Jebeli v Modir and Golyaei

[2005] NSWCA 184

CITATION:	Jebeli v Modir and Golyaei [2005] NSWCA 184
HEARING DATE(S):	12 May 2005
JUDGMENT DATE:	2 June 2005
JUDGMENT OF:	Giles JA at 1; Tobias JA at 2; McColl JA at 83
DECISION:	Appeal dismissed with costs

CATCHWORDS:	TRADE PRACTICES - Fair Trading - Misleading or deceptive conduct - Representation by mortgage broker to purchaser that price of unit was "off the plan" price - Whether representation in "trade or commerce" - Whether purchaser relied on representation - Reasonableness of reliance - Whether purchaser suffered damage as a result of reliance - Fair Trading Act 1987 ss 42, 68 - NEGLIGENCE - Negligent misrepresentation - Whether mortgage broker's conduct in breach of duty of care to purchaser - EVIDENCE - Appeals - Fresh evidence - Evidence of attempt by party to suborn witness - Whether evidence should be admitted on appeal as fresh evidence - Whether high degree of probability that evidence would have produced different finding at trial - Whether evidence an admission of party having a bad case - Supreme Court Act 1970 s 75A(7), (8) - EVIDENCE - Illegally obtained evidence - Party tape-recorded conversation without knowledge or consent of other party - Whether evidence should have been admitted - Gravity of contravention - Whether contravention deliberate or reckless - DAMAGES - Correct measure where misleading conduct induces party to enter contract of purchase
LEGISLATION CITED:	Fair Trading Act 1987 Listening Devices Act 1984 Evidence Act 1995 Supreme Court Act 1970 Trade Practices Act 1974 (Cth)
CASES CITED:	Concrete Constructions (NSW) Pty Limited v Nelson (1990) 169 CLR 594 Plimer v Roberts (1997) 80 FCR 303 Shaddock and Associates Pty Limited v Parramatta County Council (No 1) (1981) 150 CLR 225 Esanda Finance Corporation Limited v Peat Marwick Hungerfords (1997) 188 CLR 241 O'Brien v Smolonogov (1983) 53 ALR 107 Argy v Blunts & Lane Cover Real Estate Pty Limited (1990) 94 ALR 719 Akins v National Australia Bank (1994) 34 NSWLR 155 Moriarty v London Chatham Railway Company (1870) LR 5 QB 314 See v Hardman [2002] NSWSC 234 Potts v Miller (1940) 64 CLR 282 Gould v Vaggelas (1985) 157 CLR 215 Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1 Sydney Harbour Casino Properties Pty Limited v Coluzzi [2002] ANZ ConvR 253 HTW Valuers (Central Qld) Pty Limited v Astonland Pty Limited (2004) 211 ALR 79 Thompson v Henderson & Partners (1990) 58 SASR 548
PARTIES:	Fahimeh Jebeli Habibollah Modir Masoumeh Golyaei
FILE NUMBER(S):	CA CA 40475/04
COUNSEL:	A: P Menzies QC / Assaf R: D Bernie
SOLICITORS:	A: Carneys Lawyers, Sydney R: Robert Silberberg, Double Bay

LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 8240/02
LOWER COURT JUDICIAL OFFICER:	Walmsley SC

CA 40475/04
DC 8240/02

GILES JA
TOBIAS JA
McCOLLJA

Thursday 2 June 2005

FAHIMEH JEBELI v HABIBOLLAH MODIR and MASOUMEH GOLYAEI

Judgment

1 GILES JA: I agree with Tobias JA.

2 TOBIAS JA: Ms Fahimeh Jebeli (the appellant) is a self-employed finance and mortgage broker whose business includes assisting clients in finding investment properties. Following a number of meetings with the appellant, by contracts exchanged on 11 May 2001, Mr Habibollah Modir (Mr Modir) and his wife Ms Mosoumeh Golyaei (together the respondents) purchased from the appellant and Mrs Daniella De Contades (Mrs De Contades) Unit 1009B in the development known as "The Regency" situated at 18-26 Anderson Street, Chatswood (the unit). The respondents alleged and the appellant denied that the latter represented to the former prior to their purchase of the unit, that the price at which they were purchasing it ($465,000) was the “off the plan” price. They further alleged that it was in reliance upon this representation that they decided to acquire the unit.

3 The respondents further alleged that they later discovered that the price they had paid for the unit was not in fact the "off the plan" price but a significantly higher price. Having purchased the unit for $465,000 they sold it 10 months later for only $410,000 thereby sustaining a loss of $55,000 together with the costs and expenses of the purchase and resale. Accordingly, on 16 October 2002 the respondents instituted proceedings in the District Court against the appellant claiming liquidated damages for, inter alia, misleading or deceptive conduct under s 42 of the Fair Trading Act 1987 (the Act) and negligence.

4 The proceedings were heard by Walmsley DCJ who, on 27 May 2004, found that the appellant was liable to the respondents on both causes of action. His Honour then assessed damages and entered a verdict and judgment in the respondents' favour in the sum of $104,538.35 together with costs. It is against that decision that the appellant appeals to this Court.

