Corani & Corani v Wright, Wright and Basheer & De Conno Pty Ltd - [2004] SADC 154

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CORANI & CORANI v WRIGHT, WRIGHT AND BASHEER & DE CONNO PTY LTD
Judgment of His Honour Judge Smith
5 November 2004
TRADE PRACTICES
Misleading or deceptive conduct – misstatement in sales material provided by defendant agent as to area of land to be sold – effect of disclaimer clause in sales material – whether purchaser, plaintiffs, relied upon misstatement – purchasers elected to settle on contract reserving their rights to claim damages – whether such election to settle negatived reliance so that purchasers estopped from claiming damages – measure of loss or damage whether confined by analogies with tort law – whether natural person vendors can be secondarily liable pursuant to ss 82(1) and 75B for agent’s contravention of s52 – knowledgeable complicity required for “involvement” – mere principal and agent relationship by itself not sufficient for involvement – discussion of rights of contribution and indemnity where there is a mix of statutory and general law causes of action – whether defendants entitled to equitable contribution or indemnity.
FAIR TRADING
Misleading or deceptive conduct – whether natural person vendors “involved” within meaning of s84(1) in agent’s contravention of s56 – “involvement” not circumscribed by any provision similar to s75B of Trade Practices Act 1974 (Cth) – discussion of whether principal and agent relationship of itself amounts to involvement where agents contravening conduct is within authority.
Trade Practices Act 1974 (Cth) ss 52, 82; Fair Trading Act 1987 (SA) (SA) ss 56, 84; Misrepresentation Act 1972 (SA) s7, referred to.
Brown v Jam Factory Pty Ltd (1981) 53 FLR 340; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83; Fencott v Muller (1982-1983) 152 CLR 570; Yorke v Lucas (1983) 46 ALR 319; Hornsby Building Information Centre v Sydney Building Information Centre (1978) 140 CLR 216; Yorke & Anor v Lucas (1985) 158 CLR 661; I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002] 210 CLR 109; Burke v LFOT Pty Ltd (2002) 209 CLR 282; Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594; Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; McMahon v Pomeray Pty Ltd (1991) ATPR 52,851 (41-125); Burg Design Pty Ltd v Wolki (1999) 162 ALR 639; Wardley Australia Ltd v WA (1992) ATPR 40,565 (41-189); Como Investments Pty Ltd (In Liq.) v Yenald Nominees Pty Ltd (1997) ATPR 41-550 at 43,619 ; Redgrave v Hurd (1881) 20 ChD 1; Gould v Vaggelas & Ors (1985) 175 CLR 215; Commonwealth v Verwayen (1990) 170 CLR 394; Sargent v ASL Developments Ltd (1974) 131 CLR 634; MacCormick v Nowland (1988) ATPR 49,180 (40-852); Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1; Marks and Ors v GIO Australia Holdings Ltd (1998) 196 CLR 494; Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281; Aliotta v Broadmeadows Bus Service Pty Ltd & Anor (1988) ATPR 49,445 (40-873); Mullens v Miller (1882) 22 ChD 194; Bellotti v Quequers Development Ltd [1936] 1 All ER 89; San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340; Re La Rosa and ano; Ex parte Norgard v Rodpat Nominees Pty Ltd (1991) 31 FCR 83; Trade Practices Commission v Manfal Pty Ltd and Others (No 3) (1991) 33 FCR 382, considered.

CORANI & CORANI v WRIGHT, WRIGHT AND BASHEER & DE CONNO PTY LTD
[2004] SADC 154
Introduction

The plaintiffs in this action purchased from the defendants two allotments of land together with improvements thereon known as 43 and 45 North East Road, Collinswood. They entered into the contract of sale immediately following an auction on the 27^th May 2000 at which the first plaintiff was the successful bidder. Settlement under the contract was effected on the 23^rd June 2000. The selling agent was the third defendant.
Between the time of entry into the contract and settlement the plaintiffs discovered that the area of the subject land was not approximately 2,469 m² as it was represented to be but rather was approximately 2,300 m². The plaintiffs contend that they settled specifically reserving their rights to claim compensation for the loss allegedly arising from the over statement of the area of land.
In this action the plaintiffs claim $29,204.00 by way of such compensation.
The defendants deny the plaintiffs entitlement to any such loss.
The Claims – the Defences – the issues
The plaintiffs claim as damages what they say was the amount of overpayment for the land plus a certain proportion of the fees payable to the Lands Title Office and the Commissioner of Stamps. The quantum of the claim is calculated as follows:

·       Amount of overpayment (ie amount paid $513,000 less true value $485,115)

$27,885

·       Excess stamp duty paid

$1,181

·       Excess LTO fees paid

$138

TOTAL $29,204
(See 138; Exhibit P13)

