Gardiner, Colin Guthrie v Suttons Motors (Homebush) Pty Ltd

[1983] FCA 154

Re: COLIN GUTHRIE GARDINER
And: SUTTONS MOTORS (HOMEBUSH) PTY. LIMITED (1983) 71 FLR 294
No. G58 of 1983
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

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

CATCHWORDS

Trade Practices - misleading conduct - statement of future intention as to entitlement of lessee of motor vehicle to acquire the vehicle for its residual value at the end of the lease - statement made with reckless indifference as to whether or not the respondent would permit the applicant to acquire the vehicle on those terms - action brought by respondent against applicant in District Court for recovery of amounts owing under lease - whether this action should be dismissed because the claim for damages under the Trade Practices Act 1974 could or should have been brought in the District Court - cross-claim by respondent for costs incurred in relation to District Court proceedings not recoverable in these proceedings - Trade Practices Act 1974, s.52.

Trade Practices - Misleading conduct - Representations of future intention - Made with reckless indifference - Whether misleading conduct - Trade Practices Act 1974 (Cth), ss 52, 86.

Practice - Federal Court - Jurisdiction - Trade practices claim - Res judicata - Whether doctrine applies following District Court proceedings - Trade Practices Act 1974 (Cth), s. 86.

HEADNOTE

Prior to the execution of a lease of a motor vehicle the respondent lessor represented to the applicant lessee that on termination of the lease the applicant would be able to acquire the vehicle for the residual value shown in the lease. On the faith of the representation the applicant entered into the lease. At the end of the lease, which did not in fact give to the applicant any right to acquire the vehicle, the respondent sought return of the vehicle and, following the applicant's refusal, obtained judgment in the District Court for damages for breach of contract. The applicant then commenced proceedings in the Federal Court alleging the representation made to him prior to entry into the lease, and relying on s. 52 of the Trade Practices Act 1974 (Cth) which prohibits misleading or deceptive conduct in trade or commerce. The applicant sought damages under s. 86 of the Act, and the respondent cross-claimed for costs incurred in the District Court.

Held: (1) Representations of future intention, made with reckless indifference as to whether they would be adhered to or not, may constitute misleading conduct within s. 52 of the Trade Practices Act 1974 (Cth).

Thompson v. Mastertouch T.V. Services Pty Ltd (1977) 29 F.L.R. 270; Stack v. Coast Securities (No. 9) Pty Ltd (1983) 46 A.L.R. 451, distinguished.

(2) As the District Court does not have jurisdiction to hear claims for damages under the Act, the doctrine of res judicata does not prevent a party to the District Court proceedings from commencing fresh proceedings in the Federal Court based on s. 86, concerning the same subject matter.

Westco Motors (Distributors) Pty Ltd v. Palmer (1979) 37 F.L.R. 140, distinguished.

(3) In the Federal Court proceedings under s. 86, the respondent was not entitled to recover, by way of cross-claim, the costs incurred in the District Court because the claim made by the respondent in that court was intended to quantify entirely the damage suffered by the respondent as a result of the applicant's breach of the lease.

Henderson v. Henderson (1843) 3 Hare 100; 67 E.R. 313 at 319; Port of Melbourne Authority v. Anshun Pty Ltd (1981) 55 A.L.J.R. 621, applied.

HEARING

Sydney, 1983, June 23, 24. #DATE 24:6:1983

APPLICATION.

Application for relief under the Trade Practices Act 1974 (Cth) by the lessee of a motor vehicle, alleging a misleading representation made by the lessor in contravention of s. 52 of the Act.

J. C. Campbell, for the applicant.

S. J. Archer, for the respondent.

Solicitors for the applicant: Sloan & Co.

Solicitors for the respondent: Clayton Utz & Co.

F.P.C.

ORDER

1. The respondent be perpetually restrained from taking any steps to enforce or otherwise rely upon the judgment of the District Court of New South Wales in proceedings No.24504 of 1981, including steps to obtain an order that the applicant pay the costs of an application for leave to pay by instalments the amount of the judgment.

2. The respondent's cross-claim be dismissed.

3. The respondent pay the applicant's costs of these proceedings, including the costs of the cross-claim.

4. Otherwise make no order on the application.

5. Liberty to apply.

Orders accordingly.

JUDGE1

This unfortunate dispute originally concerned a claim for the return of a motor vehicle which the applicant claimed to be entitled to acquire from the respondent for $3,500. The vehicle was valued at $4,900, $1,400 more than the applicant was prepared to pay. A sensible discussion between the parties in the early stages of the trouble would have settled the matter. Instead, there have been incurred in the District Court of New South Wales and in this Court several thousand dollars in costs. Be that as it may, the parties have brought the case and are entitled to the Court's decision on it.

