John Shuman, Ivan Vrlic and Blosea Markovic v Coober Pedy Tours Pty Ltd South Australia v Coober Pedy Tours Pty Ltd Nos. SCGRG 93/219 and SCGRG 93/226 Judgment No. 4401 Number of Pages 21 Contracts Negligence

[1994] SASC 4401

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA KING CJ(1), MILLHOUSE(2) AND OLSSON(3) JJ

CWDS
Contracts - general contractual principles.

Negligence - apportionment of responsibility and damages - Sale of fossil - parties mistakenly believed fossil to be a dinosaur bone - four years later found to be a fossilised tree - respondent rescinded contract - right to rescind exists by reason of a common mistake or Misrepresentation Act s 6 - consideration of contractual principles - fundamental condition of contract that fossil was a dinosaur bone - consideration of liability of appellants to respondent - no entitlement to contribution between appellants as liability several - State of South Australia (the State) liable for negligent misstatement - the State is only liable to extent that, following rescission, moneys cannot be recovered from vendors of fossil. Misrepresentation Act s 6. Ivanoff v Phillip M Levy Pty Ltd (1971) VR 167; Leason Pty Ltd v Princes Farm Pty Ltd (1983) 2 NSWLR 381; Graham v Freer (1982) 35 SASR 424; Leaf v International Galleries (1950) 2 KB 86; Allen v Robles and Anor (1969) l WLR
1193; Fenton v Kenny (1969) NZLR 552; Alati v Kruger (1955) 94 CLR 216; Kramer v McMahon (1970) 1 NSWR 194; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 66 ALJR 768; Baltic Shipping Co v Dillon (1993) 67 ALJR 228; Sibley v Grosvenor (1916) 21 CLR 469; Goldrei, Foucard and Son v Sinclair and Anor (1918) 1 KB 180; McLaren Maycroft and Co v Fletcher Development Co Ltd
(1973) 2 NZLR 100; Hanson v Matthew Bros Contractors Ltd and Anor (1990) 55 SASR 183; Thompson v Henderson and Partners Pty Ltd and Anor (1990) 58 SASR
548; Petersen v Malony (1957) 84 CLR 91 and London and South of England Building Society v Stone (1983) 3 All ER 105, discussed.

HRNG ADELAIDE, 1 December 1993 #DATE 14:2:1994

Counsel for appellants:                Mr R A Harms

Solicitors for appellants:             Tindall Gask Bentley

Counsel for appellant State of SA:     Mr B M Selway

Solicitors for appellant State of SA: Crown Solicitor

Counsel for respondent:                Mr R W Evans

Solicitors for respondent:             Condon and Co

JUDGE1 KING CJ The respondent brought this action in the District Court against the appellants Shuman, Vrlic and Markovic claiming restitution of monies paid under a contract for the sale of a fossil or alternatively for damages for breach of contract and against the State for damages for negligence. It obtained judgment against Shuman, Vrlic and Markovic for $30,000 plus interest, subject to the return of the subject matter of the contract, and against the State for $30,000 damages plus interest. The appellants have appealed against the judgment.

2. The three personal appellants were prospectors at Coober Pedy. In 1985 they found an unusual opalised fossil in five pieces totalling over 2 metres in length. They took it to the South Australian Museum which is operated by the South Australian Government, for an opinion as to its nature. The Curator of Fossils at the Museum, Mr N S Pledge, examined the fossil. He conveyed his opinion to Mr Shuman in a letter dated 16th May 1986, as follows:
    "Dear Mr Shuman The specimen you and your partners left with
    me last November has proven very interesting. With your
    permission we cleaned down one face of the concretion, and
    confirmed what was indicated on the broken surface, namely that
    the concretion enclosed a long, narrow, almost straight, rather
    flattened object. There is no proof for my first suspicion, that
    the object was a piece of fossil wood. Rather, the structure that
    can be discerned indicates that it is a bone. This being the
    case, it is a very large bone, since it is incomplete at each end,
    and must have come from a huge animal. The overall shape and huge
    size suggest that it is, in fact, a fragment (nearly 2 m long])
    from a rib of a dinosaur of the brachiosaur family. Brachiosaurus
    is one of the largest dinosaurs known, standing some 12 m tall.
    Two very incomplete bones relating to this family have been found
    in Queensland, and are roughly the same age as your Coober Pedy
    specimen (middle Cretaceous, about 105 million years), so we
    should not be too surprised to find a representative in South
    Australia. Although it is too incomplete ever to put a specific
    name on it, nevertheless, it is an important discovery, and
    increases the number of dinosaur bones known from South Australia
    to four, and the number of species represented to three] We thank
    you for allowing us to study this specimen, and I hope you will
    let us see any further discoveries you may make. Yours sincerely"

3. Early in 1986, Mr and Mrs Campagna, the principals of the respondent company, met the personal appellants in a restaurant at Coober Pedy. There were some differences between the witnesses as to what occurred and what was said. The learned trial judge based his findings principally on the evidence of Mr Campagna, whom he found to be "essentially honest and reliable". Mr Campagna's version of what was said at this encounter is given in the following answers:
    "Well while we were having dinner, Markovic approached our
    table and they say you know he opened a new shop. I say where it
    is yes and then he says that we a - a special important souvenirs
    and would be suitable for your shop, is a really unique piece of
    fossils and that you talk about this specimen. I said what's it
    all about, what sort of specimen and he said, well he says it's a
    dinosaur rib bone and so he want to find a buyer. ... Well, we
    say you know can you tell me more about, what he say specimen has
    been taken to Adelaide and be testing and the results of the test
    is a dinosaur bone opalised and six feet long. I say what money
    you talking about, you know, what's worth and he say well you know
    is about $30,000."

