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Henderson v Amadio Pty Ltd (No 1)

Henderson v Amadio Pty Ltd (No 1)

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Case Copied 23 November 1995 77 min read

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CATCHWORDS

TRADE PRACTICES - misleading and deceptive conduct - syndicate for purchase of office building with negatively geared vendor finance - representations as to value, as to increase in rent and capital value, as to ease of re-financing and as to sale of share with no further liabilities - whether representations false or made without reasonable grounds - whether reliance - whether representations made by accountants introducing investors to promoters - alleged representation by silence - whether disclosure of accountants' commission - whether vendor's estate agent's opinion of value held honestly or on reasonable grounds - whether accountants represented to clients good repute of promoters - whether contributory negligence a defence - whether estoppel, affirmation or election - whether damages limited to difference between price and market value at time of purchase - whether subsequent unexpected fall in market value recoverable - whether tax benefits to be taken into account - whether failure to mitigate loss by accepting refinancing proposal

NEGLIGENCE - accountants retained to prepare cashflows for promoter of investment scheme - term of retainer that assumptions not be investigated - whether duty of care owed to purchasers

NEGLIGENCE - promoters of investment scheme - statements as to value of building, increase in rent and capital value, ease of re-financing and sale of share with no further liabilities - whether duty of care - foreseeability and proximity

NEGLIGENCE - accountants - investment advice - introduction of clients to promoters of syndicate for purchase of office building with negatively geared vendor finance - non-disclosure of commission from promoter - whether adequate investigation - whether adequate advice as to risk

NEGLIGENCE - solicitors - retainer - whether retained as conveyancing sub-contractors for promoters of syndicate for purchase of office building with negatively geared vendor finance - whether obligation to advise as to joint and several liability - whether obligation to advise as to lack of ratchet clause in lease

NEGLIGENCE - estate agents acting for vendor - provision of valuation letter to promoters of syndicate - non-disclosure of role as vendor's agent - valuation - relevance of market history of property - whether opinion held honestly or on reasonable grounds - whether duty of care owed to purchasers - foreseeability and proximity

REAL PROPERTY - valuation - evidence of market perceptions - application of rule in Spencer v Commonwealth - market performance of subject property

CORPORATIONS - prescribed interest - syndicated for purchase of office building with negatively geared vendor finance - whether investment in partnership - financial or business undertaking or scheme - investment contract - invitation to public - offer to public - partnership exclusion - illegality - restitution - unjust enrichment

EQUITY - Unconscionable conduct - vendor granting option to promoter of syndicate of purchasers - purchasers advised by solicitors and accountants - whether at special disadvantage

EQUITY - restitution - sale of office building with mortgage back to vendor - breach of prescribed interest provisions - retention of benefits by purchasers - setting aside transactions - whether…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1995] FCA 1029
Decision Date: 23 Nov 1995

CaseChat Overview and Summary

This case involves a dispute between a group of investors and various parties, including the vendor Amadio Pty Ltd, the promoters Gray & Winter, and other professionals involved in the transaction. The investors claim they were misled and negligently advised about the value and prospects of an office building they purchased, leading to significant financial loss when the property's value declined sharply. The case covers a wide range of legal issues, including misleading and deceptive conduct, duties of care, breach of duty, reliance, causation, and contributory negligence. The court found that Gray & Winter, the promoters, were not acting as solicitors but owed a duty of care under ordinary principles of negligence. They were held liable for making several negligent and misleading statements about the property. Bird Cameron, the accountants, were also found to have breached their duty of care by failing to adequately warn their clients of the risks involved in the investment. The court further found that the sale of the building by Amadio to the investors and the associated mortgage and guarantee contravened prescribed interest provisions, leading to an order to set aside those transactions. The court also addressed issues of insurance indemnity, finding that Bird Cameron was entitled to indemnity from their insurer despite the accountants' misconduct, as the insurer's policy did not exclude such claims. The final orders are to be determined based on written submissions regarding the form of orders and costs.

Orders