The applicant claims damages and other relief from the respondent for an alleged breach of s.52 of the Trade Practices Act 1974. His claim arises out of his entering into a lease of a Holden Torana motor car on 15 August, 1978. It is his contention that the words and conduct of employees of the respondent led him to believe that at the termination of the lease he would be entitled to acquire the vehicle for $3,500. The lease was for a period of three years and required monthly payments of rent of $238.28. The schedule to the lease noted that the vehicle was to have a residual value of $3,500. To understand the purpose of that statement it is necessary to refer to clauses 27 and 28 of the lease which, so far as relevant, may be summarised as follows.

Clause 27 provides that within seven days of the delivery up of the vehicle after the expiration of the term, the respondent shall determine the appraised value thereof. If that value be less than the residual value then the Lessee, that is the applicant, is to pay the deficiency to the respondent on demand by way of indemnity "for the loss so sustained". Clause 28 provides that in the event that upon any sale by the respondent of the motor vehicle the net sale proceeds exceed the residual value, the respondent shall be under no obligation to account for any such excess to the lessee. Reference to residual value was also made in clause 29 to which it is unnecessary to refer.

Thus the obligation of the lessee upon the termination of the lease was to return the vehicle. If the appraised value of it was less than the sum of $3,500, he was to make up the difference. If it exceeded that sum, he was not entitled to the excess. Nor was he entitled under the terms of the lease to acquire the vehicle for $3,500 or any other sum.

It is convenient to note at this point the distinction which there is between a lease such as this and a hire purchase agreement. Sub-section 2(1) of the Hire Purchase Act 1960(N.S.W.), defines a hire purchase agreement so as to include a letting of goods with an option to purchase. If provisions to that effect had been inserted in the lease, the agreement would have been a hire purchase agreement within the meaning of the Hire Purchase Act, with the result that the provisions of the Act would have had to be observed by the respondent.

Negotiations for the acquisition of the vehicle commenced on 8 August, 1978, when the applicant and his wife visited the respondent's showroom. They were seen initially by a salesman, Mr. Manuel Spiteri, referred to in the evidence as Manuel. Mr. Spiteri approached the Gardiners when they were looking at a Torana vehicle. The applicant asked Mr. Spiteri for a price on the vehicle if fitted with air-conditioning and tinted windows and was rust proofed. He was told that he would be advised to have a larger motor to cope with the air-conditioning.

The Gardiners had brought with them their existing car. This was taken away by a valuer for an assessment of its trade-in value. The sum of $5,000 was offered. The evidence of the applicant then continued:

"I said to this Manuel, I said, 'Well, look, could not we put this on hire purchase agreement with IAC, and for the insurance with the NRMA'. The reason for asking for it to go to IAC is, the previous car had been with IAC and they had recently written to me and said that I had paid my commitments quite well and they were willing to refinance any other vehicle if I wanted one. And he said to me, well, he said, 'if you do it that way it would be three or four days extra and' he said, 'if you do it with our finance company,' he said, 'We can do all the paperwork here today', he said, 'and furthermore' he said, 'why do you not have it under a lease with us.' He said, 'Have you had any leases in the past?. I said, 'Yes' and he said, 'Why do you not lease it with us,' he said, 'You can put the $5000 then in the bank or somewhere and get some interest on it and' he said, 'That will help to pay, or pay the residual value when the time comes.' And I said well, 'That sounds a good plan to me, go ahead.' So he then started to make out some figures because of the additional equipment I wanted on the car and such, and, at that, my wife walked away. After he had compiled these figures he took them into the office and later came back with the lease agreement, and I said to him then, I said, 'Now is this lease agreement the same as all the others that I have entered into?' I said, 'I notice the residual value here is $3 1/2 thousand.' I said, 'Will I be able to purchase the car, or will Suttons Motors sell it to me for that $3 1/2 thousand at the end of the lease?' And he said 'Of course we will,' he said, 'This is the same as any other lease,' he said, 'You will be able to buy it for the residual value.' At that, I called my wife back over to the table and I said, 'Now, this man assures me that we can buy it for the residual value at the end of the lease.' And I said to him, 'Is that right?' and he said, 'Yes, certainly; no different to any other lease.' So I signed it."

