Baillieu Knight Frank (Gold Coast) Pty Ltd v Susan Pender Jewellery Pty Ltd

[1996] FCA 969

CATCHWORDS

TRADE PRACTICES  - damages - whether losses sustained by reason of conduct in breach of Trade Practices Act 1974 (Cth), s.52 - misrepresentation that a trader would be sole retailer of goods in shopping centre - circumstances indicating representation was false prior to event triggering complaint - whether chain of causation broken - question of fact for the trial Judge.

PRACTICE AND PROCEDURE - interest pursuant to Federal Court of Australia Act 1976 (Cth), s 51A - whether discretion of trial Judge miscarried.

Trade Practices Act, 1974 (Cth), ss 52, 82
Federal Court of Australia Act, 1976 (Cth), s 51A

Gould v Vaggelas (1985) 157 CLR 215
Minister for Immigration, Local Government and Ethnic Affairs v Hamsher (1992) 35 FCR 359
March v E & M H Stramare Pty Ltd (1991) 171 CLR 506
Wardley Australia Limited v State of Western Australia (1992) 175 CLR 514

BAILLIEU KNIGHT FRANK (GOLD COAST) PTY LTD v SUSAN PENDER JEWELLERY PTY LTD
QG 147 OF 1996

Sackville, Kiefel, Finn, JJ
Brisbane
7 November, 1996

IN THE FEDERAL COURT OF AUSTRALIA )
QUEENSLAND DISTRICT REGISTRY     )    No. QG 147 of 1996
GENERAL DIVISION                 )

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

BAILLIEU KNIGHT FRANK (GOLD COAST) PTY LTD

Appellant

AND:

SUSAN PENDER JEWELLERY PTY LTD

Respondent

CORAM:    SACKVILLE, KIEFEL, FINN, JJ.
PLACE:    BRISBANE
DATE:     7 NOVEMBER, 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The appeal be dismissed.

1. The appellant pay the respondent's costs of the appeal.

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

IN THE FEDERAL COURT OF AUSTRALIA )
QUEENSLAND DISTRICT REGISTRY     )    No. QG 147 of 1996
GENERAL DIVISION                 )

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

BAILLIEU KNIGHT FRANK (GOLD COAST) PTY LTD

Appellant

AND:

SUSAN PENDER JEWELLERY PTY LTD

Respondent

CORAM:    SACKVILLE, KIEFEL, FINN, JJ.
PLACE:    BRISBANE
DATE:     7 NOVEMBER, 1996

REASONS FOR JUDGMENT

THE COURT:
Introduction
This is an appeal from a judgment of a Judge of this Court, awarding damages and interest to the respondent, Susan Pender Jewellery Pty Ltd, against the appellant. 

The trial Judge found that the appellant, a real estate agent, had engaged in misleading and deceptive conduct, in contravention of s.52 of the Trade Practices Act 1974 (Cth) ("TP Act") by making representations to Ms Susan Pender, a director of the respondent, concerning the Marina Mirage Gold Coast Retail Shopping Centre ("the Centre"). His Honour also found that the respondent had suffered loss and damage by

reason of the appellant's conduct, and was therefore entitled to damages under s.82 of the TP Act. He assessed damages at $56,800, and awarded a further $51,000 by way of interest, pursuant to s.51A of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act"), making a total award of $107,800. The appeal is limited to the question of damages and interest.

Factual Background
In 1988, the respondent conducted a business in Melbourne, involving the design, manufacture and import of high quality costume jewellery.  The respondent sold the jewellery, principally by wholesale, from its premises in Melbourne, and had no retail outlet.  Ms Pender, as his Honour found, was the "controlling mind" of the respondent.  The litigation arose out of representations made in March and April 1988 on behalf of the appellant, in the course of negotiations with Ms Pender relating to the proposed sub-sub-lease of a shop in the Centre.

The sub-lessor of the Centre was ANZ Executors and Trustee Company Ltd ("ANZ").  ANZ empowered Mirage (Operations) Pty Ltd ("Operations"), to grant and obtain the grant of sub-sub-leases of shops within the Centre.  Mirage (Management) Pty Ltd ("Management") acted with Operations in procuring the services of the appellant and Max Christmas Pty Ltd as real estate agents for this purpose.  Operations and Management were members of the Qintex Group of companies, of which Mr Christopher Skase was a director.

