Boffo v N C Nominees and Anor No. Scciv-01-1202
[2002] SASC 242
•30 July 2002
BOFFO v N.C. NOMINEES PTY LTD and ANOR
[2002] SASC 242Full Court: Perry, Williams and Gray JJ
PERRY J. The appellant (“Mr Boffo”) was the plaintiff in an action in the District Court in which he sought damages against Midcity Motor Auctions (“Midcity”) and ESANDA Finance Corporation Ltd (“Esanda”) with respect to his purchase of a Ford EA Falcon GL station wagon at a public auction conducted by Midcity.
Esanda had previously financed the purchase of the station wagon by a Mrs Ivkovic, who bought it from a car dealer. The repayment of moneys advanced by Esanda for that purpose was secured by a consumer mortgage.
Apparently, Mrs Ivkovic experienced difficulty in maintaining the payments due to Esanda. After a time she voluntarily surrendered the vehicle to the company. Esanda then instructed Midcity to sell the vehicle on its behalf.
In accordance with those instructions, on 23 July 1998 the station wagon was auctioned by Midcity and knocked down to Mr Boffo at the sale price of $5,500.
In his statement of claim, Mr Boffo alleged that at the time of the auction Midcity represented to him:
“(a)that the odometer reading when the vehicle was acquired from the last owner was 135,740kms;
(b)that, to the best of the knowledge, information and belief of the second named defendant (“Esanda Finance”) the odometer reading could not be regarded as reasonably accurate because the history of the vehicle was unknown to Esanda Finance;
(c)that Esanda Finance did not carry on the business of vehicle leasing and had not let the vehicle on hire to another person;
PARTICULARS
The said representations are in writing and contained in two notices under the Second Hand Vehicle Dealers Act 1995 entitled Form 6 and Form 7 respectively given to the plaintiff by Mid City’s servant, Mr P. Hawkes at the time of the sale.”
Mr Boffo further alleged that “at some time between January 1996 and the repossession (sic) of the vehicle, the odometer on the vehicle had been wound back to 135,740 kilometres”, and that this fact was known to Esanda at the time the station wagon was sold to him.
This allegation had its origin in evidence tendered at the trial which indicated that at the time Mrs Ivkovic purchased the vehicle in February 1996, documentation generated by the dealer, Steinborner Holden, and given to her indicated that the odometer reading at the time of the sale was 151,497 kilometres. A copy of the documentation testifying to that fact was kept in Esanda’s records.
It was Form 6 rather than Form 7 which arguably contained the misrepresentation. The relevant part of the Form 6 in question read:
“FORM 6
SECOND-HAND VEHICLE DEALERS ACT 1995
AUCTION NOTICE
VEHICLE TO BE AUCTIONED ON BEHALF OF
PERSON WHO IS NOT A DEALER
Manufacturer Ford Falcon
Model EA
Type Wagon
Year of manufacture 1990
Year of first registration
Registration No UZL 282
Engine No (if not registered) JG31LY204466FPAAA
Odometer reading when the vehicle was acquired from the last owner who was not a dealer
135,740
Miles/Kilometres
To the best of the owner’s knowledge, information and belief, can this odometer reading be regarded as reasonably accurate? (
Yesor No)If not, why not?
History unknown
Was the vehicle used by the owner as a taxi-cab, rental card or hire car?
(Yesor No)...................”
It was the reference in that document to an odometer reading of 135,740 kilometres, coupled with the words “history unknown”, against the background of the odometer reading of 151,497 kilometres as at February 1996 recorded in the documentation on Esanda’s file, which lay at the heart of the case on misrepresentation.
Mr Boffo alleged that the pleaded representations contained in Form 6, which was prepared by Midcity, were made by Midcity as agent of Esanda, and that Esanda was vicariously liable as principal. He alleged further that the representations were made fraudulently; that Midcity knew them to be false, or alternatively, was recklessly indifferent as to their falsity; that Midcity “ought to have known that Esanda Finance had some knowledge of the history of the vehicle”; and that it had failed to make any inquiries of Esanda as to that history.
Alternatively, Mr Boffo claimed that the alleged misrepresentations were actionable pursuant to s 7 of the Misrepresentation Act 1972, and in the further alternative, that Midcity had engaged in misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth).