The relevant facts

5 The appellant and the respondents originally came from Iran. It is common ground that they had known each other prior to the events in question as the appellant had previously obtained finance on behalf of the respondents when they had purchased their home.

6 The appellant had operated her own business as a finance and mortgage broker for nearly 10 years. Through her contacts in the local Persian community and through advertisements in local Persian newspapers, she received finance broking business and occasionally put clients in contact with the vendors of real estate developments or their agents. As a finance broker, the appellant received a commission upon arranging the finance for a successful purchase.

7 By early 2001 the respondents were seeking to purchase an investment property with a view to selling it fairly quickly at a profit. In relation to home unit developments it is common for a developer to sell “off the plan”, that is, to sell the unit before the building is erected. In general, the developer’s "off the plan" sale price is regarded as attractive by those desiring to on-sell quickly at a profit.

8 It was common ground that the appellant and Mr Modir had met at the appellant’s Bondi Junction office in early March 2001 to discuss the purchase by the respondents of potential investment properties. The appellant had indicated that she had such a property in Chatswood being constructed for Australand, a well-known developer. It was owned by a client and friend of the appellant (Mrs De Contades) who had purchased the property "off the plan" from the developer but was unable settle in time because she had moved overseas. On doing so, she had given the appellant her power of attorney. According to Mr Modir, the appellant had said that he could purchase the unit for $465,000 which was the price that Mrs De Contades had contracted to pay to the developer – that is, the "off the plan" price together with certain out of pocket expenses which she (Mrs De Contades) had incurred.

9 The appellant denied that she ever said that $465,000 was the "off the plan" price. She agreed that Mr Modir had requested that she tell him what that price was but maintained that she had told him that that information was confidential and that he should make his own inquiries.

10 The respondents decided to purchase the unit. Exchange of contracts occurred on 11 May 2001. A few days before exchange, the respondents saw the contract for the first time. They noticed that the vendors were listed in the contract as both Mrs De Contades and the appellant. Mr Modir then telephoned the appellant who, so he said, told him that she did not own any beneficial interest in the unit but merely held a power of attorney from Mrs De Contades who was the sole owner.

11 Finance arranged by the appellant for the purchase was approved in July 2001 and settlement occurred on 8 August 2001. Two weeks later the respondents’ solicitors conducted a search and, by reference to the transfer from the developer to Mrs De Contades and the appellant (dated 8 August 2001), discovered that the consideration stated in that transfer was only $361,350.

12 After this discovery, Mr Modir had a number of telephone conversations with the appellant in the Farsi language which he tape-recorded without her knowledge or consent. On the first day of the trial, the primary judge, when objection was taken to the tender of a transcript of the English translation of the tape-recording, held that the recording had been made in contravention of the Listening Devices Act 1984 but admitted into evidence the relevant parts of the English translation pursuant to s 138 of the Evidence Act 1995. According to that translation (the accuracy of which was not contested), Mr Modir asserted and the appellant agreed that she had told him that the price of $465,000 was indeed the "off the plan" price of the unit.

13 On 28 March 2002 the respondents entered into a contract to sell the unit for $410,000 which was duly completed on 24 May 2002.

The findings of the primary judge

14 After noting that it was impossible to reconcile the evidence of Mr Modir with that of the appellant in relation to the essential factual issue of the alleged misrepresentation and that the outcome of the case therefore depended to a large extent upon the credit of the respective parties, the primary judge found (at Red 17-18) that the evidence of Mr Modir was to be preferred to that of the appellant in relation to that issue. It was not suggested that that finding was other than credit-based.

15 His Honour then proceeded to make several further findings of fact. He found (at Red 18) that Mr Modir was concerned to know the "off the plan" price and that he was unlikely to have accepted the appellant’s alleged response – that that was a confidential matter and that he ought to make his own inquiries – and carried on with the purchase of the unit without further inquiry. His Honour also found (at Red 18) that the appellant was desirous of selling the unit which she jointly owned (albeit probably as a trustee) with Mrs De Contades.

16 On the basis of the above findings, the primary judge concluded (at Red 20) that the appellant had represented to Mr Modir that $465,000 was the "off the plan" price of the unit and that in reliance upon that assurance, the respondents decided to and did purchase the unit. His Honour also found that the appellant and Mrs De Contades in fact purchased the unit "off the plan" for $361,350.

17 His Honour then turned to the pleaded causes of action. As I have noted, the respondents brought a claim against the appellant for breach of s 42 of the Act. Section 42(1), which was contained in Part 5, provided as follows:

“A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
Also relevant was s 68(1) of the Act:

“A person who suffers loss or damage by conduct of another person that is in contravention of a provision of Part 3, 4, 5 (section 43 excepted), 5A, 5B, 5C or 5D may recover the amount of the loss or damage by action against the other person or against any person involved in the contravention.”

