Fenech v Sterling

[1983] FCA 278

Re: GEORGE FENECH and JULIAN FENECH
And: ROBERT STERLING (1983) 79 FLR 244
No. NSW G97 of 1980
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Davies J.(1)

CATCHWORDS

Trade Practices - proceedings under s.87(1A) - whether instituted within limitation period prescribed by s.82(2) - accrual of cause of action - whether affected by equitable principle relating to fraud

Trade Practices Act 1974 (Cth) ss.52, 80, 82, 83, 87

Crown Suits Act 1898 (WA) s.37

Limitation Act 1969 (NSW) s.55

Limitation of Actions Act 1958 (Vic) s.27

Trade Practices Commission and Robert Sterling (1980) 28 ALR 497

Brown v Jam Factory Pty Limited (1981) 35 ALR 79

Mister Figgins Pty Limited v Centrepoint Freeholds Pty Limited (1981) 36 ALR 23

Bulli Coal Mining Company v Osborne (1899) AC 351

The Crown v McNeil (1922) 31 CLR 76

Gibbs v Guild (1882) 9 QBD 59

Trade Practices - Proceedings under s 87(1A) - Whether instituted within limitation period prescribed by s 82(2) - Accrual of cause of action - Whether affected by equitable principle relating to fraud - Trade Practices Act 1974 (Cth), ss 52, 80, 82, 83, 87 - Crown Suits Act 1898 (WA), s 37 - Limitation Act 1969 (NSW), s 55 - Limitation of Actions Act 1958 (Vic), s 27.

HEADNOTE

The Trade Practices Commission had sought injunctions pursuant to s 80(1) of the Trade Practices Act 1974 restraining Robert Sterling Pty Ltd from certain activities in respect of certain land.

On 21 February 1980 (in a judgment reported in (1980) 28 ALR 497) Lockhart J gave judgment in favour of the Commission and made certain orders.

On 12 November 1975 George Fenech and Julian Fenech had purchased land on a written agreement as tenants in common from Robert Sterling Pty Ltd. On 31 October 1980 they brought these proceedings against Robert Sterling seeking to recover damages from him and alleging, inter alia, that the company had been wound up on 28 July 1978, that it would be futile to seek to recover damages from the company and that at all times Robert Sterling had been a shareholder in the company and its managing director.

Held: (1) If sealed with the seal of the court, the judgment and reasons for judgment of Lockhart J dated 21 February 1980 provided evidence which could be relied upon under s 83 of the Trade Practices Act 1974 with respect to any findings of fact made therein.

(2) Section 82(2) is not a general limitation enactment. It is a provision dealing specifically with a cause of action which the statute created. It makes no such exemption for a cause of action based on fraud or deceit as is made in s 55 of the Limitation Act 1969 (NSW) or s 27 of the Limitation Act 1958 (Vic).

(3) Whether or not the proceedings now under consideration were brought under s 82(1) or s 87(1A) of the Trade Practices Act 1974, the limitation period by s 82(2) should be applied because s 87(1A) is discretionary and, in the exercise of that discretion, the intention of Parliament expressed in s 82(2) should be given full force and effect.

(4) The proceedings now under consideration were not brought within three years of the accrual of the cause of action within the meaning of s 82.

(5) The discretion conferred by s 87(1A) should therefore not be exercised in the applicants' favour and the proceedings should be dismissed.

Trade Practices Commission v. Sterling (1980) 28 ALR 497; Brown v. Jam Factory Pty Ltd (1981) 53 FLR 340; Mister Figgins Pty Ltd v. Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23; Bulli Coal Mining Co v. Osborne (1899) AC 351; R v. McNeil (1922) 31 CLR 76; Gibbs v. Guild (1882) 9 QBD 59, referred to.

HEARING

Syney, 1982, December 5; 1983, October 13. #DATE 13:10:1983

O B Patterson, for the applicants.

J Kahn, for the respondent.

Solicitors for the applicants: Public Solicitor.

Solicitors for the respondent: J W Walker & D K L Raphael.

MPS

ORDER

1. The application be dismissed.

2. Leave be reserved to the parties to apply for any order as to costs or otherwise as may seem meet.

JUDGE1

On 21 February 1980, Mr Justice Lockhart gave judgment in a proceeding in the Federal Court of Australia brought by the Trade Practices Commission against Robert Sterling, a shareholder and managing director of Robert Sterling Pty Limited. The Trade Practices Commission had sought injunctions pursuant to s.80(1) of the Trade Practices Act 1974 to restrain Robert Sterling from

(a) aiding, abetting, counselling or procuring any company or person to engage in trade or commerce, in the conduct of advertising, representing, offering for sale or selling interests in land in a manner that is misleading or deceptive or is likely to mislead or deceive in contravention of s.52 of the Act;(b) inducing or attempting to induce, any company or person to engage in such conduct; and

(c) being in any way, directly or indirectly, knowingly concerned in, or party to, such conduct by any company or person.'

The proceeding concerned the activities of Robert Sterling Pty Limited in the sub-division and selling of land near Lake Burrumbeet, Ballarat, Victoria, and Robert Sterling's association with those activities and with Robert Sterling Pty Limited. Mr Justice Lockhart's judgment is reported at (1980) 28 ALR 497. His Honour found in favour of the Trade Practices Commission and ordered that:

'1. The respondent be restrained until further order from aiding, abetting, counselling or procuring any company or person to engage, in trade or commerce, in the conduct of advertising, representing, offering for sale or selling interests in land in a manner that is misleading or deceptive in contravention of s 52 of the Trade Practices Act 1974;

2. The respondent be restrained until further order from inducing or attempting to induce any company or person to engage in any of the conduct aforesaid and from being in any way, directly or indirectly, knowingly concerned in or party to such conduct by any company or person;
<$P 3. The respondent pay the applicant's costs of this proceeding including any reserved costs; and

4. Liberty reserved to apply."

The proceedings with which I am now dealing were brought by George Fenech and Julian Fenech, persons who had purchased land from Robert Sterling Pty Limited in the course of the activities which Mr Justice Lockhart discussed in his reasons for judgment. The present proceedings are brought against Robert Sterling.