There are multiple causes of action pleaded by the plaintiffs. They are in summary as follows:
·Damages pursuant to s82 of the Trade Practices Act 1974 (Cth) for breach of s52 of the said Act;
·Damages pursuant to s84 of the Fair Trading Act 1987 (SA) for breach of s56 of the said Act;
·Compensation for “error, omission or misdescription of the land” pursuant to Clause 5.4 of the Contract;
·Damages for negligent misrepresentation; and
·Damages pursuant to s7 of the Misrepresentation Act 1972 (SA).
The first and second defendants admit that the third defendant was their agent and at all material times was acting within the scope of its agency. They deny that they engaged in misleading or deceptive conduct and contend that if the third defendant did so it was without their knowledge or consent. They deny negligence and they seek contribution from the third defendant.
The third defendant contends:
·that while the brochure expressed the site area as being 2,469 square metres, it was expressed to be an approximate measurement and as such was not a misrepresentation of fact;
·that the brochure contained an express disclaimer of responsibility for information contained therein;
·that the plaintiffs purchased the land and improvements for investment only and thus the precise area was not material to their decision to buy (ie no reliance upon the information in the brochure); and
·that the plaintiffs are estopped from claiming loss or damage in respect of the misstated area of land by reason of electing to settle on the contract without notifying a protest or reservation of rights to the third defendant; and
·that the plaintiffs suffered no loss or damage.
Finally, the third defendant seeks contribution from the other defendants to the extent that any judgment obtained by the plaintiffs causes a reduction in the purchase price.
The Circumstances – Findings of Fact
I set out hereunder my findings as to the circumstances surrounding the contract and its completion. I will specially advert to the areas of conflict and make specific findings where necessary.
The Land – early history
The two allotments known as 43 and 45 North East Road, Collinswood, were jointly owned by the first and second defendants. The land had been in the first defendant’s family for several generations. The first defendant inherited it. He had owned and operated a carrying business and parked his truck on the land. At some stage in the course of the marriage the second defendant became a joint owner with the first defendant. In about 1994/1995 the first defendant suffered a stroke and as a result of an inability to work he and his wife decided to sell the land. They approached Mr John De Conno of the third defendant in about November 1999. Mr De Conno was a director and shareholder of Basheer & De Conno Pty Ltd, a licensed real estate agent. He appraised the property (see Exhibit P13). On the 3^rd April 2000 they appointed Mr DeConno’s company, the third defendant as their agent for the purposes of selling the allotments (see Exhibit D12). It was resolved to auction the land on Saturday the 27^th May 2000. The first and second defendants left the business of selling the land to the agent. They did not tell the agent the area of the two allotments. Indeed, I accept that they did not know the area of the two allotments.
As at the time of sale there were two tenancies on the land, the particulars being as follows:
·Collinswood Crash Repairs:
Term:          2/2/98 – 1/2/2003
Rent:           $39,792 per annum
·Doctors Surgery:
Term:          no formal lease
Rent:           $10,572 per annum
In addition to the premises housing the two tenants there was a shed in which the first two defendants had garaged the truck during the time of operating the carrying business.
Preparations for sale
In preparation for the auction, Mr John De Conno, of the third defendant, prepared a folder of documents which effectively was information for prospective purchasers (142; see Exhibit D5). The folder contained:
·Advertising brochure;
·Rent schedule;
·Plan or diagram of the land and buildings thereon; and
·Copies of two Certificates of Title.
Mr De Conno said he had “one to one appointments with a number of prospective purchasers” (142), including the first plaintiff. He said that he gave copies of the folder and enclosed documents to each of the potential buyers (143). It can be seen that the first document in the folder namely the advertising brochure sets out as follows:
“SITE AREA 2469 m² (approx)”.
Mr De Conno said in evidence that it was he who calculated the site area and his evidence about that was as follows:
“Q.You say in that document that the land area is 2469 square metres, approximately.
A.Yes.
Q.Do you see that.
A.Yes.
Q.How did you arrive at that figure.
A.I averaged the parallel boundaries.
Q.Can you explain what you mean by that, I don’t understand.
A.You add up the two parallel boundaries, get an average and multiply it out and that’s a standard practice within the industry.
Q.You multiply that average by what.
A.The two parallel boundaries, you add the two together, get an average and do the same on the other side and multiply it out.
Q.Multiply it by the average of the other two boundaries.
A.Yes.
HIS HONOUR
Q.You assumed they were true rectangles then, did you.
A.Yes, I must have.
XXN
Q.Did you make any search with the valuer general as to what the area of the property was.
A.No, I didn’t.
Q.You didn’t think it was necessary to take it to a surveyor.
A.Not at that time, no.”
(160-161)
Because of the irregular shape of the allotments calculating the area was quite a difficult exercise. Mr De Conno’s calculation is incorrect. Mr Lilio Bibbo, an engineer, calculated the area as 2,300.2 m² (see 61-67; Exhibits P9 and P11). The best evidence of area was that of the licensed surveyor, John Bested, who calculated the area as 2,298 m² (see 24-39; Exhibits P5, P6 and P7). The plaintiff, and indeed the case, has proceeded on the basis that the area is 2,300 m². It is a rounding up favourable to the defendants. I am content to proceed on that basis.
So the area of land in the advertising brochure was overstated to the extent of approximately 169 m².
I return to the narrative.
Early May 2000 – plaintiffs become interested – contact between plaintiffs and third defendant
There is conflict in the evidence of Mr and Mrs Corani on the one hand and Mr De Conno on the other as to the detail of the contact between them prior to the auction.
By reference to his diary, (see Exhibit P14), Mr De Conno said that Mr Corani telephoned him about the 10^th May 2000 expressing an interest in the property and in particular asking for more detail about the tenancies (143). He said that he called on Mr Corani at his Manningham home on that same day and left him with the folder containing the four lots of documents (143; see also Exhibit D5). He said that there was a discussion between them in which:
·Corani indicated interest in rental return because he was only earning 3% to 4% from the bank on his money and in the course of this explanation Corani produced some bank statements;
