Allen v G and F Steel Constructions Pty Ltd

[1999] QCA 18

IN THE COURT OF APPEAL [1999] QCA 018

SUPREME COURT OF QUEENSLAND

Appeal No. 10370 of 1998

Brisbane

[Allen v G&F Steel Constructions Pty Ltd]

BETWEEN:

DONALD WILLIAM ALLEN

(Second Defendant) Applicant

AND:

G&F STEEL CONSTRUCTIONS PTY LTD

(Plaintiff)	Respondent
McMurdo P Thomas JA Mackenzie J

Judgment delivered 9 February 1999.

Judgment of the Court.

APPLICATION FOR LEAVE TO APPEAL REFUSED, WITH COSTS AGAINST THE

APPLICANT.

CATCHWORDS:	APPEALS - whether leave to appeal should be granted - Trade Practices - misleading and deceptive conduct - assessment of damages under ss52, 82 and 87 Trade Practices Act 1974 (Cth) not necessarily limited to usual method of assessment for damages for deceit - no sufficient reason to grant leave.
Counsel:	Mr M.P. Amerena for the applicant. Mr R. Morgan for the respondent.
Solicitors:	Hyland Hinckfuss for the applicant. McKays for the respondent.
Hearing Date:	2 February 1999

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 10370 of 1998

Brisbane

Before McMurdo P
Thomas JA
Mackenzie J

[Allen v G&F Steel Constructions Pty Ltd]

BETWEEN:

DONALD WILLIAM ALLEN

(Second Defendant) Applicant

AND:

G&F STEEL CONSTRUCTIONS PTY LTD

(Plaintiff) Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 9 February 1999

1. This is an application for leave to appeal under s118(3) of the District Court Act 1967.

   Judgment was given against the applicant Mr Allen and his company (Erford Pty Ltd) for $35,000

   damages and interest which brought the overall judgment to $49,000.

2. At trial her Honour found that Erford had breached a contract made with Sandoc Pty Ltd

   for the benefit of a third party, namely the plaintiff/respondent. Her Honour also found that Erford

   and the applicant had contravened s52 of the Trade Practices Act 1974 (Cth). Her Honour found

   it unnecessary to decide the respondent's other claims for rectification of the primary contract between Sandoc as vendor and Erford as purchaser of the land on which it was intended that the

   respondent would perform some building work for the applicant and Erford, or the respondent's

   claim of collateral contract. The contract contained clauses which it might be thought were intended

   to ensure that such a contract would be forthcoming in favour of the respondent.

3. In the event the applicant and Erford failed to provide any proper opportunity for the

   respondent to tender, and instead awarded the contract to another company with whom the

   applicant had some association.

4. Her Honour proceeded on the basis that the respondent had succeeded in establishing both

   breach of contract and breach of s52 of the Trade Practices Act, and that it had elected in favour

   of the Trade Practices Act remedy of damages.

5. There was conflicting evidence concerning the relevant dealings, and on material issues the

   learned trial judge accepted evidence of the respondent's witnesses and rejected that of the

   applicant Mr Allen. In our view the evidence was capable of supporting a finding of misleading

   conduct in a number of ways. One of these is that the applicant made a promise as to future

   conduct that he never intended to keep - that is that the company would grant the contract to the

   plaintiff. The subsequent conduct of the respondent and Erford suggests that neither of them ever

   seriously intended to do so.

6. It seems to be arguable whether the contract, and in particular clause 3(v), was binding.

   The construction contended for by the respondent (which would give Erford a limited discretion

   in relation to certain aspects concerning the work that was to be done) seems preferable to one that

   would confer an open-ended right upon Erford to decide whether to award or refuse to award a

   building contract to the respondent. The submission of the applicant is indeed that it was an open- ended promise leaving the applicant with the sole discretion whether to honour the promise or not.

   If that is correct it would be invalid (Placer Developments Ltd v The Commonwealth (1969)

   121 CLR 353, 356). Evidence demonstrates that the parties had orally agreed on what was to

   happen, namely that the sale was to proceed at the agreed price and that the respondent was,

   subject to certain specified conditions, to be awarded the building contract at a specified price.

   Highly complex issues follow the submission of the applicant based on the construction which it

   advances, as clause 3 was an integral part of the fixation of the price, and if that clause is invalid,

   severance would be difficult to effect. If one proceeds along this track, it becomes increasingly

   difficult for the applicant to avoid the finding that has been made of misleading or deceptive conduct.

7. Conversely, if the respondent's construction is correct so that the contract was binding, and

   was for the benefit of the respondent, he would not be entitled to judgment against the applicant for

   damages for breach of the contract because the applicant was not a party to that contract. The

   findings of deceptive conduct would however remain in relation to his conduct that induced the

   contract.

8. Further submissions were advanced that the damages pursuant to the remedy under the

   Trade Practices Act were erroneously assessed on the footing of breach of warranty rather than

   on the footing of a tort, and that the quantum was in error because her Honour took into account

   gross profits rather than nett profits. So far as the first point is concerned, assessments of damages

   under ss52, 82 and 87 of the Trade Practices Act are not limited to the usual method of

   assessment for damages for deceit (Marks v GIO Australia Holdings Limited (1998) 73 ALJR

   12, 21), although such assessments frequently are made on that basis. In the present unusual circumstances we are not prepared to assume that where a contract is made for the benefit of a third

   party such as the respondent, where the contract is induced by the applicant's misleading conduct,

   where the applicant is involved in the conduct which breaches the contract although is not the actual

   party which breaches it, it is necessarily inappropriate that the damages assessed for the applicant's

   misleading conduct be assessed along the lines of damages for breach of contract (compare Marks

   above; Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Limited (1993)

   42 FCR 470, 506; Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2)

   (1987) 16 FCR 410, 420-421). It may also be noted that such an assessment would plainly be

   appropriate in respect of the claim for breach of collateral contract which was open to be found but

   which her Honour found unnecessary to pursue.

9. The question then arises whether further litigation should now be permitted to ensue in order

   to cover various possible alternatives upon which the respondent might justify a similar result.

10. It is true that an error seems to have been made by her Honour in taking into account gross

    profits rather than nett profits, but the figure assessed is consistent with having used nett profits

    ($42,016) as the starting point. The parties at trial have indicated their assent to the proposition that

    had the construction of the building units been awarded to another builder he would have made a

    gross profit of $65,000 or a nett profit of $42,016. The contingencies justifying a discount of that

    conceded sum are not great, consisting only of the chance that the respondent might not satisfy the

    conditions prescribed for being awarded the contract, and the chance of the profit being less than

    the parties had estimated. The latter factor must be very slightly regarded, and one might think that

    it would be offset by the possibility of a greater profit being realised by the respondent. In view of

    these factors, although some error may be perceived in her Honour's reasoning, the quantum actually assessed does not appear to be unreasonable or likely to be significantly varied in the event

    of an appeal.

11. Looking at the matter overall, there was a three day trial which raised many arguable issues

    on which different minds could perhaps take different views. The parties ventilated their respective

    positions, and the evidence supports the view that the applicant offered inducements or made

    promises which he did not intend to carry out and which were not carried out. The judgment for

    $49,000 which includes $14,000 for interest is not necessarily suggestive of error. Overall the

    decision does not appear manifestly unfair or incorrect.

12. At best, there is an arguable appeal on complicated factual and legal matters in a commercial

    matter involving damages of $35,000. We are not satisfied that the present matter is an appropriate

    case for the grant of leave to appeal and are not prepared to protract the dispute further. Leave

    should be refused, with costs against the applicant.