It should be noted that the respondent ultimately instituted proceedings not only against the appellant, but against ANZ, Operations and Management.  However, the proceedings against ANZ, Operations and Management were settled before the trial.  Accordingly, it was only the claim against the appellant that proceeded.  It was therefore not necessary for the trial Judge to consider whether ANZ, Operations and Management bore any responsibility for the appellant's conduct.

By March 1988, the appellant was experiencing difficulties in obtaining suitable tenants for the Centre.  Mr Clyde-Smith, an employee of the appellant, contacted Ms Pender in Melbourne by telephone and invited her to inspect the Centre.  Ms Pender did so on 8 April 1988.  The trial Judge found that, in the course of a telephone conversation of 30 March 1988 and Ms Pender's visit to the Centre, Mr Clyde-Smith made the following representations:

•that having investigated the matter, they had determined that the respondent was the only one in Australia in the jewellery design field who came up to their standards; and

•that there was one space for a retailer of high class fashion/costume jewellery in the Centre and that they wanted the respondent to take that space.

By letter dated 22 April 1988, the appellant offered Ms Pender a five year lease of Shop 157 in the Centre.  The offer included a clause permitting Ms Pender to rescind the lease after the first year, by giving two months' notice of her intention to do so.  That clause was inserted into the offer at Ms Pender's insistence, because of her concern about expanding her business to include a retail outlet.  Ms Pender accepted the offer by letter dated 18 May 1988, in which she nominated the respondent as the tenant.

The fitting-out of Shop 157 commenced in late May 1988.  On 4 July 1988, a deed of agreement to lease was sent to Ms Pender.  The deed nominated the respondent as a party.  However, the lease documentation was never executed.  On 16 July 1988, the respondent commenced to trade in the Centre.

In about August-September 1988, another costume jeweller, Toscana, opened a shop in the Centre, but at a considerable distance from Shop 157.  Ms Pender became aware of Toscana's activities because she was told of them by her manager.  However, she did not actually see Toscana's operations until she visited the Centre in very early December 1988.  We shall return later to Ms Pender's evidence about the effect of Toscana on the respondent's trade in the Centre.

In August 1988, a Mr Shaw wrote to Max Christmas Pty Ltd requesting the opportunity to establish a "High Fashion Costume Jewellery Shop" called "Deneuve", that was to sell other fashion accessories, including watches, belts and bags, and precious jewellery.  On 9 September 1988, Mr Shaw signed an offer to lease Shop 155, which was located opposite the respondent's store.

On 3 October 1988, prior to Deneuve opening, Ms Pender telephoned Mr Clyde-Smith to complain about the fact that there was to be a competitor in the store adjacent to her store.  She stated in that conversation that the respondent would vacate the shop at the end of twelve months, in accordance with the special clause in her then proposed lease.  On 15 November 1988, at about the time Deneuve opened, Ms Pender wrote to the chief executive of Management, complaining that she had gone into the complex on the basis that there would be no other costume jewellers.  She noted that Deneuve bought much of the stock from one of her main suppliers.  On the following day she wrote in similar terms to Mr Skase, stating that if her business was affected by Deneuve she would not hesitate to leave the Centre.

The trial Judge found that during the first 19 weeks of the respondent's trading from Shop 157, the respondent's business sustained a loss of about $200 per week, on sales averaging $3,600 per week.  The arrival of Deneuve had a "drastic effect" on sales, which declined to $2,000 per week.

On 5 December 1988, Ms Pender and her husband (who was also a director of the respondent) indicated to Mr Hunt that they would close down Shop 157 before Christmas.  Some further
discussions took place and, on 8 December 1988, Mr Pender wrote to Mr Hunt of Management as follows:

"However, it is, and always has been, our view that even if Shaw is restricted [in the amount of floor area devoted to costume jewellery], this will not enable Susy to resume viable trading.  The irreversible damage has been to permit Shaw to trade next door to Susy."