18 After considering the relevant authorities (including Concrete Constructions (NSW) Pty Limited v Nelson (1990) 169 CLR 594 at 603-4 and Plimer v Roberts (1997) 80 FCR 303 at 328), his Honour concluded (at Red 24) that the appellant's representation to the respondents was made “in trade or commerce”. He further found that the appellant, in representing to Mr Modir that the "off the plan" price was $465,000, engaged in conduct that was misleading and deceptive, or likely to mislead or deceive, and that the respondents suffered loss or damage as a consequence of that conduct by purchasing the unit in reasonable reliance upon that representation, thus entitling them to recover damages from the appellant under s 68 of the Act.

19 The primary judge then proceeded to calculate damages in the following way (at Red 24). He first found that the respondents were entitled to $55,000 being the difference between the price for which they had purchased the unit ($465,000) and the price for which they ultimately sold it ($410,000). He then added to this sum the stamp duty which they had paid upon the purchase of the unit ($16,445), the selling commission upon its resale ($9,020) and legal fees on both its purchase and sale ($2,069.32 and $1,210 respectively) to arrive at total of $83,714.32. To this was added interest in the sum of $20,824.03 which resulted in judgment for the respondents for $104,538.35 (Red 27-28).

20 Finally, the primary judge considered the respondents’ alternative claim in negligence. After citing the relevant tests articulated in Shaddock and Associates Pty Limited v Parramatta County Council(No 1) (1981) 150 CLR 225 at 231 and Esanda Finance Corporation Limited v Peat Marwick Hungerfords (1997) 188 CLR 241 at 282, his Honour found (at Red 26) that the appellant owed the respondents a duty of care in answering Mr Modir's questions in relation to the "off the plan" price of the unit; that by giving an answer which was misleading she breached that duty; that the respondents purchased the unit in reliance upon the appellant’s representation and, accordingly, they had suffered the loss determined by him with respect to the misleading conduct claim.

The appellant's submissions

21 In her written submissions, the appellant challenged the following findings of the primary judge:

(a) that the appellant's conduct was in " trade or commerce " within the meaning of s 42 of the Act;

(b) that the appellant owed the respondents a duty of care which she had breached;

(c) that the appellant had represented to the respondents that the price of $465,000 was the " off the plan " price of the unit;

(d) that in reliance upon that representation, the respondents had proceeded to exchange contracts for the purchase of the unit;

(e) that the appellant's conduct was the cause of the respondent's loss; and

(f) that the respondent's reliance upon the representation by the appellant that the purchase price of the unit was its " off the plan " price was reasonable.

22 However, at the outset of the hearing of the appeal, senior counsel for the appellant indicated that he did not propose to support those challenges with any oral submissions but rested on his written submissions. It is therefore appropriate to dispose of these challenges before dealing with the three matters upon which the Court was addressed by the appellant's counsel.

The appellant's conduct was in trade and commerce

23 The primary judge found that the appellant's business activities involved a myriad of activities of which finance and mortgage broking was the primary activity. However, he also found that that activity involved, as amongst other things, recommending properties to clients as investments. Reference was made in the respondents' submissions to advertisements by the appellant in the local Persian press extolling the exceptional opportunity to acquire apartments in the best locations of Sydney priced from $220,000 and to obtain the loans with the lowest interest rates through the appellant in order to purchase those apartments.

24 In cross-examination the appellant agreed that it was in the interest of both herself and her clients for her to find appropriate properties for investment and introduce them to those clients. The reason for this was that by introducing clients to investment properties, either directly to the vendors or their agents, the appellant would be requested to arranged finance in respect of which she was paid a brokerage fee being a percentage of the amount borrowed. In my opinion, his Honour was clearly correct in holding that providing a client with the opportunity to purchase an investment property at a particular price was part and parcel of the appellant's business of providing finance for the acquisition of those properties.

25 Nevertheless, it was submitted by the appellant that the present transaction was merely a private sale by an owner to a purchaser and thus lacked the necessary trading or commercial character referred to in Nelson. Reliance was placed upon decisions such as O'Brien v Smolonogov (1983) 53 ALR 107 and Argy v Blunts & Lane Cover Real Estate Pty Limited (1990) 94 ALR 719 upon the basis that the sales by the vendor in those cases occurred in a non-business context.

26 In my opinion, his Honour was correct to distinguish those decisions. As Hill J said in Argy at 735, the decision in O'Brien was reached because the land there had never been used at all for the purpose of any business. Further, in the case with which he was dealing which was that of a person selling his house, Hill J held that whether or not a real estate agent is used by the vendor, the sale still remained a sale by the vendor of his house and was not an act performed in a business context.

27 The present case is entirely different. The fact that the appellant's business activities may not have involved her directly in the buying and selling of real estate does not detract from the fact that part and parcel of her finance and mortgage broking business involved finding appropriate properties for her clients to acquire as an investment in circumstances where the finance for that purchase was arranged by her for reward. Obviously, the higher the purchase price the greater the borrowing and the higher her commission. Accordingly, in my opinion the appellant's challenge to his Honour's finding that her conduct in making the subject representation as to the "off the plan" price of the unit was made in trade or commerce should be rejected.