The applicant then gave evidence as to a conversation with another employee of the respondent who is not identified except by the applicant's description of him as sales manager. Of this conversation the applicant said:

"I said to him, 'My wife is concerned about us being able to buy this car for the residual value at the end of the lease. Will we be able to do so?' and he turned around to her and said, 'This is no different to any other lease, Mrs Gardiner, you will certainly be able to buy it for that.'"

The applicant made an affidavit in the proceedings in response to a motion taken out by the respondent to have the action dismissed as vexatious or, in the alternative, to strike out the statement of claim. In that affidavit he gave an account of his conversation with Mr. Spiteri but did not mention any conversation with the sales manager.

Mrs. Gardiner gave evidence. She confirmed her husband's evidence of the initial part of the conversation. She referred to the car being taken away to be valued. Her evidence continued:

"I said, 'If we get the car we want it under the same finance company we have had before and with NRMA'. He said, 'Well, we have a very good finance company at Suttons. We have our own finance company'. He said to my husband then, 'How did you buy your other cars?' He said, 'Well, I leased them, but this one we would rather have it under hire-purchase'. He said, 'Oh well, we will talk about that'. Then after some time the man came back from the used car division and told us that they would offer $5000. My husband said, 'That was about the price I thought it would be'. So then this Manuel said to my husband, 'We will start talking about what you want with the car'. Then my

"husband said to him, 'I want it under IAC'. And then Manuel said, 'It will take a couple of days to do that. With Suttons we could do it all for you here'. And he said, 'I do not want that, I am not in any hurry. We are just looking really'. So he went to one of the little offices at the back and then he came back and started to talk to my husband and ask him pertinent questions about his financial situation and so forth. He was asking how much he earned and all this business. Then I started to get angry and I said, 'But we want it under IAC, we do not want it with Suttons'. He more or less dismissed what I said, so I got up and I walked to the other end of the showroom because I was getting really angry then because I could see that he was pressuring my husband, which I did not like. So after I was up there for a while my husband called out to me and he said, 'Madeleine, come back here, this man assures me that this contract is exactly the same as any other we have signed, and we will just have to pay the residual value'. So I came back and then Colin had the contract in front of him by then. I said, 'I do not care what that man tells you, I just do not believe it'. I said, 'I just do not like it. They are pushing'. I said, 'I would not sign it anyway'. Then this Manuel just turned to my husband and he said, 'Your wife does not have to sign it, Mr. Guthrie you can sign it'. And you know, I was really angry about that because I knew then that there was something wrong because it was just the way he spoke to me. So then we - after my husband had signed I do not remember much about that, because I had more or less turned my back on it, because I was so disappointed that my husband would not even listen to me, because this man would not even let me get a word in. So eventually we went to the sales manager's office and my husband said to him, 'My wife is not very happy about this arrangement' and he said to him, 'Explain it to her again'. So the sales manager said, 'Well, it is exactly the same as any other contract, and you pay payments over the 30 months' - I think it was - and he said, 'At the end you just pay the residual and the car is yours' And I said, 'All right' so then my husband signed various other documents and then we left."

Mrs. Gardiner also made an affidavit in response to the respondent's notice of motion. She did refer in it to the conversation with the sales manager. Mrs. Gardiner's affidavit, unlike the applicant's affidavit, was not tendered in evidence, but in the light of a submission made by counsel for the respondent I drew his attention to it. Only Mr. Spiteri was called in the respondent's case. No attempt was made by the respondent to identify a person known as the sales manager. Mr. Spiteri's evidence confirms that the Gardiners would be likely to have seen a person other than himself whom he described as the finance manager. No attempt was made in the evidence called by the respondent to identify this person either. No explanation was offered as to why the sales manager or finance manager was not called to give evidence. When asked by me in the course of his address why this should not lead me the more readily to accept the Gardiners' evidence, counsel said that the respondent had come to meet a case based on conversations with Mr. Spiteri alone. It was after that that I noticed the form of Mrs. Gardiner's affidavit and drew counsel's attention to it. The affidavit was sworn on 19 May last, so the respondent was forewarned that evidence of a conversation with the sales manager was likely to be led. In any event, notwithstanding the respect I always have for counsel's statements, I would not think it appropriate to give effect to a submission such as was made without some evidentiary basis for it. There is of course none.

Mr. Spiteri is no longer employed by the respondent. He said that he had no recollection of the transaction at all, except that he remembered the name of Gardiner. That is understandable, bearing in mind the lapse of time and the numerous transactions with which Mr. Spiteri must have been concerned in the meantime.