Mr Hunt apparently succeeded in persuading Ms Pender to cause the respondent to remain in possession of Shop 157 until the end of January 1989.  From mid-December 1988, the respondent conducted a sale in an endeavour, as his Honour found, to mitigate losses prior to vacating the premises.  During the seven week period of the sale, weekly sales exceeded $4,400, but the gross profit margin declined to 31.6%, compared with the "pre-Deneuve" figure of 51.8%.

On 20 December 1988, the solicitors for the respondent wrote to Mr Hunt rescinding the lease agreement and giving notice that the shop would be vacated at the end of January 1989.  The letter also stated that legal proceedings would be instituted, as they were on 17 August 1989.

The Trial Judge's Reasons
The respondent's amended statement of claim pleaded a large number of representations allegedly made by Mr Clyde-Smith on behalf of the appellant.  Insofar as relevant to this appeal, the pleaded representations were as follows:

"17.In the course of the negotiations, Clyde-Smith orally made the following express representations ("the representations") to Pender:

...

(b)that having investigated the matter they had determined that the Applicant was the only one in Australia in the jewellery design field who came up to their standards;

(c)that there was one space for a retailer of high class fashion/costume jewellery in the Centre and that they wanted the Applicant to take that space;

...

18.By making the express representations specified in sub-paragraphs 17(a) to (c) inclusive, Clyde-Smith impliedly represented that the Applicant would be and would remain the only retailer of fashion/costume jewellery in the Centre."

The trial Judge examined the evidence in depth, before concluding that representations had been made in the terms pleaded in paragraph 17(b) and (c) of the amended statement of claim. His Honour further found that these representations conveyed the implied representation that the respondent would be, and would remain, the only retailer of costume jewellery in the Centre. He held that this representation was with respect to future matters and that the appellant had no reasonable grounds for making it. In accordance with s.51A(1) of the TP Act, the representation was to be "taken to be misleading". His Honour was also satisfied that the representation played an important part in the decision of the respondent to enter into possession of Shop 157. We should add that Mr Cooper did not challenge any of these findings before us.

The trial Judge then considered whether the respondent was entitled to rely upon the representations made to Ms Pender.  He concluded that it was open to the respondent to rely on statements not specifically directed to it, provided that the respondent was, or ought to have been, within the contemplation of Mr Clyde-Smith as somebody who might have acted in reliance upon his (Mr Clyde-Smith's) statements to Ms Pender.  His Honour concluded that it should have been within Mr Clyde-Smith's contemplation that the respondent would act in reliance upon his statements.  Moreover, Ms Pender relied on the representations in her capacity as the respondent's agent.  Again, there is no challenge to his Honour's conclusions on these issues.

The trial Judge then referred briefly to Toscana's presence in the Centre.

"Having regard to those considerations that Pender says led her to a similar attitude, the Toscana presence as falsifying the representation can, as a matter of practical significance, be put to one side."

Although it is not entirely clear what his Honour intended to convey by the phrase "similar attitude", it is clear enough from this passage that his Honour accepted Ms Pender's reasons for not rescinding the lease upon learning that Toscana had opened a shop.  We shall return to those reasons later in the judgment.

The trial Judge pointed out that the High Court had accepted the proposition that a person claiming damages under the TP Act is generally entitled to recover a sum representing the prejudice or disadvantage suffered in consequence of altering his or her position under the inducement: Wardley Australia Limited v State of Western Australia (1992) 175 CLR 514, at 526. He noted that the respondent's case was that but for the appellant's misleading and deceptive conduct, the respondent would not have gone into possession of Shop 157 and thus would not have suffered any losses. The respondent submitted that, accordingly, all its losses were recoverable.

The trial Judge rejected this submission.  He observed that Mason CJ in March v E & M H Stramare Pty Ltd (1991) 171 CLR 506, at 515-516, had referred to the difficulties to which the "but for" test gives rise, in cases of conjoint contributing "causes". The trial Judge found that, since the respondent had "de facto" exclusivity until the arrival of Deneuve in the shop opposite, the respondent, although losing money, was no worse off than if the representation made on behalf of the appellant had been truthful. There was therefore no "prejudice or disadvantage" flowing from reliance on the representation until Deneuve commenced business.

"In my opinion, the trading losses from opening until this event are not caused "by" the making of the representations.  Those losses, viewed in a practical manner, do not flow from the making of the misrepresentations: they are properly to be seen as flowing from the nature and location of the centre, and its inherent commercial shortcomings."