4. A few nights later, Mr and Mrs Campagna inspected the fossil, which was embedded in sandstone, at Mr Shuman's house. Messrs Markovic and Vrlic were also there. Mr and Mrs Campagna were shown some photographs depicting the fossil and some published material concerning the "find".

5. After negotiations they agreed that the respondent would buy the fossil for $30,000. The purchase price was paid in due course and possession of the fossil was taken on behalf of the respondent.

6. The fossil was exhibited by the respondent for an admission charge. It appears not to have generated as much customer interest as Mr Campagna would have wished.

7. It appears that in 1990 another fossil was discovered in the vicinity of the earlier find. Mr Pledge came to Coober Pedy to inspect that fossil and had a discussion with Mr Campagna. It turned out that the newly discovered fossil was mineralised wood from a tree. This apparently sowed doubts in Mr Pledge's mind as to the fossil previously discovered. At his suggestion a section of the respondent's fossil was sent to the Museum for examination. On 31st October 1990 the Museum faxed a letter signed by Mr Pledge to Mr Campagna advising him that the fossil was not a dinosaur bone but wood from a tree. The learned judge found that the fossil was worthless.

8. Mr Campagna immediately consulted a solicitor. The solicitors sent a letter to Mr Shuman dated 30th November 1990 which recited what had occurred and added: "Our client looks to you for restitution of the contract price and reserves his rights in relation to other loss which has flowed from the original misrepresentation." The letter does not use the words "avoid" "rescind" or "disaffirm", but I think that the intention to do so is made clear by the claim for restitution.

9. There can be no doubt that the parties entered into the transaction in the common mistaken belief that the fossil was a dinosaur bone. That common mistake, however, was not of such a kind as to prevent the consensus necessary for a contract to come into existence. The subject matter of the sale was the physical object. The parties were ad idem as to the subject matter of the sale. The common mistake as to the nature or quality of the object was not such as to render the contract void.

10. The learned trial judge resorted to equitable principles. He held that the circumstances of the common mistake were such as would make it unconscionable for the vendors to hold the purchaser to the contract and to retain the purchase price; Solle v Butcher 1950 1 KB 671; Taylor v Johnson (1982-83) 151 CLR 422 per Mason ACJ, Murphy J, and Deane J, at p.431.

11. The contract between the parties was for the sale of the fossil. I do not think that what was said between the parties gave rise to a contractual condition or warranty that the fossil was a dinosaur bone. What Markovic said was not couched in promissory terms. Neither was there any express stipulation that the purchaser was to take the risk of the fossil turning out to be different in nature from what all believed it to be. The parties did not direct their minds to the possibility of their common belief being erroneous and made no contractual provision for that eventuality. So far as the terms of the contract are concerned, the principle caveat emptor is applicable.

12. Was the respondent induced to purchase the fossil by a representation by the vendors that it was a dinosaur bone? Markovic certainly told Campagna in emphatic terms that it was a dinosaur bone. Mr Harms for the vendors argued, however, that Markovic's statements should not be construed as representations because of the circumstances in which they were made. He argued that the vendors were in no position to know whether the fossil was a dinosaur bone apart from the letter from the Museum, and that Mr and Mrs Campagna must have known that. The statements were to be understood as no more than statements of belief based upon the letter.

13. I do not think that Mr Harms' interpretation is correct. Markovic emphatically told Mr and Mrs Campagna that the fossil was a dinosaur bone and used that supposed fact to induce them to buy. The letter was produced in support of the representation. It is true, of course, that the vendors were relying on the letter for their information, but they took the responsibility for the assertion as to the nature of the fossil by putting it to Mr and Mrs Campagna as a reason to purchase. I am satisfied that what was said must be construed as a representation by the vendors through Mr Markovic to the respondent through Mr and Mrs Campagna that the fossil was a dinosaur bone. The mistake on the Campagnas' part was brought about by the vendors' representation. The representation was not in accordance with fact and was therefore a misrepresentation. It was an innocent misrepresentation because the vendors believed in its truth.

14. Mr Harms argued that the Campagnas were not induced to buy the fossil by anything that the vendors said, but by the letter from the Museum. No doubt the letter played an important part in inducing the Campagnas to buy. But the letter was produced in support of the representation. I think that the true interpretation of the events is that the vendors' representation was an inducement which contributed to the decision to buy.

15. The respondent, having been induced by misrepresentation to enter into the contract to purchase the fossil, was entitled to rescind the contract unless some bar to such rescission existed. The vendors are entitled to the return of the chattel sold upon rescission of the sale; the respondent is in a position to make that restitution. The chattel is unchanged in character and no third party rights have been acquired. It was argued, however, that rescission was not open to the respondent which had accepted the fossil as performance of the contract. It was also argued that the delay of 4 years between sale and purported rescission operated as a bar to effective rescission. Reliance was placed upon Leaf v International Galleries 1950 2 KB
86.

16. The right to rescission is not extinguished by the performance of the contract; Misrepresentation Act s.6. As to the alleged delay, the words of the judgment of Dixon CJ, Webb J, Kitto J and Taylor J in Alati v Kruger
(1955) 94 CLR 216 at 223 are applicable to the facts of this case: "It will be seen that upon discovering the falsity of the representation which had been made to him he acted promptly and without having done anything which could amount to an affirmation of the purchase."

