Bowler v Hilda Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Bowler v Hilda Pty Ltd [2000] FCA 899

TRADE PRACTICES – alleged contraventions of Part V of the Trade Practices Act 1974 (Cth) – purchase of unit in property redevelopment – alleged contravention arising from representation that unit purchased by applicants could be lived in, rented out privately or rented as a serviced apartment – whether representation false because residential use of unit not authorised upon registration of units plan: Land (Planning and Environment) Act 1991 (ACT), s 175 – whether representation false because residential use of building not approved by Building Controller: Building Act 1972 (ACT), s 54A – whether representation relied upon by applicants.

ACCESSORIAL LIABILITY – Part V contraventions made out – whether directors of property redevelopment company and of real estate companies liable under s 75B of the Trade Practices Act 1974 (Cth) – whether requisite actual knowledge present.

DAMAGES – assessment of damages under s 82 of the Trade Practices Act 1974 (Cth) – applicants claim difference between price paid for, and "true value" of, unit at date of acquisition – extent to which subsequent events expose "true value": Kizbeau Pty Ltd v WG&B Pty Ltd (1995) 184 CLR 281 – applicants claim difference between total outlays and receipts – whether all losses flowed directly from contraventions.

Trade Practices Act 1974 (Cth), s 52, s 53(g), s 53A, s 53A(1)(b), s 75B, s 75B(a), s 75B(c), s 82, s 84(2)
Federal Court of Australia Act 1976 (Cth), s 51A
Land (Planning and Environment) Act 1991 (ACT), s 159, s 175, s 225, s 227, s 228, s 230, s 230(3), s 235, s 235(1), s 245(1), s 245(2), s 249
Unit Titles Act 1970 (ACT), s 16(1)(a), s 24, s 25, s 25(1)(b)
Building Act 1972 (ACT), s 32(1), s 32(1)(a)(iii), s 32(1)(a)(iv), s 33(1), s 33(6), s 54A
Buildings (Design and Siting) Act 1964 (ACT), s 6

Bowler v Hilda Pty Ltd (1998) 80 FCR 191 referred
Grant v Estill Holdings Pty Limited (SC of ACT, 5 February 1990, Lockhart J) referred
Auburn Municipal Council v Szabo (1971) 67 LGRA 427 referred
Ryde Municipal Council v Royal Ryde Homes (1970) 19 LGRA 321 referred
Baulkham Hills SC v O'Donnell (1990) 69 LGRA 404 referred
Leichardt MC v Terminals Pty Ltd (1970) 21 LGRA 44 referred
Matijesevic v Logan City Council (1983) 51 LGRA 51 referred
Parramatta CC v Shell (1972) 2 NSWLR 632 referred
Whitlock v Brew (1968) 118 CLR 445 referred
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 referred
Holloway v McFeeters (1956) 94 CLR 470 applied
Gould v Vaggelas (1985) 157 CLR 215 discussed

Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd (1994) 123 ALR 681 referred
Westbay Seafoods (Australia) Pty Ltd v Transpacific Standardbred Agency Pty Ltd (FCA, 6 June 1996, Full Court) referred
Giorgianni v R (1985) 156 CLR 473 referred

Jones v Dunkel (1959) 101 CLR 298 referred
Transport Industries Insurance Co…

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Details
Case
[2000] FCA 899
Decision Date

CaseChat Overview and Summary

In the case of Bowler v Hilda Pty Ltd, the applicants, Mr and Mrs Bowler, sought damages under section 82 of the Trade Practices Act 1974 (Cth) in relation to alleged misleading or deceptive conduct by the respondents, who were involved in the marketing and sale of units in a residential development. The applicants alleged that the respondents made certain representations that induced them to purchase a unit, which they claimed caused them loss. The court had to determine whether the representations were false, whether the applicants relied on them, the accessorial liability of the directors of Hilda, and the assessment of damages. The applicants sought damages for the alleged misleading or deceptive conduct which occurred during meetings with a representative of the Leader companies, the respondents responsible for marketing the units.

The legal issues before the court included determining the falsity of the alleged misleading or deceptive representations, whether the applicants relied on the representations when purchasing the unit, the accessorial liability of the directors of Hilda under section 75B of the Trade Practices Act, and the assessment of damages under section 82 of the Act. The court had to apply the principles established in Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 and Kizbeau Pty Ltd v WG&B Pty Ltd (1995) 184 CLR 281 when assessing damages. The court also had to consider the evidence of subsequent transfers of units in the development to determine the value of the units at the date of acquisition.

The court found that the representations made by the Leader companies were false and misleading, and the applicants relied on them when purchasing the unit. The directors of Hilda were held to be accessorially liable under section 75B of the Trade Practices Act. The court assessed the damages based on the difference between the price paid for the unit and its real value at the date of acquisition, taking into account subsequent events that illuminated the value of the unit at that date. The court found that the applicants were entitled to damages in the sum of $37,000.00 and allowed them leave to apply for interest. The court also directed the parties to make submissions on the issue of the costs of the proceeding.

In summary, the court found in favour of the applicants, awarding them damages of $37,000.00 against the first, second, and third respondents. The court allowed the applicants leave to apply for interest and directed the parties to make submissions on the issue of the costs of the proceeding.

Orders

Orders of the court

1. judgment be given for the applicants against the first, second and third respondents in the sum of $37,000.00;

2. leave be given to the applicants to apply for interest under s 51A of the Federal Court of Australia Act 1976 (Cth);

AND DIRECTS THAT:

3. the parties make submissions on the issue of the costs of the proceeding.