He gave evidence of his own and the respondent's procedures when a vehicle was to be sold. He said that he did not have any involvement with the leasing of vehicles. His practice was to obtain from the customer a signed order form and a deposit. He would ask how the vehicle was to be paid for, and if finance was required, he would refer the customer to the finance manager. He said he was not familiar with provisions of leases of motor vehicles, and said he had no knowledge of the standard Suttons Motors form of lease. His evidence then proceeded as follows:

"Were you ever given any instruction by any person in the organisation of Suttons Motors to tell prospective customers, intending to lease their vehicles from Suttons Motors, that they could purchase their motor vehicle from Suttons Motors at the end of the term for its residual value? . . . No.

In the course of your employment with Suttons Motors, and specifically on 8 August 1978, did you ever tell any prospective customer of Suttons Motors that if they leased their vehicle from Suttons Motors they could purchase the vehicle at the end of the term for the residual value?. . . No. I have never said that.

"HIS HONOUR: Is the expression 'residual value' familiar to you?. . . Yes.

What do you understand by it?. . . Residual value? How much the customer would have to pay at the end of a period, of a lease period, for rental of a car.

For what?. . . Well, it is part of the . . .
How much he would have to pay for what?. . . It is part of the contract.

Yes, but you just referred to how much the customer would have to pay at the end of the period; and I asked, how much he would have to pay for what?. . . For the use of the vehicle.

He paid the residual value for the use of the vehicle, at the end of the period?. . . Yes.

Even though he has already paid the rental payments? . . . Yes, I believe so. As I say, I am obviously not very familiar with lease agreements. I stay right away from them. It is too complicated for me."

Mr. Spiteri also gave evidence tending to show that it was unlikely that the lease itself was signed on the day of the Gardiners' visit, 8 August, 1978. He said it would be most unusual for the lease to be prepared and signed at so early a stage. This was particularly so in the light of the need to make inquiries concerning the creditworthiness of a customer.

In evidence is a document entitled, "Proposal to lease". It bears the respondent's name on its outside cover. It contains a number of particulars related to the applicant's financial affairs. Referees' names are included, and there is notation against those names which indicates that the referees have been asked their opinion of Mr. Gardiner's capacity to meet the payments under the lease.

The document was identified by the Gardiners as a document Mr. Spiteri had filled in in their presence. I have reached the conclusion it was not. Mr. Spiteri denied that any of the handwriting on it was his. I accept his evidence in this respect, particularly because of a comparison of his signature which appears twice on the lease with the handwriting; they bear no resemblance. Nevertheless, the respondent did not favour the Court with any evidence of whose handwriting did appear on the document. I would suspect it was that of the finance manager, but I cannot be sure.

The evidence of Mr. Spiteri establishes that a document which was probably signed by the applicant on 8 August, 1978, was an order form. This was not produced and no explanation for its absence is forthcoming. Nevertheless, Mr. Spiteri's evidence of procedures and practice persuades me that he probably procured the applicant's signature to such a document. I think this makes it unlikely that the lease itself was prepared or signed by the applicant on 8 August. It is more probable that the procedure described by Mr. Spiteri was followed. That involved the making of inquiries and the preparation of the lease during the period the vehicle was being got ready for delivery.

I find therefore that the lease was signed on the date it bears, 15 August, 1978. On that day the applicant took delivery of the car.

The applicant made the payments required by the lease. He said he telephoned the respondent in July 1981. His evidence continued:

"I rang Suttons in July because I was going overseas on 1 August and I do not know who I spoke to there but I said, 'How do I go about paying this $3500 residual value to fix up and finalise the car?' and they told me that I could do no such thing, they wanted the car back.

To which you said?. . . 'You must be joking'.

And you left for overseas, to go overseas on 1 August, is that correct?. . . Yes, 1 August.

And before you went overseas you spoke to your solicitor about paying out the car, is that correct? . . . Yes.

And you gave him instructions to pay out the car for $3500, is that right?. . . Yes."

After the applicant had left for overseas his office received a letter dated 17 August, 1981, from the respondent. It said that the lease had expired on 15 August, 1981. The return of the vehicle was demanded in default of which legal action was threatened. The applicant's solicitors replied on 21 August, 1981, saying:

"Prior to his departure overseas our client instructed us to pay the amount of $3,500.00 declared to be the residual value of the motor vehicle in question provided your company transfer all right, title and interest in the motor vehicle and indemnify our client against any third party claiming right, title and interest in the motor vehicle.

We shall be pleased to receive your reply at your early convenience."