·he, De Conno, provided Corani with details of the tenancies and in particular told Corani that one of the tenants did not have a formal lease.
(144)
In particular, Mr De Conno said that Mr Corani did not discuss with him the development possibilities for the property (144).
On the other hand the evidence of both Mr and Mrs Corani was to the effect that Mr De Conno called at their Manningham home when Mr Corani was absent and left with Mrs Corani copies of:
·the advertising brochure;
·the rent schedule; and
·a plan or diagram of the land and improvements thereon.
(See 40, 50-52, 68, 69; see also Exhibit P8).
In particular, Mr Corani said that his interest in the property was sparked by the “for sale” sign (49). He said that as a result he rang Mr De Conno seeking the papers which would be of “interest to him” (68). He said that his wife received the papers (Exhibit P8) and put them in his office for his attention (51, 52). Mrs Corani supported that. She said that Mr De Conno came to the house and left her with papers for her husband who was away from the house at the time (40).
At first blush resolving this conflict would appear to be unnecessary. However, the defendants rely on the conversation which De Conno says occurred between him and Mr Corani as indicating that because Mr Corani was only interested in the investment potential of the land and not its development the precise area of the two allotments could not have been material to his decision to buy and in that sense he did not rely on the erroneous representation of area. Further, I suspect that the defendants were at pains to establish that Mr Corani had all the documents in the folder (Exhibit D5) and in particular the Certificate of Title to support their contention that Mr Corani knew the area of the allotments or at least had the means of ascertaining it accurately if he wished to.
As to this topic I prefer the evidence of Mr De Conno. Mr Corani in evidence-in-chief stated that he did not speak to Mr De Conno at all before the auction (52, 53) yet in cross-examination accepted that he did so (68). So too Mrs Corani’s evidence is a little unsatisfactory. She said that the time when the papers were delivered to the house by Mr De Conno was after the purchase of the land by her husband (40, 41, 42). Clearly the “selling information” documents would not have been delivered after the auction. She could be confused about another delivery made by Mr De Conno who accepts that he delivered lease documents to the plaintiffs home after the settlement (157, 158). So on balance I think the Corani evidence as to this is unreliable. It does not follow from this finding that I accept that Mr Corani’s sole motivation for purchasing the land was the investment value of it and not its development. So I find that Mr Corani met and spoke to Mr De Conno and received from him all the documents in the folder, including the Certificates of Title before the auction.
I return again to the narrative.
The Auction 27 May 2000 – 11.00 am – plaintiffs purchase property
In the light of the submissions put to me about the way in which the value of the land should be ascertained it is necessary to make findings about the auction and in particular the bidding. There is no conflict about what transpired at the auction.
At the outset I accept the uncontested evidence that no less than three days before the auction there was displayed for all to see at the offices of the third defendant:
·Form 1 – Statement under Section 7 of the Land and Business (Sale and Conveyancing) Act 1994 (Exhibit D16);
·Copies of Certificates of Title (Exhibits D1 and D2);
·Public Auction Conditions (Exhibit D7).
(See 145, 146)
These documents were also on display at the auction. At the auction the auctioneer drew the attention of all those present to the displayed documents (145, 146). The point which the defendants wished to make by establishing the prominent display of these auction documents is that these documents made it clear that the successful bidder was unconditionally required to complete the purchase.
There were about 20 persons in attendance including the first plaintiff. There was a person representing the tenant medical practitioners. The bidding reached $510,000. The auctioneer then consulted with Mr De Conno and Mr and Mrs Wright and then announced that the property was on the market. The bidding was then as follows:
·Mr Corani bid $511,000;
·Doctors representative bid $512,000;
·Mr Corani bid $513,000.
There were no further bids and the property was “knocked down” to Mr Corani (147, 148).
According to Mr De Conno at the signing of the contract the first plaintiff expressed some regret at having purchased the property (148).
Then there followed some difficulties with respect to Mr Corani paying the deposit of $51,300. Making a finding about this is unnecessary. Mr Corani paid the deposit and executed the contract indicating the purchaser as “Guiseppe Corani and nominee” (see Exhibit P1).
Settlement was to be the 23^rd June 2000.
The first plaintiff said and I accept it to be so that the factors which influenced him in purchasing the property were:
·location – being on a main road close to the city;
·the area; and
·the rental receipts being over $50,000 per annum.
(53)
When cross-examined about his plans for the land at the time of purchase he said:
“Q.As I understood what you told the judge earlier, you had no specific plans on the morning of the auction as to exactly what you would do with the site if you bought; is that right.
A.Specifically at that moment was that I am buying a property on the good location, a property close to where I live, a property which gave 2,469 square metre of land, a property that have income, just a bit under $50,000. I consider that’s a good property, that I can’t lose the money there.
Q.But you didn’t have any specific plan about what you would do with it if you bought it, did you.
A.At that moment all that I have, I know was three years lease, so for three years I know I can’t do nothing unless the tenants move out, I think it is a specifically no. Many things passed through my mind; could be little shopping centre, could be small warehouses, could be some – you name it, that’s what I was thinking.”
(72-73)
I take into account that such evidence is often coloured by the passage of events and the subtle processes of reconstruction. However, this evidence from Mr Corani had the ring of intrinsic probability about it. No one feature of the land dominated his motivation to buy and he did not pretend that the represented area was alone crucial to his decision to buy.
So I find that Mr Corani was induced to buy the land and improvements thereon in part at least because of the stated area of land.
Between Auction and settlement – discovery of shortfall in area
Within days of the auction Mr Corani, with the help of his son-in-law, asked the third defendant for copies of the leases (85; Exhibit D9). In response, Mr De Conno dropped some lease documents into the Manningham home of the Corani’s in early June when he returned from overseas (157, 158).