Order 4 rule 1 of the Federal Court Rules establishes the practice that, save where the rules otherwise provide, proceedings instituted in the original jurisdiction of the Court shall be instituted by way of the filing of an application in the form numbered 5 in the First Schedule. That form requires that the application be accompanied by an affidavit or statement of claim. The original application lodged on 31 October 1980 named George Fenech as the applicant. It was subsequently amended to include Julian Fenech as an applicant. Other amendments were made in the course of the proceedings and the amended application now reads:

'On the grounds appearing in the accompanying Statement of Claim, the applicants claim :-

1. Orders in terms of Section 82, Section 87(1A) and Section 87(2)(c) and (d) of the Trade Practices Act, 1974 (as amended).

2. In the alternative, on the facts pleaded in paragraphs 1 to 10 of the Statement of Claim filed herein, the Applicants seek orders in term of Section 82 of the Trade Practices Act, 1974 (as amended).

3. In the further alternative, on the facts pleaded in paragraphs 1 to 10 of the Statement of Claim filed herein, the Applicants seek orders in terms of Section 87(1A) and Section 87(2)(d) of the Trade Practices Act, 1974 as amended).

4. In the further alternative, on the facts pleaded in paragraphs 1 to 10 of the Statement of Claim filed herein, the Applicants seek orders i in terms of Section 87(1A) and Section 87(2)(c) of the Trade Practices Act, 1974 as amended).

5. Such orders as the Court deems meet.

6. Costs.'

A statement of claim was filed on 31 October 1980 and that also was amended during the course of the proceedings and now reads:

'1. Some time in November, 1975, the Applicants agreed to purchase from Robert Sterling Pty Limited and Robert Sterling Pty Limited agreed to sell to the Applicants an interest in land at 'Paradise Waters Estate' near Ballarat in the State of Victoria.

2. The Applicants made a payment of money in the sum of $3,650.00 to Robert Sterling Pty Limited pursuant to the said Agreement.

3. In order to induce the Applicants to make and complete the said Agreement and pay the said money, Robert Sterling Pty Limited and/or its agents made representations to the Applicants in conjunction with :-

(a) the nature of the interest in the land;

(b) the ownership of the land;

(c) the development approval by local government authorities;

(d) the zoning of the land;

(e) the completion of development;

(f) the engagement of consultants and

(g) the expected increase in the value of the land and the profit which could be made on its resale

which were untrue, misleading and deceptive.

4. Acting on the faith and truth of the said representations and induced thereby, the applicants entered into the said Agreement and paid the said money.

5. The Applicants have, some time in 1978, discovered, and the fact is, that the said representations were untrue, misleading and deceptive.

6. By reason of the matters aforesaid, the applicants lost the monies invested in the land and also failed to make the profit which they expected to make.

7. Robert Sterling Pty Limited was wound up by the Supreme Court of New South Wales in its Equity Division on 28th July, 1978 and it would be futile to endeavour to recover damages from the company.

8. During all relevant times, the respondent, Robert Sterling, was Managing Director and a shareholder in Robert Sterling Pty Limited.

9. On 21st February, 1980 Lockhart J, in the Federal Court of Australia at Sydney granted the Trade Practices Commission's Application for injunctions pursuant to Section 80(1) of the Trade Practices Act ('the Act') restraining Robert Sterling from :-

(a) aiding, abetting, counselling or procuring any company or person to engage in trade or commerce, in the conduct of advertising, representing offering for sale or selling interests in land in a manner that is misleading or deceptive or is likely to mislead or deceive in contravention of Section 52 of the Act;

(b) inducing or attempting to induce, any company or person to engage in such conduct; and

(c) being in any (way), directly or indirectly, knowingly concerned in, or party to, such conduct by any company or person.

10.Lockhart J also made certain findings pursuant to Section 83 of the Act.

11.The Applicants seek orders as referred to in the Application filed herein."

The defence reads:

'1. THE Respondent admits paragraph 1 of the Statement of Claim.

2. THE Respondent admits paragraph 2 of the Statement of Claim.

3. THE Respondent does not admit paragraph 3 of the Statement of Claim.

4. SAVE That the Applicant entered an agreement, the Respondent does not admit paragraph 4 of the Statement of Claim.

5. SAVE That the Applicant made a discovery, the Respondent does not admit paragraph 5 of the Statement of Claim.

6. THE Respondent does not admit paragraph 6 of the Statement of Claim and in particular does not admit that the loss of profits expected to be made on the resale of the land is the same loss or damage referred to in Section 82 of the Act.

7. THE Respondent admits paragraph 7 of the Statement of Claim.

8. THE Respondent admits paragraph 8 of the Statement of Claim.

9. THE Respondent admits paragraph 9 of the Statement of Claim.

10.THE Respondent denies that Lockhart J was empowered under Section 83 of the Act to make the said findings of fact as the said Section 83 is ultra vires the powers conferred on the Commonwealth by Section 51(xx) of the Commonwealth Constitution or any other Section.

11.THE Respondent claims that the Plaintiff is, by reason of Section 82(2) of the Act statute barred from initiating or pursuing proceedings.

12.THE Respondent denies that the Document of Lockhart J is a document under the Seal of the Court within the meaning of Section 83 of the Act.'

The following facts are agreed:

'1. That Robert Sterling Pty Limited was until 28th July, 1978 a company duly incorporated in New South Wales pursuant to the Provisions of the Companies Act, 1961.

2. That on 28th July, 1978, Robert Sterling Pty Limited was wound up by order of the Supreme Court in its Equity Division.

3. That on or about 12th November, 1975, the applicants herein agreed to purchase from Robert Sterling Pty Limited and Robert Sterling Pty Limited agreed to sell to the applicants, an interest in land at the 'Paradise Waters Estate' near Ballarat in the State of Victoria.

4. That some time prior to the said date, the applicants were approached by a Mr Kranicz, a servant or agent, of Robert Sterling Pty Limited.