17. The respondent, being lawfully entitled to rescind the contract, did so by the solicitor's letter referred to above. It thereupon became entitled to the restitution of the purchase price of $30,000. The learned trial judge reached the same conclusion by the route of common mistake. The result is the same. It would be clearly unconscionable for the vendors to seek to hold the respondent to the contract and to retain the purchase price when the mistake which led it to enter into the contract was produced or contributed to by the vendors' conduct; Taylor v Johnson supra.

18. An argument was advanced that there is no power to include interest in the judgment because an order for the return of the purchase price is not a "monetary judgment" within the meaning of s.39 of the District Courts Act 1991. There is no substance in that argument. The judgment is for a sum of money and is therefore a monetary judgment.

19. The appeal against the judgment against the vendors should therefore be dismissed.

20. Before leaving that aspect of the case, I should refer to an argument that the vendors should not be required to pay the costs associated with calling certain expert witnesses whose evidence was said to relate only to the claim against the State. This Court will interfere with an order for costs only if there is a clear error of principle. The order as to costs was a matter for the discretion of the trial judge and no error of principle has been demonstrated.

21. The State does not contest the finding that the advice given by the Curator of Fossils was negligently given and that the respondent acted upon it in entering into the contract. The contention of the learned Crown Solicitor was that the damages for which the State is liable are the reasonably foreseeable losses suffered by the plaintiff after all reasonable attempts to obtain restitution have been made, and that the trial judge was in error in awarding, at least at this stage, the amount of the purchase price as damages for negligence.

22. The causes of action against the vendors and State are different and the respondent was entitled to pursue them concurrently and to obtain a judgment against the defendant in each action for the amount properly recoverable on that cause of action. The respondent may enforce the judgments as it sees fit. The respondent is not entitled, however, to double satisfaction. If the judgments entered by the learned District Court judge stand, the respondent will be entitled to execute the judgments in its discretion. If however, it seeks to do so in a way which will result in recovery of more than the amount of the purchase price and interest, the jurisdiction of the Court to restrain the exercise of the right of execution to the full extent, could be invoked; B O Morris Ltd v Perrott and Bolton 1945 1 All ER 567.

23. There is, however, the antecedent question as to whether the judgment against the State should stand. It proceeds upon the basis that the loss incurred in consequence of the negligent advice of the Curator of Fossils, is the amount of the purchase monies paid out in consequence of that advice less the value of the chattel acquired. The chattel being worthless, the damages were held to be the full amount of the purchase price. If the principle caveat emptor had applied to the purchase and the purchaser had been left without rights against the vendors, I think that that basis of assessment would be correct. But that was not the true legal position.

24. The purchaser was induced to enter into the contract by means of misrepresentation and therefore had the legal right to rescind and obtain repayment of the purchase money. The purchase money was not irretrievably lost in consequence of the negligent advice. The loss flowing from the negligent advice, as it seems to me, was the amount of the purchase money paid out less the value of the right which remained in the purchaser, unknown to it of course at that time, to rescind the contract and recover the purchase price. If the respondent had not rescinded the contract, but had sued the State for damages, it would have been necessary to value the right for the purpose of the assessment of damages. There could be no obligation on the respondent to rescind the contract or to sue the vendors for damages for breach of contract or misrepresentation, but the value of its right to do so would have to be taken into account in the assessment of damages.

25. That, however, is not what occurred. The respondent lawfully rescinded the contract. It thereupon became entitled to the restitution of the purchase monies. The act of rescission by the respondent had the effect, by its own force, of vesting in the respondent the legal right to restitution of the purchase monies; Clough v London and NW Rlwy Co 1871 LR 7 Ex 26 at 34. The existence of the legal right to restitution does not of course remove or reduce the loss resulting from the negligent advice. Its capacity to do that depends upon the purchaser's ability to enforce it effectively so as to recover the purchase money. Any failure of the respondent to take reasonable steps to mitigate its loss by pursuing its right to restitution would operate in reduction of damages; London and South of England Building Society v Stone 1983 3 All ER 105, but the respondent would not have been required to take the risk of litigation against the vendors; Pilkington v Wood 1953 CH 770.

26. In the event, however, the respondent has instituted proceedings against the vendors for the restitution of the purchase monies and has recovered judgment. The mere recovery of judgment against one defendant is no bar to judgment against another defendant on a different cause of action; Isaacs and Sons v Salbstein and Anor 1916 2 KB 139. That proposition, however, does not resolve the question of whether the purchase price, in the present circumstances, has been shown to have been lost in consequence of the tort. The judgment in this case was obtained at the same time as judgment against the State; there was therefore no evidence as to whether execution of the judgment would be fruitful. There is little in the authorities which is of any assistance in determining in those circumstances how the purchaser's judgment against the vendors is to be treated in assessing the loss caused by the tort. In Goldrei Foulard and Son v Sinclair and Russian Chamber of Commerce in London 1918 1 KB 180, the first defendant as agent for the defendant company induced the plaintiff to enter into a contract to become one of the founders of the company and to pay a sum of money to the company, by fraudulent misrepresentations. The plaintiff obtained judgment against the company in default of defence for the amount paid. The company did not repay the money. The plaintiff proceeded against the first defendant and obtained judgment for the sum paid. The Court of Appeal dismissed an appeal holding that the recovery of judgment against the company was not a bar to recovery against the agent. There however the judgment against the company had been obtained prior to judgment against the agent and was unsatisfied. B O Morris Ltd v Perrott and Bolton supra was also cited but that was not a case of assessment of damages for tort. Ivanoff v Levy Pty Ltd 1971 VR 167 is distinguishable because in that case the purchaser had not rescinded the contract and there was no claim for rescission. In those circumstances the purchaser's right to recover monies paid under the contract as damages against the fraudulent agent was not dependent upon the purchaser establishing that it could not recover the amount paid from the vendors.