Mr Boffo asserted that he had rescinded the purchase, but had suffered loss for which he sought damages, particularised as follows:
“purchase price $5,500.00
RAA callout $24.00
petrol pump $317.99
radiator$110.00
repairs$1,351.40
stamp duty and transfer fees $180.00
insurance$587.00
loan interest and fees $895.00
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$8,965.39”
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In addition, he claimed exemplary damages “in at least the sum of $27,496.17 being treble the loss sustained by the plaintiff”.
Both defendants denied liability. For reasons which will appear, it is unnecessary further to define the issues joined in the pleadings.
Mr Boffo gave evidence at the trial, from which it appears that he made a number of inquiries about the station wagon before and on the date of the auction. On that date, an advertisement appeared in the daily newspaper describing the car as “90 Ford EA Falc GL wgn auto LPC 135k UZL-282”. Clearly, the statement “135k” was intended to convey that the odometer reading was about 135,000 kilometres.
Mr Boffo was keen to buy the station wagon. He believed that reading to be low for a vehicle of that age.
As I have explained, the statement of claim alleged that the relevant misrepresentations were contained in the two notices being Forms 6 and 7, more particularly Form 6. The learned trial judge found, consistently with Mr Boffo’s evidence, that Form 6, which pursuant to the Second-Hand Dealers Act 1995 (s 20) should have been displayed on the vehicle before its sale, was in fact not so displayed. It was not seen by Mr Boffo until after the fall of the hammer, that is, after the sale had been effected, when an employee of Midcity showed it to him. In those circumstances, the learned trial judge correctly held that the contents of that notice could not have constituted an actionable representation, whether fraudulent or innocent, in that they could not have induced Mr Boffo to enter into the contract.
But contrary to the pleaded case, he held that the details given in the newspaper advertisement were relied on by Mr Boffo. Insofar as the implication in the advertisement was that the odometer reading correctly indicated that the vehicle had travelled 135,000 kilometres or thereabouts, this was false.
However, he held that what he found to be a misrepresentation in the newspaper advertisement was not actionable at common law or pursuant to the Misrepresentation Act. This was because notices were prominently displayed in the auction premises and read out aloud before bids were accepted, warning potential bidders that “mileage or kilometres cannot be guaranteed correct unless otherwise stated on the schedule attached to the vehicle”. Nothing was “otherwise stated”, as there was no schedule attached to the vehicle.
However, he held that the warning did not protect Esanda from liability under s 52 of the Trade Practices Act. He proceeded to find that in the circumstances there had been a contravention of the section by Esanda which entitled Mr Boffo to recover the amount of his loss pursuant to s 82(1) of the Act.
The learned trial judge held, relying on Gates v City Mutual Life Assurance Ltd[1] that the damages recoverable under s 82 should be assessed in a similar manner to damages recoverable in tort, that is:
“... comparing the position in which the plaintiff would have been in if the misleading conduct had not occurred with the situation the plaintiff in fact found himself in as a result of acting in reliance on the representation ...”
[1] (1986) 160 CLR 1 at 14.
Although an order for rescission was within the range of further remedies which might have been given under s 87 of the Trade Practices Act, he did not consider that it was a proper case in which to order rescission.
He went on to assess damages in the following way:
“32I can use only a broad brush in attempting to fix an appropriate amount for damages. The greater the distance travelled by the car, the less its value would be. It seems likely to me that, for example, a car that has travelled as much as 195,000 kms would have a value considerably less than if it had travelled 135,000 kms.
33I would have thought that the only amount recoverable by the plaintiff would be the difference between the price actually paid for the car and the amount he might have paid if he knew about the odometer reading error.[2] Most of the other expenses he would have incurred anyway if he had purchased the car for a more appropriate price. However, it seems that the loss suffered as a result of misleading conduct may include insurance and stamp duty and other expenses incurred in the purchase over and above the purchase price (Franklin)[3] ..... However, the plaintiff in the present case cannot recover the costs of repairs to the car, as these would not have been the responsibility of the defendants in any event (and see Neville Hank Real Estate Pty Ltd v Knope, unreported, [1998] SASC 6980 at para 26).[4]
34I order that the defendant Esanda pay to the plaintiff by way of damages the sum of $2,467 calculated as follows:
Reduction in purchase price $1,500
Stamp duty and transfer fees 180
Insurance 587
Reduction in loan interest and fees 200
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$2,467”=====[2] This does not quite state the law accurately. As will be seen, the measure of the loss is the difference between the price paid and the actual value of the vehicle.
