Jacfun Pty Ltd v Sydney Harbour Foreshore Authority

Jacfun Pty Ltd (the appellant) appealed to the Court of Appeal of New South Wales against a decision of the Supreme Court which had dismissed its claim against the Sydney Harbour Foreshore Authority (the respondent). The dispute concerned negotiations for the surrender of a lease held by the appellant over premises at Darling Walk. The appellant alleged that representations made by the respondent during these negotiations, regarding the potential for future development of the site, induced the appellant to surrender its lease and accept a lower price than it otherwise would have.

The central legal issues before the Court of Appeal were whether the respondent had engaged in misleading or deceptive conduct in contravention of the *Trade Practices Act 1974* (Cth) (now the *Competition and Consumer Act 2010* (Cth)) and, if so, what damages were recoverable. Specifically, the court had to determine whether the respondent's negotiator made representations about the unlikelihood of office development and the prospect of a low-rise hotel being the best possible future development, and whether these representations were misleading or deceptive in the circumstances. The court also considered the causal link between any misleading conduct and the appellant's decision to surrender the lease and the price it accepted.

The Court of Appeal found that the respondent's negotiator had made representations that were misleading or deceptive. The court reasoned that the negotiator's statements, intended to lower the appellant's expectations regarding the value of its lease, conveyed a false impression about the future development prospects of the site. The court applied the principles of misleading or deceptive conduct, focusing on the effect of the representations on a reasonable person in the position of the appellant. The court concluded that the appellant had suffered a loss of a chance to negotiate a higher price for the surrender of its lease due to the misleading conduct.

The Court of Appeal allowed the appeal, set aside the orders of the Supreme Court, and entered judgment for the appellant for $1.25 million, with the respondent ordered to pay the appellant's costs in both the Supreme Court and the appeal.