Immer (173) Pty Limited v Cyrens Holdings Pty Limited

[1993] FCA 95

IN THE FEDERAL COURT OF AUSTRALIA )	1 No. NG 821 of 1992
GENERAL DIVISION	j

ON APPEAL FROM A SINGLE JUDGE OF THE

FEDERAL COURT OF AUSTRALIA

BETWEEN:	IMMER (173) PTY LIMITED
First Appellant
and
PIARTIN POSS
Second Appellant
AND :	CYRENS HOLDINGS PTY
LIMITED, PETER ROBIN,
WILLIAM SMITH and
WENDY ABBOTT DANPORTH

CORAM:
PLACE :

DATE :	18 FEBRUARY 1993
point in reciting them in these reasons. It is sufficient

EXTEMPORE REASONS FOR JUDGMENT

THE COURT: The matters argued in this appeal depend entirely upon the facts of the particular case. We have been taken by counsel for the appellants to the relevant facts or at least to those of them upon which they place reliance. Their significance has been discussed with counsel and we see no

for us to state briefly the reasons why we think the appeal
must fail.

Four representations were relied upon by the respondents and found established by the learned trial judge. The critical representation was that concerning the turnover of the restaurant immediately prior to the making of the contract for sale of the restuarant business. If it is established that this representation was made, and was false it constitutes misleading conduct by the appellants. If the representation was relied upon by the respondents, occasioning damage to them, the respondents cause of action is made out.

It matters not whether there were other items of misleading conduct.

It is common ground that, in early July 1991, a representation was made to the respondents on behalf of the appellants that the "present weekly turnover" of the business was $20,000. It is also common ground that this figure was

incorrect. The appellants' evidence was that the turnover of

the restaurant in the 1990/1991 financial year was $723,017;

that is under $14,000 per week. It is not suggested that the weekly figure at the end of the year was running at a level higher than the average for the full financial year. Indeed, the appellants suggested the contrary, claiming that the average in the first six months of the year was about $19,000 per week.

Counsel for the appellants do not dispute that the respondents suffered losses as a result of their decision to purchase the restaurant business; but they do dispute that these losses were the result of their clients' false representations. They say that there was zn reliance by the respondents on the representation as to weekly turnover; the reason being that, prior to contract, Mr Poss informed Mr Roach of his rough estimate that the turnover during the 1990/1991 financial year was $933,500 - that is, $17,900 per week. Mr Smith admitted that Mr Roach passed this information on to him but he would not concede lack of reliance. In his affidavit evidence, Mr Smith referred to the figure of $20,000

per week and the figure of $933,500. He went on:

"Taking i n t o account the reces s ion and the f a c t

t h a t Martin Poss had informed me t h a t the

f igures f o r t h e current year were down i n

r e l a t i o n t o previous years , I considered t h a t

t h e drop was acceptable and i n d i c a t e d t h a t t h e

bus iness was st i l l q u i t e sound. "

this issue. He conceded that he realised that there had been Not surprisingly, M r Smith was cross-examined on some decline in revenue but he thought that this was the product of particular management problems. As a result, he expected the 1990/1991 turnover to be "marginally down on the year before's figures" of $1,101,282; that is, about $21,000 per week. Mr Smith apparently thought an average figure of $17,900 for 1990/1991 within this expectation. He insisted, over the course of a lengthy cross-examination, that he

regarded as still operative the representation that takings in

July 1991 were $20,000 per week. As a matter of logic, of

course, it would be possible for takings in June and/or July

1991 to be about $20,000 per week, notwithstanding a lower

weekly average for the full financial year.

The question whether Mr Smith's assertion that he, in fact, relied on the representation of $20,000 should be accepted, was a matter which the trial judge had to determine by reference to his assessment of M r Smith as a person, taking

into account not only his truthfulness but also his experience, intelligence and personality. This is an area where a trial judge has a considerable advantage over an appellate court. After taking into account all those matters, his Honour concluded:

"There was evidence that the applicants had done their preliminary costings on the basis of the $1 7,900 turnover figure and the respondents asserted that it was this figure that was ultimately relied upon. However, I do not

the relevant transactions took place, that the	find, given the whole circumstances in which
preliminary estimate of $1 7,900 was, in fact, relied on. This case involved a number of meetings and a series of representations over a number of months, many of which I have already outlined.
The figure that was constantly represented as being the true weekly turnover figure was, in fact, the figure of approximately $20,000.
Small er turnover figures were easily attributable to the past problems which Mr Poss
had made clear to the applicants. "
Counsel for the appellants have taken us to all the

evidence which they think might indicate that these findings were erroneous. But we are not persuaded. It seems to us that the conclusion reached by his Honour was well open to him on the whole of the evidence.

Counsel for the appellants submitted that, if the respondents were entitled to succeed, it was nonetheless erroneous for his Honour to make an order avoiding the transaction ab initio. Reference was made to the fact that, after they entered into possession of the restaurant, the respondents ceased to trade on Sundays and reduced prices for both wine and food. These changes are, of course, all reversible. Perhaps a more serious matter is that nobody exercised the option to renew the lease. But the proceeding was commenced, with an Application seeking avoidance of the transaction, on 24 December 1991, well before the date of expiry of the option. It seems to us that, if parties take no action to deal with a problem such as this, they must take their chances on the result. The appeal should be dismissed

with costs.

I certify that this and the preceding four (4) pages

are a true copy of the Reasons for Judgment

of the Court.

Dated:  18 February 1993

APPEARANCES

Counsel for the Appellants:	P R Graham QC and
R C Williams
Solicitors f - the Appellants:	Stern and Tanner
Counsel for the Respondents:	P Biggins and R Beech-Jones
Solicitors for the Respondents:	Peter D Irving
Dates of hearing:	18 February 1993