5. That some time prior to the said date, Mr Kranicz gave the applicants certain brochures headed 'Paradise Waters Estate, Ballarat', 'Robert Sterling Pty Limited congratulate you on your purchase of Paradise Waters Estate' and Certificate from the Shire of Ballarat headed 'Ballarat & District Planning Scheme 1966'.

6. That some time prior to the said date, Mr Kranicz represented to the applicants that they would be entitled upon payment of money and the signing of a Contract to an interest in the land known as the 'Paradise Waters Estate', such interest entitling them to exclusive possession of a piece of land having an area of one acre within such estate.

7. That the representation referred to in paragraph 6 above, was made by Mr Kranicz, a servant or agent, of Robert Sterling Pty Limited in the course of its business.

8. That the representation referred to in paragraph 6 above, was made by Mr Kranicz in the course of his duties on behalf of Robert Sterling Pty Limited.

9. That the representation referred to in paragraph 6 above, was untrue, misleading and deceptive in that the applicants were buying an interest as tenants-in-common together with other persons in the whole of the land comprised in the 'Paradise Waters Estate' and were not buying an interest in land which entitled them to exclusive possession of a piece of land having an area of one acre in the said estate.

10.That the representation referred to in paragraph 6 above, was material in that it materially contributed to the applicants entering into their Contract with Robert Sterling Pty Limited for the purchase of an interest in land in the said estate.

11.That some time prior to the said date, Mr Kranicz represented to the applicants that Robert Sterling Pty Limited was the owner of the land known as 'Paradise Waters Estate'.

12.That the representation referred to in paragraph 11 above, was made by Mr Kranicz, a servant or agent, of Robert Sterling Pty Limited in the course of its business.

13.That the representation referred to in paragraph 11 above, was made by Mr Kranicz in the course of his duties on behalf of Robert Sterling Pty Limited.

14.That the representation referred to in paragraph 11 above, was untrue, misleading and deceptive in that Robert Sterling Pty Limited did not at that or any other time hold the legal estate in fee simple in the said land and was not in a position to give good title to the applicants as purchasers of a lot in the said land.

15.That the representation referred to in paragraph 11 above, was material in that it materially contributed to the applicants entering into their Contract with Robert Sterling Pty Limited for the purchase of an interest in 'Paradise Waters Estate'.

16.That some time prior to the said date, Mr Kranicz represented to the applicants that Robert Sterling Pty Limited had obtained the approval of the Ballarat Shire Council to sub-divide land in the 'Paradise Waters Estate' and to develop it by installing services such as roads, kerbing, guttering, water, electricity, gas, drainage and sewerage.

17.That the representation referred to in paragraph 16 above, was made by Mr Kranicz, a servant or agent, of Robert Sterling Pty Limited in the course of its business.

18.That the representation referred to in paragraph 16 above, was made by Mr Kranicz in the course of his duties on behalf of Robert Sterling Pty Limited.

19.That the representation referred to in paragraph 16 above, was untrue, misleading and deceptive in that Robert Sterling Pty Limited never did obtain final approval from the Ballarat Shire Council to sub-divide and to develop the land in the 'Paradise Waters Estate'.

20.That the representation referred to in paragraph 16 above, was material in that it materially contributed to the applicants entering into their Contract with Robert Sterling Pty Limited for the purchase of an interest in land in the 'Paradise Waters Estate'.

21.That some time prior to the said date, Mr Kranicz represented to the applicants that it was likely that the Ballarat Shire Council would soon alter the zoning of the land from 'Corridor' zoning to residential 'A' zoning.

22.That the representation referred to in paragraph 21 above, was made by Mr Kranicz, a servant or agent, of Robert Sterling Pty Limited in the course of its business.

23.That the representation referred to in paragraph 21 above, was made by Mr Kranicz in the course of his duties on behalf of Robert Sterling Pty Limited.

24.That the representation referred to in paragraph 21 above, was untrue, misleading and deceptive in that none of the relevant steps to put in train the rezoning of the land were taken.

25.That the representation referred to in paragraph 21 above, was material in that it materially contributed to the applicants entering into their Contract with Robert Sterling Pty Limited for the purchase of an interest in land in the 'Paradise Waters Estate'.

26.At some time prior to the said date, Mr Kranicz represented to the applicants that the development of the 'Paradise Waters Estate' was likely to be completed in approximately one year from the date of signing the Contract of Sale of Land.

27.That the representation referred to in paragraph 26 above, was made by Mr Kranicz, a servant or agent, of Robert Sterling Pty Limited in the course of its business.

28.That the representation referred to in paragraph 26 above, was made by Mr Kranicz in the course of his duties on behalf of Robert Sterling Pty Limited.

29.That the representation referred to in paragraph 26 was untrue, misleading and deceptive in that such an estimate for the completion of the sub-division was utterly unrealistic.

30.That the representation referred to in paragraph 26 above, was material in that it materially contributed to the applicants entering into their Contract with Robert Sterling Pty Limited for the purchase of an interest in land in the 'Paradise Waters Estate'.

31.That some time prior to the said date, Mr Kranicz represented to the applicants that Robert Sterling Pty Limited had a number of prominent well qualified and experienced consultants.

32.That the representation referred to in paragraph 31 above, was made by Mr Kranicz, a servant or agent, of Robert Sterling Pty Limited in the course of its business.

33.That the representation referred to in paragraph 31 above, was made by Mr Kranicz in the course of his duties on behalf of Robert Sterling Pty Limited.

34.That the representation referred to in paragraph 31 above, was untrue, misleading and deceptive.

35.That the representation referred to in paragraph 31 above, was material in that it materially contributed to the applicants entering into their Contract with Robert Sterling Pty Limited for the purchase of an interest in land in the 'Paradise Waters Estate'.

36.That on or about 12th November, 1975, the applicants signed a Contract of Sale of Land whereby they agreed to purchase from Robert Sterling Pty Limited an interest in land at the 'Paradise Waters Estate' near Ballarat in the State of Victoria.

