is necessary to keep in mind, further, that the applicant's case is, as it concedes, for loss of a chance; it would be unrealistic to assume that, but for the alleged breach of the Trade Practices Act all the units would necessarily have been sold by 13 July 1989 (when they went on the market) or indeed, by now.
As I have mentioned, the applicant also puts forward a much smaller claim for damages for breach of contract. I have
looked at that claim and it is unnecessary to explain that claim in detail; the amount recoverable under it, if the applicant is successful in contract, is not such as to justify a Mareva injunction.

In the end, I have decided the interlocutory application

in favour of the respondent. The injunction granted on 14 August

1989 and extended on 21 August 1989 is discharged. The application for an interlocutory injunction is dismissed. I order that the applicant pay the respondent's costs of and incidental to the application for injunctive relief, including the costs of the hearing on 21 August and today's costs, to be taxed. I will also order that taxation take place no earlier than the making of a general order for costs in the proceedings, unless the Court otherwise orders.

I direct that the applicant either deliver an amended statement of claim or deliver particulars of the present statement of claim on or before 21 September 1989. I order that the respondent deliver its defence on or before 19 October 1989; discovery take place on or before 31 October 1989; inspection by 7 November.

It can come back before me for review on Friday, 10

November 1989 at 9.30 a.m. t -- .~fy that this and the Five preceding

-s are a t r ~ ~ a co~y of t l ie reasons for

,:13lrcni herein of His I--'

Mr. Justice Pincus

Dated 7