His Honour then found that it was likely, had Deneuve not commenced trading, that the respondent would have continued in occupation of Shop 157.  Less confidently, his Honour found
that the business would have become profitable in the "quite short term". 

He noted that, where representations have induced a party to purchase a business which was always going to be unprofitable, the representee's measure of damages is the difference between what was paid and the value of what was acquired, together with reasonable consequential losses: Gould v Vaggelas (1985) 157 CLR 215, at 221-222. The position with a "green field project", such as the opening of a new business, was more difficult. In such a case, his Honour took the view that it was necessary to adopt a rather "broad brush and robust approach to the difficulties of causation".

His Honour considered that this approach would be followed by awarding damages for the trading losses incurred by the respondent from the time Deneuve commenced trading until the end of January 1989, together with the cost of setting up the respondent's business, and one-half of stock losses.  His Honour declined to award the respondent damages equivalent to total cost of stock losses.  He took this course because he found that the respondent had contributed to its own losses, by maintaining an excessive quantity of stock and failing to take all reasonable steps to mitigate its losses.

The trial Judge rejected a submission made on behalf of the appellant that any losses incurred by the respondent had been caused by Ms Pender's decision to leave the premises, rather than by any misleading or deceptive conduct on the part of the appellant.  His Honour was satisfied that the decision to leave

"was not an unreasonable reaction in the circumstances and is attributable to the conduct of [the appellant].  It is not a supervening event that severs the chain of causation."

His Honour also rejected a belated attempt by the appellant to amend its defence in order to plead that any loss or damage sustained by the respondent was due to its wrongful repudiation of the lease and the abandonment of a viable business.

In the result, the trial Judge allowed the following heads of damage:

•the actual losses incurred in the conduct of the respondent's business from the commencement of trading by Deneuve until the end of January 1989, a total of $6,218;

•the whole of fit-out costs, including shop fittings of $17,284, architect's fees of $2,102 and net loss on furniture of $5,478 (a total of $24,864);

•stock loss of $22,000, being a little more than 50% of the total amount claimed; and

•other costs, totalling $3,726.

The total of these amounts came to $56,808, which his Honour rounded off to $56,800.  His Honour allowed interest of 12% from 1 February 1989 to the date of judgment (5 August 1996), amounting to $51,000.

His Honour rejected certain other claims made by the respondent, but there is no cross-appeal in respect of these issues.

The Appellant's Submissions
Mr Cooper, who appeared on behalf of the appellant, submitted that none of the losses for which the respondent had been awarded damages was caused by the appellant's misleading and deceptive conduct. He supported this submission by relying on contentions that appear to owe more to the law of contract than to principles applicable to the TP Act. In particular, Mr Cooper contended that the respondent had "waived" the "breaches of the exclusivity entitlement" and thereby affirmed the lease. The respondent, through Ms Pender, was aware that the "exclusivity" representation had ben breached in August or September by Toscana opening its shop in the Centre. Despite this knowledge, the respondent had elected to remain in possession. It followed that the purported rescission on 20 December 1988 was a repudiation and any losses accruing after Toscana commenced business were attributable to the respondent's decision not immediately to give up possession of the premises.

In the alternative, Mr Cooper challenged the trial Judge's finding that the respondent's decision to give up possession of the shop was reasonable.  Reasonableness or otherwise depended on inferences drawn from the circumstances.  By the time the respondent resolved to rescind the lease, Ms Pender was aware of the "breaches" by at least one competitor, yet only took action when a competitor traded in close proximity to the respondent's shop.  This decision, so Mr Cooper submitted, "was made not because the exclusivity representation had been broken again, but simply because of the proximity of Deneuve" to the respondent's business.

The Causation Issue
Section 82(1) of the TP Act provides as follows:

"A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention."

The word "by", as the trial Judge recognised, introduces the notion of causation.  In Wardley v Western Australia, at 525, the joint judgment of Mason CJ, Dawson, Gaudron and McHugh JJ said this:

"The statutory cause of action arises when the plaintiff suffers loss or damage `by' contravening conduct of another person. `By' is a curious word to use. One might have expected `by means of', `by reason of', `in consequence of' or `as a result of'. But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s.82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v Stramare (E. & M.H.) Pty Ltd & Anor (1991) 171 CLR 506, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so."