37.That on or about 12th November, 1975, the applicants signed a Deed between Municipal and General Development Corporation Pty Limited and themselves regarding the development of the land in the 'Paradise Waters Estate'.

38.That on or about 12th November, 1975, the applicants initialled a Certificate from the Shire of Ballarat headed 'Ballarat & District Planning Scheme 1966' regarding the zoning of land in the 'Paradise Waters Estate'.

39.That on or about 12th November, 1975, the applicants paid to Mr Kranicz the sum of $650.00 by way of bank cheque being a deposit for the purchase of an interest in land at the 'Paradise Waters Estate'.

40.That on or about 12th November, 1975, Mr Kranicz issued a receipt under the name of Robert Sterling Pty Limited, receipt number - 2007 for payment of the said amount of $650.00 by the applicants.

41.That on or about 12th November, 1975, the applicants signed a form of Authority directed to the Shire Clerk, Ballarat Shire Council, to the Deputy Registrar, Registrar General's Department, Victoria and an unaddressed Authority regarding the forwarding of any mortgage monies to Municipal and General Development Corporation Pty Limited.

42.That some time after the 12th November, 1975, the applicants applied for a loan of $3,000.00 from the Bank of New South Wales, Fairfield branch, to finance the purchase of the interest in land in the 'Paradise Waters Estate'.

43.That some time prior to the 21st November, 1975, the Bank of New South Wales, Fairfield branch, approved the granting of a loan to the applicants in the sum of $3,000.00.

44.That on or about the 21st November, 1975, the applicants paid to Robert Sterling Pty Limited the sum of $3,000.00 by way of bank cheque, being the balance of monies owing in respect of the purchase of an interest in land at the 'Paradise Waters Estate'.

45.That on or about the 21st November, 1975, Mr Kranicz issued a receipt under the name Robert Sterling Pty Limited, receipt number - 2009 for payment of the said amount of $3,000.00.

46.That pursuant to the said loan agreement between the applicants and the Bank of New South Wales, the applicants made the following repayments to the said bank :-

23-12-75 - $ 145.00

27- 1-76 - 145.00

23- 2-76 - 145.00

24- 3-76 - 145.00

20- 4-76 - 145.00

24 -5-76 - 145.00

22- 6-76 - 145.00

21- 7-76 - 145.00

23- 8-76 - 145.00

23- 9-76 - 145.00

25-10-76 - 145.00

23-11-76 - 145.00

21-12-76 - 145.00

20- 1-77 - 145.00

23- 2-77 - 145.00

24- 3-77 - 145.00

15- 4-77 - 290.00

22- 4-77 - 145.00

23- 5-77 - 145.00

2- 6-77 - 414.04

9- 6-77 - 11.88

Total : $ 3,325.92

47.That on or about 1st December, 1975, Robert Sterling Pty Limited forwarded a letter to the applicants advising that their purchase had been settled.

48.On or about 10th May, 1977, Robert Sterling Pty Limited forwarded to the applicants a letter enclosing a booklet and their Memorandum of Title in respect of the purchase of an interest in land at the 'Paradise Waters Estate'.

49.That for the period November, 1975 to the date of the winding up of Robert Sterling Pty Limited, that is, 28th July, 1978, Robert Sterling was Managing Director and a shareholder in Robert Sterling Pty Limited."

Documents in evidence show that Robert Sterling Pty Limited proposed the scheme known as the 'Paradise Waters Project' for developing 560 acres of land near Lake Burrumbeet, Ballarat, Victoria. The precise nature of the scheme was not made clear in the Explanatory Memorandum, which was entitled on its front page 'Robert Sterling Pty Limited congratulates you on your purchase of Paradise Waters Estate'. In the brochure was a plan for the sub-division and development of 560 acres of land to be called the 'Paradise Waters Estate' and an analysis of the use to which the land would be put and of the development and realisation costs of each acre. The analysis disclosed an estimated profit per acre of $18,856. The brochure did not state what interest in the project an investor or purchaser would have.

Mr George Fenech gave this evidence:

'Tell his Honour what was said about this matter of prospective profits?-Well, your Honour, this Mr Stan Kranicz, he said they got some land for sale at Ballarat, Burrumbeet. He said they got two lots, one on the - facing the lake - and some on the other side of the hill, not seeing the lake, but they are only a few minutes away from the lake. He said the ones like I was interested in was $3,950, but if I buy them before Friday he will take $300 off - like Friday of that same week, he will take $300 off.

I just want you to tell his Honour what was said about this matter of the profit that was to be made?-Well, he told me that on the whole lot there is about $40,000 profit, but after costs of development you will have between $18,000 to $20,000 profit left over. We had to give two blocks of land back to the company for cost of development, and the rest we can do what we like with the other two blocks.

.....

Will you show the gentleman the relevant document? Perhaps, your Honour, the witness might be shown the document which is 'Robert Sterling Pty Limited congratulates you on your purchase of Paradise Waters Estate'. It is in the schedule of documents and, indeed, I think it is the first document.

Look at the page that was discussed between yourself and Mr Kranicz, what appears on the top of that page? Will you read it to us?---'Robert Sterling Pty Limited Paradise Waters Estates'.

That page contains a schedule of prospective profits. Tell his Honour what was said in regard to that schedule?-Well, he told me that is how they break up, it is all the blocks I am going to have broken up, but he was very stressful on the profits, most stressful on the profits side.

Did he tell you when you could expect to receive the profits?-He said the property will start within one year, which would be November 1976, so I expect profits from that day onwards. They say as soon as they sell the remaining blocks they start developing the land."