This letter was answered by a letter from the respondent's solicitors dated 2 September, 1981. Amongst other things it said:

"The 'Without Prejudice' offer in your letter of 21st August, 1981 to our client, has no foundation in the agreement between our client and your client and is totally unacceptable to our client. Our client demands the return of the motor vehicle, the subject of the lease, within 7 days."

The letter went on to say what would happen in the event of it not being returned.

I do not understand the basis of the statement that the offer made in the letter under reply was without prejudice. There is nothing to that effect said in the letter. It is true that the letter is headed at its very top, "Without Prejudice", but that is because the letter of demand sent by the respondent to the applicant was itself, for some reason which I do not understand, headed, "Without Prejudice".

On 11 September, 1981, the respondent's solicitors were told that they had no instructions as to the service of the statement of claim. The statement of claim was then issued. It seems to have been based on a cause of action for breach of contract - that is, breach of terms of the lease - and possibly upon a cause of action for detinue.

The statement of claim was served on the applicant's daughter on 7 October, 1981. On 23 October, 1981, the applicant's solicitors wrote to the respondent's solicitors saying amongst other things:

"When we took instructions from our client, he was of the view that, provided he paid all rent instalments during the term of the lease, he would be able to purchase the vehicle for its' residual value at the end of the term. We did not explore with him whether this belief arose from a representation to him by an employee of your client, or whether it arose from an assumption on our clients' part. If the former we have been advised that our client has a cause of action under Sections 52 and 53 of the Trade Practices Act."

A further letter written by the applicant's solicitors on 1 November, 1981, said, amongst other things, that their client's belief, he having by then returned from overseas, that he would be entitled to purchase the vehicle for its residual value at the expiration of the lease, "arose from an explicit representation made to him prior to the signing of the lease". On 4 November, 1981, the respondent's solicitors wrote denying that any such representation had been made.

A defence was put on to the respondent's claim. There was no ground of defence included in it based on misrepresentation or estoppel. The only defence was based on a provision of the agreement which was said in the circumstances to excuse the applicant from having to deliver the vehicle. Eventually the view was taken that the defence was hopeless, a view with which I entirely agree. On 5 March, 1982, the applicant formally confessed to $7,693.47 said to be part of the amount claimed by the respondent. This figure was the sum said to be due to the respondent in a letter from his solicitors dated 9 February, 1982. The sum was said to be made up as follows:

(a) Value of the motor vehicle $4,900.00

(b) Rental pursuant to clause 26 of the Lease (194 days at $7.94 per day) 1,540.36

(c) Expenses incurred by or on behalf of the Plaintiff consequent upon default under the Lease including legal expenses, pursuant to clause 8(b) of the Lease 750.00

(d) Interest at the rate of 11-1/2% pursuant to clause 8(c) of the Lease on the amounts set out in (b) and (c) above

The amount of interest was not there specified no doubt because the amount depended upon when either the amount was paid or judgment was entered.
On 8 March, 1982, the applicant's solicitors wrote to the respondent's solicitors as follows:

"We enclose herewith copy:-

(1) Statement of Confession and
(11)Affidavit as to Property and Means of Judgment Debtor.

As your client now has a judgment in its favour, any attempt by it to recover the motor vehicle which was the subject of the dispute, will "undoubtedly bring into operation certain provisions of the Crimes Act, 1900.
We are instructed to commence proceedings against your client under the Trade Practices Act 1974 and shall be pleased if you would advise us as to whether you will accept service of documents on behalf of your client."

As a result of the confession, judgment was signed in the sum of $7,693.47. The judgment did not order the payment of costs. They were treated as payable under clause 8(b) of the lease which provides as follows:

"8. In addition to the Total Rent the Lessee will pay to Suttons on demand:
. . . . . .
(b) Any expenses incurred by or on behalf of Suttons consequent upon default hereunder (including any expenses and legal costs including Solicitor/client costs which Suttons may see fit to incur in attempting to trace the whereabouts of the Goods and in retaking or attempting to retake possession of the Goods or in instituting proceedings for the payment of moneys due to it by the Lessee hereunder) together with any other moneys which Suttons may see fit to pay to make good any failure by the Lessee to comply with any obligation of the Lessee hereunder or any other obligation incurred in respect of the Goods."

The costs of the District Court proceedings were thus included in the amount of the judgment, no doubt in the figure of $750 earlier mentioned.

Based on the affidavit referred to in the letter, the applicant made application for leave to pay the judgment by instalments of $2 per week. The application, as might have been expected in the light of so stupid a suggestion, was opposed and rejected but an order was made requiring the the applicant to pay $4,500 forthwith and permitting him to pay the balance on or before 30 June next.