The appellant's conduct was in breach of her duty of care

28 The primary judge found that the appellant owed the respondents a duty of care given the circumstance that she introduced the unit to Mr Modir who was concerned, as the appellant accepted, to ascertain the "off the plan" price thereof which, he said, was the price at which he was prepared to purchase the unit. Accordingly, it was clear to the appellant, and his Honour found, that the gravity of that enquiry and the importance and influence attached to the answer was apparent.

29 The appellant submitted that as the transaction was a private sale of the unit, it was incumbent upon the respondents to make their own enquiries and not to rely upon the appellant's representations. As I understand this argument, the challenge was not so much to his Honour's finding that there was a duty of care but to the reasonableness of the respondent's reliance upon the appellant's representation that the purchase price of $465,000 was the "off the plan" price. For reasons referred to below, there is no substance in that submission. In my opinion the appellant's challenge to his Honour's finding of the existence of a duty of care should be rejected.

30 The appellant also challenged his Honour's finding that there was a breach of that duty. However, that submission was based on the appellant's challenge to the finding of the primary judge that she had made the representation alleged. In my opinion that challenge also fails (see below).

31 Alternatively, the appellant submitted that if the representation was made, it was a mere error of judgment on the appellant's part and not to be equated with the breach of a duty of care. Given the primary judge's finding that the representation constituted misleading conduct, the submission is difficult to sustain. Furthermore, it is clear from the evidence that the appellant was fully aware that, firstly, Mrs De Contades had contracted to purchase the unit "off the plan" at its "off the plan" price; and secondly, that that price was $365,000 which was adjusted down to $361,350 at the time of settlement of that contract on 8 August 2001 which was also the date of completion of the contract entered into by the respondents. In my opinion, there is no substance in the appellant's challenge to his Honour's finding that there was a breach of her duty of care.

Did the appellant represent that the price of $465,000 was the " off the plan " price of the unit?

32 As I have already observed, the evidence of the appellant on the one hand and Mr Modir on the other was irreconcilable on this issue but was resolved by the primary judge by his credit-based preference for the evidence of Mr Modir over that of the appellant. The latter sought to attack that finding on two bases. Firstly, it was submitted that his Honour ought to have found that Mr Modir was not a reliable witness and lacked credibility as he had resorted to illegal means to tape a telephone conversation between himself and the appellant; had threatened to kill the appellant; and had suborned or attempted to suborn a witness. Secondly, it was submitted that it was glaringly improbable that the appellant made the alleged representation. Some six submissions were put in support of that contention, none of which had any substance. The primary judge rejected all of them for good and sufficient reasons.

33 It was submitted that as a consequence of those six matters it was inherently unlikely that the appellant would have made the representation alleged. In particular it was contended that the fact that the unit had been purchased some two years prior to the making of the representations, in itself, was sufficient to refute the allegation that the appellant represented to the respondents that the price was "off the plan". However, I see the matter differently. Mr Modir never suggested that he was acquiring the unit from the original developer: he was well aware that Mrs De Contades and/or the appellant had contracted to purchase the unit from the developer "off the plan". The building was in the course of erection over the two years referred to given that the strata plan was only registered in July 2001, shortly before settlement of the two contracts. The fact that the respondents were not purchasing the unit "off the plan" did not militate against a finding that Mrs De Contades was prepared to on-sell the unit at the "off the plan" price given his Honour's findings as to the unchallenged reasons why she wished to resell and was prepared not to make any profit on that resale.

34 Further, the primary judge accepted Mr Modir's evidence in preference to that of the appellant notwithstanding that he treated Mr Modir's denial of having threatened to kill the appellant "with some reserve". This he was entitled to do. Although his Honour made no mention of the alleged tape-recording as influencing his credit finding with respect to Mr Modir, I would not find that the circumstances in which that occurred should necessarily reflect adversely on Mr Modir's credit with respect to the veracity of his version of events. The same comment applies to his alleged attempt to suborn a witness of which the primary judge unaware and which, therefore, could not have influenced his view of Mr Modir's credit on the evidence before him (see below).

35 Finally, although it was submitted that there was "absolutely no reason for the appellant to make" the representation, for the reasons set out above the contrary is the case. Her friend, Mrs De Contades, was as the primary judge found, "someone who was keen to get out of the deal without cost, albeit without profit."

The issue of reliance and its reasonableness

36 The primary judge found that by reason of the appellant's assurance that the purchase price of $465,000 was the "off the plan" price of the unit, the respondents decided to purchase the unit and proceeded to exchange contracts. He further held that that reliance was reasonable.

37 The appellant submitted that Mr Modir was highly motivated and desirous of accumulating an investment property, was an intelligent person and was acquiring another investment property in the King Street Wharf development which he knew was at an "off the plan" price. Consequently, it was more plausible to find that he simply assumed that the unit was being purchased at the "off the plan" price and/or that he was not concerned whether that was the price or not. In my opinion, there is no substance in these contentions. Once the primary judge accepted Mr Modir's evidence with respect to the relevant conversations and that he was only prepared to purchase the unit at its "off the plan" price, it followed that he relied upon the appellant's assurance that the price of $465,000 was in fact the "off the plan" price in deciding to proceed with the purchase by exchanging contracts.