27. In Sibley v Grosvenor (1916) 21 CLR 469 there was a claim for rescission against the vendor and also a claim for damages for misrepresentation against the vendor and his agent. The damages claimed consisted of the monies paid under the contract. It was held by the High Court that the purchasers were entitled to rescission and restitution of the purchase monies by the vendor. The Court also held that the purchasers were entitled, as against the agent, to recover by way of damages in an action for deceit the monies which they had paid under the contract and of which they were entitled to restitution as well as incidental damages. Griffiths CJ referred to the first head of damages against the agent, one Grosvenor as the same sums as those payable by the vendor, one Loughnan, by way of restitution. He then commented:
    "As to the first there is no reason to doubt that the plaintiffs
    will obtain restitution from Loughnan, and it is not necessary to
    consider the form in which relief in respect of that branch of the
    case should be awarded as against Grosvenor."

28. The Court made orders appropriate to effect restitution by the vendor. It made an order to "reserve further consideration as to defendant Grosvenor's liability in respect of such balance in event of non-recovery from defendant Loughnan."

29. In my opinion the loss sustained by the respondent in consequence of the negligence for which the State is responsible, extends only to so much of the amount paid under the contract as is not restored by the vendors. Whatever may have been the proper method of assessing those damages if the respondent had acted differently, the damages must now be assessed in a practical way having regard to the course which the respondent has followed. The contract has been rescinded and judgment has been obtained against the vendors. Until some attempt is made to execute that judgment, the extent of the loss flowing from the negligence cannot be ascertained. The respondent cannot be expected to expend money on attempts to enforce the judgment which are clearly futile or to go to extreme and expensive lengths to execute it. It can be expected, however, to apply for satisfaction of the judgment and to take reasonable steps, if required, to enforce the judgment. If the expenses associated with such attempts is not recovered from the vendors, they would be recoverable as part of the damages against the State.

30. I think the course followed by the High Court in Sibley v Grosvenor supra ought to have been taken. The assessment of damages against the State was premature. It should be deferred until reasonable steps have been taken to obtain satisfaction of the judgment against the vendors.

31. I would therefore allow the appeal by the State and set aside the judgment against the State. I would affirm the finding of liability on the part of the State but would order that the case be remitted to the District Court for assessment of damages and entry of judgment in due course.

32. I would dismiss the vendors' appeal.

JUDGE2 MILLHOUSE J I have read the draft Reasons of the Chief Justice and of my brother Olsson. Each says everything which I could say but with more erudition than I could shew. I agree with their conclusions and with the orders which the Chief Justice proposes.

JUDGE3 OLSSON J These are appeals from judgments entered by a District Court Judge in favour of a plaintiff against the various defendants, following a trial of certain issues which I will hereafter discuss. In the event he entered judgment for the sum of $35,850 (inclusive of interest) against the defendants Shuman, Vrilic and Markovic (to whom I shall refer as "the Vendors") and for the sum of $34,725 (inclusive of interest) against the defendant, the State of South Australia ("the State"). He also made an order formally rescinding a contract in relation to which the plaintiff's cause of action arose. He recognised the fact that each judgment arose from a common factual situation and that, although the judgments were several, because they arose from different causes of action, the plaintiff could not recover more than a total sum of $35,850 plus costs of action. Both the Vendors and the State have appealed, albeit with a view to raising different issues. Background facts Before embarking on a consideration of the matters ventilated on these appeals it is first necessary, with some care, to tease out the facts which were established by the evidence.

2. The plaintiff in the court below, Coober Pedy Tours Pty Ltd ("CPT"), of which the witness Campagna and his wife were principals, at all material times carried on the business of tour operators and tourist services at Coober Pedy. In 1986 it opened a shop in that town for the purpose of both conducting its general business operations and also selling opals, specimens and souvenirs.

3. One evening early in 1986 Campagna and his wife were dining at Trace's Restaurant in Coober Pedy. Two of the Vendors were also present, sitting at another table. During the evening the defendant Markovic approached the Campagnas. He commented that he knew that they were opening a new shop. He said that the Vendors had a really unique piece of fossil that would be suitable for the shop.

4. As I understand the reasons for decision published by the learned trial judge, he substantially accepted Campagna's version of what subsequently transpired. He described Campagna as being essentially honest and reliable, albeit an unsophisticated man.

5. Campagna deposed, and the learned trial judge clearly accepted that, when he asked "What's it all about?" the defendant Markovic replied that the fossil was a "dinosaur rib bone" and that the Vendors wanted to find a buyer for it. Campagna further testified that Markovic went on to say that the specimen had been taken to Adelaide and tested; and that the result of the test was that the fossil was an opalised dinosaur bone, about six feet long. He stated that the Vendors wanted $30,000 for it.

6. After some further discussion it was arranged that Mr and Mrs Campagna would go to the defendant Shuman's house a few days later to view the fossil. They did so and there had further discussion with all of the Vendors. The fossil was laid out on the kitchen table and the Campagnas viewed it.

7. On that occasion the Vendors showed the Campagnas at least some photographs and newspaper articles concerning the fossil (although there was an evidentiary dispute as to how many), as well as a letter dated 16 May 1986 written to Shuman by one Pledge, the Curator of Fossils at the South Australian Museum in Adelaide. That letter was clearly produced by the Vendors to substantiate their prior claim to the Campagnas that the fossil was, indeed, the rib of a dinosaur.

