Jones v Acfold Investments Pty Ltd

[1985] FCA 137

Re: SAMUEL BARRY JONES and PATRICIA JONES
And: ACFOLD INVESTMENTS PTY. LIMITED & R.B. FOSTER PTY. LIMITED (1981) 2 FCR
512 No. Qld G129 of 1983
Trade Practices - Companies
(1985) ATPR para 40 - 561

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Sheppard(1), Morling(1) and Spender(1) JJ.

CATCHWORDS

Trade Practices - sale of home units - misrepresentation - whether purchase induced by misrepresentation - misleading conduct - strata title - parking space - obligation of vendor to give purchaser exclusive use of parking space - whether obligation complied with - agreement with managing agent - "interest" under Companies Act (Q'land) - whether agreement illegal and void

Trade Practices Act, 1977 s.52

Companies Act 1961 (Queensland), s. 76

Companies - Issue of an "interest" under s 76 of the Companies Act 1961 (Qld) - Agreements to sell home units permitting the vendor to procure the body corporate to enter into management and agency agreements - Whether provisions gave rise to an "interest" and therefore void - Management agreement making provision for care and administration of the common property - Agency agreement giving unit holder a "right" to use services of a letting agent - Companies Act 1961 (Qld), ss 76, 81 - Building Units and Group Titles Act 1980 (Qld), s 30(7).

Trade Practices - Consumer protection - Misleading and deceptive conduct - Statement of vendor's agent - Misrepresentation - No inducement - Rescission wrongful - Damages - Onus of proof - Need to prove inducement and reliance to establish nexus - Trade Practices Act 1974 (Cth), ss 82, 87.

HEADNOTE

Held: (1) The agreements for the sale of home units, by making provision for a management agreement whereby the care and administration of the common property was provided for and an agency agreement whereby each unit holder could, if he so chose, use the services of a nominated letting agent, did not, in the context in which they were made, give rise to any "interest" in terms of par (a) of the definition of that term in s 76 of the Companies Act 1961 as none of the agreements gave to the unit holder an interest in the agent's assets or profit, or in the realisation of the agent's financial or business undertaking. Further, none of the agreements gave rise to any "common enterprise" within the meaning of par (b) of that definition, the mere fact that the unit holders could utilise the services of a common agent not giving rise to a common enterprise, there being no contractual relationship between the unit owners per se and no sharing of rents and profits. Nor did the purchasers under the agreements acquire rights to participate or interests in an "investment contract" in terms of par (c) of that definition, as the letting of individual units in a pool by an agent did not amount to the use or employment of a unit owner's rights in common with the rights of other unit owners.

Australian Softwood Forests Pty Ltd v. Attorney-General (NSW) (1981) 148 CLR 121; Munna Beach Apartments Pty Ltd v. Kennedy (1983) Qd R 151; Applewood Pty Ltd v. Dadinbridge Pty Ltd (1983) 1 Qd R 412; Brisbane Unit Development Corporation Pty Ltd v. Deming No 456 Pty Ltd (No 2) (1983) 2 Qd R 92, referred to.

(2) The onus lay on the purchasers to establish that they were induced by or relied upon representations when entering into the sales agreement.

Holmes v. Jones (1907) 4 CLR 1692; Smith v. Chadwick (1884) 9 App Cas 187; Barton v. Armstrong (1976) AC 104, referred to.

HEARING

Brisbane, 1984, August 1-2; 1985, April 10. #DATE 10:4:1985
APPEAL

Appeal from a decision of Lockhart J dismissing an application for damages, orders and declarations pursuant to ss 82 and 87 of the Trade Practices Act 1974 and s 76 of the Companies Act 1961.

C E K Hampson QC and P A Keane, for the appellants.

D F Jackson QC and J D Muir, for the first respondent.

R N Chesterman QC, for the second respondent.

Cur adv vult

Solicitors for the appellants: W T Purcell Chadwick & Skelly.

Solicitors for the first respondent: Feez Ruthning & Co.

Solicitors for the second respondent: Cooper Grace & Ward.

GFV

ORDER

1. The appeal be dismissed.

2. The appellants are to pay the respondents' costs.

Appeal dismissed with costs

JUDGE1

In 1981 each of the appellants, who are husband and wife, agreed to purchase from the first respondent strata title units in a proposed multi-storey building known as "Langley Park" near the beach at Maroochydore. The appellants brought proceedings against the first respondent claiming that, by its agent the second respondent, it made representations to the male appellant which constituted misleading or deceptive conduct within the meaning of s.52 of the Trade Practices Act 1974. It was alleged that the representations were made in the course of negotiations for the sale by the first respondent to the appellants of the units.