Mr George Fenech and Mr Julian Fenech entered into a written agreement in the ordinary form of a Contract of Sale of Land for the purchase

'...as tenant in common as to 4/80ths All that piece of land containing 20 acres or thereabouts being part of Allotment 7 of a subdivision of Crown Allotments 11D, 12A, 12B, 12C, 12D, 15D, 15C, 15A and 15E, Section E, Parish of Burrumbeet, County of Ripon and being part of the land contained in Certificate of Title Volume 8557 Folio 124'.
The price of the land was not mentioned on the agreement but a deposit of $650.00 was stated. The agreement was dated 12 November 1975. The agreed facts show that $650.00 was paid on 12 November 1975 and that subsequently a loan of $3,000.00 was obtained from the Bank of New South Wales to finance the purchase, that on 21 November 1975 the applicants paid to Robert Sterling Pty Limited the sum of $3,000.00 by way of bank cheque and that thereafter the applicants made payments to the Bank of New South Wales with respect to that loan.

In about May 1977, the applicants received a document headed 'Memorandum of Title' and dated 10 May 1977 which, to a non-lawyer, may have appeared to be a Certificate of Title. The document stated:
'Be it known that Mr/Ms G. FENECH do hereby own as tenants common, 4/80THS in the whole of the land, namely the land containing 20 acres, nil roods, nil perches, or thereabouts and 1 allotment 7, section E, parish of Burrumbeet, county of Ripon, as per contract of sale.'
The document was signed 'Robert Sterling'.

On 6 September 1978, the 'Daily Telegraph', a Sydney newspaper, reported '200 LOSE $1.5m 'IN LAND RIP-OFF'.' I accept the evidence given to me that it was this article, which described the Paradise Waters venture, which made known to the applicants that they had been involved in a fraud. Mr Julian Fenech said in evidence : 'Prior to reading that document, had you any fears that the contract would not be completed?-After I read the paper, that is when I knew of the rip-off or whatever you call it.'

Prior to the Trade Practices Amendment Act 1977 (Cth), ss.82, 83 and 87 of the Trade Practices Act 1974 read as follows:
'82.(1) A person who suffers loss or damage by an act of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person.

(2) An action under sub-section (1) may be commenced at any time within 3 years after the date on which the cause of action accrued.

83. In proceedings against a person under section 82, a finding of any fact by the Court made in proceedings under section 77, 80 or 81, or for an offence against section 79, in which that person has been found to have contravened a provision of Part IV or V is prima facie evidence of that fact and the finding may be proved by production of a document under the seal of the court from which the finding appears.

.....

87.(1) Where in a proceeding instituted under or for an offence against this Part the Court finds that there has been a contravention of a provision of Part IV or V, the Court may, in addition to imposing a penalty under section 77 or 79, granting an injunction under section 80 or making an order under section 82 in an action for the recovery of the amount of any loss or damage, make such other orders as it thinks fit to redress injury to persons caused by any conduct to which the proceeding relates or any like conduct engaged in by the defendant.

(2) The orders that may be made under sub-section (1) include, but are not limited to-

(a) an order declaring the whole or any part of a contract or of a collateral arrangement relating to a contract to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after such date before the date on which the order is made as is specified in the order;

(b) an order varying a contract or such an arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after such date before the date on which the order is made as is so specified;

(c) an order directing the refund of money or the return of property; and

(d) an order directing the payment to a person who has suffered loss or damage of the amount of the loss or damage.

(3) Where -

(a) a contract made before the expiration of the period referred to in sub-section 2(4) is unenforceable by reason of section 45 in so far as it confers rights or benefits or imposes duties or obligations on a corporation; or

(b) the engaging in conduct by a corporation in pursuance of or in accordance with a contract made before the expiration of that period would constitute a contravention of section 47,

the Court may, on the application of a party to the contract, make an order -

(c) varying the contract, or a collateral arrangement relating to the contract, in such manner as the Court considers just and equitable; or

(d) directing another party to the contract to do any act in relation to the first-mentioned party that the Court considers just and equitable.

(4) The orders that may be made under sub-section (3) include an order directing the termination of a lease or the increase or reduction of any or premium payable under a lease.

(5) The powers conferred on the Court under this section in relation to a contract do not affect any powers that any other court may have in relation to the contract in proceedings instituted in that other court respect of the contract."

After the Trade Practices Amendment Act 1977 (Cth), which came into operation on 1 July 1977, ss.82 and 87 read :

'82.(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

(2) An action under sub-section (1) may be commenced at any time within 3 years after the date on which the cause of action accrued.

.....

87.(1) Where, in a proceeding instituted under, or for an offence against, this Part, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this sub-section) in contravention of a provision of Part IV or V, the Court may, whether or not it grants an injunction under section 80 or makes an order under section 80A or 82, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in sub-section (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.

(1A) The Court may, on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this sub-section in contravention of a provision of Part V, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders sub-section (2)) if the Court considers that the order or orders concer concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.

(2) The orders referred to in sub-sections (1) and (1A) are -

(a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after such date before the date on which the order is made as is specified in the order;

(b) an order varying such a contract or arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after such date before the date on which the order is made as is so specified;

(c) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage;

(d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to the person who suffered the loss or damage the amount of the loss or

(e) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct at his own expense, to repair, or provide parts for, goods that had been supplied by the person who engaged in the conduct to the person who suffered, or is likely to suffer, the loss or damage; and

(f) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct at his own expense, to supply specified services to the person who suffered, or is likely to suffer, the loss or damage.

(3) Where -

(a) a provision of a contract made, or a covenant given, whether before or after the commencement of the Trade Practices Amendment Act 1977-

(i) in the case of a provision of a contract, is unenforceable by reason of section 45 in so far as it confers rights or benefits or imposes duties or obligations on a corporation; or

(ii) in the case of a covenant, is unenforceable by reason of section 45B in so far as it confers rights or benefits or imposes duties or obligations on a corporation or on a person associated with a corporation; or

(b) the engaging in conduct by a corporation in pursuance of or in accordance with a contract made before the commencement of the Trade Practices Amendment Act 1977 would constitute a contravention of section 47, the Court may, on the application of a party to the contract or of a person who would, but for sub-section 45B(1), be bound by, or entitled to th benefit of, the covenant, as the case may be, make an order -

(c) varying the contract or covenent, or a collateral arrangement relating to the contract or covenant, in such manner as the Court considers just and equitable; or

(d) directing another party to the contract, or another person who would, but for sub-section 45B(1), be bound by, or entitled to the benefit of the covenant, to do any act in relation to the first-mentioned party or person that the Court considers just and equitable.