8. The letter in question, which was tendered as exhibit P1, was expressed in these terms:-
    "16 May 1986 Mr John Shuman PO Box 361 COOBER PEDY SA 5723
     Dear Mr Shuman The specimen you and your partners left with me
    last November has proven very interesting. With your permission
    we cleaned down one face of the concretion, and confirmed what was
    indicated on the broken surface, namely that the concretion
    enclosed a long, narrow, almost straight, rather flattened object.
    There is no proof for my first suspicion, that the object was a
    piece of fossil wood. Rather, the structure that can be discerned
    indicates that it is a bone. This being the case, it is a very
    large bone, since it is incomplete at each end, and must have come
    from a huge animal. The overall shape and huge size suggest that
    it is, in fact, a fragment (nearly 2 m long]) from a rib of a
    dinosaur of the brachiosaur family. Brachiosaurus is one of the
    largest dinosaurs known, standing some 12 m tall. Two very
    incomplete bones relating to this family have been found in
    Queensland, and are roughly the same age as your Coober Pedy
    specimen (middle Cretaceous, about 105 million years), so we
    should not be too surprised to find a representative in South
    Australia. Although it is too incomplete ever to put a specific
    name on it, nevertheless, it is an important discovery, and
    increases the number of dinosaur bones known from South Australia
    to four, and the number of species represented to three] We thank
    you for allowing us to study this specimen, and I hope you will
    let us see any further discoveries you may make. Yours sincerely
    (Signed) Neville Pledge CURATOR OF FOSSILS"

9. On the hearing of these appeals I took Mr Harms, of counsel for the Vendors, to suggest that it was never represented by his clients to the Campagnas that the fossil was definitely that of a dinosaur rib bone - only that Pledge thought it might have been. I construe what was written by the learned trial judge as indicating that he did not accept such a proposition. Rather, he clearly accepted Campagna's evidence to the effect that the fossil was unequivocally represented by the Vendors to be a fossilised dinosaur rib bone; and that the letter and other documents were merely produced to verify that assertion.

10. The learned trial judge described the outcome of the visit to Shuman's house in these terms:-
    "Negotiations then took place for the sale and purchase of
    the specimen, being a dinosaur rib bone, and there was some
    bargaining over price. Mr. Campagna saw the specimen as a unique
    specimen and something worth purchasing to promote his business
    and as an investment. He relied upon the information contained in
    the letter (Exhibit P1) which he regarded as a letter from a
    responsible public body. Eventually agreement was reached for the
    sale and purchase at a price of $30,000 of a specimen, being a
    dinosaur rib bone, to be paid by way of a deposit of $2,000 and
    the balance of $28,000 a day or so later before the specimen was
    to be collected.

Subsequently, the deposit and the balance of the contract
    price were paid and the specimen in five pieces was collected and
    placed in a display case especially purchased for the purpose in a
    corner of the plaintiff company's shop. An admittance fee was
    charged for viewing the specimen. Pamphlets and postcards
    featuring the dinosaur rib bone were printed."

11. Wilson DCJ recorded that, some time later, CPT purchased what was thought to be a second fossilized dinosaur bone, which had been found near the location at which the Vendors had discovered that sold to the company. This was sent to Pledge for testing and was also said by him to be a bone from the same or a related prehistoric animal.

12. So the situation stood until April or May 1990 when, by chance, Campagna encountered Pledge at the Coober Pedy airport. The latter, at that stage, expressed doubt as to whether the second "bone" was actually a dinosaur bone. In the course of a subsequent telephone conversation Pledge told Campagna that the fossil sold by the Vendors to him was more like a tree trunk. Upon Campagna expressing some concern Pledge suggested that a small piece of the specimen be chopped off and sent to him for further testing. This was done.

13. After some weeks Campagna was informed by Pledge that the specimen which had been purchased from the Vendors was not a dinosaur bone, but segments of a tree. This was confirmed in a letter dated 31 October 1990, which read as under:-
    "31 October 1990 Mr Tom Campagna PO Box 90 COOBER PEDY SA
    5723 Dear Tom, This is to confirm my earlier telephone
    conversation with you.

Following the discovery of a fossil tree trunk at Coober Pedy
    earlier this year, I became suspicious of the large object found
    by John Shuman several years ago which I had considered to be
    probably a dinosaur rib. Accordingly, I had thin sections made of
    a piece of the 'rib' and a piece of genuine dinosaur bone from
    North America, for comparison. Although very poorly preserved at
    a microscopic level, it was clear the Shuman object was not
    dinosaur bone, and a colleague confirmed that it was wood.
    Furthermore, it was just possible for my colleague to identify the
    type of tree: it is probably a species of Araucaria (i.e. similar
    to the Norfolk Island Pine and Hoop Pine), although there is a
    slight possibility that belongs to Ginkgo - the maiden hair tree.
    Araucaria is quite rare as a fossil in these sediments - most
    specimens have been of the more common podocarp group. The
    unusual things about this specimen are its lack of braches or
    knotholes, and its flattened cross- sectional shape with no
    obvious rings. Yours sincerely, (Signed) Neville Pledge
    CURATOR OF FOSSILS"

14. Following receipt of that letter CPT sought legal advice. The outcome was that, on 30 November 1990, the solicitors for CPT wrote to Shuman, on behalf of the Vendors, in these terms:-
    "30th November, 1990 Mr J Shuman C/- Post Office COOBER PEDY
    SA 5723 Dear Sir, RE; MR T CAMPAGNA We advise that we act for Mr T
    Campagna of Coober Pedy Tours, Coober Pedy in relation to a
    contract which was reached between he and his wife and yourself
    and your two partners for the purchase of a dinosaur bone some
    years ago.