On 31 August, 1982, the respondent's solicitor wrote to the applicant's solicitor saying:

"We enclose for your client's attention copies of our accounts to our client in connection with these proceedings totalling $2,663.40. The judgment entered against your client in these proceedings took account of $750 of those costs. Accordingly our client looks to your client for the payment of its costs of $1,913.40 pursuant to clause 8(b) of the lease agreement.
Kindly let us have those monies as soon as possible."

It would seem that the additional amount for costs represented principally costs incurred in resisting the application for leave to pay by instalments, but it may be that there was a degree of overlapping.

The accounts which were enclosed were in a usual form and state, in summary, what work the solicitors have done for the charges which they claim. The bills, however, are not broken up so as to show the amount of each individual charge.

Apparently no order for costs was sought from the judge who dismissed the application for leave to pay by instalments of $2 per week because it was thought that the reference to solicitor and client costs in clause 8(b) of the lease would be of more benefit to the respondent.

The sum of $4,500 has been paid. No payment has been made of the balance of the judgment, nor of the additional amount claimed for costs. Despite the threat of action under the Trade Practices Act in March 1982 these proceedings were not commenced until 15 March this year. They have been expedited because of the approach of 30 June, the deadline for the payment of the balance of the judgment.

The respondent, relying upon the Court's associated jurisdiction, has brought a cross-claim seeking recovery, irrespective of whether or not the applicant succeeds, of the amount claimed for costs, that is, $1,913.40.

The first question is whether I accept the applicant's evidence. I have no hesitation in saying that I do. I was particularly impressed with Mrs. Gardiner as a witness. She made it clear that she was angry and upset, not only with the respondent, but also with her husband over the whole matter. She was chary of accepting assurances given her. She wished to deal with Industrial Acceptance Corporation Limited. Her concern in this regard came through very clearly and genuinely as she gave her evidence

It was submitted by counsel for the respondent that I ought not to be satisfied concerning the veracity of the Gardiners' evidence for a number of reasons, the principal of which were:

(a) the applicant's failure to mention his conversation with the sales manager in his affidavit;

(b) the errors of the Gardiners in saying that the proposal to lease document was filled in by Mr. Spiteri, and their belief that the lease was drawn up and signed on 8 August, 1978;

(c) their failure to raise any ground of defence based on the matters now complained of, for example, defences based on misrepresentation, by fraud or otherwise, or a defence based on promissory estoppel;

(d) their failure to commence these proceedings until long after the District Court proceedings were at an end;

(e) the credibility of Mr. Spiteri's evidence which it was said I should accept in its entirety. If this were done, it would make it unlikely that any relevant representations were made by him. Accordingly, the Gardiners' evidence should be rejected so far as it imputed relevant conversations to him; it would be unsafe to rely on it in relation to the alleged conversation with the sales or finance manager.

I have taken each of these matters into account; they do not persuade me from the course earlier announced.

So far as the proposal to lease is concerned, the Gardiners' evidence is consistant with a situation in which Mr. Spiteri himself filled out the information on another document which he gave to the finance manager. There is no evidence to enable me to make this finding, but at least the position is consistent with that being the case. I agree, and I have found, that the Gardiners have made a mistake about the date when the lease was signed by the applicant. I think they confused the document with the order form which has not been produced. If it had been produced, it may be that their recollections would have been refreshed in this regard. I do not regard their error as one which should lead me not to accept the general purport of their evidence.

I do not wish to say anything particularly about Mr. Spiteri's evidence. He gave his evidence, I thought, straightforwardly, but I did wonder as he gave it whether he spoke in the witness box as he would speak when conducting negotiations for a sale. The picture of him which the Gardiners painted was altogether different. Particularly is that so if I have regard to Mrs. Gardiner's evidence. One matter which makes me cautious about accepting Mr. Spiteri is his professed absence of knowledge of anything to do with financing motor car transactions. I must say that I find this surprising in the light of the fact that he is and has been for some years an experienced car salesman. I find it hard to believe that he does not at least have a rudimentary knowledge of these matters.

I am reinforced in my conclusion that I should accept the Gardiners' evidence by a more general consideration. The applicant until his retirement was an accountant. He apparently took motor cars on lease because of the tax advantage which that way of financing their purchase gave him. Apparently he had always been able to buy the vehicles at the end of the lease periods for their residual value. Although he does not expressly say so, it seems clear to me he knew the terms of the lease would be such as not to oblige the respondent to sell to him for the residual value, or indeed, to sell to him at all. When he bought the car he knew he would retire at or before the expiration of the lease. He wanted to be sure that he would become the owner of the vehicle at the end of the period. He wanted the vehicle to be available in his retirement years. That was why he asked initially for hire purchase rather than lease finance.

