Bennett & Bennett v LPC Holdings & Je Abel Real Estate P/L

[1998] VSC 55

SUPREME COURT OF VICTORIA
CAUSES JURISDICTION	Do not Send for Reporting
Not Restricted

No. 8050 of 1996

GRAEME BENNETT and KAREN BENNETT	Plaintiffs
v
LPC HOLDINGS PTY LTD (ACN 006 582 752) and LYALL PATRICK COOPER and J.E. ABEL REAL ESTATE PTY LTD (ACN 004 622 048)	Defendants

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JUDGE:	Ashley, J.
WHERE HELD:	Melbourne
DATE OF HEARING:	24 August 1998
DATE OF RULING:	24 August 1998
MEDIA NEUTRAL CITATION:	[1998] VSC 55

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr C. Johnson	Dwyer Mahon & Robertson
For the First Defendant	No appearance
For the Second Defendant	Appeared on his own behalf
For the Third Defendant	Mr P. Vickery QC with Mr G. Robertson	Coltmans Price Brent

HIS HONOUR:

1. The plaintiffs' case against the third defendant, as opened by Mr Johnson, is in part that the defendant engaged in conduct in direct contravention of s.52(1) of the Trade Practices Act 1974 (Cth) (the TPA) and in any event engaged in conduct in contravention of that section by recourse to s.75B(1) of the TPA. Further, that the third defendant engaged in conduct proscribed by s.11(1) of the Fair Trading Act 1985 (the FTA); see also s.31 of that Act.

1. It is apparent from the evidence which I have heard so far that almost all of the representations relied upon by the plaintiffs as constituting the impugned conduct were made ‑ mainly in writing, some also orally. The issues between the plaintiffs and the third defendant appear to be these: first, were the representations untrue when they were made, or misleading by reason of s.51A of the TPA? Second, was the third defendant, acting through Mr Serroni, party to a contravention of s.52? Third, was the third defendant involved, through Mr Serroni, in conduct in breach of s.52 by recourse to s.75B? Fourth, did the plaintiffs rely upon conduct in breach of s.52 in purchasing the resort? Fifth, what is the quantum of damage that the plaintiffs have suffered in the event that they have made out liability against the third defendant? Sixth, does a time bar stand in the plaintiffs' way? These issues are replicated in connection with the claim brought under the FTA.

1. The representations relied upon by the plaintiffs were made in April 1993. The plaintiffs wish to call evidence from Mr and Mrs Howard, formerly the proprietors of the Rosebud Motel, concerning conversations which each of them had with Mr Serroni concerning the sale of their motel in late 1994 ‑ he still being employed by the third defendant at that time. Being doubtful whether the foreshadowed evidence would be admissible, I heard each of the witnesses on a voir dire. The substance of their evidence was that a statement under s.52 of the Estate Agents Act (the Agents Act) having been obtained by them, Mr Serroni, in the first instance, asked Mr Howard if he would alter the figures to make the bottom line look better. Then he asked Mrs Howard if she had spoken to her husband about changing the figures. Then he asked Mr Howard, again, if the Howards would alter the figures so as to improve the bottom line. In each instance, these overtures were rebuffed.

1. Mr Vickery, senior counsel for the third defendant, submitted that the evidence was inadmissible.  It could not bear upon, was not logically probative of, any matter in issue between the parties.  The remarks attributed by Mr and Mrs Howard to Mr Serroni were distant in time from the representations made to the plaintiffs.  They related, obviously enough, to a different business.  They did not address, by contrast with the situation in other cases, a matter squarely in issue.

1. The cases show, I consider, that a court must be  alert to ensure, where evidence of similar facts is sought to be introduced, that the evidence goes in proof of an issue alive between the parties ‑ not in some remote and speculative way, but in a way which aids a determination of the issue (in a civil case) on the probabilities. Inherent in such an analysis is identification of the facts which are alleged to be similar.  Necessarily, this means that 'each case must be considered with close regard to its particular circumstances,' as Gummow J pointed out in DF Lyons Pty Ltd & Ors v. Commonwealth Bank of Australia (1991) 100 ALR 468 at 478 (and see discussion of the topic generally at 475‑478).

1. The principles to which I have referred are illustrated by the cases.  In Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23 the matter in issue was whether certain representations were made by the respondent to the applicant, the latter being a prospective lessee of part of a shopping centre. The judge admitted evidence of representations made to members of the target audience ‑ other prospective lessees of portions of the shopping centre ‑ as bearing logically upon the issue whether a similar representation had been made to the applicant.

1. In Gates v City Mutual Life Assurance Society Ltd (1982) 43 ALR 313 the matter in issue was whether an insurance salesman, and agent of the respondent, had represented to the plaintiffs that a cover could be added to certain policies, which cover would have a particular operation. Ellicott J admitted evidence of representations made by the agent to holders of policies of those types concerning the cover and its operation: see at 327‑328.

