FEDERAL COURT OF AUSTRALIA
Chowder Bay Pty Ltd v Paganin [2017] FCA 332
File number: WAD 461 of 2013 Judge: BARKER J Date of judgment: 3 April 2017 Catchwords: CONSUMER LAW – whether respondents engaged in misleading or deceptive conduct under s 52 of the Trade Practices Act 1974 (Cth) – where applicants invested in joint venture for development of a resort pursuant to syndicate agreements – joint venture debt to be repaid from sale of villas comprising the resort – whether first and second respondents were involved or engaged in misleading or deceptive conduct as directors of companies – companies applied to bank for a loan facility to finance the development – securities given by applicants to bank in respect of loan facility – whether valuations prepared by the third and fourth respondents for bank were misleading or deceptive
CONSUMER LAW – whether applicants suffered loss or damage pursuant to s 82 of the Trade Practice Act 1974 (Cth) – applicants claim bank relied on valuations in providing financing for resort development – whether such reliance caused applicants to suffer loss – whether applicants entitled to damages for loss of opportunity to have development property sold – whether applicants entitled to recover legal costs incurred in related proceedings – whether related proceedings commenced as “defensive proceedings”
Legislation: Trade Practices Act 1974 (Cth) ss 52, 82
Fair Trading Act 2012 (WA)
Legal Profession Act 2008 (WA)
Cases cited: ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1; [2014] FCAFC 65
Advanced Buildings Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1995) ATPR (Digest) 46-144; [1995] FCA 236
Bennett v Elysium Noosa Pty Ltd (in liquidation) (2012) 202 FCR 72; [2012] FCA 2011
Caason Investments Pty Ltd v Cao [2015] FCAFC 94
De Bortoli Wines Pty Ltd v HIH Insurance Ltd [2012] FCAFC 28
Digi-tech (Australia) Pty Ltd v Brand (2004) 62 IPR 184; [2004] NSWCA 58
Finishing Services Pty Ltd v Lactos Fresh Pty Ltd (2007) ANZ ConvR 93; [2006] FCAFC 177
Hampic Pty Ltd v Adams [1999] NSWCA 455
I&L Securities Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41
Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206
Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526
JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237
Marks v GIO Australia Holding Ltd (1998) 196 CLR 494; [1998] HCA 69
McBride v Christie’s Australia Pty Ltd [2014] NSWSC 1729
McCarthy v McIntyre [1999] FCA 784
QNI Resources Pty Ltd v Sino Iron Pty Ltd [2016] QSC 62
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4
Townsend v Roussety and Co (WA) Pty Ltd (2007) 33 WAR 321; [2007] WASCA 40.
Travel Compensation Fund v Tambree (2005) 224 CLR 627; [2005] HCA 69
Date of hearing: 14-18, 21-24, 29 March and 4 May 2016 Date…
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- AGLC
- Chowder Bay Pty Ltd v Paganin [2017] FCA 332
- Case
- [2017] FCA 332
- Decision Date
CaseChat Overview and Summary
The court examined the evidence and submissions presented by the parties and found that the applicants had not established their claims against the respondents. The court held that there was insufficient evidence to support a finding of misleading or deceptive conduct by the respondents, and that the applicants had not demonstrated that they suffered loss or damage as a result of any such conduct. The court also found that the applicants' decision to commence proceedings against certain respondents before others was not unreasonable, and that there had been little emphasis placed on the extent to which the proceedings could have succeeded. The court concluded that the applicants' originating application should be dismissed, and that the applicants would pay the costs of each respondent unless a respondent indicated within 7 days of the judgment that it wished to move for a costs order on some other terms.
The court ordered that the applicants' originating application be dismissed as against each respondent, and that the applicants pay the costs of each respondent, to be taxed if not agreed, unless a respondent indicated within 7 days of the judgment that it wished to move for a costs order on some other terms. The parties were directed to provide further submissions on the orders to be made, including the costs of the proceeding.
Orders
Orders of the court
1. As against each respondent, the application be dismissed.
2. Unless a respondent indicates within 7 days of today that it wishes to move for a costs order on some other terms, the applicants do pay the costs of each respondent, to be taxed if not agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
The valuers contend there is no evidence to establish that this settlement sum represented any discount on the amount that Chowder Bay was liable for as a consequence of its failure to complete the sale contract.Consideration In the circumstances, as I have found in relation to the 497 Proceeding, I consider it was not unreasonable for Chowder Bay to commence the 277 Proceeding, although why it chose to sue the Bank is not clear. While the valuers also raise submissions about the unreasonableness of the applicants not pursuing all respective respondents at the same time, and instead proceeding against the Bank and the Ibex companies at first, and then the directors and the valuers in this proceeding at a later time, I do not consider that forensic decision to be an unreasonable one. Whilst, at least in principle, the costs of the 277 proceeding might, at least to some extent, together with the settlement sum, be considered recoverable in this proceeding, had the misleading and deceptive conduct action been established, as the directors submit there really has been little emphasis placed on the extent to which the 277 Proceeding could have succeeded. Little evidence has been led in respect of the purchase of the Bay Beach Villa under a separate contract not to do with the joint venture, and why that contract was liable to be upset. If the misleading and deceptive conduct action had been made out, I would have declined to make any award of damages in respect of the 277 Proceeding because the evidence, in the event, is insufficient to satisfy me that the proceeding had a reasonable chance of success, as well as because of the general evidentiary difficulties in identifying the expenses actually incurred, which I have canvassed above in relation to the 497 Proceeding.CONCLUSION AND ORDERS For these reasons I would dismiss the applicants’ originating application. I will hear from the parties as to the orders that should now be made including as to the costs of the proceeding.