Cameron, Peter Stuart v Goldtek Australia Pty Ltd
[1996] FCA 693
•9 AUGUST 1996
CATCHWORDS
TRADE PRACTICES - Application for damages for misleading and deceptive conduct in relation to an agreement for the exclusive right to act as head distributor of a "mobile gold plating system" - representations prior to agreement as to future nett income - whether representations were misleading or deceptive - whether applicants suffered loss or damage.
Trade Practices Act 1974: ss 51A and 52
Yorke v Ross Lucas Pty Ltd (1982) 69 FLR 116
Setters v Adelaide Petroleum NL & Ors (1994) 179 CLR 332
No. NG 183 of 1995
PETER STUART CAMERON & ANOR v GOLDTEK AUSTRALIA PTY LTD & ORS
MOORE J
SYDNEY
9 AUGUST 1996
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 183 of 1995
)
GENERAL DIVISION )
BETWEEN: PETER STUART CAMERON
First Applicant
FRANCIS ANN CAMERON
Second Applicant
AND: GOLDTEK AUSTRALIA PTY LTD
First Respondent
AUSTRALIAN BUSINESS DEVELOPMENT PTY LTD
Second Respondent
BRUSHTEK AUSTRALASIA PTY LTD
Third Respondent
ALLEN HERBERT LEWIS
Fourth Respondent
DAVID FALCONER
Fifth Respondent
DAVID CHARLES TYSON
Sixth Respondent
ROBERT GEORGE STUBBS
Seventh Respondent
JUDGE: Moore J
PLACE: Sydney
DATE: 9 August 1996
ORDER OF THE COURT
THE COURT ORDERS THAT:
The second respondent pay the applicants $301,488 plus interest in the sum of $68,000.00.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 183 of 1995
)
GENERAL DIVISION )
BETWEEN: PETER STUART CAMERON
First Applicant
FRANCIS ANN CAMERON
Second Applicant
AND: GOLDTEK AUSTRALIA PTY LTD
First Respondent
AUSTRALIAN BUSINESS DEVELOPMENT PTY LTD
Second Respondent
BRUSHTEK AUSTRALASIA PTY LTD
Third Respondent
ALLEN HERBERT LEWIS
Fourth Respondent
DAVID FALCONER
Fifth Respondent
DAVID CHARLES TYSON
Sixth Respondent
ROBERT GEORGE STUBBS
Seventh Respondent
JUDGE: Moore J
PLACE: Sydney
DATE: 9 August 1996
REASONS FOR JUDGMENT
Judgment is sought against two respondents Australian Business Development Pty Ltd ("ABD") and David Charles Tyson in proceedings brought by Peter Stuart Cameron and Francis Anne Cameron against seven respondents. Neither ABD nor Tyson appeared in the proceedings and no defence has been filed by them though service has been proved. As a result of agreements reached between the applicants and five of the respondents, the proceedings, as against them, have been discontinued by consent. After indicating during the hearing that I was not satisfied, on what had been put to that point, that a case had been made out against Tyson, I was informed by counsel for the Camerons that no further submissions would be made in relation to the application as it concerned Tyson nor did they require detailed reasons for the preliminary views I had expressed.
The proceedings are, for relevant purposes, brought under the Trade Practices Act 1974 ("the Act"). The Camerons are a married couple who signed an agreement in March 1994 relating to a business they intended to operate in New South Wales. The agreement was between the first respondent Goldtek Australia Pty Ltd ("Goldtek") and the Camerons. Under the agreement Goldtek granted the Camerons an exclusive right to act as head distributor of a "mobile gold plating system" within New South Wales and the Australian Capital Territory. Under the agreement the Camerons were required to pay Goldtek the sum of $95,000. The involvement of ABD arose at an earlier point in time. The precise relationship between ABD and Goldtek is not entirely clear. However for reasons which become apparent shortly, that is of no consequence.