We are instructed that Mr Campagna and his wife purchased
    the dinosaur bone for the sum of $30,000.00. At the time of
    negotiation Mr Campagna was shown a copy of a letter from the
    South Australian Museum to substantiate your claim that the object
    was partly opalized dinosaur bone. Recently Mr Campagna has been
    advised by the same curator of fossils at the South Australian
    Museum that the object is not a dinosaur bone and is, most likely,
    a fossilized tree trunk. Naturally our client is greatly
    concerned by the fact that the item which purported to be a
    valuable fossil has in fact turned out to be merely a tree trunk.
    Enclosed herewith is a copy of the original letter that was shown
    to Mr Campagna at the time of the purchase of the 'bone' and the
    recent letter from the Museum advising that the object is a tree
    trunk. Our client looks to you for restitution of the contract
    price and reserves his rights in relation to other loss which has
    flowed from the original misrepresentation. We look forward to
    hearing from you. Yours faithfully, STRATFORD and CO. Per:
    (Signed) PETER BARNES Encs."

15. At a later date again more segments were cut from the specimen and submitted to the Forensic Science Centre for examination. Experts from that Centre, who gave evidence at the trial, confirmed that the specimen sold by the Vendors to CPT was, indeed, portion of a tree. As such, this was, as the learned trial judge expressed the situation, "to all intents and purposes, worthless".

16. In reiterating his finding that the effect of the original transaction between the parties was for the sale and purchase of what was represented by the Vendors to CPT as "a dinosaur rib bone" the learned trial judge accepted that all parties had entered into the contract between them under what was a fundamental, but innocent, common mistake.

17. He held that there had, in effect, been a total failure of consideration and therefore made orders for rescission and repayment of the consideration of $30,000 by the Vendors to CPT, plus interest computed from 30 November 1990, on the basis that the fossil was to be returned to the Vendors. In so doing he expressed the view that, alternatively, CPT would, in any event, have been entitled to damages for breach of condition or for non-fraudulent misrepresentation, which ought to be assessed in a similar amount.

18. The learned trial judge then turned his attention to the separate cause of action against the State, on the basis of its vicarious liability for the actions of Pledge. After examining the evidence of the manner in which Pledge went about his original assessment of the fossil, Wilson DCJ concluded that CPT had proved a negligent mis-statement in relation to it by Pledge, which was actionable at its instance. He entered a separate judgment against the State, on that basis, for the sum of $30,000 plus $4,725, being interest from 19 April 1991 to 25 January 1993. The validity of the finding as to negligence against the State is not now in issue.

19. Against that background the Vendors now appeal against the judgment entered against them on bases expressed in their notice of appeal in these terms:-
    "1. The learned trial Judge erred in fact in finding that
    the subject matter of the contract between the respondent and the
    appellants was a 'dinosaur rib bone'. The learned trial Judge
    should have found that the subject matter of the contract was a
    fossil which had been identified as having formed from a dinosaur
    bone.

2. The learned trial Judge erred in fact and in law in
    finding that the respondent and the appellants had entered into a
    contract of sale and purchase under a fundamental common mistake.
    The learned trial Judge should have found that both parties knew
    that the subject matter of the contract was a fossil which had
    been identified by the South Australian Museum as having been
    formed from a dinosaur bone but might possibly have been formed
    from something else namely a tree.

3. The learned trial Judge erred in finding that it would
    be unconscionable for the appellants to enforce the contract
    against the plaintiff.

4. The learned trial Judge erred in finding that there
    existed 'what amounts practically to a total failure of
    consideration'.

5. The learned trial Judge erred in finding the respondent
    was entitled to an order for rescission of the contract.

6. The learned trial Judge erred in finding that there was
    a term in the contract as to the quality of the subject matter
    namely as to the origin of the fossil.

7. The learned trial Judge erred in finding that the
    agreement between the respondent and the plaintiffs amounted to a
    sale by description.

8. The learned trial Judge erred in finding that the
    respondent would be entitled to damages for breach of condition or
    for non fraudulent representation.

9. The learned trial Judge erred in law in awarding
    interest in favour of the respondent against the appellants; in
    the alternative the learned Trial Judge erred in finding that the
    respondent was entitled to any award of interest prior to the date
    of his original reasons for judgment handed down on 23 December
    1992 or in the further alternative prior to the issue of
    proceedings.

10. The learned trial Judge erred in law in ordering the
    appellants to pay the costs of the respondent insofar as those
    costs related to the calling of expert witnesses which were not in
    any way directed to any issue related to the respondent's case
    against the appellants."

20. The appeal prosecuted on behalf of the State focuses on a much more restricted area of concern. The grounds relied upon are pleaded as follows:-
    "1. The learned Trial Judge erred in holding that the
    plaintiff's measure of damages as against the fourth defendant was
    the value of a dinosaur bone.

2. The learned Trial Judge erred in holding that the
    plaintiff had suffered any loss which called for an award of
    damages against the fourth defendant, having regard to the fact
    that His Honour had ordered the rescission of the contract,
    repayment of the contract price by the first, second and third
    defendants, and return of the subject matter of the contract by
    the plaintiff.

3. The learned Trial Judge erred in failing to have regard
    to the fact that the plaintiff had the use of the subject matter
    of the contract for several years and earned income from it when
    assessing damages.

4. The learned Trial Judge erred in awarding interest to
    the plaintiff as against the fourth defendant in the circumstances
    referred to in ground 2 hereof, and in the further circumstance
    that His Honour also awarded interest against the first, second

    and third defendants.