38 As to the reasonableness of that reliance, the appellant submitted that it was not reasonable, as the respondents had failed to look after their own interests by not carrying out all necessary searches. It was submitted that they knew that the appellant was not a real estate agent and, therefore, they should have sought advice from such an agent or other qualified or experienced person as to the true value of the property and/or its "off the plan" price. In this respect the respondents knew that the unit was not being purchased from the original developer as Mrs De Contades had purchased it from the developer nearly two years earlier.

39 In my opinion these submissions have no substance. Given Mr Modir's knowledge of the appellant's close association with Mrs De Contades and the fact that she was one of the vendors of the unit, there was no reason for him to believe that, when she informed him that the price of $465,000 was the "off the plan" price, she was doing other than telling the truth from her own knowledge. In these circumstances, there was no rational reason why he should have made any sort of confirmatory enquiry.

40 I turn now to the three matters the subject of the appellant's oral argument.

The attempted subornation of a witness

41 Ms Shohreh Delfi Alipour was a witness called by the appellant. She swore an affidavit on 7 November 2003 which was admitted into evidence without objection and upon which she was not cross-examined.

42 The relevant parts of Ms Alipour's affidavit were as follows:

"3. In approximately June or July 2001 Ms Jebeli told me that she was selling her apartment 1009B at Regency Apartments at 18-26 Anderson Street, Chatswood. She showed me the plans of the apartment and said it was for sale at $465,000.
4. I considered buying her apartment, however I bought [another] apartment."

43 In an affidavit sworn 4 May 2005, Ms Alipour deposed that on 14 April 2004 (about five weeks before the hearing commenced before the primary judge on 24 May 2004), she attended a tea party at the home of a friend at which Mr Modir was also present. At some point Mr Modir confronted Ms Alipour, produced a copy of her affidavit of 7 November 2003 and asked her to read it during which he said several times "Mrs Jebeli has played with the words".

44 Whilst she was reading the affidavit Mr Modir pointed at it and said

"I want you to think about what you've said here. You could say that you did not understand what you were signing. I want you to change your statement so that we can show that fraudsters like Mrs Jebeli can't get away with it."

45 Mr Modir then insisted on playing the tape-recording of the conversation between himself and the appellant to which I have already referred and which is the subject of a different issue to which reference is made below.

46 The appellant submitted that Ms Alipour's affidavit of 4 May 2005 should be admitted into evidence in the appeal as fresh evidence pursuant to s 75A(7) and (8) of the Supreme Court Act 1970. It was accepted by the appellant that for that evidence to be admitted, three preconditions needed to be satisfied. Firstly, it must be established that the evidence could not have been obtained with reasonable diligence for use at the trial. Secondly, the evidence must be appropriately credible. Thirdly the evidence must be such that there must be a high degree of probability that there would be a different verdict or, in the present case, that there would have been a different finding by the primary judge as to Mr Modir's credibility: Akins v National Australia Bank (1994) 34 NSWLR 155 at 160F per Clarke JA with whom Sheller JA and, on this issue, Powell JA agreed. In fact it was accepted by the appellant that the third requirement was that Ms Alipour's evidence would need to be destructive of the primary judge's credit finding with respect to Mr Modir.

47 Although the respondents tendered an affidavit by Mr Modir which denied the statements that Ms Alipour attributed to him at the tea party, it was conceded that firstly, the requirement of reasonable diligence had been satisfied and, secondly, that notwithstanding that an issue of credibility arose in that there was a conflict of evidence between Mr Modir on the one hand and Ms Alipour on the other, for present purposes the respondents were content to have the matter determined by reference to the third requirement namely that as a consequence of the evidence in question there had to be a high degree of probability that there would have been a different finding as to Mr Modir's credibility.

48 The appellant rightly accepted that in determining this issue, it was appropriate for the Court to have regard to the totality of the evidence before the primary judge that ultimately led him to the conclusion that he preferred the evidence of Mr Modir to that of the appellant. That evidence included that of Mr Modir's brother-in-law which his Honour accepted and which related to a telephone conversation between them in early March 2001 shortly after the relevant conversation between Mr Modir and the appellant, in which Mr Modir informed his brother-in-law that the appellant, through a friend, had three units available at The Regency for sale and which she was offering at the "off the plan" price.

49 The evidence further included the English translation of the transcript of the telephone conversation between Mr Modir and the appellant which he had unlawfully recorded without the appellant's knowledge and consent. The admission of that transcript into evidence is the subject of challenge but if that challenge fails, then, as the appellant's senior counsel conceded, that evidence was devastating to the appellant's case.

50 However, the primary judge found that, even putting that transcript to one side, the balance of the evidence suggested strongly that Mr Modir's version of events was the more probable.

