Auyeung v Chan

The Court of Appeal of New South Wales heard an appeal concerning a dispute arising from the lease of premises for a restaurant. The plaintiff, Mr. Auyeung, alleged that the defendants, Mr. and Mrs. Chan, engaged in misleading and deceptive conduct in contravention of the *Fair Trading Act 1987* (NSW) by failing to disclose that the air-conditioning system in the leased premises was faulty. This alleged misrepresentation led to a downturn in the plaintiff's business, for which he sought damages.

The central legal issues before the Court of Appeal were whether the defendants' conduct constituted misleading or deceptive conduct under the *Fair Trading Act*, and if so, whether this conduct caused the plaintiff's loss. The court was required to determine the causal link between the faulty air-conditioning and the plaintiff's alleged financial detriment.

The Court of Appeal found that the defendants had indeed engaged in misleading and deceptive conduct. Their Honours reasoned that the failure to disclose the significant defect in the air-conditioning system, which was essential for the operation of a restaurant, amounted to a misrepresentation by omission. The court concluded that this conduct caused the plaintiff's loss, as the faulty system directly impacted the restaurant's ability to operate effectively and attract customers, leading to the downturn in business.

Consequently, the Court of Appeal allowed the appeal, setting aside the original verdict and judgment. In its place, the court ordered a verdict for the plaintiff in the sum of $270,000, effective from 26 February 1998. The defendants were also ordered to pay the plaintiff's costs of the hearing at first instance and one-half of the plaintiff's costs of the appeal.