The mobile gold plating system referred to in the agreement was a system involving the use of machines which enabled the gold plating of non-ferrous metal objects without removing the objects from larger objects to which they might be affixed. This was illustrated in a promotional video, which is in evidence, used to induce the Camerons to enter the agreement in which metal objects on a car such as a door handle and wing mirror were gold-plated by use of these machines. Under the agreement the Camerons were to receive and did receive a motor vehicle and a machine used for gold-plating and a miscellany of business equipment.
Prior to entering the agreement the Camerons were told various things about the process by, inter alia, the fourth respondent, Allan Herbert Lewis in March 1994. There is evidence that in February and March 1994 Lewis was an employee of ABD. I am satisfied he was authorised to act on behalf of ABD. In the amended statement of claim relied upon by the applicants it is alleged that on or about 1 March 1994 certain representations were made to them and insofar as ABD was concerned, they were made by, inter alia, Lewis. The relevant representations are as follows:
"b)That the cash flow and net income per year for a single vehicle operation using the Goldtek Mobile Gold Plating operation would be as set out in the document entitled "Cashflow for single vehicle operation".
c)That it would be feasible for a single vehicle operation to achieve five operations per day and that, in that case, the cash flow for a single operation using the Goldtek Mobile Gold Plating operation would be as set out under the heading "5" in the document entitled "Cash Flow for Single Vehicle Operation".
Particulars of (b) and (c)
The representations are set out in the document entitled "Cash Flow for Single Vehicle Operation" which was included in document headed "Goldtek" and numbered "35" (prepared on the instructions of the Sixth Respondent) and handed to the Applicants by the Fourth Respondent and the Fifth Respondent at the meeting. The representation is also set out in bundle of documents commencing with draft agreement described as between the Second Respondent and "Goldtek (NSW) Pty Ltd" (prepared on the
instructions of the Sixth Respondent) also handed to the Applicants by the Fourth Respondent and the Fifth Respondent at the meeting.
(d)That net income for the Applicants for the period from April 1994 to December 1994 from the sale of distributorships should the Applicants become the head distributor within New South Wales and the Australian Capital Territory of the Goldtek Mobile Gold Plating operation would be as set out in the document showing "Nett Income/Year $311,760" and that during that period 18-20 distributors would be established in New South Wales.
Particulars
The representations are set out in the document showing "Net Income/Year $311,760" which was set out in bundle of documents commencing with draft agreement described as between the "Second Respondent and "Goldtek (NSW) Pty Ltd" (prepared on the instructions of the Sixth Respondent") handed to the Applicants by the Fourth Respondent and the Fifth Respondent at the meeting."
Counsel for the Camerons submitted that each of these matters constitute a future matter for the purposes of s51A of the Act. It follows, it was submitted, that in the absence of evidence that ABD had reasonable grounds for making the representations they are to be taken to be misleading. As there is no such evidence, the Camerons have established, it was submitted, that ABD has engaged in conduct proscribed by s52.
I am satisfied on the evidence that each of the representations pleaded in the manner just described was made on behalf of ABD. The Camerons were given documents by Lewis before entering the agreement which canvassed the matters pleaded. I accept the submission based on the combined operation of ss 51A and 52 and accordingly I am satisfied that ABD engaged in conduct proscribed by the latter section.
This gives rise to a consideration of whether the Camerons suffered loss or damage by that conduct. The relevant facts may be briefly stated. In total, the Camerons paid $179,600 under the agreement to Goldtek though some payments were made prior to entering it and other payments were made pursuant to arrangements entered into which were collateral to the agreement itself. Other sums were expended which I refer to shortly in the context of the quantification of the damage suffered. The business acquired by the Camerons did not prove a success. They encountered significant technical problems in using the portable gold-plating equipment in the way that it had been represented it might be used. Only one distributorship was sold contrary to what was contemplated in the agreement. The business proved to be an unmitigated disaster for the Camerons. The levels of income represented to them in the representations were not met and indeed did not even come close to being met. While it may be accepted that a combination of factors may have led to the failure of the business I am satisfied that damage was suffered by the Camerons as a result of the representations made. Had it not been for the representations the Camerons would not have embarked upon the business venture at all. Had it not been for the representations I am satisfied that the Camerons would have not expended the amounts of money they did in trying to make a success of the business.