51 The appellant submitted that evidence of a party to proceedings suborning or attempting to suborn a witness was admissible as an admission by conduct of that party having a bad case: Moriarty v London Chatham Railway Company (1870) LR 5 QB 314 at 319. However, it is implicit in that proposition that the evidence must firstly establish that Mr Modir was seeking to suborn false testimony from Ms Alipour.

52 The appellant accepted that Ms Alipour's evidence fell short of an admission by Mr Modir with respect to the strength of his case. However, it was contended that the fact that he asked her to change her statement must mean that he was asking her to change it to say something that was false; or, alternatively, not to give evidence at all.

53 I am unable to read Ms Alipour's evidence in the manner suggested. It is clear that, as far as Mr Modir was concerned, he was convinced that the appellant had been fraudulent. It seems to me that in those circumstances he was asking Ms Alipour not to change her statement so as to give false evidence but, on the contrary, to change it to give true evidence. In other words, he wanted her to say what was right rather than something he knew or believed to be wrong.

54 In my opinion the evidence of Ms Alipour falls far short of giving rise to a high degree of probability that, had it been admitted at trial, a different finding with respect to Mr Modir's credibility would have been forthcoming. Even without the evidence in the tape-recording, the findings of the primary judge with respect not only to his impression as to the credibility of Mr Modir but also as to the credibility of the appellant, when taken with the other evidence to which his Honour referred, lead inevitably to the conclusion that there is nothing in the evidence deposed to in Ms Alipour's affidavit of 4 May 2005 which would give rise to a possibility (let alone a high degree of probability) that the primary judge would have come to a different finding with respect to Mr Modir's credit.

55 For the foregoing reasons, in my opinion Ms Alipour's evidence should be rejected.

The admission of the English translation of the transcript of Mr Modir's tape-recording of his telephone conversation with the appellant

56 At the trial objection was taken by the appellant to Annexure "F" of Mr Modir's statement dated 15 September 2003 comprising an English translation of a tape-recording made by Mr Modir of a number of telephone conversations between himself and the appellant from late August to early September 2001. Those recordings were made without the knowledge and consent of the appellant and, therefore, contravened s 5 of the Listening Devices Act 1984.

57 The primary judge held that the evidence constituted by that transcript was obtained in contravention of an Australia law within the meaning of s 138(1)(a) of the Evidence Act 1995 as a consequence whereof, it could not be admitted

"unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained."

58 In determining whether to exercise his discretion to admit the evidence, his Honour was bound to take into account the eight matters listed in s 138(3). This he purported to do in his judgment ruling on the appellant's objection: (Black 28U-31K). It was accepted by the appellant that his Honour had taken into account the matters referred to in all subparagraphs of s 138(3) other than those referred to in subparagraphs (d) and (e) which relevantly required him to take into account

"(d) the gravity of the … contravention; and
(e) whether the … contravention was deliberate or reckless."

59 It was therefore submitted that the exercise by his Honour of his discretion to admit the evidence miscarried as he failed to take into account those two matters. In this respect, it was contended that his Honour had wholly failed to take into account the consideration referred to in subparagraph (e) and had only paid lip service to that referred to in subparagraph (d).

60 As to the consideration referred to in subparagraph (d), the primary judge said:

"The contravention of the law involved, however, is of some gravity because as I see it Australian society generally finds repulsive the secret recording of conversations between citizens."

61 That observation by his Honour accords with that of Bryson J (as he then was) in See v Hardman [2002] NSWSC 234 where he said:

"27. In ordinary business and social behaviour there is, in my understanding, a very strong expectation that there will not be a secret recording of a conversation but that any process of recording will be revealed, so as to give those recorded an opportunity to decide whether or not they will participate. … The view of ordinary reasonable people in Australian society that behaviour of a particular kind is an impropriety is what it makes it an impropriety. What the community thinks about secret recordings is, in my view, altogether clear and furnishes the explanation for the enactment of legislation such as the Listening Devices Act …
28. I understand, both from such events as the enactment of the Listening Devices Act and also from my general understanding of values and behaviour in the community of which I must take notice, that such conduct is not tolerated and is regarded as an extreme impropriety. The nature of the breach of an Australian law and the nature of the impropriety have a part in the weighing exercise and in appraisal of the undesirability of admitting evidence to which s 138(1) refers."

62 After dealing in some detail with the considerations referred to in s 138(3) (other than those referred to in subparagraphs (d) and (e)) in a manner which unmistakably took them into account, the primary judge, after noting that the tape had been available to the appellant by way of discovery and that it was open to her to put into evidence the full transcript and/or to challenge the accuracy of the translation (none of which occurred), concluded as follows:

"Having taken account of all of those matters which I have referred to, I conclude that the desirability of admitting the evidence outweighs the undesirability of admitting evidence illegally obtained. Accordingly, I will permit the plaintiff to read the relevant paragraphs in the transcript."

63 In my opinion there is no substance in the appellant's first challenge to the admission of the transcript namely, that the primary judge merely paid lip service to the requirement of subparagraph (d) to take into account the gravity of the contravention. He clearly did take this consideration into account and weighed it up in the balance, as he was required to do.