[3] Franklin Motors Pty Ltd v Paino (1999) 205 LSJS 185 at paras 28 and 58.
[4] The case has been reported: see (1998) 200 LSJS 395 at para 26.
The learned trial judge dismissed Mr Boffo’s claim against Midcity, on the footing that because Midcity had relied on the information supplied to it by Esanda, and had no means of knowing that the odometer reading was inaccurate, Midcity could not properly be found to have been involved in Esanda’s Trade Practices Act contravention.
The learned trial judge was clearly right in his approach to rescission, whether the matter is considered in the context of the Trade Practices Act or in equity.
In any event, Mr Boffo did not claim an order for rescission. Rather, he asserted that he had rescinded the “purchase” (statement of claim para 19).
It is true that rescission may be effected by actions taken by the parties to a contract. But Mr Boffo’s assertion that he had rescinded the contract does not prove that he had done so. Indeed, there is nothing in his words or actions at the relevant time which could possibly lead to the conclusion that he had in fact rescinded the purchase. While there was somewhat equivocal in evidence that at one stage he had asked Esanda for the price back, at no time did he attempt to return the vehicle, or even offer to return it.
He retained and regularly used the vehicle during the intervening three years or so between its purchase and the trial, during which time he expended money in maintaining and repairing it.
In those circumstances, he clearly affirmed the contract, and the suggestion that he rescinded the purchase cannot possibly be sustained.
As for the question of damages, as will have been seen from what I have so far explained, the learned trial judge chose to award damages on the basis of a misrepresentation which was entirely different from that which was pleaded.
On the hearing of the appeal, Mr Manetta for Mr Boffo offered yet another basis upon which he contended that Mr Boffo was entitled to recover for misrepresentation. He submitted that the learned trial judge:
“... overlooked the operation of misrepresentation by concealment arising out of what was not disclosed (that ought to have been) prior to purchase. The common law has already treated fraudulent concealment as a species of deceit ...”[5]
[5] Appellant’s outline of argument, para 4, citing Schneider v Heath (1813) 3 Camp 505, 508-9, 170 ER 1462-3; Horsfall v Thomas (1862) 1 H & C 90, 158 ER 813, 817; Greenfield v Edwards (1865) 2 De GJ & S 582, 598-9, 46 ER 510, 507-8; Cavendish Bentinck v Fenn (1887) 12 App Cas 652, 671 and cf Central Ry Co of Venezuela v Kisch (1867) LR 2 HL 99; Oakes v Turquand (1867) LR 2 HL 325 and Phillips v Foxall (1872) LR 7 QB 666, 679.
With respect to Mr Manetta, in my opinion, his submission to that effect can only be construed as an attempt to put to this Court a case which was neither pleaded, nor advanced at the trial.
When a dispute arose between counsel during the course of the hearing of the appeal as to whether or not a case had been put at the trial based on non-disclosure, that is, misrepresentation by silence, by consent, the transcript of the opening and closing submissions of the parties at the trial was furnished to the Court.
That transcript plainly indicates that from start to finish, the appellant’s case was presented at the trial on the footing that the relevant misrepresentations were contained in Form 6.
For example, during the course of his closing address, Mr Manetta for the appellant stated:
“The basis on which the plaintiff alleges in this case that the statement made in the Form 6 is a fraudulent misrepresentation is that it was made recklessly. It was made without inquiry as to whether it was true or not. This [sic] is by Midcity.”
Later in his address he said:
“The false statement was made by Midcity in the course of its acting as the agent of Esanda for the purpose of selling the vehicle. Esanda is accordingly vicariously liable for the deceit of Midcity.”
Later again, he made it clear that what he described as the claim by or on behalf of Esanda “... not to know anything about the vehicle” which was contained in Form 6, was the relevant misrepresentation.
Insofar as Mr Manetta submitted that damages should have included a refund of the purchase price of $5,500, in my view, this contention must fail. Even if Mr Boffo had (contrary to the view which I have expressed) proved that he had rescinded the contract, he could not possibly keep the vehicle and recover the purchase price.
In any event, there was a fatal defect in the case presented by Mr Boffo at first instance with respect to his claim for damages. In particular, Mr Boffo did not call any evidence as to the true value of the vehicle.