1. Emphasising the need to closely consider the particular facts in issue, Hill J rejected evidence of representations made to lessees other than the applicants in a 'shopping centre case':  Aroutsidis & Anor v Illawarra Nominees Pty Ltd & Ors (1990) 21 FCR 500. The representations allegedly made to the other lessees were sufficiently different to the representations upon which the applicant relied not to be logically probative of the making of the latter representations. Nor did they evidence a system or pattern of fraud on the respondent's part.

1. I should refer to DF Lyons again.  In that case there was disparity between the fact in issue ‑ whether some and what representations had been made to the applicant concerning foreign currency loans ‑ and the evidence which the applicant sought to lead of 'similar facts'.  The applicant and the other persons whose evidence was sought to be led had taken foreign currency loans from the respondent.  The applicants led oral evidence concerning conversations had between the first applicant and a branch manager of the respondent bank.  The applicants sought to get into evidence statements by other persons, each of whom had had dealings with the bank and the same branch manager in relation to foreign currency loans.  Gummow J, ruling that the evidence should be rejected, emphasised that each case had to be considered with close regard to its particular circumstances.  His  Honour said that although there was an underlying unity in the bank manager's activities, the dealings with customers varied with the particular circumstances as they arose.  The applicants had to establish specific representations.  "As a matter of ordinary experience of human behaviour," his Honour said, the evidence which the applicants sought to lead would not tend to prove the making of the particular representations upon which the applicants relied.

1. In another case involving foreign currency transactions, Drambo Pty Ltd v Westpac Banking Corporation Ltd (Sundberg J, Federal Court of Australia, judgment 1 August 1996, unreported), his Honour, on the facts, and relying upon the approach taken in DF Lyons, rejected the type of evidence that had been rejected by Gummow J.

1. According to counsel for the plaintiffs, the evidence sought to be led bears on the question whether the third defendant's transmission of documentary material to the plaintiffs ‑ it containing the impugned representations ‑ ought be accepted as innocent; or, alternatively, should be concluded to be conduct in contravention of s.52(1), TPA, (or s.11, FTA). In support of this submission Mr Johnson took me to certain performance records of the first defendant's business which Mr Serroni apparently received from that defendant in the period January‑March 1993. Mr Johnson did not suggest, as I understand it, that Mr Serroni had taken any part in the preparation of this material. Nor was it suggested that the material contained in the last performance record that was sent to Mr Serroni (which material seems to have formed the basis of the statement prepared by the first defendant's accountant for the purposes of s.52 of the Agents Act), was in any way altered after Mr Serroni had seen it. Rather, as I understand it, the plaintiffs wish to contend that Mr Serroni should have seen that the material which was progressively put into his hands showed that the performance of the resort was falling short of budgetary expectations. He was or should have been put on inquiry, and ensured that what was provided to the plaintiffs' side was not relevantly misleading or deceptive. But the material was provided to the plaintiffs in unaltered form. It should be inferred that Mr Serroni connived in the supply of information which misrepresented the true performance of the business.

1. The type of conduct that the plaintiffs apparently wish to contend was engaged in by Mr Serroni on this occasion seems to me to be dramatically different to the type of conduct in which, on the evidence of Mr and Mrs Howard, Mr Serroni engaged on that other occasion. In my opinion, the evidence of Mr and Mrs Howard, assuming its accuracy, would not bear upon the probabilities that Mr Serroni had engaged in conduct vis‑a‑vis the plaintiffs of quite a different kind, conduct whose only common linking characteristic would be involvement in a breach of s.52 TPA.

1. Mr Johnson made a second submission:  that the evidence proposed to be led from Mr and Mrs Howard  would corroborate the evidence of Mr and Mrs Bennett that, at the time when they sought to sell the resort, Mr Serroni made a remark to them closely mirroring the remarks attributed to him by Mr and Mrs Howard.  I admitted evidence of a conversation which included the particular remark on the footing that in the conversation, according to the plaintiffs, Mrs Bennett asserted, in substance, that the plaintiffs had been misled into buying the resort by untruthful representations; an allegation to which Mr Serroni failed to respond.  I admitted that evidence because it might permit an inference to be drawn ‑ adverse to Mr Serroni and thereby the third defendant ‑ as to their state of knowledge at a relevant time of the untruthfulness of the representations made to the plaintiffs.  No question arises of corroboration of the particular remark allegedly made by Mr Serroni in the course of the conversation.

1. What I have so far said is enough to dispose of the matter.  The proposed evidence should not be received.

1. I add two matters: I agree with Mr Vickery, that, as the plaintiffs' case is presently pleaded, it is not alleged that the third defendant had any part in the creation of false figures. Second, Mr Vickery told me that LPC's accountant, Mr Gloury, will give certain evidence as to his preparation of the statement under s.52 of the Agents Act which was provided to the plaintiffs' side. I have put what Mr Vickery told me about that matter entirely to one side. If the evidence of Mr and Mrs Howard was admissible, the fact that Mr Gloury might give some evidence, whose effect could be to exculpate the third defendant from liability under s.52 TPA and s.11 FTA, would be beside the point.

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