64 The second challenge mounted by the appellant was that his Honour failed to take into account whether the contravention was deliberate or reckless as required by subparagraph (e). In my opinion, whether the contravention was deliberate or reckless depended upon whether Mr Modir was or ought to have been aware that it was unlawful to tape-record a telephone conversation without the knowledge and consent of the other party. The problem faced by the appellant was that his Honour specifically found that there was no evidence as to whether Mr Modir knew that what he was doing was illegal. Nor was there any evidence to suggest recklessness. It is pertinent to note that it would have been open to trial counsel for the appellant to have cross-examined Mr Modir on the voir dire in order to establish a factual basis for a submission that his contravention of the Listening Devices Act was deliberate or reckless. However, he did not avail himself of that opportunity. Accordingly, in my opinion no factual basis existed to support the submission that his Honour's discretion miscarried due to his failure to take into account the matters referred in to subparagraph (e). It follows that the appellant's challenge to the admission of the English translation of the transcript of the tape-recording should be rejected.

The measure of damages

65 The primary judge found that the appropriate measure of the respondents' damages was the difference between the price paid for the unit ($465,000) and the price for which they subsequently sold it ($410,000) – an amount of $55,000. To this figure his Honour added stamp duty on the purchase of the unit, legal and other expense relating to both the purchase and the sale and agent's commission with respect to the sale, in all $83,714.32, which together with interest of $20,824.03, totalled $104,538.35.

66 At trial counsel for the respondents tendered a schedule of their losses amounting to the sum of $83,714.32 as Exhibit "S" which was admitted without objection. On the issue of damages, the primary judge said this:

"Counsel for the defendant submitted that the measure of damages ought to be the sum of $55,000 together with expenses of purchase and sale. I take him to have accepted, since he said nothing about this in opposition, the calculations put forward by counsel for the plaintiff which are set out in Exhibit "S"."

In her written submissions, the appellant accepted that her trial counsel appeared to have conceded the measure of damages adopted by his Honour.

67 Nevertheless, the appellant submitted that the measure of damages so adopted was in error and that the correct measure, where misleading conduct induces a plaintiff to enter into an agreement to purchase property, is to calculate the difference between the price paid and the true value of the property at the time of sale. Reliance was placed upon passages in the judgment of Dixon J in Potts v Miller (1940) 64 CLR 282 at 297-9 and of Gibbs CJ in Gould v Vaggelas (1985) 157 CLR 215 at 220. In the latter case, the Chief Justice said:

"It is well established that in an action of deceit where the plaintiff has been induced by the fraudulent misrepresentation of the defendant to enter into a contract of purchase, the measure of damages usually applicable is the difference between the real value of the property at the time of purchase and what the plaintiff paid for it." (emphasis added)

68 However, Gibbs CJ, after referring to Potts, added the following further observations (at 220-1):

"The usual rule is, however, only a special application of the general principle that 'In an action of deceit a plaintiff is entitled to recover as damages a sum representing the prejudice or disadvantage he has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentations made by the defendant: Toteff v Antonas . In other words, the general principle is that the plaintiff is to be put, so far as possible, in the position he would have been in if he had not acted on the fraudulent inducement."

69 In Potts at 298, Dixon J made it clear that the reason for what Gibbs CJ referred to in Gould as the "usual rule", was that if, after the date of purchase, the thing which the plaintiff was induced to buy loses in value owing to accidental or extrinsic causes, that loss is not the reasonable consequence of the inducement. Again, in Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1 at 12, the majority said:

"It is a question of determining how much worse off the plaintiff is as a result of entering into a transaction into which the representation induced him to enter than he would have been had the transaction not taken place."

70 More recently, in Sydney Harbour Casino Properties Pty Limited v Coluzzi [2002] ANZ CONVR 253, Heydon JA, with whom Giles JA agreed, observed that the test for quantifying loss where misleading conduct induces a plaintiff to enter an agreement to purchase property, namely, to calculate the difference between the agreed price and the value of the property at the time that the price was paid, was the prima facie test in the tort of deceit and had been treated by the High Court as the prima facie test under s 82 of the Trade Practices Act 1974 (Cth). Being a prima facie test, however, it may give way to a more appropriate test if the circumstances warrant its adoption as more accurately restoring the plaintiff to the position he or she was in before the misconduct occurred or the negligent misstatement was made.

71 Again, in HTW Valuers (Central Qld) Pty Limited v Astonland Pty Limited (2004) 211 ALR 79 at 90 [35], Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ referred to the rule in Potts v Miller as being neither universal, inflexible nor rigid: see also to like effect, Murphy v Overton Investments Pty Limited (2004) 7216 CLR 388 at 403 [31] where the High Court in a joint judgment emphasised that care must be exercised before seeking to apply the rule in Potts v Miller to claims for relief under Part VI of the TradePractices Act.