Given that the only cause of action upon which Mr Boffo could succeed was under the Trade Practices Act, the measure of damages stood to be assessed by analogy with the damages recoverable in tort, relevantly the tort of deceit.[6] It has been long established by high authority that in such a case, where a fraudulent misrepresentation has induced the plaintiff to purchase an item of property, the measure of damages is the difference between the price paid and its real value.[7]
[6] The same result would follow if the assessment was to be under the Misrepresentation Act 1972. Under s 7(1) of that Act, the defendant is liable to the plaintiff “in all respects as if the misrepresentations had been made fraudulently and were actionable in tort”.
[7] This case does not call for a consideration of the circumstances in which, when a loss is established by reference to the difference in value, consequential losses may sometimes be awarded, as in Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158; [1969] 2 All ER 119.
See, for example, the observations of Dixon J in Toteff v Antonas:[8]
“In an action of deceit a plaintiff is entitled to recover as damages a sum representing the prejudice or disadvantage he has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentations made by the defendant. When what he has been induced to do is to make a purchase from the defendant and part with his money to him in payment of the price, then, if the transaction stands and is not disaffirmed or rescinded, what is recoverable is ‘the difference between the real value of the property, and the sum which the plaintiff was induced to give for it’ per Abbot LCJ in Pearson v Wheeler.[9] As Sir James Hannen P in Peek v Derry[10] pointed out, the question is how much worse off is the plaintiff than if he had not entered into the transaction. If he had not done so he would have had the purchase money in his pocket. To ascertain his loss you must deduct from the amount he paid the real value of the thing he got.” (emphasis added)
[8] (1952) 87 CLR 647 at 650. See also Voss Real Estate Pty Ltd v Schreiner and Ors (1998) 70 SASR 545.
[9] (1825) Ry & Mood 303 at 304, 171 ER 1028 at 1029.
[10] (1887) 37 Ch D 541 at 594 cf (1889) 14 App Cas 337.
In the same case, McTiernan J said:[11]
“The fair value of the totality of this property was £900. The true measure of the damages which the respondent is liable to pay ... is the difference between the price, £2,200, and the sum of £900, Holmes v Jones.”[12]
[11] Ibid 652.
[12] (1907) 4 CLR 1692 at 1703.
Williams J observed:[13]
“The damages that the plaintiff would suffer if the representations were untrue was the difference between the real market value of the business as a going concern and the price the plaintiff paid for the business.”
[13] Ibid 653.
In Ted Brown Quarries Pty Ltd v General Quarries (Gilston) Pty Ltd and Ors,[14] not only was Toteff v Antonas applied and approved, but the High Court held that in such cases the burden of proof of the value of the property at the date of purchase rests upon the purchaser. In that case, the trial judge, faced with a paucity of evidence of the value of the property the subject of the claim for damages for fraud, attempted what was described as a “jury assessment” of the value. While in that case Barwick CJ dissented as to the outcome, his statement of the relevant principle is consistent with the view of the other members of the court. He said:[15]
“It may be granted that damage is the gist of an action for fraud. Consequently, the plaintiff in such an action must prove that he suffered loss by entering into the agreement induced by fraud.”
[14] (1977) 16 ALR 23.
[15] Ibid 26.
Gibbs J observed:[16]
“I return then to the question whether General Quarries discharged the burden of establishing its damage. For that purpose it was necessary to prove the fair or real value which the property which it acquired under the contract of sale had at the date of the purchase.”
Aickin J said:[17]
“There is no doubt that in the circumstances the burden of proof of damage lay upon the purchaser, General Quarries (Gilston) Pty Ltd. General Quarries called no evidence as to the value of the ‘resource’ at the time of its purchase.”
[16] Ibid 36.
[17] Ibid 38.
In this case, Mr Boffo did not attempt to discharge the onus which fell on him to prove that he had suffered a loss, by adducing evidence of the value of the vehicle, the value being less than he had paid for it.
There was some evidence of the value according to a book used in the used car trade as a rough indication of the value of second-hand vehicles. This book is known as the “Dealers Guide”. A page from the guide was tendered which indicated that the authors put a “low” estimate on the value of a vehicle of this make and model in the sum of $8,000 and a “high” estimate at $11,000.
In an internal memorandum of Esanda which was apparently prepared after the surrender of the vehicle, there appears an entry “Dealer’s Guide trade (low) - $8,000”. Underneath that is written “chattel value $6,640”, which suggests that Esanda had assigned a value, following the surrender of the vehicle, of $6,640.