(4) The orders that may be made under sub-section (3) include an order directing the termination of a lease or the increase or reduction of any rent or premium payable under a lease.

(5) The powers conferred on the Court under this section in relation to a contract or covenant do not affect any powers that any other court have in relation to the contract or covenant in proceedings instituted other court in respect of the contract or covenant."

On 24 June 1982, I ruled, in this and other proceedings (Robert Jones & Ors v Robert Sterling, Nos. G.93-108, G.110-111 and G.127 of 1980, Nos. G.7-9, G.12-13, G.27-29, G.96, G.99-106, G.113-114, G.156-166 and G.171 of 1981), that, if sealed with the seal of the Court, the judgment and reasons for judgment of Mr Justice Lockhart of 21 February 1980 provided evidence which could be relied upon under s.83 with respect to any findings of fact made therein. The judgment of his Honour and his Honour's reasons for judgment have now been sealed with the seal of the Court. Accordingly, they may be relied upon with respect to any findings of fact therein. The judgment and the reasons for judgment of his Honour establish that Robert Sterling Pty Limited was involved in conduct by way of advertising, representing and offering for sale and selling interests of land in a manner that was misleading or deceptive in contravention of s.52 in Part V of the Trade Practices Act 1974 (Cth) and that Robert Sterling was a person involved in that contravention.

On 24 June 1982, I answered a number of questions concerning the respective operations of ss.82 and 87 of the Trade Practices Act and the limitation periods, if any, applicable thereto. Question 5 read:

'Whether there is, on the proper construction of s.87 of the Trade Practices Act 1974 a limitation period and, if so, what period?'
It was answered as follows :
'In so far as the present proceedings seek to recover from the respondent Robert Sterling the amount of the loss or damage suffered by the applicants as a result of a contravention of a provision of Part V of the Trade Practices Act, the proceedings are actions within the terms of s.82 of the Act and the time limit prescribed by s.82(2) applies.'
Question 7 read -
'In the circumstances of the instant case, does s.87(1A) have an operation independent of s.82? If so, is it subject to any limitation period and if so what limitation period?'

It was answered :
'No to the extent that the proceedings seek to recover from the respondent Robert Sterling the amount of the loss or damage suffered by the applicants as a result of the contravention of the provisions of Part V of the Trade Practices Act.'
Those answers dealt only with the issue as to the limitation period, if any, applicable to the proceedings.

It is convenient if I set out again some of the reasoning which led to those answers:
'One view of s.87(1) and (1A) is that both sub-sections are ancillary or facultative provisions, that although, by reason of their terms, claims may be made and orders and relief may be granted in circumstances where otherwise this could not be done, the exercise of the power conferred by s.87(1) and (1A) is dependent upon the existence of a proceeding otherwise on foot. A number of factors support this reading. Sub-section (1) specifies that there be a proceeding already instituted. Sub-section (1A) uses terminology which is appropriate to an application made in an existing proceeding. Thus, the present proceedings are not mere applications for orders, they are proceedings against persons and proceedings of the nature traditionally described as actions. Furthermore, s.87(1A) does not provide for a limitation period, a provision which may not be necessary if the application may be made only in a proceeding which is validly on foot. Another factor is the structure of Part VI. Sections 77, 80A, 81 and 82 all provide for the institution of proceedings. Section 86 then confers jurisdiction on the court to hear and determine '...actions, prosecutions and other proceedings under this Part...'. If s.87 dealt with the institution of a proceeding one may have expected it to precede s.86. Moreover, s.83 refers to '...a finding of any fact by a court made in proceedings under section 77, 80, 80A or 81, or for an offence against section 79...' and does not include a reference to proceedings under s.87, notwithstanding that it was amended by Act No.81 of 1977, the Act which inserted sub-section (1A) into s.87.

However, I prefer the view that an application may be made to the court for relief under s.87(1A) without any other proceeding being on foot or any other claim being made. If this were not the case, sub-section (1) would be sufficient and sub-section (1A) would be unnecessary. Moreover, sub-section (1A) does not commence with the words 'Where, in a proceeding instituted under, ..., this Part, ...', words which appear in sub-section (1); and sub-section (3) appears from its terms to confer a right of application independent of the existence of any other proceedings. The subject matter of that sub-section suggests that its provisions may be applied in proceedings brought exclusively for that purpose. In my view, s.87(1A) authorises the making of an application to the Court independent of any other proceeding.

But that conclusion does not determine the matter so far as the applicants and the respondent Robert Sterling are concerned. In so far as the present proceedings seek to recover damages from Robert Sterling, the proceedings are, in the terms of s.82, actions against a person involved in the contravention of a provision of Part V of the Trade Practices Act and, in the terms of s.83, '...proceedings against a person under section 82...'. The legislature has made plain its intention that actions for loss or damage against the person who does an act in contravention of a provision of Part IV or V of the Trade Practices Act or against any person involved in the contravention shall be brought within three years after the date on which the cause of action accrued. In my opinion that intent should be applied whether an award of the amount of the applicant's loss or damage is sought in terms of s.82 of the Act or in terms of s.87(1A) and (2)(d). Thus, in so far as the present proceedings seek to recover from the respondent Robert Sterling the amount of the loss or damage suffered by the applicants as a result of the contravention of a provision of Part V of the Trade Practices Act, the proceedings are actions within the terms of s.82 of the Act and the time limit prescribed by s.82(2) applies."

On 24 June 1982, I also considered the following question:

'8. Whether the amendments to s.82 of the Trade Practices Act 1974 effected by Act No.81 of 1977 operate in respect to facts and circumstances occurring before 1 July 1977?'
The answer given to question 8 was :
'8. The repeal of s.82 as it then stood and the substitution of s.82 as it now reads by the Trade Practices Amendment Act 1977 did not impose upon a person involved in a contravention of Part V of the Trade Practices Act 1974 prior to 1 July 1977 a liability which did not exist prior to that date.'