In March v Stramare Pty Ltd a majority of the High Court rejected the view that the "but for" or "causa sine qua non" test should be a definitive test of causation where negligence is alleged.  Mason CJ, with whom Toohey and Gaudron JJ agreed, pointed out (at 515) that the common law tradition is that determining the cause of a particular occurrence is a question of fact to be decided by applying common sense to the facts of each case.  The "but for" test, by contrast, yielded unacceptable results, and the results had to be tempered "by the making of value judgments and the infusion of policy considerations".

In Wardley v Western Australia, after having referred to March v Stramare Pty Ltd, the joint judgment continued (at 525-526):

"Here we are concerned with contraventions of s.52(1) in the form of misleading conduct constituted by misrepresentations. In this situation, as at common law, acts done by the representee in reliance upon the misrepresentation constitute a sufficient connexion to satisfy the concept of causation. And, if those acts result in economic loss, that is, loss other than physical injury to person or property, that economic loss will ordinarily be recoverable under s.82(1). In the context of the area of commercial conduct in which the Act operates, the reference to `loss or damage' in s.82(1) plainly includes economic or financial loss.

In determining when a plaintiff first suffers economic loss or damage in an action under s.82(1) based on misleading conduct constituting a contravention of s.52, it is necessary to have regard to the applicable measure of damages. In this respect, it would not be right to conclude that the measure of damages recoverable under the sub-section necessarily coincides with the measure of damages applicable in an action for deceit or in an action for negligent misrepresentation. The measure of damages recoverable under s.82(1) can only be fully ascertained after a thorough analysis of those provisions in Pts IV and V of the Act for contravention of which the statutory cause of action may be maintained. But the common law measure of damages will in many cases be an appropriate guide, though it will always be necessary to look to the provisions of the Act with a view to ascertaining the existence of any relevant legislative intention. In a case such as the present, it may safely be assumed that the plaintiff is entitled to recover `a sum representing the prejudice or disadvantage [the plaintiff] has suffered in consequence of his altering his position under the inducement' of the misleading conduct or `the actual damage directly flowing from' that conduct, to take up and adapt well-known statements of the measure of damage applicable in an action of deceit. Whether the condition of foreseeability, applicable to claims for consequential damages in cases of negligent misrepresentation inducing the purchase of property, would apply to a claim for consequential damage under s.82(1) is a question that may be put to one side for present purposes." [Footnotes omitted.]

In the present case, the trial Judge found that the appellant had made representations that, in accordance with s.51A(1) of the TP Act, must be taken to be misleading. He also specifically found that the representation played an important part in inducing the respondent to enter possession of Shop 157. As we have said, Mr Cooper did not seek to challenge these findings.

Mr Cooper's submissions referred to the appellant's representation as having been "broken" and to the "exclusivity which [the respondent] had been promised".  At one point, the trial Judge echoed this approach, by describing the respondent's decision to leave the premises as being

"triggered by the actuality that falsified in fact the `exclusivity' representation."

It is, however, important to remember that this is not a case in which the respondent sought to enforce a contractual promise made by the appellant.  The appellant's case was that it had suffered loss and damage in consequence of being induced to enter possession of Shop 157 by reason of the appellant's misleading conduct.  On the trial Judge's findings, the appellant's conduct was misleading at the time the representation was made.  It was not rendered misleading, nor was it "falsified", by subsequent events.

The fact that Toscana had commenced trading in August-September 1988 became known to Ms Pender, although she did not revisit Shop 157 until early December 1988.  Her knowledge of Toscana's activities was relevant to the factual issue of whether the respondent had established reliance on the appellant's representations.  Her failure to complain about Toscana's activities, unless explained, might have cast doubt on her contention that the representation had induced the respondent to enter the lease and commence retailing at Shop 157.  In the end, his Honour accepted Ms Pender's version of events and found for the respondent on the question of reliance.