72 Leaving aside the fact that at trial the appellant accepted as appropriate the calculation of the respondents' damages in accordance with Exhibit "S" which the primary judge adopted, one of the difficulties facing her submission is the lack of reliable evidence as to the value of the unit at either the date of exchange of contracts (11 May 2001) or the date of settlement (8 August 2001). I mention the date of settlement as there is authority for the proposition that the difference between what the plaintiff pays and the value of what he or she gets is recoverable, and that the time at which he or she gets the latter value is at settlement when it becomes his or her property: Thomspon v Henderson & Partners (1990) 58 SASR 548 at 556 per Bollen J, with whom White and Mohr JJ agreed.

73 The appellant did not call expert evidence as to the value of the unit on either of those dates. The respondents primarily relied on what they no doubt submitted was the best evidence of value, namely, the sale of the unit itself in March 2002 for $410,000. There was no suggestion that that sale was other than for the best price then available or that it was otherwise affected by extrinsic, independent or supervening factors: cf HTW Valuers at 92 [40].

74 Notwithstanding the foregoing, the appellant seeks to rely upon a valuation of the unit prepared by REA Australia Pty Limited (REA) dated 19 June 2001 which valued the unit at $465,000. This document was an annexure to the appellant's affidavit sworn 9 April 2004. When objection was taken to its admission, trial counsel for the appellant conceded that it was not an expert report and tendered it not as evidence of value, but as a document that the respondents used to obtain finance to acquire the unit. It was common ground that it was admitted only on that limited basis.

75 The foregoing notwithstanding, the appellant submitted that when Mr Modir was cross-examined with respect to that document he admitted that it represented the true value of the unit at the time of his and his wife's acquisition of it. The exchange upon which this submissions was based was as follows:

"Q. Then you exchanged contracts on 11 May.
A. That's the exchange of contract, yes.
Q. In June Mrs Jebeli had organised for you a loan of $400,000 to purchase the Chatswood property.
A. Yes.
Q. There was a valuation done.
A. Obviously there's a valuation, yes.
Q. You're aware of that valuation, aren't you?
A. She said to me that it's been valued, yes. I was aware, yes.
Q. That valuation was presented to the lenders of the money.
A. That's it, yes.
Q. Do you recall what that valuation said your property was worth?
A. It exactly matches the purchase price, $465,000.
Q. I'm going to show a document. Can I just show you four pages of a document. Is that the valuation that you had done of the Chatswood property for the purposes of borrowing the money to buy it?
A. She applied for me. I didn't do the valuation, she did, yeah.
Q. She's your mortgage broker, isn't she?
A. Yeah, she did it, yes.
Q. She does it for you.
A. Yes, that's right.
Q. That valuation was done by people called REA Australia Pty Ltd, wasn't it?
A. Yes.
Q. It valued your property at $465,000.
A. That's true.
Q. Based on that valuation you were able to borrow $400,000.
A. That's true.
Q. To buy 1009B the Regency in Chatswood.
A. That's true."

76 In my opinion, the above exchange contains no admission by Mr Modir that the REA valuation represented the true value of the unit as at June 2001. It is pertinent to note that the question which followed the above exchange was as follows:

"Q. There's nothing wrong with that valuation is there, to your knowledge?"

77 The question was objected to and withdrawn and the matter was taken no further by the cross-examiner. In my opinion, therefore, the REA valuation did not provide evidence of the value of the unit as at May/June 2001. It was not admitted as evidence of value and that position did not change.

78 In any event, it is to be noted that the respondents tendered as Exhibits "F" and "G" respectively a valuation report by Australia Pacific as at 1 February 2002 in the sum of $375,000 and by Glyn Stark, Thomas & Associates as at 21 September 2001 in the sum of $410,000. Both valuations were tendered by the respondents as "expert reports" and were admitted as such without objection.

79 Given that on the one hand the REA report of 19 June 2001 was not admitted as evidence of value of the unit and on the other, the Australia Pacific and Glyn Stark valuations (Exhibits "F" and "G") were, it is not surprising that trial counsel for the appellant was content to accept that the respondents' measure of damages was the difference between the price paid for the unit ($465,000) and the amount for which it was subsequently sold ($410,000). In fact, if the date of settlement is the relevant date upon which the measure of damages is to be calculated, then the Glyn Stark valuation of $410,000 would provide cogent evidence of that value at that time thus giving rise to a loss of $55,000 as his Honour found. In my opinion, therefore, the appellant's challenge to the measure of damages adopted by the primary judge is without merit.

80 Finally, the appellant submitted that his Honour erred in allowing as part of the respondents' loss, the stamp duty paid on the purchase of the unit, the legal and other expenses paid on the purchase and the resale as well as the agent's commission paid on the resale. It was submitted that the incurring of those costs could in no way be said to have been the result of the appellant's misleading conduct.

81 In my opinion, the foregoing submission is misconceived. If the respondents are to be put back into the position they were in had they not been induced by the appellant's misleading conduct to purchase the unit, then they would not have expended the amounts challenged. They were properly conceded, by the appellant's trial counsel, to be payable. This further challenge to the primary judge's quantification of the respondents' loss should also be rejected.

Conclusion

82 For the foregoing reasons, in my opinion the appeal should be dismissed with costs.

83 McCOLL JA: I agree with Tobias JA.

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