It is clear to me that, unless he thought he had the assurance upon which his case is based, he would not have entered into the transaction. That is his express evidence and I accept it. It is completely in accordance with the probabilities.

His conduct subsequently is consistent with this view. That conduct consists in his ringing the respondent towards the end of the period of the lease and leaving his solicitors with instructions to make the payment of $3,500 during his absence.

My findings therefore are:

(a) the respondent by Mr. Spiteri and an unidentified person known as its finance manager represented to the applicant before he entered into the lease that at the termination thereof he would be able to acquire the vehicle on payment of the residual value of $3,500;

(b) on the faith of that representation he entered into the lease; but for it he would not have done so.

Upon the basis that those might be my findings, counsel for the respondent made the following submissions:

(a) the representation could not be relied upon because it was properly characterised as no more than a representation of future intention;

(b) the claim should have been raised in answer to the respondent's claim in the District Court; that Court had jurisdiction to deal with the matter;

(c) whatever the outcome of the applicant's claim, the respondent was nevertheless entitled to succeed on its cross-claim.

In support of the first submission I was referred to the decision of Franki J. in Thompson v. Mastertouch TV Services Pty. Limited (1977) 15 A.L.R. 487, particularly at pp.493-495. That was a case decided under s.59 of the Act. I was also referred to Stack v. Coast Securities No.9 Pty. Limited, a decision of Fitzgerald J.,(1983) ATPR, case number 40-342, particularly at p.44,119 where his Honour said:

"However, no submission was made to me for the applicants that an innocent misrepresentation with respect to future events or conduct relfecting a belief conscientiously and reasonably held was either conduct which was misleading or deceptive or likely to mislead or deceive within the meaning of s.52 of the Trade Practices Act, a false representation within of sec.53(aa), or a false and misleading statement within the meaning of sec.53A. It would be appropriate at this interlocutory stage, and not inconsistent with any submission made before me on behalf of either applicants or respondent, for me to act upon a view which has been consistently adopted by a number of Judges of this Court that, irrespective of whether representations as to the future events or conduct constitute promises or predictions, they involve contraventions of the presently relevant provisions of the Act only if it is established that the belief of the respondent was at the time different from what was stated, or that the respondent did not believe what was stated, or was recklessly indifferent as to what was stated. Accordingly, an issue as to the respondent's state of mind at the relevant time is, in fact, central to these proceedings as it was to the proceedings in the Supreme Court."

His Honour's statement is obiter and I do not find it necessary to consider whether it is necessarily true for all cases and circumstances. But assuming it to be applicable here, the applicant has clearly brought himself within what he needs to establish in order to rely upon a breach of s.52.

The misleading conduct alleged is the making of the relevant statements. It is true that they must be regarded as statements of how the respondent proposed to act at the end of the lease, and that they are therefore statements of future intent. But that they were misleading at the time they were made is to be inferred from the subsequent conduct of the respondent in insisting on the letter of the lease. Particularly should that inference be drawn in the absence of any evidence from its finance manager and my reservations concerning Mr. Spiteri's evidence. At least it should be found, and I do at bottom find, that the representations were made with a reckless indifference as to whether they would in fact be adhered to or not. Accordingly I find a breach of s.52 established.

In respect of his next proposition, counsel for the respondent referred to Henderson v. Henderson (1843) 3 Hare 100; 67 E.R. 311 at p.319, and Port of Melbourne Authority v. Anshun Pty. Limited (1981) 55 A.L.J.R.621. In the former case it was said (pp.114-115):

"In trying this question I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

Notwithstanding those principles the respondent was faced with a difficulty; the District Court had no jurisdiction to try a claim under s.86 of the Act. That jurisdiction is conferred on this Court. Counsel for the respondent sought to overcome his problems by referring to my decision in Westco Motors (Distributors) Pty.Limited v. Palmer (1979) 37 F.L.R. 140. But that was a case concerned with the quantification of a defendant's liability under a guarantee. His liability depended upon the liability of the principal debtor who, so it was claimed, had a cause of action for damages under the Trade Practices Act. For the purposes of quantification I held that the Supreme Court could consider the claim but only on that basis. This case is in a quite different category.