Given that finding, there was only one other way in which Ms Pender's knowledge of Toscana's activities was relevant to the issues in the case.  The information available to her in about September 1988 might have been sufficient to enable her to realise at that time that the representations made by the appellant in March and April 1988 had not been accurate when made.  Where a person, having been induced to enter a transaction by a misrepresentation, subsequently learns that the representation was false when made, a court might well be justified in holding that losses post-dating the person's knowledge cannot be attributed to the representation.  For example, if a lessee who has entered a lease in reliance on a misrepresentation subsequently learns that the representation was false, but nonetheless consciously chooses to continue in possession, a court might conclude that any further losses were caused by the decision to retain possession rather than by the original representation.  Whether such a conclusion is to be drawn in a particular case depends on the circumstances.

The difficulty in the present case is that the findings of the trial Judge are inconsistent with the case Mr Cooper sought to make.  As we have said, his Honour accepted the reasons given in evidence by Ms Pender for not taking action when she learned of Toscana's activities.   The relevant passages in her cross-examination are these:

"So did you see Toscana for the first time between 1 and 4 December?---I must have done.

And as soon as you saw Toscana, you decided you were out of there.  Correct?---No, not Toscana.

Well, you decided on 5 December you were leaving the complex, did you not?---It was nothing to do with Toscana.

But you had only seen - you do not---

HIS HONOUR:  I think you misunderstand.  Toscana is far away---

MR COOPER:  I know that, your Honour

HIS HONOUR:  All right.

MR COOPER:  You had only seen Toscana for the first time a couple of days before 5 December?---Yes.

And then you saw, for the same time, or at the same time, the person next door to you?---Yes.

And you then realised there were two people apparently breaching your exclusivity.  Correct?---I had known about Toscana earlier when they were fait accompli and they had not affected my trading.

But they breached your exclusivity, did they not?---But they were fait accompli.

They breached your exclusivity, did they not?---Yes.

And you did nothing about it?---Because it was fait accompli.

I see.Well, Mr Shaw was a fait accompli when you saw him, too, was he not?---But I had objected from the moment I knew he was going in.

But he was a fait accompli when you first saw him.  Correct?---But he need not have been.

But he was, was he not?---Yes.

And so you then formed the view that these two tenancies were there, and you would leave?---No, it was nothing to do with the earlier tenancy.,

With the what?---It was nothing to do with the earlier tenancy."

Ms Pender was then questioned about a letter she had written:

"All right.And you say:

`Since then, another custom jewellery shop has opened in the complex.  Although this does not accord with my original understanding, it does not unduly worry me as its not in direct competition with me, nor proximity to my shop.'

?---Yes.

So what you are saying is `I was promised I'd be the only costume jeweller, but it doesn't worry me if
that's not adhered to as long as they're not close to me'?---Yes.

And that is what your case is all about, is it not, that you are angry because someone is trading next door to you, or was trading next door to you?---Yes.

That is your complaint in a nutshell, is it not?---It was---

Is it not?---Yes."

It is clear from these passages that Ms Pender considered  that the opening of Toscana had simply not affected the respondent's trading in the Centre.  Ms Pender's contemporaneous assessment is supported by the respondent's trading figures, which show a reasonably uniform pattern until the advent of Deneuve in early November 1988.  Ms Pender was not directly asked whether the opening of Toscana had caused her to reassess the accuracy of the representation made by the appellant in March and April 1988 (as pleaded in paragraph 18 of the amended statement of claim).  In particular, she was not specifically asked whether the commencement of trading by Toscana demonstrated to her that there could have been no reasonable basis for the appellant's representation that the respondent would be the only retailer of costume jewellery in the Centre.  But even if Ms Pender did appreciate that the representation must have been false in that sense, it was a question of fact for the trial Judge to determine whether this was a reason "in common sense, logic or policy" for holding that the chain of causation was broken and that the respondent could not claim damages for losses flowing from the opening of Deneuve: March v Stramare Pty Ltd, at 579;  Gould v Vaggelas at 221-222.
The trial Judge found that the Toscana presence could "as a matter of practical significance be put to one side".  He also found that the respondent's decision to leave the premises was attributable to the appellant's misleading conduct.  It was open to his Honour to make these findings reflecting, as they do, the absence of any practical effect of Toscana's activities on the respondent.  Accordingly, there is no basis for a submission that any losses incurred by the respondent after September 1988 were attributable to Ms Pender's decision to remain in possession of Shop 157, rather than to the appellant's misrepresentation.