5. The amount of interest awarded was excessive in the
    circumstances."

21. The issues I now turn to a consideration of the major issues, as argued on the hearing of the appeals.

22. I have already indicated that, in my opinion, the contention by Mr Harms, of counsel for the Vendors, concerning the essential nature of the transaction entered into between them and CPT is untenable. Not only was the assessment of the learned trial judge as to the nature of the contract concluded by the parties fairly open on the evidence, but, given his findings as to the relative credibility of witnesses, it was well nigh inevitable. There is simply no basis for impugning the findings that the Vendors expressly represented the fossil to CPT as being rib bone of a dinosaur; and that the resultant contract was specifically for the sake by the Vendors to CPT of the fossil, being a dinosaur rib bone. The subject of the sale was not merely the fossil, as a fossil, or even a fossil which Pledge had identified as a rib bone, but of a fossilised dinosaur rib bone. At the very least it was a fundamental condition of the contract that the fossil was in fact that which it was represented to be. Cadit quaestio as to certain of Mr Harm's primary contentions, which were based upon his submission that any mistake was as to an alleged quality of the subject of the contract and not as to the subject itself.

23. His submission that no right of rescission arose in the circumstances cannot be sustained.

24. Equally his argument that the only representation which the Vendors made in relation to the fossil was that it had been identified by Pledge as a rib bone cannot withstand scrutiny. The finding of the learned trial judge was to the contrary and it was well warranted on the evidence.

25. The factual basis for Mr Harm's submissions that CPT must be held to its bad bargain and that the fossil must have some residual value does not exist on the findings made on the evidence.

26. As was properly conceded by the Crown Solicitor on behalf of the State, the contract between the Vendors and CPT was duly rescinded by the latter, by reason of its solicitor's letter of 30 November 1990, above recited (Ivanoff v Phillip M. Levy Pty Ltd (1971) VR 167 at 169-170). As he put it CPT had at least two bases for that rescission, namely, by virtue of section 6 of the Misrepresentation Act, or on the basis of common mistake. (See, for example, on the issue of innocent misrepresentation, Leason Pty Ltd v Princes Farm Pty Ltd (1983) 2 NSWLR 381 and Graham v Freer (1982) 35 SASR 424. Cf Leaf v International Galleries (1950) 2 KB 86 at 90.)

27. Here there is no issue of delay as in Leaf's Case, because CPT acted promptly as soon as the true situation became known to it. In any event Leaf's Case does not seem to have been followed in Allen v Robles and Anor (1969) 1 WLR 1193 or Fenton v Kenny (1969) NZLR 552. In the circumstances the order made by the learned trial judge merely gave effect to the pre-existing act of rescission by declaring it to be effective and granting necessary consequential relief (Alati v Kruger (1955) 94 CLR 216 at 223-225, Kramer v McMahon (1970) 1 NSWR 194 at 207.)

28. In my opinion the learned Crown Solicitor was patently correct when he contended that the order of Wilson DCJ in relation to rescission was justified on the basis of the provisions of the Misrepresentation Act alone.

29. In the instant case CPT further had an equitable right to rescind, as it did, at least by reason of a common mistake which was causative of the parties entering into the contract, it not appearing that, in all of the circumstances that it was unjust to do so. There is no practical impediment to full restitution on both sides.

30. I here digress to acknowledge the argument advanced by Mr Evans, of counsel for CPT, that the act of rescission is not that of a party, but is the product only of the curial pronouncement of the court. There may indeed be situations in which that is so, but it is not the invariable situation. In the instant case the authorities already adverted to render it apparent that the pronouncement of the learned trial judge did no more than give formal effect to the pre-existing election and notification of CPT.

31. Here there was a fundamental mistake going to the very heart and subject of the contract itself and the Vendors have been unjustly enriched as a consequence of it. The reasoning of the High Court to be found in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 66 ALJR 768 and Baltic Shipping Co v Dillon (1993) 67 ALJR 228 would seem ample support for that proposition. Whilst it is unnecessary to enter into a protracted discussion of the differing conceptual approaches to the broad issue of common mistake adopted by Messrs Meagher, Gummow and Linnane in their well known text with what is to be found in Gregg and Davis, The Law of Contract, it seems to me that what is argued by the latter, is, with respect, more consistent with modern authority.

32. As I have already commented, the State does not now argue against the validity of a finding of negligent misstatement against it. Clearly that concession is well founded on the evidence discussed in the reasons for decision of the learned trial judge. There is no need to retraverse the same ground.

33. The major difficulty which arises in this case stems from the fact that the liability of the Vendors to make restitution to CPT and the liability of the State in damages for tort are several, and not joint, liabilities (Ivanoff v Phillip M. Levy Pty Ltd (supra) at 171).

34. There does not appear to be any published authority directly bearing on how the court should approach the issue of assessment of damages against the State in such circumstances. The only authorities which the researches of counsel have elicited (Sibley v Grosvenor (1916) 21 CLR 469, Ivanoff v Phillip M. Levy Pty Ltd (supra) and Goldrei, Foucard and Son v Sinclair and Anor
(1918) 1 KB 180) all relate to cases of deceit and are thus of no direct assistance for present purposes. The damages in deceit are all those damages flowing from the deceit, whereas, in negligence, the concepts of foreseeability and remoteness necessarily intrude.