In view of the fact that the contravention of Part V of the Trade Practices Act and Robert Sterling's involvement in that contravention occurred prior to 1 July 1977, it necessarily follows that in so far as the proceedings are proceedings under s.82 of the Act they must be dismissed.

However, as I said in my reasons of 24 June 1982, I am of the view that s.87(1A) is not dependent upon the existence of a proceeding otherwise on foot and that an application may be made under that sub-section without the application being ancillary to another proceeding and without any other claim being made. The present proceedings claim orders under s.87(1A) as an alternative as well as an additional claim to the claim under s.82. The fact that the claim under s.82 is not well founded, because the 1977 amendment to that section was not retrospective in operation, does not affect the claim under s.87(1A).

Section 87(1A) provides that an application may be made under its provisions whether the conduct that was engaged in in contravention of a provision of Part V of the Act was engaged in before or after the commencement of the sub-section, 1 July 1977. Therefore, proceedings may be based upon s.87(1A) notwithstanding that the contravention of the Act and Robert Sterling's involvement therein took place prior to 1 July 1977.

However, the applicants' claim was not brought within three years of the date when the contract of sale was executed and monies were paid to Robert Sterling Pty Limited for the purchase of an interest in the 'Paradise Waters Estate'.

As I stated in my reasons of 24 June 1982, I am of the view that the limitation period prescribed by s.82(2) should be applied to the present proceedings whether they are proceedings brought under s.82 or under s.87(1A). The proceedings seek to recover from the respondent Robert Sterling the amount of the loss or damage suffered by the applicants as a result of the contravention of a provision of Part V of the Trade Practices Act. The proceedings are therefore within the description of the cause of action provided by s.82(1) as it now reads and Parliament has indicated its intention that there be a three year limitation period with respect to such a proceeding. As I said on 24 June 1982, 'The legislature has made plain its intention that actions for loss or damage against the person who does an act in contravention of a provision of Part IV or V of the Trade Practices Act or against any person involved in the contravention shall be brought within three years after the date on which the cause of action accrued'. It is necessary to look at s.82(2) as amended in 1977, for s.87(1A) was introduced into the Act by the amending Act of 1977. Parliament's intention would not be gleaned by reading s.82 in its earlier form and s.87 in its amended form.

The question therefore is : when did the cause of action accrue?

A simplistic view may be that the cause of action accrued on 1 July 1977 when the right was given under s.87(1A) to take proceedings against a person involved in the contravention. However, I think that s.82(2) looks to a cause of action against the contravener and any person involved in the contravention constituted by the suffering of loss or damage as a result of conduct that was in contravention of Part IV or V.

In determining when that cause of action accrued, assistance may be gained from Brown v Jam Factory Pty Limited, (1981) 35 ALR 79, and Mister Figgins Pty Limited v Centrepoint Freeholds Pty Limited, (1981) 36 ALR 23. In Brown v Jam Factory Pty Limited, at page 88, Fox J said:

'The correct way to approach the assessment of damages in this case, in my view, is to compare the position in which the applicants might have been expected to be if the misleading conduct had not occurred with the situation they were in as a result of acting in reliance on that conduct (see Esso Petroleum Co Ltd v Mardon (1976) 1 QB 801; (1976) 2 All ER 5). This is the same, or analogous to, the general principle respecting the measure of damages in tort. There was not anything promissory in the statements relied upon, and no basis exists for adopting the measure of damages applicable in contract. As an action based on s.52 is more appropriately classified as one of tort, it is possible that the measure of damages will always, fundamentally, be based on principles affecting torts."
In Mister Figgins Pty Limited v Centrepoint Freeholds Pty Limited, at page 59, Northrop J said:
'...The principles to be applied are similar to those applied in determining the measure of damages in tort, not for breach of contract. With respect, I agree with the views expressed by Fox J in Brown v Jam Factory Pty Ltd (1981) 35 ALR 79.'
His Honour, at pages 58-9, referred to and applied the principles respecting an action of deceit.

Ordinarily, a cause of action for tort accrues when loss is suffered as a result of the tort. This principle accords with the cause of action claimed in the present proceedings under both ss.82 and 87(1A) constituted by the suffering of loss as the result of conduct that was in contravention of Part V of the Trade Practices Act, in which contravention the respondent was involved. In the present case, the cause of action accrued when, in November 1975, the applicants signed the contract for the purchase of an interest in the 'Paradise Waters Estate' and paid monies to Robert Sterling Pty Limited. The applicants then suffered loss as the result of conduct of Robert Sterling Pty Limited that was in contravention of s.52, in which contravention Robert Sterling was involved.

This conclusion is not, I think, affected by the equitable principle that, in an action based on fraud, time does not run while the injured person remains ignorant of the fraud. This principle was explained by Lord James of Hereford, delivering the opinion of the Judicial Committee in Bulli Coal Mining Company v Osborne (1899) AC 351. At pages 362-3, his Lordship said :
'This Court', as Lord Hardwicke (Chesterfield v Jansen (1750) 2 Ves.Sen.125) presiding in a Court of Equity observed, 'has an undoubted jurisdiction to relieve against every species of fraud'. Where the remedy is given on the ground of fraud Lord Westbury (Rolfe v Gregory (1865) 4 D.J. & S.576, 579) pointed out that 'it is governed by this important principle that the right of the party defrauded is not affected by lapse of time, or, generally speaking, by anything done or omitted to be done so long as he remains without any fault of his own in ignorance of the fraud which has been committed'.'
His Lordship went on to make his own comment that
'...Now it has always been a principle of equity that no length of time is a bar to relief in the case of fraud, in the absence of laches on the part of the person defrauded. There is, therefore, no room for the application of the statute in the case of concealed fraud, so long as the party defrauded remains in ignorance without any fault of his own.'

In my view, the above principle, which has been established for a very long time and which is now enacted in most of the statutes of limitation in the common law world, is a principle which deals not with the date upon which a cause of action accrues but rather with the circumstance under which it is unconscientious to rely on the lapse of time.