Background

Background to the litigation

Before so doing I would note that the applicants' claim is, in the circumstances that now obtain, for damages under s 82 of the Trade Practices Act 1974 (Cth) ("the TP Act") in respect of an alleged infringement of provisions of Part V of that Act. The principal outstanding issues that now fall for determination are (a) the falsity or otherwise of the representations alleged to constitute Part V infringements; (b) whether the representations were relied upon; (c) accessorial liability of directors of the corporate respondents under s 75B of the TP Act; and (d) damages and their assessment. The facts peculiarly relevant to each of these will be detailed separately as each issue is considered General Background This proceeding is a representative one brought under Part IVA of the Federal Court of Australia Act 1976 (Cth). There are twenty-eight other members of the group. All are purchasers of units from Hilda Pty Limited ("Hilda"), the first respondent. The proceeding itself arises out of the redevelopment and then sale to the public through the vehicle of a corporate Units Plan of residential and serviced apartments. The applicants, Mr and Mrs Bowler, acquired a unit (Unit 23) in the Units Plan which for convenience I will call the Regency Apartments. The redevelopment was undertaken by Hilda the then lessee of the property. I should note in passing that the fourth and fifth respondents, Mr and Mrs McDonald, were directors of Hilda at all relevant times. The public marketing of the units can be said for the moment to have been undertaken by either or both of Leader Real Estate Pty Ltd and Leader Holdings Pty Ltd, the second and third respondents, in consequence of an agency agreement with Hilda. I will not differentiate between the two and will, for convenience, refer to them collectively as "the Leader companies". Mr Whitcombe, the sixth respondent, was a director of the Leader companies. The essence of the complaint made by the Bowlers is that the Leader companies in promoting the sale of the units made representations to them which were misleading or deceptive and which induced them to acquire Unit 23 to their damage and loss. Contraventions of the TP Act, s 52, s 53(g) and s 53A(1)(b) were alleged. Relief was sought in consequence, that relief now being limited to a claim for damages. The contravening conduct alleged is claimed to have occurred during meetings between the Bowlers and a Mr Singh, an employee of one of the Leader companies, which occurred on 22 and 23 July 1993. The impugned representations (said to have been both oral and written) were, in substance, that:(i)the income the Bowlers were to receive from their unit would be at least equal to 10 per cent of the purchase price paid for up to nine years from the date of completion of the purchase and this was "guaranteed" (the "rental guarantee");(ii)their unit could be lived in, rented out privately or rented as serviced apartments (the "unit use" representation); and(iii) Mr Singh's father had bought one of the units.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

FINN J
(10) Such evidence as there is of transfers of units in Regency Apartments subsequent to their initial sales is limited to the following paragraph in Mr Swinbourne's report:"The following transfers have been recorded in Regency Apartments:Unit 42 70m2 February 1997 $40,000 (first transfer)Unit 43 21m2 July 1998 $28,000 (previously transferred 7/97 at $59,000)Unit 44 21m2 February 1999 $25,000 (previously transferred 10/97 @ $30,000 and 3/94 @ $59,000)Unit 2 53m2 February 1997 $52,000 (previously transferred 3/94 @ $103,000)Unit 9 53m2 May 1999 $75,800 (previously transferred 4/94 @ $95,000)Note: It is understood Units 2 and 9 above are not restricted to serviced apartment use."Submissions and Conclusions There was no significant divergence between the parties as to the principles to be applied in assessing damages under s 82 of the TP Act in a case such as this. Under the shadow of the decisions of the High Court in Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 and Kizbeau Pty Ltd v WG&B Pty Ltd (1995) 184 CLR 281, they have been expounded regularly by judges of this Court in appellate and first instance decisions: see eg Anema E Core Pty Ltd v Aromas Pty Ltd [1999] FCA 904; Radferry Pty Ltd v Starborne Holdings Pty Ltd (unreported, FCA, 18 December 1998, Full Court); Carlton v Pix Print Pty Ltd [2000] FCA 337; see also Jacobs, Damages in a Commercial Context, Ch 7. Here I need only advert to the following. (i) In assessing damages under s 82, the Court is not constrained by, though it may be assisted by, doctrines developed at common law and in equity. "The question presented by s 82 … is what loss or damage has been caused by the conduct contravening the Act": Marks v GIO Australia Holdings Ltd, above, at 512. That loss is to be gauged by a comparison "between the position in fact of the party which alleges loss and the position that would have obtained had there been no contravention": Radferry Pty Ltd v Starborne Holdings Pty Ltd, above. (ii) The usual starting point in a case of the present kind is to measure the difference between the price paid for the property acquired and its value in fact at the date of acquisition. That latter value is to be assessed "according to what price freely contracting, fully informed parties would have offered and accepted for it": Marks, at 514 (emphasis added). The value in fact is the "real value" of what was acquired and this is not necessarily the same as its market value: see the discussion in Flemington Properties Pty Ltd v Raine & Horne Commercial Pty Ltd (1997) 148 ALR 271 at 310-317. (iii) Though value in fact is to be assessed as at the date of acquisition, subsequent events may be looked at insofar as they illuminate the value of the thing at that date:"A distinction is drawn, however, between subsequent events that arise from the nature or use of the thing itself and subsequent events that affect the value of the thing but arise from sources supervening upon or extraneous to the fraudulent inducement. Events falling into the former category are admissible to prove the value of the thing, those falling into the latter category are inadmissible for that purpose."Kizbeau Pty Ltd v WG&B Pty Ltd, above, at 291; see also Anema E Core Pty Ltd v Aromas Pty Ltd, above.

Ratio Decidendi

Legal Principle Established

Established by: FINN J

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