The damages claimed can be grouped into three headings. The first concerns the direct operating costs associated with acquiring and running the business. They included the payments made to Goldtek to acquire the business, a sum of $8,881 associated with the acquisition or leasing of a computer, copier, phones and faxes, a sum of $777 for polishing equipment and a sum of $109,633 representing operating losses incurred during the period March to September 1995. Those costs total $301,488 after an adjustment is made for income received and the proceeds of the sale of the residue of the business. This amount is recoverable.
The second concerns the costs associated with the sale of the applicants' home to meet debts which arose from the operation of the business. In my view, this loss is too remote. It is not a loss caused by the proscribed conduct.
The third concerns income lost by each of the applicants both during the period they sought employment after the failure of the business and also income they would otherwise have earned during the period they unsuccessfully operated the business. In the particulars of the losses in the statement of claim reference is made to personal drawings from the business which I take to be income derived by the Camerons. The amount involved is not apparent. However the operating loss I earlier referred to is a nett amount, that is, it does not include the personal drawings. There is authority for the proposition that a claim for lost wages should not be allowed as it does not involve a financial loss but the loss of an opportunity to earn wages: see Yorke v Ross Lucas Pty Ltd (1982) 69 FLR 116 at 137. It is now plain that lost opportunity may be compensable see: Sellers v Adelaide Petroleum NL & Ors (1994) 179 CLR 332. However it is unnecessary to determine any legal issue having regard to the facts.
Prior to entering the business the subject of these proceedings the Camerons had operated a guest house. They bought it in March 1985 and sold it in September 1993. It was described as "quite a valuable business". There is no evidence to suggest either of the applicants worked in employment, or indeed sought employment, till they commenced to operate the business to which the proceedings relate in March 1994. There is evidence that Mr Cameron had been offered employment in March 1994 but declined it. It is entirely unclear when, or indeed if, the Camerons would have taken up employment after the sale of the guest house. It may be they would have, equally they may not have worked for some further period while they looked for other business opportunities. They may simply have enjoyed a period of leisure after what may well have been a demanding period operating a guest house. It is, for my part, really speculation. I am not satisfied that had they not entered the business, the Camerons would have engaged in employment. Accordingly the amounts claimed as lost wages have not, in my opinion, been demonstrated to be loss caused by the proscribed conduct of ABD.
Accordingly the applicants are entitled to judgment against ABD in the sum of $301,488 plus interest which I determine in the sum of $68,000.00. Interest is for the period September 1994 to the date of judgment and is calculated by reference to Schedule J of the Supreme Rules 1970, being the rules of the Supreme Court of New South Wales.
I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.
Associate: ........ ........ ......
Dated: 9 August 1996
APPEARANCES
Counsel for the First Applicant: Mr I.E. Davidson
Solicitor for the First Applicant: Kerridge & Osborne
Counsel for the Second Applicant: Mr I.E. Davidson
Solicitor for the Second Applicant: Kerridge & Osborne
Solicitor for the First Respondent: Mr A.H. Lewis appeared on behalf of the First Respondent
Counsel for the Second Respondent: No appearance
Solicitor for the Second Respondent: No appearance
Counsel for the Third Respondent: Mr A. Leary
Solicitor for the Third Respondent: Ramrakha Jenkins
Solicitor for the Fourth Respondent: Mr A.H. Lewis appeared in person
Solicitor for the Fifth Respondent: Mr D. Falconer appeared in person
Counsel for the Sixth Respondent: No appearance
Solicitor for the Sixth Respondent: No appearance
Counsel for the Seventh Respondent: Mr A. Leary
Solicitor for the Seventh Respondent: Ramraha Jenkins
Dates of Hearing: 22, 23 & 30 July 1996
Date of Judgment: 9 August 1996
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