There was in the evidence considerable debate about the detail of an attempt to sell Mr Corani’s interest in the contract to the underbidders (88, 89, 90 (Corani), 150, 151 (De Conno)). It is not possible and nor is it necessary to make findings about this topic. Suffice it to say some approaches were made to the underbidders and nothing came of it.
On about the 6^th June 2000 the third defendant engaged North East Conveyancers to act for the vendors in the settlement (150; Exhibit D15). By that time the plaintiffs had nominated their solicitor Mr Ray Frost of Messrs Treloar & Treloar to act on their behalf (see Exhibit D14).
Sometime early in June 2000 Mr Corani made enquiries at the local council about the permissible uses of the land. He was contemplating building on the land including building home units (56, 87). In the course of this he discovered the shortfall in the represented area. His own calculations showed an area of about 2,300 square metres (56). He said that he made no calculation before the auction (58). Prior to the auction he understood the area of the allotments to be “the same as what was in the brochure 2469 m²” (58). When asked if he would have been prepared to bid $513,000 for the land if he had known it was 2,300 m² and not 2,469 m² Mr Corani answered:
“That is something really honestly that I can’t say, because that would affect me and all other bidders, I don’t know”.
(58)
As a result of discovering this shortfall Mr Corani spoke with his solicitor Mr Frost (57). Then presumably on the advice of Mr Frost on or about the 10^thJune he engaged Mr Lelio Bibbo, a structural engineer, to make a precise calculation of the area of land (62). Mr Bibbo calculated the area of both allotments to be a total of 2,300.2 m². On the 13^th June Mr Bibbo wrote to Mr Corani setting out his calculation (61; Exhibit P9). That calculation was later incorporated into a more formal report (see Exhibit P11).
Armed with Mr Bibbo’s calculation Messrs Treloar & Treloar on the 16^thJune 2000 wrote to both Mr De Conno and North East Conveyancers drawing the problem of the discrepancy to their attention (152, 164; Exhibits P2, P9 and D16). “Within a day or so” of receiving the Treloar & Treloar letter Mr De Conno spoke about the discrepancy to Mr Frost and on another occasion to Mr Corani (151, 153, 90, 91 and 95). Mr De Conno said in evidence that he expressed surprise to both Frost and Corani that Mr Corani had relied on the approximated area in the sales documentation when he had the wherewithal, namely the titles, to make a precise calculation himself (152, 153). North East Conveyancers response to the letter from Messrs Treloar & Treloar was much the same (see Exhibit P3). Their response was probably dictated by Mr De Conno. On my findings Mr Corani did have the Titles delivered to his home but nonetheless Mr De Conno’s response was a rather poor justification for such a significant mistake. Mr Corani said that he spoke to Mr De Conno about the discrepancy and suggested that some “arrangement” be made about it. According to Mr Corani, Mr De Conno “laughed at me and say ‘you bought it and it’s yours’ and ‘goodbye’” (91). Further, Mr Corani said that he told Mr De Conno that the settlement would go ahead but it would be under protest (90, 91 and 92). Mr Frost did not give evidence. Save for the conversations spoken of by Mr De Conno as occurring soon after the Treloar & Treloar letter, these conversations are difficult to place in the chronology of events. I think the probabilities are that at one time or other the parties said what they claimed to one another.
I now turn to the evidence as to the basis upon which settlement took place.
Was settlement under protest or not?
By letter dated the 20^th June 2000 Messrs Treloar & Treloar wrote to North East Conveyancers enclosing the transfer and in part the letter read as follows:
“Kindly note that our client will proceed with settlement under protest and reserves all rights to claim against the vendor and the vendors’ agents regarding the misdescription or misrepresentation of the area of land being purchased.”
(See Exhibit P4)
On the 20^th June 2000 Mr De Conno said that Mr Corani telephoned him. He said the following of the telephone call:
“... he didn’t want any hard feelings, he had assessed the situation, he said that the contract will settle according to the terms and conditions; and I was pleased to hear that and I said to him ‘I will confirm this conversation in writing’ and he gave me a fax number ...”
(153, 154)
It is this conversation which is the core of the third defendant’s contention that the plaintiffs are estopped from seeking compensation having elected to settle.
Mr Corani denied that he said that claimed above by Mr De Conno (90). Indeed as indicated above Mr Corani emphasised that in conversations with Mr De Conno he made it clear that though he would settle, it was under protest (91, 99). On the 21^st June Mr De Conno made a facsimile transmission to Mr Corani which set out, inter alia, as follows:
“I acknowledge your phone call of Tuesday the 20^th June whereby you confirmed that settlement of the above property would proceed as per the terms of the contract”
(153, 154; Exhibit D10).
As to whether Mr De Conno knew of settlement being under protest Mr De Conno said this in his evidence:
“Q.On that occasion, on 20 June 2000, did Mr Corani say anything to you about settlement under protest.
A.No.
HIS HONOUR
Q.And the previous conversation you had with him, because you had a previous call with both him and his solicitor, Mr Frost.
A.Yes.
Q.Any hint then.
A.No, in the letters from Frost I understand there was some indication of protest, but Mr Corani on the 20^th made it very clear that the settlement was on the 23^rd. He made it very clear to me that there was no hard feelings. He said those words and that we will settle as per the terms of the contract.
Q.So in the previous conversation with him, that is the conversation with Mr Corani prior to the 20^th, following the conversation with Mr Frost, tell me again what was said on the topic of the area of the land.
A.Well, he said he had someone check it and that there was a discrepancy and I was surprised to hear all that and he said that ‘You will have to get it checked out yourself’ so I said ‘Yes, I will do that’ and I engaged Fyfe Surveyors myself and we didn’t take it any much further than that because it was becoming a professional check that we had to do on it, so we left it at that.
XN
Q.Looking at Exhibit P4, a letter from Treloar & Treloar to North East Conveyancers, it’s addressed to North East Conveyancers by Treloar & Treloar.
A.Yes.
Q.Did you receive a copy of that letter in June 2000, or at any time prior to settlement.
A.I don’t recall receiving a letter.
Q.Is that a letter that you have seen, at least since that time in the course of preparation of this court case.
A.Yes.”
(154, 155)
In cross-examination Mr De Conno was pressed as to whether he knew the purchasers had settled under protest (155, 156). His best answer was that he could not recall (156).
I find that the plaintiffs did settle under protest. What passed between Mr De Conno and Mr Corani on the 20^th and 21^st June did not negate that. Through their solicitor the plaintiffs categorically notified North East Conveyancers who were the agents of the vendors. I find also that it is probable that Mr De Conno also knew. The intercourse between Mr Corani and Mr De Conno, namely the telephone call of the 20^th June 2000 and the facsimile of the 21^st, are not necessarily inconsistent with that. Mr De Conno’s retort in cross-examination that he was not able to recall whether settlement was under protest or not, was ambivalent and less than convincing. I do not accept that Mr Corani, having made an approach to Mr De Conno for some “arrangement” suddenly abandoned his position. The solicitors’ letter to the conveyancer made it clear. It is hard to accept that Mr De Conno’s chosen conveyancers would not have notified him of the protest. In any event, it is not crucial that the third defendant be notified. North East Conveyancers were charged with the responsibility of the settlement by the vendors’ agent and they were in receipt of the solicitors’ letter of protest. Though it is not necessary for my finding, I consider that in all the circumstances Mr De Conno ought to have dealt with Mr Frost of Messrs Treloar & Treloar and clear up the basis upon which settlement was to take place. Mr Corani had an imperfect grasp of English much less some of the contractual concepts which arose here. The confirmatory facsimile of the 21^st June was one of those documents which frequently emanate from lawyers offices. They are designed rather for production in a law suit than for genuine communication.
Such are the background circumstances as found by me.
Valuation Evidence
The plaintiffs called the only valuation evidence. Mr John Robert Eyre, a certified practising valuer, valued the land and improvements as at the date of the auction, namely the 27^th May 2000 (103; Exhibit P12). It was his opinion that the purchase price of $513,000.00 constituted an “overpayment” for the land of $27,885.000.
His opinion and methodology were the subject of considerable challenge but no other expert view was arraigned against him.
I now turn to the claims and the defences.
Claim for damages pursuant to Section 82 of the Trade Practices Act 1974 (Cth) for breach of Section 52 of the said Act
This, together with the claim under the Fair Trading Act 1987 (SA), was the main focus of the plaintiffs’ contentions.
Section 52(1) of the Trade Practices Act provides:
“A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
The above section “establishes a norm of conduct, failure to observe which has consequences provided for elsewhere in the same statute ...” (see Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 per Fox J at 348). A breach of s52(1) above gives rise to a right under s82 to recover the amount of the loss or damage.
Section 82(1) provides:
“A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.”
Section 52 is within Part V of the Act.
It is contended in this case that the first and second defendants who are natural persons are liable jointly with the corporate agent because being the principals they are “persons involved in the contravention”. Accordingly, s75B has a role to play and so I set it out hereunder.
Section 75B provides:
“(1) A reference in this Part to a person involved in a contravention of a provision of Part IV, IVA, IVB, V or VC, or of section 75AU or 75AYA, shall be read as a reference to a person who:
(a) has aided, abetted, counselled or procured the contravention;
(b) has induced, whether by threats or promises or otherwise, the contravention;
(c)has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d) has conspired with others to effect the contravention.”
(the italics are mine)
It can be seen that the ways in which a person can be involved in a contravention is circumscribed by s75B. Some degree of knowledgeable complicity is required. I will return to this under a later heading because it is apposite to this case.
I turn now to some relevant legal principles and apply them to the facts.
·Exercise of statutory construction:
Construing ss 52 and 82 is an exercise of statutory interpretation. So, effect has to be given to the ordinary meaning of the words employed in sections (see Brown v Jam Factory (supra) per Fox J at 348; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 per Lockhart J at 93).
·Relevance of common law concepts:
Common law concepts drawn from, for instance, the law of torts, cannot qualify the meaning of the words but nonetheless “may prove helpful in deciding a case under s52(1)” (see Brown v Jam Factory (supra) per Fox J at 348).
·The usual defendant is a Corporation but natural persons can be the subject of a judgment
For its constitutional validity s52 necessarily focuses upon the corporation (see s51xx of Constitution – Corporations Power). What triggers the entitlement to recover loss or damage under s82(1) is the contravention of s52 by a corporation. Further, a person may recover loss or damage from, not only the corporation whose conduct contravened s52, but also from “any person involved in the contravention” (see s82(1)). As indicated, the ways in which this person can be involved in the corporations contravention are circumscribed by s75B. Two questions arise, the answers to which are crucial to this case. They are:
·can this secondary or “accomplice like” liability for the corporations contravention extend to, not only corporations, but also natural persons such as the first and second defendants; and
·what degree of knowledge is required of the person “involved”.
It is now clear “any person involved in the contravention” within the meaning of s82(1) can include natural persons. The imposition of this secondary liability on natural persons pursuant to s82(1) assisted by s75B has been held to be a valid law of the Commonwealth and does not cease to be a law with respect to corporations insofar as it extends to natural persons. Rather, such an interpretation of the said provisions is regarded as reasonably incidental to the regulation of corporations (see Fencott v Muller (1982-1983) 152 CLR 570 per Gibbs CJ at 582, 583; see also s51xxxix of Constitution).
The question of the degree of knowledge required by the “person involved” was agitated in Yorke v Lucas (1983) 46 ALR 319. In that case the first respondent (a corporation) had acted as selling agent for the third respondents business. It had misstated to the applicants the turnover of the business in contravention of s52. The applicants sought damages under s82 from the managing director of the first respondent (a natural person) alleging that he was “a person involved in the contravention” within the meaning of s75B. In the Federal Court, Fisher J dismissed the application holding that it must be proved that a person was aware or should have been aware of the relevant facts before he can said to have been involved in a contravention. At p322 Fisher J said:
“At first glance it might be assumed that because s 52 does not in itself involve any questions of intent or fault or more generally mens rea on the part of the primary offender, the same would be the case with the accomplice. In other words that there was no obligation on the applicants to establish to any extent the state of mind of the alleged accomplice. However in my opinion such is not the case and consideration is required of the circumstances before Mr Lucas can be said to have been "involved" in the contravention as a result of the provisions of s 75B. In my opinion the authorities establish that it must be proved that Mr Lucas was aware or should have been aware of the relevant facts before he can be said to have been involved in the contravention.”
(The italics are mine)
It follows that merely being the principal in a principal and agent relationship, and thereby having, at common law, vicarious responsibility for the contravening conduct of the agent on the basis that it is within the agent’s actual or ostensible authority, would not by itself, make the principal “a person involved” within the meaning of ss 82(1) and 75B. Rather, it must be established that the principal had either actual knowledge of the facts constituting the contravening conduct, or deliberately avoided acquiring the knowledge (see Yorke v Lucas (supra) at 323-325).
·Intent to mislead and deceive and knowledge thereof is not relevant.
It is not necessary for a plaintiff to establish that the offending conduct is intended to mislead or deceive. All that is required is that it be established that in fact the conduct was misleading or deceptive or likely to be so (see Hornsby Building Information Centre v Sydney Building Information Centre (1978) 140 CLR 216 per Stephen J at 223; Yorke & Anor v Lucas (1985) 158 CLR 661 per Brennan J at 675-6).
So it is not necessary to prove that the defendants knew or intended to deceive or were negligent in calculating the area.
·Contributory behaviour is not relevant and cannot reduce the plaintiffs’ entitlement to loss or damage
Consistent with the absence of any requirement for a mental element in s52 including negligence, there is no provision in the Trade Practices Act which enables the plaintiffs’ entitlement to loss or damage to be reduced on the basis that either the plaintiff has been careless or in some way contributed to the contravention (see I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at [60]).
So the faint suggestion in this case that the first plaintiff was careless in that he failed to make his own calculation of area from the Certificates of Title which he was given prior to the sale is irrelevant other than to issues such as reliance.
·There is no mechanism in the Trade Practices Act 1974 for contribution or indemnity orders as between defendants
The Trade Practices Act does not provide any mechanism to enable the Court to make orders for contribution or indemnity as between defendants who have participated in the contravening conduct. Such claims can be founded in equity (see Burke v LFOT Pty Ltd (2002) 209 CLR 282). In this case there are contribution notices as between the defendants. I will return to this matter at the end of this judgment.
·The conduct the subject of this claim must be “in trade or commerce”
In Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 604 Mason CJ, Deane, Dawson and Gaudron JJ said as follows:
“What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. Such conduct includes, of course, promotional activities in relation to, or for the purposes of, the supply of goods or services to actual or potential consumers, be they identified persons or merely an unidentifiable section of the public.”
There is no debate in this case that the third defendant, by its servant Mr De Conno, was engaged in “trade or commerce” within the meaning of the section.
·For conduct to be misleading or deceptive or likely to be so within the meaning of s52 it must be misrepresentative in character or lead into error
For conduct to be misleading or deceptive the conduct must convey in all the circumstances of the case a misrepresentation (see Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202). In each case “it is necessary to examine the conduct whether representational in character or not, and ask the question whether the impugned conduct of its nature constitutes misleading or deceptive conduct” (see Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (supra) per Lockhart J at 93). Whether particular conduct is misleading or deceptive is a question of fact which turns upon the circumstances of each case. In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, Gibbs CJ at 198 said of the words of s52 as follows “... one meaning which the words mislead and deceive share in common is to lead into error.” Whether conduct is “misleading or deceptive or is likely to mislead or deceive” is an objective question of fact for the Court to decide in all the circumstances of the case. The section contemplates the effect of the conduct on reasonable people (see Puxu (supra) per Gibbs CJ at 198-9).