Then it was said that a matter of set-off was involved and reference was made to the decision of the Court of Appeal in New South Wales, Stehar Knitting Mills Pty. Limited v. Southern Textile Converters Pty. Limited (1980) 2 N.S.W.L.R. 514, and to the District Court rule providing for set-off which is in similar terms to the Rule of the Supreme Court under consideration in the Stehar case. But the applicant's right, if any, is a right conferred by s.86 to bring an action for damages for breach of the Act. Set-off is not provided for. The action is one which can only be brought in this Court. Thus the principles in Henderson's case have no application here. The second submission is therefore rejected.

The third submission, that is the claim made on the cross-claim, fails because the case is within the class of case referred to in both Henderson's case and the Anshun case. I would go further and say that the claim made by the respondent in the District Court was one intended to quantify entirely the damage suffered by the respondent as a result of the applicant's breach of the lease. Notwithstanding that the application in which the bulk of the costs was incurred was made after judgment was entered, the respondent is barred from its action either by estoppel by judgment or because its rights under the lease have been merged in the judgment.

My conclusion makes it unnecessary to deal with a number of other submissions made by the applicant in relation to the cross-claim but I mention them. They were:

(a) the case was not within clause 8(b) of the lease because the costs were not incurred in instituting proceedings for the payment of moneys due to the respondent. I do not resolve that question, but it seems to me that the submission has considerable merit. The contra proferentem rule plainly applies and there is no reason for giving the words a construction as against the applicant wider than their ordinary meaning will bear. The intention may well have been, as counsel for the applicant submitted, that after or upon the institution of proceedings it was recognised that the Court would have jurisdiction to award costs, and the respondent was content to have access to the Court for the purpose of recovering expense that it was put to in the way of legal costs.

(b) the respondent had not taken the steps provided for in the Legal Practitioners Act 1898 (N.S.W.), particularly having regard to ss.21 and 32 and the decision of the Court of Appeal in New South Wales in Debney v. Semerdziev (1982) 2 N.S.W.L.R. 391 at pp.393-394.
In the absence of those steps having been taken, there could be no recovery. I express no opinion whatever on that submission.

(c) If contrary to these submissions, the respondent was entitled to recover upon its cross-claim, the applicant nevertheless was entitled to claim the amount as damages in his claim. I express no view on that matter either.

It follows that the applicant is entitled to succeed on his claim. The respondent's cross-claim fails. There is no issue as to damages. The amount involved is the difference between the amount for which judgment was entered $7,693.47 and the residual value of $3,500, that is $4,193.47.

I propose to hear counsel on the orders I should make.

(During the discussion that followed counsel for the respondent foreshadowed a possible application by his client to the District Court for an order for costs in relation to the application made by the applicant to pay the District Court judgment by instalments. After an adjournment counsel for the applicant said that his client would not press for the recovery of $1,000, part of the $4,500 which his client had paid, if the respondent would refrain from making the application for costs which he had foreshadowed. Counsel for the respondent said that his client was prepared to accept the sum of $1,000 in satisfaction of its claim for costs.)

After discussion the matter proceeded as follows: HIS HONOUR: There has ensued discussion concerning the form of the orders which I should make. One matter that has been raised is the costs of the proceedings in the District Court in which the applicant here sought leave to pay the judgment debt by instalments of $2 per week. I have earlier said something about the stupidity of such an application. By that I did not mean that it was stupid to make an application for leave to pay by instalments; what was stupid was to make an application for leave to pay the judgment debt by instalments of $2 per week. It invited the resistance with which the application was met.

It seemed to me that justice might require, now that I have held that the respondent was unable to rely upon clause 8(b) of the lease to recover the costs of that application, that the respondent is entitled to approach the District Court and ask it for the exercise of its discretion to make an order in its favour for the costs as between party and party. As counsel for the respondent pointed out, that would involve yet another bout of litigation between the parties with consequent expenditure, a course which I agree is highly undesirable.

After a short adjournment the parties agreed that the matter would be best left if the respondent instead of retaining $3,500, as would otherwise have been the case, retained the whole sum of $4,500 which the applicant paid. Upon that basis it has been agreed that I restrain further steps to enforce the judgment but make an order for costs in favour of the applicant.

The formal orders I make are as follows: I order that the respondent be perpetually restrained from taking any steps to enforce or otherwise rely upon the judgment of the District Court, including steps to obtain an order that the applicant pay the costs of an application for leave to pay by instalments the amount of the judgment recovered by it against the applicant in proceedings number 24504 of 1981; I order that the respondent's cross-claim be dismissed; I order the respondent to pay the applicant's costs of these proceedings, including the costs of the cross-claim; otherwise I make no order on the application. I give liberty to apply.