The First Four Months' Losses
As we have said, the trial Judge rejected the respondent's claim for losses incurred during its first four month's trading, until Deneuve opened.  A strict application of the "but for" test might suggest that these losses were recoverable, since the respondent would not have opened its shop in the Centre had the misleading representation not been made.  On the other hand, a common sense test might suggest that trading losses, not attributable in any way to the presence of another shop in the Centre selling costume jewellery, cannot be said to flow directly from the appellant's misleading and deceptive conduct: compare R G Maxwell and Associates Pty Ltd v Warner, [1990] ATPR (Digest) 46-062 (FCA/FC). Since no cross-appeal was filed we need not consider this question further.

Double Compensation
Mr Cooper submitted that there was an element of double compensation in the damages award, since losses were allowed in respect of capital expenditure, as well as in respect of trading losses.  In our opinion, there is no double compensation.  As his Honour found, the respondent was induced to incur the fit-out expenditure by reason of the appellant's misleading conduct.  The expenditure would not have been incurred had the respondent not engaged in that conduct and would not have been incurred had the respondent known that it would have enjoyed exclusivity only for four months.  The respondent's losses after Deneuve commenced trading, as his Honour also found, were attributable to the same conduct.  As the observations of Gibbs CJ in Gould v Vaggelas, at 221-222, show, there is no reason in principle why a representee cannot recover damages for both capital and trading losses.

Vacating of the Premises
Mr Cooper submitted that the respondent had acted unreasonably in vacating the premises.  However, in order to succeed on this submission it is necessary for the appellant to overturn the trial Judge's specific finding that the decision to leave was a not unreasonable reaction in the circumstances and was attributable to the appellant's misleading conduct.

In our opinion, there was ample material to justify his Honour's finding.  For example, His Honour referred to the series of complaints made by Ms Pender once she became aware that Deneuve was to open opposite the respondent's shop.  He also pointed out that Mr Clyde-Smith himself recognised that the position was unfair to Ms Pender and that steps were taken to restrict the products sold by Deneuve in competition with the respondent.  There is no foundation in our view for the submission challenging the inferences drawn from the primary facts by the trial Judge: see Minister for Immigration, Local Government and Ethnic Affairs v Hamsher (1992) 35 FCR 359 (FCA/FC), at 369.

The Respondent as a Retailer
Mr Cooper also submitted that the respondent had sustained losses by reason of Ms Pender's lack of competence as a retailer.  However, the findings made by his Honour are inconsistent with this submission.  There is nothing in the evidence to warrant concluding that his Honour's findings were erroneous.

Interest
Section 51A of the Federal Court Act relevantly provides as follows:

"(1)In any proceedings for the recovery of any money...in respect of a cause of action that arises after the commencement of this section, the Court or a Judge shall, upon application, unless good cause is shown to the contrary,...

(a)order that there be included in the sum for which judgment is given interest at such rate as the Court or the Judge, as the case may be, thinks fit or the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date as of which judgment is entered...".

Mr Cooper initially submitted that his Honour should have afforded the appellant an opportunity to make submissions on interest. However, the amended application specifically sought interest and, as Mr Cooper acknowledged, it was open to the appellant to make submissions at the trial on whether there was "good cause" to depart from the usual rule stated in s.51A.

Section 51A confers a discretion upon the Court and, for the appellant to succeed, it must show that the discretion exercised by the trial Judge had miscarried in that his Honour erred in law: Australian Guarantee Corporation Ltd v Border Printing Services Pty Ltd, FCA/FC, 21 April 1989, at 6.  It suffices to say that nothing referred to by the appellant, suggests that his Honour's discretion miscarried or that he erred in law.

Conclusion
The appeal should be dismissed.  The appellant must pay the respondent's costs.

I certify that this and the preceding 22 pages are a true copy of the reasons for judgment herein of the Court.

Associate:

Date:7 November, 1996

Heard:            4 November, 1996

Place:            Brisbane

Decision:         7 November, 1996

Appearances:

Appellant:Mr D.R. Cooper, instructed by Creswicks, Solicitors.

Respondent:       Mr W. Sofronoff QC with Mr D.A. Savage, instructed by Freehill Hollingdale & Page, Solicitors.