This is a matter of contention in this case.
In my view the mistaken assertion of the area of land in the brochure was misrepresentative in character and likely “to lead into error”. The dimension of the discrepancy was significant and was not ameliorated by the accompanying qualification “approx.” The error was of the order of 7%. I find that the conduct of the third defendant in publishing the brochure, containing that mistaken assertion, to interested purchasers, such as the plaintiffs, constituted “misleading or deceptive” conduct within the meaning of s52.
·Disclaiming provisions cannot operate to exclude reliance on the provisions of the Act
On one of the documents of the four in the folder of selling material, namely the document described as “plan or diagram of the land and improvements thereon”, were the following clauses:
“This brochure is prepared for illustration purposes only. Intending purchasers must not rely on information contained herein in determining their offer to purchase.
Neither the Vendor nor the Agent accepts any responsibility for errors or omissions contained in this brochure”
Such disclaiming clauses cannot operate so as to exclude the provisions of the Trade Practices Act or deprive a plaintiff of remedies under that enactment (see Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (supra) per Lockhart J at 98; McMahon v Pomeray Pty Ltd (1991) ATPR 52,851 (41-125) at 52,860; Burg Design Pty Ltd v Wolki (1999) 162 ALR 639 at 648). So I hold in this case that the clauses have no application. If necessary I would hold that if validly binding they could only apply to the said diagram document.
·Reliance – Inducement - Causation
The third defendant contended that in the circumstances the plaintiffs purchased the land and improvements for investment only and so the precise area of the land was not material to their decision to buy. In other words the plea was that the plaintiffs did not rely upon the misrepresented area and so it did not induce the entry into the contract which is said to have given rise to the loss.
To recover damages pursuant to s82 the plaintiffs must prove that the loss or damage was sustained “by” the conduct which breached s52 (see Wardley Australia Ltd v WA (1992) ATPR 40,565 (41-189) per Mason CJ at 40,571). In this case it is necessary for the plaintiffs to prove that the first plaintiff relied upon the representation as to the area and that it thereby induced him to bid for the property and so enter into the contract. However, it is not necessary that the plaintiffs here prove that the representation as to area was the sole inducement for entry into the contract. As to this the Full Court of the Federal Court of Australia in Como Investments Pty Ltd (In Liq) v Yenald Nominees Pty Ltd (1997) ATPR 43,617 (41-550) said:
“The law does not consider cause and effect in mathematical or in philosophical terms. The law looks at what influences the actions of the parties. Acknowledging that people are often swayed by several considerations, influencing them to varying extents, the law attributes causality to a single one of those considerations, provided it had some substantial rather than negligible effect. As Brennan J. said in San Sebastian Proprietary Limited v Minister administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340 at 366:
“The representation must be a real inducement or one of the real inducements to engage in the conduct which occasions the loss.”
Where a representation is relevant to the decision in question, and in its nature persuasive to induce the making of that decision, it accords with legal notions of causation to hold that it has a causative effect.”
As previously indicated I accept the first plaintiff’s evidence that he did rely upon the represented area in the sales brochure. It was one of several significant influences. The fact that he had the wherewithal, namely the Certificate of Title which would have enabled him, with some expert help, to calculate the area of the two allotments does not mean that he did not rely upon the representation as to area. In Redgrave v Hurd (1881) 20 ChD 1 Jessel MR at 21 said:
“If it is a material representation calculated to induce him to enter into the contract, it is an inference of law that he was induced by the representation to enter into it, and in order to take away his title to be relieved from the contract on the ground that the representation was untrue, it must be shown either that he had knowledge of the facts contrary to the representation or that he stated in terms, or showed clearly by his conduct that he did not rely on the representation.”
(See also Gould v Vaggelas & Ors (1985) 175 CLR 215 per Wilson J at 236).
In this case there is no need to rely upon any inference of reliance and inducement. I accept the first plaintiff’s direct evidence that he did rely on the representation of area.
·Estoppel - Election
This is the appropriate place to deal with the defendants’ contention that the plaintiffs are estopped from claiming loss or damage in respect of the misstated area of land by reason of electing to settle on the contract. This defence is effectively a contention by the defendants that the plaintiffs abandoned their protest about the misstated area and so no longer sought to rely upon the representation.
My findings of fact have effectively decided this issue of estoppel and election against the defendants. I have found that the plaintiffs settled under protest reserving their rights to claim in respect of the misstated area and that such was notified to the vendors’ agents, namely North East Conveyancers and Basheer & De Conno Pty Ltd. That being so, there was no unconscionably inconsistent position taken by the plaintiffs causing the defendants to act to their detriment such as to support a plea of estoppel (see Commonwealth v Verwayen (1990) 170 CLR 394). Nor was there an election which constituted a loss of the right to sue for damages (see Sargent v ASL Developments Ltd (1974) 131 CLR 634). The election to settle, conditional as it was, is neither inconsistent with, nor a waiver of any right to pursue an action based on reliance upon the misrepresentation (see MacCormick v Nowland (1988) ATPR 49,180 (40‑852) at 49,182; see also Como (supra) at 43,620).
I now turn to the question of whether the plaintiffs have suffered “loss or damage” as a result of buying the land.
·Loss or Damage
If the plaintiffs suffered loss or damage by the conduct of the defendants in contravention of s52 then pursuant to s82 of the Trade Practices Act 1974 (Cth) they are entitled to recover the amount of the loss or damage. The plaintiffs bear the onus of proving that they have suffered “loss or damage” on the balance of probabilities (see Sellars v Adelaide Petroleum NL (1994) 179 CLR 332).
At the outset I accept the valuation evidence of Mr Eyre. There was no evidence to the contrary. I do not accept that he effectively abdicated his view in the course of cross-examination or that his opinion was wholly untenable. In summary, it was his opinion that the land and improvements thereon were worth less than that paid by the plaintiffs by $27,885. So together with the fees of $1,319 is that the measure of damages which are recoverable?
The Trade Practices Act, in particular Parts IV and V, does not prescribe the measure of damages. What then is the measure of damages? In Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1, Mason, Wilson and Dawson JJ said at 11, 12 and 14 that the tortious measure of damages, namely placing the injured plaintiff, so far as money can do it, in the position in which he or she would have been had the tort not been committed “is appropriate in most, if not all, Part V cases, especially those involving misleading or deceptive conduct ...”. However the case of Gates which, for sometime, has guided the assessment of damages under the Trade Practices Act and the Fair Trading Acts has been explained in Marks and Ors v GIO Australia Holdings Ltd (1998) 196 CLR 494. At page 510 McHugh, Hayne and Callinan JJ said:
“It can be seen, therefore, that both ss 82 and 87 require examination of whether a person has suffered (or, in the case of s 87, is likely to suffer) loss or damage “by conduct of another person” that was engaged in the contravention of one of the identified provisions of the Act. That inquiry is one that seeks to identify a causal connection between the loss or damage that it is alleged has been or is likely to be suffered and the contravening conduct. But once that causal connection is established, there is nothing in s 82 or s 87 (or elsewhere in the Act) which suggests either that the amount that may be recovered under s 82(1), or that the orders that may be made under s 87, should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Indeed, the very fact that ss 82 and 87 may be applied to widely differing contraventions of the Act, some of which can be seen as inviting analogies with torts such as deceit (eg, s 52) or with equity (eg, s 51AA) but others of which find no ready analogies in the common law or equity, shows that it is wrong to limit the apparently clear words of the Act by reference to one or other of these analogies.
Gates did not hold to the contrary.”
At page 514 their Honours set down what are now the guiding parameters:
“Thus, the party that is misled will have suffered loss if a chose in action which was acquired was worth less than the amount paid for it. There may well be other ways in which it might suffer loss or damage. For example, consequential loss may be suffered. But no loss of that kind was alleged in this case and, putting that kind of loss to one side, we focus only on loss said to be suffered by the making of the contract.
It is necessary, then, to determine whether the value of what was acquired is less than what was paid. How is value to be assessed? It is to be assessed objectively, not according to what either or both of the parties to the contract believed that it would obtain from the contract. That is, the value of what in fact was acquired is to be identified according to what price freely contracting, fully informed parties would have offered and accepted for it (cf Spencer v The Commonwealth (1907) 5 CLR 418 at 431-432, per Griffith CJ; at 441, per Isaacs J.). It is only by comparison with the value assessed in this way that there can be an assessment of whether the party that is misled could have obtained some greater benefit or incurred less detriment. What is important is what that party could have done, not what it might have hoped for or expected. Some examples may serve to illustrate the point.”