1. The appellants sought damages pursuant to s.82 of the Trade Practices Act and orders pursuant to s.87. They also claimed that the representations induced them to enter into their respective agreements for the purchase of the units and that in the circumstances they were entitled to rescind the agreements. They further alleged that the agreements were illegal and void in that, by executing the agreements which contained provisions for the letting of the units to tenants by a third party pursuant to an agency agreement, the first respondent issued to each of the appellants an "interest" within the meaning of that word as defined by s.76 of the Companies Act 1961 (Queensland) ("the Companies Act") and that the first respondent could not validly issue such an "interest" as it was not a public company. They alleged that they had duly rescinded the agreements and suffered damages which they sought to recover from the first respondent. It was common ground that the relevant provisions of the companies legislation were to be found in the 1961 Act and not in Div. 6 of Part IV of the Companies (Queensland) Code 1981.

2. All these claims were denied by the respondents. The first respondent cross-claimed against the appellants alleging that they had refused to settle the agreements for sale of the units and that consequent upon their refusal it had duly rescinded the agreements and forfeited the deposits paid thereunder. It sought to recover damages from the appellants. The appellants resisted the first respondent's cross-claim upon the ground, inter alia, that it was not able and willing to complete the agreements on the date fixed for completion.

3. After a trial occupying several days the learned trial judge found that the appellants were not entitled to any relief. He further found that the first respondent was entitled to succeed on its cross-claim, and stood over the question of the quantum of damages to a subsequent hearing. It is unnecessary to refer to all his findings of fact since some only of them were challenged on the hearing of the appeal. For the purposes of disposing of the appeal, it is only necessary to advert to the findings of fact made in relation to the allegation that it was represented to the appellants that a caravan park erected between the proposed building and the beach would be removed by the time the building was completed and that the Maroochy Shire Council had decided to remove the caravan park. His Honour found that the male appellant was told by a salesman employed by the second respondent that the caravan park would be removed at some time in the future, but that the time was not specified. His Honour did not accept the male appellant's evidence that the salesman had told him that the caravan park would be removed about the same time as the building was to be completed. He rejected a submission made on behalf of the respondents that the statement about the caravan park was mere puffing and held that it amounted to a contravention of s.52 of the Trade Practices Act.

4. However the learned trial judge also found that the appellants placed no reliance on the statement about the caravan park and that they were not induced by it to enter into the agreements for the purchase of the units. He found that they would have agreed to purchase the units whether the statement had been made or not. He held that for a person to establish a claim for loss or damage pursuant to s.82 of the Act it was necessary that there be some nexus between the deceptive or misleading conduct and the loss or damage. He found that the requisite nexus between the offending conduct in this case and the loss or damage alleged by the appellants had not been established.

5. The appellants challenged the decision under appeal on several grounds. First, it was argued that the first respondent was not able and willing to complete the contracts on the due date, in that it was in breach of cl.4(a) of the contract and in consequence the appellants were entitled to rescind. Clause 4 of the contract was in the following terms:
   
   

"4. - CAR SPACE

(a) The Vendor will ensure that prior to settlement the By-Laws of the Body Corporate brought into existence upon the registration of the Building Units Plan will be amended so as to grant to the proprietor for the time being of the said unit the exclusive use for car parking of that part of the common property outlined on the plans of car spaces annexed hereto without payment of any fee.

(b) Notwithstanding the provisions of paragraph (a) of this clause the Vendor may elect to include the car space as part of the said unit in the relevant Building Units Plan and if the Vendor so elects then the terms of paragraph (a) of this clause shall not apply and the By-Laws set out in the Third Schedule hereto if altered pursuant to clause 16 hereof shall be varied accordingly."

1. Pursuant to the obligation cast upon it by cl.4(a) the first respondent proposed to bring into existence upon the registration of the Building Units Plan a by-law 38 in the following terms:
   
   

"38. -

The proprietor for the time being of each unit in the building shall be entitled to the exclusive use for himself and his licensees of the car space or spaces the identifying number or numbers of which shall be notified in writing by ACFOLD INVESTMENTS PTY. LTD. to the Council of the Body Corporate within twelve (12) months after the date of registration of the Building Units Plan provided that in respect of those car spaces allocated pursuant to this By-Law, the Council is hereby authorised to vary the allocations so made and to transpose car spaces from one unit to another unit at any time and from time to time on the written request of the proprietors of the units involved. A sketch plan is set out hereunder for the purpose of clearly identifying the said car spaces. The identifying number as set out in such sketch plan shall be used by ACFOLD INVESTMENTS PTY. LTD., for the purposes of its notification to the said Council of the Body Corporate. (For the purposes of this Agreement, the sketch plan referred to in By-Law 38 above is not in the Third Schedule reproduced, but shall be in the form of the plan of car spaces hereinafter appearing). (NOTE: The words in parenthesis in By-Law 38 will not form part of the said By-Law)."

