FEDERAL COURT OF AUSTRALIA
Harvard Nominees Pty Ltd v Tiller [2020] FCAFC 229
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Details
- Case
- [2020] FCAFC 229
- Decision Date
CaseChat Overview and Summary
The appeal in Harvard Nominees Pty Ltd v Tiller was heard by the Full Court of the Federal Court of Australia. The dispute involved claims of misleading or deceptive conduct by the respondents, leading to the appellant entering into a series of pastoral leases. The appellant sought statutory rescission under section 243 of the Australian Consumer Law (ACL) due to alleged misleading conduct. The primary judge had found against the appellant on the issue of loss or damage, which was critical for the grant of relief under sections 236 and 237 of the ACL. The appeal was primarily concerned with whether the primary judge correctly assessed the loss or damage suffered by the appellant and the applicability of rescission in equity and under the ACL.
The central legal issues before the court were whether the appellant had suffered or was likely to suffer loss or damage due to the misleading conduct, and if so, what form that loss or damage took. The court also had to consider the differences between rescission at common law and in equity and how these principles applied to the statutory relief under the ACL. The primary judge had ruled that the appellant would not have entered into the leases but for the misleading conduct, but had not found that the appellant had suffered loss or damage as required by section 237 of the ACL. The appeal challenged this finding, arguing that the detriment of being bound by the leases constituted sufficient loss or damage.
The court found that the primary judge's conclusion that the appellant would not have entered into the leases but for the misleading conduct was sufficient to establish that the appellant had suffered or was likely to suffer loss or damage within the meaning of section 237(1)(a) of the ACL. This was because the appellant would not have contracted with Mr Nicoletti due to personal animosities and a perception that Mr Nicoletti would benefit unfairly from the low rent. This reasoning aligned with previous cases such as Marks and Wardley, which held that loss or damage is not confined to economic loss but can include other forms of prejudice or disadvantage. The court disagreed with the primary judge's assessment that the appellant had not suffered loss or damage and held that the appeal should be allowed on this basis. The matter was remitted to the primary judge to determine the appropriate relief under the ACL and to address any costs issues.
The court ordered that the appeal be allowed, and specific orders made by the primary judge were set aside. The matter was remitted to the primary judge to determine what, if any, relief should be granted under sections 236 and 237 of the ACL, as well as any costs related to the proceedings. The respondents were ordered to pay the appellant's costs of and incidental to this appeal.
The central legal issues before the court were whether the appellant had suffered or was likely to suffer loss or damage due to the misleading conduct, and if so, what form that loss or damage took. The court also had to consider the differences between rescission at common law and in equity and how these principles applied to the statutory relief under the ACL. The primary judge had ruled that the appellant would not have entered into the leases but for the misleading conduct, but had not found that the appellant had suffered loss or damage as required by section 237 of the ACL. The appeal challenged this finding, arguing that the detriment of being bound by the leases constituted sufficient loss or damage.
The court found that the primary judge's conclusion that the appellant would not have entered into the leases but for the misleading conduct was sufficient to establish that the appellant had suffered or was likely to suffer loss or damage within the meaning of section 237(1)(a) of the ACL. This was because the appellant would not have contracted with Mr Nicoletti due to personal animosities and a perception that Mr Nicoletti would benefit unfairly from the low rent. This reasoning aligned with previous cases such as Marks and Wardley, which held that loss or damage is not confined to economic loss but can include other forms of prejudice or disadvantage. The court disagreed with the primary judge's assessment that the appellant had not suffered loss or damage and held that the appeal should be allowed on this basis. The matter was remitted to the primary judge to determine the appropriate relief under the ACL and to address any costs issues.
The court ordered that the appeal be allowed, and specific orders made by the primary judge were set aside. The matter was remitted to the primary judge to determine what, if any, relief should be granted under sections 236 and 237 of the ACL, as well as any costs related to the proceedings. The respondents were ordered to pay the appellant's costs of and incidental to this appeal.
Orders
Orders of the court
1. The appeal is allowed.
2. Order 1 of the orders made on 19 March 2020, order 5 of the orders made on 11 May 2020 and order 1 of the orders made on 22 July 2020 be set aside.
3. The matter be remitted to the primary judge on the question of what, if any, relief should be granted under ss 236 and 237 of the Australian Consumer Law and any issues as to costs of the proceedings below.
4. The respondents pay the appellant’s costs of and incidental to this appeal.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
The relevant dictum in Demagogue is that the loss or damage contemplated by s 87(1A) (now s 237 of the ACL) includes the detriment suffered by being bound to a contract unconscionably induced (at 32 per Black CJ and 44 per Gummow J), or that it includes the disadvantage of incurring contractual obligations which would not have been incurred but for the conduct complained of (at 47 per Cooper J). See PJ [554]–[556] quoted above. On that basis, the finding by the primary judge (PJ [470]) that Harvard would not have entered into the Tiller Leases but for the offending conduct is sufficient to establish that Harvard “suffered, or is likely to suffer, loss or damage” within the meaning of s 237(1)(a) of the ACL which in turn provides a foundation for relief under s 243. We are accordingly in respectful disagreement with the primary judge in that respect.Conclusion as to loss or damage However, it is not necessary to decide the case on that narrow basis. That is because of the primary judge’s findings that Harvard was set against contracting with Mr Nicoletti, albeit for its own subjective reasons, and that but for Mr Nicoletti’s involvement having been kept from Harvard it would not have entered into the Tiller Leases at the rental that it did that was advantageous to the lessee. The primary judge found that “Mr Nicoletti’s involvement would have put a very different complexion on the proposed lease for what was believed to be below market rent” (PJ [364]) and that John Caratti (i.e. Harvard) “would not have been content to see Mr Nicoletti benefit from the low rent under the Tiller Leases” (PJ [409]). Ultimately the primary judge concluded that Harvard would not have contracted with Mr Nicoletti because of John Caratti’s animosity towards Allen Caratti and his perception that Mr Nicoletti was in Allen’s camp, and his likely unwillingness in any event to allow Mr Nicoletti to take advantage of the low rent under the Tiller Leases (PJ [456]). That brings the case squarely within what was said in the joint judgment in Marks (i.e. “loss or damage … is not confined to economic loss” (at 513 [46]), the applicant must “suffer some prejudice or disadvantage” and “something more [than making a contract] must be shown” (at 515 [54]), and if not a difference in value then “some other manifestation of actual loss” is sufficient (at 515 [55])) and what was said in Wardley (that is, “disadvantageous character or effect” (at 527 per Mason CJ, Dawson, Gaudron and McHugh JJ). See also Murphy v Overton Investments (at 407 [45] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ). The respondents submitted that Mr John Caratti’s strong antipathy to Harvard contracting, or having anything to do, with Mr Nicoletti was not the view of Harvard on the basis that as a corporation Harvard had no sensibilities to offend or feelings to hurt. Reference was made to comments by Wilcox J in the context of a defamation claim that a corporation does not have feelings to be hurt: Typing Centre of NSW Pty Ltd v Northern Business College Ltd (1989) 13 IPR 627 (at 641).
Ratio Decidendi
Legal Principle Established
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