(The italics, apart from the case citations, are mine)
In my view the valuation evidence of Mr Eyre complies with the above precepts. The loss or damage in this case is “the difference between the value of the thing acquired as at the date of acquisition and the price paid for it” (see Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281 at 291). The excess fees are an additional loss. Therefore the plaintiffs are entitled to recover pursuant to s82:
·the amount of overpayment  $27,885
·the excess fees  $1,319
^{______________}
  $29,204
  ^{______________}
·Which defendants are liable?
The issue now is which defendants are liable for the loss or damage.
The first and second defendants had no knowledge of the third defendant’s contravention. Further, it has not been established that they ought to have been aware of the misstatement of the area. The fact that they, as principals, are vicariously liable for the contravening conduct of their agent, the third defendant, it being within the scope of the agent’s actual or ostensible authority, does not make them “persons involved in the contravention”.
Counsel for the plaintiff contended that the case of Aliotta v Broadmeadows Bus Service Pty Ltd & Anor (1988) ATPR 49,445 (40-873), was authority for the proposition that the principal is a “person involved” in the agent’s contravention within the meaning of s82(1), if the contravening conduct is within the agent’s actual or ostensible authority. Mr Roder’s argument must necessarily be that the principal by dint of the relationship is fixed with the knowledge of the agent sufficient to satisfy the requirements of s75B. I say necessarily, because there was no argument that the first and second defendants knew, or ought to have known, of the agent’s contravening conduct or more particularly knew of the facts constituting it. However, Yorke v Lucas makes it clear that such constructive knowledge arising from the mere fact of the principal and agent relationship will not satisfy s75B. So to the extent that Aliotta holds otherwise, I am unable to follow it.
So I hold that the first and second defendants are not “persons involved in the contravention” within the meaning of the phrase in s82(1) as read in conjunction with s75B. Accordingly, the first and second defendants cannot be liable to the plaintiffs for damages under s82(1) for the third defendant’s breach of s52. I turn to the third defendant’s liability.
The third defendant engaged in the conduct which I have found contravened s52, and so is responsible for the said loss and damage.
Mr De Conno’s contravening conduct in this matter which was engaged in on behalf of the third defendant, Basheer & De Conno Pty Ltd, is deemed to be the conduct of that corporation (see s84(2)). Indeed it is clear that Mr De Conno acted as servant of the third defendant and in accordance with common law principles the third defendant would be vicariously liable for his conduct in misrepresenting the area of land because such was done by Mr De Conno in the course of his employment with the third defendant. Mr De Conno has not been sued personally so consideration of the complicity provisions, (ie s75B), is, to that extent, not necessary.
Accordingly, under this heading, the plaintiffs are entitled to a judgment in the sum of $29,204 against the third defendant alone.
Claim for damages pursuant to s84 of the Fair Trading Act 1987 (SA) for breach of s56 of the said Act
Section 56(1) of the Fair Trading Act provides:
“A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
Like its Commonwealth counterpart, the above section establishes a standard of conduct the breach of which provides a remedy in damages under s84 of the said State Act.
Section 84(1) provides:
“A person who suffers loss or damage by conduct of another in contravention of a provision of Part X (other than section 57) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.”
It can be seen that the above provisions of the Fair Trading Act, are virtually a mirror image of ss 52 and 82 of the Trade Practices Act. Of course the contravening conduct under the Trade Practices Act must be engaged in by a corporation.
So by a parity of reasoning most of my findings and conclusions in respect of the Trade Practices Act claims apply under this heading of claim.
Commensurate with those findings I hold that in contravention of s56, the third defendant in trade or commerce engaged in misleading or deceptive conduct, which induced the plaintiffs to purchase the land at a price in excess of its value. By that conduct the plaintiffs suffered loss and damage within the meaning of s84(1), in the sum of $29,204. So, pursuant to s84(1), the plaintiffs are entitled to recover that sum from the third defendant.
I turn now to the liability of the first and second defendants under s84(1). Are they persons “... involved in the contravention ...”? The contravening conduct in this case is within the actual or ostensible authority of the agent (see Mullens v Miller (1882) 22 ChD 194; see also Aliotta (supra) at 49,445). Therefore at common law the first and second defendants as principals would be bound by such conduct.
Though a common law concept, vicarious liability, in my view, applies to this statutory cause of action to render the first and second defendants liable as persons involved in the contravention of s56 by their agent. Indeed, as a matter of statutory interpretation it could be said that the principals became “involved” when their agent made representations about the land with their actual or ostensible authority. Such participation in the contravention amounts to being “involved” within the ordinary understanding of that word.
Notably, there is no provision in the Fair Trading Act similar to s75B of the Trade Practices Act, which circumscribes the way in which this secondary responsibility can arise. In particular, it is not required that the person involved within the meaning of s84(1) have some degree of actual knowledge of the contravening conduct or the facts constituting it. I do not regard the use of the word “involved” as conveying knowledgeable participation. In my view the mere fact of the principal and agency relationship would be sufficient to constitute the involvement. So, notwithstanding my finding that the first and second defendants neither knew nor ought to have known of the contravening conduct, nonetheless they are “involved” and so are liable under s84(1).
Accordingly, pursuant to s84(1) for the breach of s56 the plaintiffs are entitled to recover $29,204 jointly from the first and second defendants and the third defendant.
Claim for compensation for “... error, omission or misdescription of the Land” pursuant to clause 5.4 of the Contract (Exhibit P1)
The clause 5.4 provides as follows:
“5.4 Description of Land
Subject to this Agreement and any applicable laws, the Land is believed by the Vendor to be and shall be taken by the Purchaser as correctly described. No error, omission or mis-description of the Land shall invalidate this Agreement, but, if discovered and notice thereof is given by one party to the other before settlement (but not afterwards), the Vendor or the Purchaser (as the case may require) is entitled to compensation from the other party for the error, omission or mis-description.”
“Land” is defined in clause 1 of the Contract as follows:
“1.12“the Land” means the land described in the Schedule together with easements, rights, privileges and appurtenances referred to on the Certificate of Title and the improvements and Vendor’s fixtures and fittings on that land;”
So the question which immediately arises is whether a representation as to the area of land to be sold in a sales brochure, made prior to entry into the contract is an “error, omission or misdescription of the Land” within the meaning of clause 5.4. The case of Bellotti v Quequers Development Ltd [1936] 1 All ER 89 is instructive. In that case the plaintiff entered into negotiations with the defendant for the purchase of a house to be built on a building estate. He made particular enquiries as to the size of the back garden stating that he wished to erect a garage thereon. The defendant wrote to him indicating that the length of the garden was 40 feet “approximately”, but in fact, it was only 36 feet. Acting on this assurance, the plaintiff entered into the contract. Clause 10 of the conditions of sale read as follows:
“No error, misstatement or omission in the particulars, sale plan or conditions shall annul the sale, nor (save where the error, statement or omission relates to a matter materially effecting the description or the value of the property) shall any compensation be allowed either by the vendor or purchaser in respect thereof.”
In the Kings Bench Division, Hilbery J held that the plaintiff was entitled to rescind the contract on the basis that he was induced to enter into the contract by reason of an innocent material misrepresentation. In particular Hilbery J found that the letter setting out the specifications of the back garden was not “an error, misstatement or omission” within the meaning of the conditions of sale because the clause referred to the description of the land in the contract documents not in a document outside the contract. Hilbery J said at 94 as follows:
“The defendants further say that this was an error of description in the particulars and they rely on the National Conditions of Sale, clause 10. In the first place I do not think that this provision in clause 10 has any application to an innocent misrepresentation made before the contract comes into existence. I think that those words must be construed as applicable to an “error, misstatement or omission in the particulars, sale plan or conditions” in the contract. This conclusion is not altered by the fact that after the verbal representation was made, it was repeated in a letter in which were enclosed the particulars.”