In The Crown v McNeil (1922) 31 CLR 76, it was held that a claim could not be brought under the Crown Suits Act 1898 (WA) of which s.37 provided that

'No person shall be entitled to prosecute or enforce any claim or demand under this Part of this Act unless the petition setting forth the relief sought is filed within twelve months after the claim or demand has arisen.'
It was held that fraudulent conduct on the part of servants of the Crown, which prevented a person from knowing that the Crown had committed a breach of contract, did not extend the time for filing a petition in respect of the breach of contract beyond twelve months after the breach complained of took place. At pages 96-7, Knox CJ and Starke J said :
'It was suggested, on the authority of Gibbs v Guild (1882) 9 QBD 59, that, in the case of concealed fraud, producing damage to the petitioners, the cause of action only arose or accrued upon the date of the discovery of the fraud or upon the date when the fraud, with reasonable diligence, might have been discovered. If the fraud is the cause of action, then the argument is useless to the petitioner, for such a cause of action is not within the ambit of sec.33 of the Crown Suits Act. And if, as the petitioners must assert, the breach of contract relied upon in this case only arose from the discovery of the fraud, then Gibbs v Guild is no authority for the argument. Brett LJ puts the matter thus (1882) 9 QBD at pp.68-9 : 'But assuming that the Statute of Limitations would be binding, the Courts of equity, on doctrines of their own, sometimes applied, if other circumstances arose, a particular kind of equity. They did not construe the statute so as to give an equity, they adopted an equity which was quite independent of the statute, but which no doubt had an effect on the transaction notwithstanding the statute, that is to say, they said if the existence of the cause of action given by the defendant was fraudulently concealed by the defendant from the plaintiff until a period beyond six years, then they would not allow the defendant to prevent the plaintiff from supporting his right to his remedy on the ground that the statute was a bar. It seems to me that there is some little confusion in the expressions used in some cases as to the origin of the cause of action being a fraud. That is not the fraud which raised the equity; but if there was a cause of action, and if its existence was fraudulently concealed from the plaintiff by the defendant who had given that cause of action, it was then that the plaintiff's equity arose notwithstanding that his cause of action had arisen more than six years before.' Again, in Trotter v Maclean (1879) 13 ChD 574, at p.584, Fry J says that the limitation imposed by the statute of James 'ought to apply to proceedings in this Court in respect of a trespass, unless there be some equitable ground for repelling the application of the statute'. Such an equitable ground has in many cases been found in fraud. See also Barber v Houston (1885) 18 LR Ir 475 and Bulli Coal Mining Co v Osborne (1899) AC 351.

It is impossible, therefore, in this case to say that the cause of action for moneys due in respect of the first, second, third, fourth and fifth campaigns only accrued when the falsity of the statements relating to the realization charges was discovered. The Courts cannot repel the clear words of sec.37, for to do so would be to give effect to an equity which is not provided for in sec.33."
At pages 100-101, Isaacs J said :
"The position may be shortly stated. Where a Court of equity finds that a legal right, for which it is asked to give a better remedy than is given at law, is barred by an Act of Parliament, it has no more power to remove or lower that bar than has a Court of law. But where equity has created a new right founded on its own doctrines exclusively, and no Act bars that specific right, then equity is free. It usually applies, from a sense of fitness, its own equitable doctrine of laches and adopts the measure of time which Parliament has indicated in analogous cases, but, when a greater equity caused by fraud arises, it modifies the practice it has itself created and gives play to the greater equity. The present case is entirely outside the ambit of that doctrine. But the fallacy goes even deeper. Sec.37 differs fundamentally from our ordinary Statute of Limitations. The latter finds a person in possession of a right and a remedy. In some cases it abolishes the right, in others it simply bars the remedy. But in both cases it takes from the person something he already has independently of that statute. In Hurrinath Chatterji v Mohunt Mothoor Mohun Goswami (1893) LR 20 Ind.App.183, at p.192, Sir Richard Couch in the Privy Council said : 'The intention of the law of limitation is, not to give a right where there is not one, but to interpose a bar after a certain period to a suit to enforce an existing right'. Sec.37 is a condition of the gift in sec.22, and unless that condition is satisfied the gift can never take effect. Non-compliance with its terms is not a matter in bar of the claim as in the case of the Statute of Limitations : it is an objection which goes to the foundation of the procedure, and shows that the petitioner is not 'rectus in curia'."

There is a passage in Gibbs v Guild (1882) 9 QBD 59 which suggests a contrary view. See Lord Coleridge CJ at p.65. However, his Lordship's view was not the view expressed in this respect by Brett LJ or by Holker LJ.

In the present proceedings, the principle expounded in The Crown v McNeil, cited above, should be applied. Section 82(2) states in specific terms a period within which a proceeding to which it applies may be brought. Section 82(2) is not a general limitation enactment, it is a provision dealing specifically with a cause of action which the statute created. Section 82(2) makes no such exemption for a cause of action based on fraud or deceit as is made in s.55 of the Limitation Act 1969 (NSW) or s.27 of the Limitation of Actions Act 1958 (Vic). It is clear in its terms and I think it must be given effect.

In my opinion the present proceedings which were instituted on 31 October 1980 were not brought within three years of the accrual of the cause of action within the meaning of s.82(2).

I have already, on 24 June 1982, expressed my view that, whether or not the present proceedings are brought under s.82(1) or under s.87(1A), the limitation period provided by s.82(2) should be applied because s.87(1A) is discretionary and, in the exercise of that discretion, the intent of Parliament expressed in s.82(2) should be given full force and effect. The result is that, in the present case, the proceedings were not brought within three years of the contravention under Part V of the Act, of Robert Sterling's involvement in that contravention and of the suffering of loss as a result of that contravention and involvement. The discretion conferred by s.87(1A) should therefore not be exercised in the applicants' favour.

For these reasons, the proceedings will be dismissed. I reserve leave to the parties to apply for any order as to costs or otherwise as may seem meet.