35. What is clear is that, because the liabilities of the Vendors and the State respectively are several, no entitlement to contribution arises between them (McLaren Maycroft and Co v Fletcher Development Co Ltd (1973) 2 NZLR 100, Hanson v Matthew Bros Contractors Ltd and Anor (1990) 55 SASR 183, Thompson v Henderson and Partners Pty Ltd and Anor (1990) 58 SASR 548).

36. The Crown Solicitor submits that, extracting what assistance can properly be gleaned from the reasoning in the deceit cases to which reference has been made, the correct principle would appear to be that the damages for which the State is liable are those which value the reasonably foreseeable losses suffered by CPT after reasonable attempts have been made by it to extract restitution from the Vendors. Thus, he argues, the proper order which ought to have been made is one based on the approach adopted in Sibley v Grosvenor (supra) i.e. a declaration that the State is liable in damages to CPT, but that the assessment of such damages ought to be stood over until the outcome of any attempts to extract restitution from the Vendors is known.

37. I digress at this point to note that the Crown Solicitor sought, perhaps a little faintly, to argue that, in any event, some adjustment would need to be made by the parties to reflect any residual value of the fossil (albeit nominal) and any use and benefit which CPT had made of it over some four years whilst it was in its possession.

38. The short answers to those suggestions are, first, that the learned trial judge has expressly found, on the evidence, that the fossil was, to all intents and purposes, valueless and second, that the onus was on the defendants to prove that CPT had derived some net monetary benefit from the fossil and, so far as I can determine, there is simply no evidence to establish that it did. Indeed, I suspect that, in practical terms, such a task may be very difficult indeed, if not well nigh impossible.

39. This aspect can therefore be disregarded. One problem attendant upon the argument of the Crown Solicitor is that it begs the question as to the lengths to which CPT would be required to go in an endeavour first to obtain full restitution from the Vendors, before it would be entitled to seek assessed damages for any shortfall from the State. When this was put to the learned Crown Solicitor he was constrained to reply "He (it) can't be required to go very far".

40. The point is not without difficulty, but I agree with the Crown Solicitor that some assistance can be gleaned from the reasoning of the High Court in Sibley v Grosvenor. The basic concept there emerging is that, logically, damages are only available as a remedy to the extent that a rescission proves to be ineffective in achieving full restitution. On first principles the foreseeable damages in negligence are those which will arise as a residual situation if restitution in full proves impractical for any reason, given that the party rescinding cannot be expected to go to unreasonable lengths to extract moneys from the original vendors.

41. As I see the position the issue is not whether or not a right of contribution exists as between the Vendors and the State but, rather, the more fundamental question of what is the proper measure of the damages sustained by CPT.

42. I once more digress to note the argument advanced by Mr Evans, based upon Petersen v Malony (1957) 84 CLR 91 at 102 that what the learned trial judge ought to have done was to publish his findings and then invite counsel for CPT to elect as to which remedy it desired to pursue - that to which it was entitled against the Vendors, or that to which it was entitled against the State.

43. Such a submission implies that it would be inconsistent for two separate judgments to be entered against the respective defendant parties at the one time.

44. In my opinion that cannot be correct, because, as a matter of principle, the damages properly recoverable from the State are those which represent the net loss sustained by CPT as a consequence of the negligent misstatement. In this case that loss is the net deficiency arising from the CPT rescission, which remains after a reasonable attempt has been made to secure restitution from the Vendors. Had CPT merely sought and obtained a verdict against the Vendors for damages for breach of condition or warranty the situation may possibly have been different.

45. In this case CPT is, in a sense, blowing hot and cold.

46. On the one hand it sought and obtained orders giving effect to the rescission and for restitution against the Vendors, without in any sense flagging to the learned trial judge that it desired to be heard as to a possible right of election. On the other hand it now seeks to assert that such a judgment ought not to have been entered, so that it could consider a possible election.

47. It is now even suggested that, in the alternative, the present judgment ought to be set aside and a judgment for damages for breach of warranty substituted for it. I simply do not perceive how the alternative proposition could possibly be appropriate having regard to the claims actually pursued at trial, or how that would, in any event, place CPT in any more advantageous position.

48. The net situation still remains that the measure of the CPT loss, for the purposes of the negligent misstatement claim, is the difference between what CPT originally paid to the Vendors and the sum which, by reasonable endeavour, it is able to recover by way of restitution. That does not, of course, imply that CPT has first to embark upon costly processes of the law to exact restitution - only that, having sought and obtained judgment against the Vendors, it should take reasonable steps to enforce it.

49. In my view the authority of London and South of England Building Society v Stone (1983) 3 All ER 105 has no relevance in the present situation. Had CPT, initially, pursued a separate action against the State, in preference to suing the Vendors, rather different considerations may have arisen.

50. However it chose not to do so and must now live with the consequences of the course which it actually adopted.

51. At the end of the day I am of opinion that nothing has been put to this court which demonstrates that the learned trial judge fell into error in relation to the judgment which he entered against the Vendors.

52. I note in passing that Mr Harms raised certain questions concerning witness expenses apropos the costs awarded against his clients. It need only be said that this aspect is an issue proper to be raised on the taxation of costs as between various parties. I do not consider it to be an aspect in which this appellate court can or should intermeddle. I would therefore dismiss the appeal prosecuted by the Vendors.

53. However, it follows from the foregoing reasons that the State must succeed in relation to the appeal against the immediate entry of a judgment against it for the full amount of the moneys paid by CPT to the Vendors. I would allow the appeal against the State, set aside the judgment entered against it, substitute for that judgment a judgment in favour of CPT for damages to be assessed and remit the claim against the State to the learned trial judge for assessment of damages, following proof of the taking of reasonable steps by CPT to enforce its judgment against the Vendors.