CONTRACT – whether the first appellant, in scrutinising a draft contract for the sale of a tenanted property by the first respondent to the second appellant and effectuating exchange, was acting in his capacity as a director of the second appellant or as a solicitor pursuant to a retainer – if there was such a retainer, whether it was a retainer to act generally in the purchase or whether it was a limited retainer to execute the conveyancing aspects of the purchase – whether the retainer included an implied duty of care which the first appellant breached by failing to advise the second appellant as to the desirability of making inquiries concerning the financial situation of the tenants – whether the second appellant, if it had made inquiries concerning the financial situation of the tenants, would have discovered the truth – whether, in circumstances in which the first respondent’s contravention of s 52 of the Trade Practices Act 1974 (Cth) (TPA) was found to have been an operative cause of the second appellant’s decision to purchase the property and the loss thereby sustained, it was open to the primary Judge to find that the first appellant’s failure to advise the second appellant to make inquiries, by which the falsity of the first respondent’s misrepresentation would have been discovered, was also a cause of the loss
DAMAGES – measure of damages in respect of loss caused by the first appellant’s breach of his retainer – measure of damages under s 82 TPA in respect of loss caused by the first respondent’s contravention of s 52 – relevance of the second appellant’s allegedly incompetent management of the property after settlement – method of calculation of the true value of the property at the time of sale
CONTRIBUTION - right to contribution at common law and in equity - whether the first respondent (having been held liable to pay damages to the second appellant under s 82 TPA in respect of its contravention of s 52) and the second respondent (having been held liable to pay damages to the second appellant under s 82 in respect of his involvement, within the meaning of s 75B, in the first respondent’s contravention of s 52) were entitled to claim contribution against the first appellant (who had been held liable to pay damages to the second appellant in respect of a breach of his contract of retainer) - whether contribution may only be claimed by one party from another if the first party has fully discharged, or has been adjudged liable fully to discharge, a common obligation to a third party, or whether the first party may cross-claim for contribution against the second party in the proceeding in which the first party’s liability to the third party is to be determined - whether the loss caused by the breach of contract was the same loss as that resulting from the conduct infringing…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Burke v LFOT Pty Ltd [2000] FCA 1155
Case
[2000] FCA 1155
Decision Date
CaseChat Overview and Summary
Burke v LFOT Pty Ltd involved a dispute where Mr. Burke, a director and solicitor, was alleged to have been careless and to have aided and abetted breaches of the Trade Practices Act (TPA) by the respondent, LFOT Pty Ltd. The matter was brought before the court to determine whether Mr. Burke's conduct amounted to carelessness and whether he was complicit in the contraventions of the TPA by LFOT. The case hinged on the extent of Mr. Burke's knowledge and involvement in the misrepresentations made by LFOT regarding the tenancy and lease incentives. The court also had to address the cross-claim against Mr. Burke, focusing on the nature of his retainer with Hanave prior to the exchange of contracts.
The court was tasked with deciding whether Mr. Burke's conduct constituted carelessness under the TPA, considering the potential for Hanave to have discovered the misrepresentations with more extensive inquiries. Additionally, the court needed to determine whether Messrs. Glew and Tressider were involved in aiding and abetting LFOT’s contravention of the TPA. This involved examining their knowledge of the high-quality tenant description and the undisclosed incentive payment. The court also had to assess the extent of Mr. Burke’s role and responsibilities, if any, before the exchange of contracts, particularly in light of his dual role as director and solicitor of Hanave.
In its reasoning, the court held that Mr. Burke’s carelessness was established as the misrepresentations effectively led to Hanave entering the contract, regardless of the possibility of discovering the untruths with more thorough investigation. Regarding the aiding and abetting allegations, Mr. Glew was found not to be involved as he was unaware of the high-quality tenant description. However, Mr. Tressider was found to be aware of both the description in the property report and the undisclosed incentive payment, thus implicating him in the contravention. The court also found that Mr. Burke's firm had acted for Hanave since 1992, but there was no explicit retainer for acting before the exchange of contracts. Despite this, Mr. Burke had chastised clients for not consulting the firm prior to purchasing property, indicating an expectation of his involvement.
The court dismissed the appeal and the cross-appeal, ordering the appellants and cross-appellants to pay the respondents’ and cross-respondents’ costs of the appeal, respectively.
Orders
Orders of the court
1. The appeal be dismissed.
2. The appellants pay the respondents’ costs of the appeal.
3. The cross‑appeal be dismissed.
4. The cross‑appellants pay the cross‑respondents’ costs of the appeal.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
LEE, HEEREY AND LEHANE JJ
As to the question of Mr Burke’s carelessness, her Honour considered (at par 52) that once it was accepted that the misrepresentations were effective as a cause of Hanave’s entry into the contract it was no answer that it may have discovered the untruths had Mr Burke undertaken more extensive enquiries: Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302 at 309. Her Honour said that the “(l)oss suffered by Hanave was caused ‘by’ the conduct of Jagar within the meaning of s 82(1) TPA”. THE SECOND JUDGMENT OF MOORE J As to the aiding and abetting allegations against Messrs Glew and Tressider, his Honour noted that in his first judgment he had accepted Mr Glew’s evidence that he did not know the description of Barbara’s Storehouse as a “high quality tenant” had been used in the property report. His Honour recorded his understanding of the majority judgments in the Full Court as treating the contravening conduct of Jagar as a cumulation of the high quality tenant representation and the failure to disclose the incentive payment. Thus, in his Honour’s view, because Mr Glew did not know of the former he was not a person involved in the contravention of the TPA by Jagar. As to Mr Tressider however, his Honour found that he knew of both the description in the property report and Barbara’s Storehouse record of rent payment. His Honour also found that Tressider was aware at the time of the sale that the contract required disclosure of lease incentives, that the payment of the $60,000 could be characterised as an incentive, and was not disclosed. He thus knew of the essential elements of the conduct which the majority in the Full Court had concluded contravened s 52. Turning to the cross-claim against Mr Burke, his Honour noted that it was not in issue that after exchange of contracts Mr Burke’s firm Gilbert Mane acted for Hanave in the conveyance. The question was the role, if any, of the firm before exchange. Gilbert Mane had acted for Hanave since about 1992. Much of the work Gilbert Mane had been doing for Hanave before and after the purchase of the Leichardt property was acting for the company as a lessor of property. For that work Gilbert Mane’s costs were met by the lessees. Mr Burke agreed in cross-examination that on occasions he had chastised clients of Gilbert Mane who had failed to consult the firm prior to purchasing a property at auction and prior to exchange of contracts. There was no express retainer for Gilbert Mane to act before, or indeed after, exchange. His Honour referred to his first judgment where he dealt with Mr Burke’s evidence about the capacity in which he acted before exchange. Mr Burke had stated in evidence that when he attended the auction, and prior to that, he was acting in his capacity as director of Hanave and not as its solicitor, as he also had been at the time of exchange. There were letters of 28 June, 18 July and 20 July 1994 from the agent addressed to “Mr Burke, Hanave Pty Ltd”. However on 19 July, shortly after the auction and before exchange, Mr Burke received a facsimile from Kyle (the agent) addressed to Gilbert Mane. This was the one enclosing the revised tenancy schedule. Mr Burke’s explanation for this fax was that he must have given Kyle a Gilbert Mane business card at the auction because he did not have any Hanave cards.