In my view the conclusions of Hilbery J are correct. Similarly there was no error in the description of the land in the schedule to the Contract here. It follows therefore that the plaintiffs are not entitled to compensation under this particular heading.
Claim for Damages for negligent misrepresentation or misstatement
I find that:
·the third defendant, though acting for the first and second defendants, owed a common law duty of care to the plaintiffs;
·the scope of that duty of care extended to using all reasonable care and diligence to ensure that representations to purchasers such as the first plaintiff about the area of the land to be sold be reasonably accurate;
·that the third defendant was in breach of that duty of care in that it published to the plaintiffs a calculation of the area of land which was not made with reasonable care and skill and was materially erroneous;
·that the plaintiffs, through the agency of the first plaintiff, relied upon the misrepresentation and were induced thereby to buy the land by successfully bidding for it;
·the plaintiffs suffered loss and damage by paying more than the land was worth and incurring some incidental charges based on the amount of overpayment;
·that the first and second defendants are vicariously liable for the negligence of their agent the third defendant.
(see San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340).
In the result, the plaintiffs are entitled to recover damages in the sum of $29,204 jointly from the first and second defendants and the third defendant for negligent misrepresentation.
Claim for damages pursuant to s7 of the Misrepresentation Act 1972 (SA)
Again, commensurate with my findings both as to the statutory remedies and the claim in common law negligence, I find and hold that the plaintiffs are entitled to damages from the third defendant for misrepresentation pursuant to s7. However, the first and second defendants have made out the defence provided by s7(2)(b) of the said Act, and so are not liable for the third defendant’s negligent misstatement.
Conclusion re Plaintiffs’ claims
So there will be judgment for the plaintiffs in the sum of $29,204 against respectively:
·the third defendant pursuant to s82 of the Trade Practices Act 1974 (Cth) for breach by the third defendant of s52 of the said Act;
·the first and second defendants and the third defendant pursuant to s84 of the Fair Trading Act 1987 (SA) for breach by the third defendant of s56 of the said Act;
·the first and second defendants and the third defendant for the negligent misrepresentation by the third defendant; and
·the third defendant for damages for misrepresentation pursuant to s7 of Misrepresentation Act 1972 (SA).
with the effect that the judgment will be borne jointly by defendants.
Interest
The plaintiffs are entitled to interest on the judgment sum (see s39 of District Court Act). The calculation should be from the date of settlement to the date of this judgment. The rate of interest should be at the commercial rate which can conveniently be found in the Third Schedule to the Supreme Court Rules. The average rate over the period is approximately 6.5%. On that basis I allow interest in the sum of $8,220 (ie $29,204 x 6.5% per annum x 4.33 years = $8,220).
Contribution Proceedings
No argument was put as to the cross claims or contribution notices nor as to the applicable law. The matter is not without difficulty. So I will delay making any final orders on the contribution proceedings until I hear further argument from defendants’ counsel. I set out the issues which in my view require addressing.
·Contribution as between Joint Judgment Debtors
First of all as the matter now stands there is a joint judgment against the first and second defendants on the one hand and the third defendant on the other. If no contribution orders are made the law relating to joint judgment debtors will prevail.
The judgment of $29,204 will be borne as to 50% by the first and second defendant and as to 50% by the third defendant. If the plaintiffs recovered the entirety of the judgment from, say the third defendant, as would be their right, the third defendant could obtain contribution of 50% of that sum from the first and second defendants.
·Common Law Right of Principal to obtain Indemnity from Defaulting Agent
Secondly the liability of the principals, namely the first and second defendants, under s84 of the Fair Trading Act and for negligent misrepresentation, is a vicarious or secondary liability which arises from the relationship of principal and agent. They are liable for the agent’s contravention of s56 and for the agent’s negligent misrepresentation because the contravention and the misrepresentation were within the agent’s actual or ostensible authority.
The common law or more particularly the law relating to principal and agent would accord the principal a right of indemnity for any judgment incurred by him as a result of the agent’s default. In this matter are the first and second defendant entitled to be indemnified by the third defendant for any portion of the judgment recovered from them? It could be argued in support of such a right of indemnity that rather than being overpaid for their land the third defendant’s contravening conduct and negligence lost for them the opportunity of selling the property for a price in excess of its strict value.
·Equitable Contribution
Finally, there is to be considered the principles of equitable contribution.
As indicated there is no mechanism in either the Trade Practices Act or the Fair Trading Act to enable a court to make orders for contribution or indemnity. However, defendants who are the subject of a judgment for such statutory causes of action are entitled to seek equitable contribution one from the other (see Burke (supra); Re La Rosa and ano; Ex parte Norgard v Rodpat Nominees Pty Ltd (1991) 31 FCR 83; Trade Practices Commission v Manfal Pty Ltd and Others (No 3) (1991) 33 FCR 382). This is so even if there be a joint judgment arising from a mix of such statutory and common law causes of action (see Burke per McHugh J at [49]). In Burke McHugh J said in relation to the applicable principals as follows:
“Both common law and equity give a person the right to obtain contribution to a payment made by that person in discharging “a common obligation” that is owed by that person and others (Dimdore v Leventhal (1936) 36 SR (NSW) 378 at 385; Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 350-351). In determining whether there is “a common obligation”, the traditional test is whether the liability of each party “is of the same nature and to the same extent” (Caledonian Railway Co v Colt (1860) 3 Macq 833 at 844). Early cases suggested that the common law right arose as a result of an implied contract between the parties (Craythorne v Swinburne (1807) 14 Ves Jun 160 at 164, 169 [33 ER 482 at 483-484, 485]). But whether that be right or not -- and if it is, in many cases, it must be the result of a contract imputed to the parties -- the equitable principles now cover the field (Armstrong v Commissioner of Stamp Duties (1967) 69 SR (NSW) 38 at 48). Those principles are based on the equitable doctrine of equality. When a person pays more than his or her share of a common monetary obligation, the payment pro tanto discharges the obligation of all who owe the common obligation (Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 350-351). In accordance with the maxim that equality is equity, equity requires the common burden to be shared equally so that none of those owing the common obligation will pay more than his or her share of the burden. An order of contribution prevents the injustice that would otherwise flow to the plaintiff by the defendant being enriched at the plaintiff's expense in circumstances where they have a common obligation to meet the liability which the plaintiff has met or will have to meet (Bonner v Tottenham and Edmonton Permanent Investment Building Society [1899] 1 QB 161 at 174; Mahoney v McManus (1981) 180 CLR 370 at 388).”
(para 38)
Further, the following equitable principles can be distilled from the cases of Burke, La Rosa and Manfal:
·contribution should depend on the discharge of a common obligation (see Burke per McHugh J at [50]);
·the prevention of unjust enrichment (see Manfal per Lee J at 385);
·the dictates of fairness and justice should predominate (see Manfel per Lee J at 385; see also Burke per Gaudron A-CJ and Hayne J at [22]);
·contribution is to be commensurate with ensuring that each claiming defendant bears his or her proper share so as to prevent any unjust enrichment (see Burke per Gaudron A-CJ and Hayne J at [22]).
In this case, as was the case in Burke, the loss or damage is in substance the amount of overpayment which resulted from the agent’s contravening conduct. So arguably the joint judgment entered above is effectively a requirement that the first and second defendants disgorge the excess payment. It follows that if the third defendant is ordered to indemnify the first and second defendants they will not have paid their proper share but rather will stand “unjustly enriched”. Effectively the argument could be that they have profited by their agent’s contravention and justice will only be served by them disgorging it. This outcome would be arguably unpalatable because it would impose the loss on the innocent principals and effectively leave the defaulting agent without a penalty.
The question which remains is whether the principles of equitable contribution as enunciated in Burke override the common law position relating to the principals right to be indemnified by the agent? I would suggest that the majority judgments in Burke did not touch upon that matter. Further, do the principles in Burke also affect the liability of joint judgment debtors?
·Miscellaneous Matters – Agent’s Commission - Fees
For the purposes of contribution it would seem that the principals ought to be indemnified by the agent for the $1,319 being the excess of fees and moreover they should be entitled to recover that part of the agent’s commission applicable to the amount of the overpayment. This is not pleaded but I would give leave to amend.
All these matters require agitation before my decision as to where this judgment finally rests.
Final Orders on the main action
1Judgment be entered in favour of the plaintiffs against the defendants in the sum of $29,204.
2That the plaintiffs recover from the defendants interest on the judgment sum fixed in the sum of $8,220.
3That the contribution proceedings between the first and second defendants and the third defendant be adjourned for further submissions.
I will hear the parties as to costs and as to the date for hearing further argument on the contribution proceedings.

· Amount of overpayment (ie amount paid $513,000 less true value $485,115)	$27,885
· Excess stamp duty paid	$1,181
· Excess LTO fees paid	$138
TOTAL	$29,204