In a sheet headed “Repossessions Report” which was apparently prepared by Midcity, there is a line “valuation as is $3,500”, but there are other entries confirming the Dealer’s Guide (trade) value to be $8,000 and noting the reserve of $5,500.
What can be asserted with confidence is that this vehicle displaying an odometer reading of 135,740 kilometres in fact brought at a public auction $5,500. The question as to what a person might have paid for the car if it had been known that the odometer was incorrect, remained on the evidence adduced in the case, unanswered.
It should not be overlooked that this car was what was known in the trade as a “non-goer”; it was incapable of being started up and driven. Mr Boffo well knew that, and called the RAA (after joining that organisation following the sale) to enlist their help to start the engine and drive it away. Given that it was a “non-goer”, and given the warnings that unless indicated otherwise, odometer readings “cannot be guaranteed”, it is by no means obvious that had the true history of the vehicle been made clear, it would have fetched anything less than what Mr Boffo paid for it.
The position taken by Mr Manetta for the appellant on the hearing of the appeal was that a knowledge of how far the car had travelled was a “critical element” in the value of the car, and absent that knowledge, “we cannot produce evidence of the true value”.
But there was no evidence called to support the proposition that the only method of assessing the value of the vehicle was by having regard to the kilometres travelled.
Such a submission flies in the face of the obvious fact that even absent evidence of the true kilometres which the vehicle had travelled, there is no reason to suppose that a mechanical examination of the vehicle could not have been performed to indicate its condition which, no doubt, would have been relevant to any assessment of its value.
Given those considerations, in my view, the appellant was fortunate to obtain a judgment for any sum of money at all. When the learned trial judge awarded as the main head of damage “reduction in purchase price $1,500”, he did so in the absence of any evidence upon which such an assessment could properly have been based. In particular, there was no evidence that the vehicle was in fact worth anything less than was paid for it.
Even if one was to assume that, had the fact that the odometer reading was incorrect been known, the value would have been less than Mr Boffo paid for it, there is nothing to suggest that the difference would have exceeded the amount awarded on this head, namely $1,500.
In the circumstances, it is unnecessary to deal with the notice of alternative contentions filed by Esanda.
I would dismiss the appeal.
WILLIAMS J. I agree.
GRAY J. I agree.
JUDGMENT CITATIONS
LISTED IN ORDER OF APPEARANCE IN JUDGMENT1. (1986) 160 CLR 1 at 14.
2. This does not quite state the law accurately. As will be seen, the measure of the loss is the difference between the price paid and the actual value of the vehicle.
3. Franklin Motors Pty Ltd v Paino (1999) 205 LSJS 185 at paras 28 and 58.
4. The case has been reported: see (1998) 200 LSJS 395 at para 26.
5. Appellant’s outline of argument, para 4, citing Schneider v Heath (1813) 3 Camp 505, 508-9, 170 ER 1462-3; Horsfall v Thomas (1862) 1 H & C 90, 158 ER 813, 817; Greenfield v Edwards (1865) 2 De GJ & S 582, 598-9, 46 ER 510, 507-8; Cavendish Bentinck v Fenn (1887) 12 App Cas 652, 671 and cf Central Ry Co of Venezuela v Kisch (1867) LR 2 HL 99; Oakes v Turquand (1867) LR 2 HL 325 and Phillips v Foxall (1872) LR 7 QB 666, 679.
6. The same result would follow if the assessment was to be under the Misrepresentation Act 1972. Under s 7(1) of that Act, the defendant is liable to the plaintiff “in all respects as if the misrepresentations had been made fraudulently and were actionable in tort”.
7. This case does not call for a consideration of the circumstances in which, when a loss is established by reference to the difference in value, consequential losses may sometimes be awarded, as in Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158; [1969] 2 All ER 119.
8. (1952) 87 CLR 647 at 650. See also Voss Real Estate Pty Ltd v Schreiner and Ors (1998) 70 SASR 545.9. (1825) Ry & Mood 303 at 304, 171 ER 1028 at 1029.
10. (1887) 37 Ch D 541 at 594 cf (1889) 14 App Cas 337.
11. Ibid 652.
12. (1907) 4 CLR 1692 at 1703.
13. Ibid 653.
14. (1977) 16 ALR 23.
15. Ibid 26.
16. Ibid 36.
17. Ibid 38.
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