1. The relevant building plan was registered on 28 April 1982 and by-laws, including by-law 38, were lodged with the Registrar of Titles and later registered. Registered by-law 38 is in identical terms with the proposed by-law 38 as referred to in the agreement. By notice dated 30 April 1982 the first respondent gave notice pursuant to by-law 38 that car parking spaces for each of the lots in the Building Units Plan would be allotted in accordance with the plan annexed to the notice.

2. At the trial, it was submitted on behalf of the appellants that the first respondent could not comply with the contractual requirement of cl.4(a) of the agreement, that it give each of the appellants "the exclusive use" of the relevant car space, since a right to "exclusive use" of the space was not created in accordance with the requirements of s.30 of the Building Units and Group Titles Act 1980, in particular sub-s. (7) thereof which provides:
   
   

"(7) Without limiting the generality of any other provision of this section, a body corporate may, with the consent in writing of the proprietor of a lot, pursuant to a resolution without dissent make a by-law in respect of that lot conferring on that proprietor the exclusive use and enjoyment of, or special privileges in respect of, the common property of any part thereof upon such terms and conditions (including the proper maintaining and keeping in a state of good and serviceable repair of the common property or that part of the common property, as the case may be, and the payment of money by that proprietor to the body corporte) as may be specified in the by-law and may, in like manner, make a by-law amending, adding to or repealing any by-law made under this subsection."

1. The learned trial judge held that by-law 38 was a valid exercise of the power conferred upon a body corporate by sub-s.30(7) to confer on proprietors of lots "the exclusive use and enjoyment" of part of the common property, namely the car space. He rejected the argument that the sub-section requries the allocation of a particular and identified car space to be made by the by-law itself. In so holding, his Honour followed the decision of G.N. Williams J. in Dainford Smith v Smith (1984) Q Conv. R. 56874 where a similar submission was made in respect of a substantially identical by-law relating to car spaces. The decision in Dainford Limited v Smith was reversed by a majority of the Full Court of the Supreme Court of Queensland, but on 28 March 1985 the High Court allowed an appeal from the Full Court's decision. In the light of the High Court's decision the appellants' argument on this point must be rejected.

2. The appellants further argued that the learned trial judge ought to have concluded that the offer contained in the agreements for the sale of the units involved the offer of an "interest" within the meaning of s.76 of the Companies Act. It was urged that his Honour ought to have held that the agreements were illegal and void, in that by executing them, the first respondent issued to each of the appellants as members of the public an "interest" within the meaning of that word as defined in s.76. It was said that pursuant to cl.17 of the agreements and the Management and Agency Agreements referred to therein and in particular Cl. 1(b), (c) and (f) of the latter, the appellants were offered an "interest" within the meaning of the section.

3. Section 76 so far as relevant defines the term "interest" as follows:
   
   

"'Interest' means any right to participate, or interest, whether enforceable or not and whether actual prospective or contingent -

(a) In any profits, assets or realisation of any finncial or business undertaking or scheme whether in the State or elsewhere;

(b) In any common enterprise whether in the State or elsewhere in which the holder of the right or interest is led to expect profits, rent or interest from the efforts of the promoter of the enterprise or a third party; or

(c) In any investment contract,

whether or not the right or interest is evidenced by a formal document and whether or not the right or interest relates to a physical asset, but does not include ..."

1. Certain exclusions are then specified which are irrelevant for present purposes. "Investment contract" is defined by s.76 as meaning -
   
   

"any contract, scheme or arrangement which in substance and irrespective of the form thereof involves the investment of money in or under such circumstances that the investor acquires or may acquire an interest in or right in respect of property whether in the State or elsewhere which under or in accordance with the terms of investment will, or may at the option of the investor, be used or employed in common with any other interest in or right in respect of property whether in the State or elsewhere acquired in or under like circumstances."

1. Section 81 prohibits, in effect, any person except a company from issuing or offering to the public "any interest" for purchase. Section 76 defines "company" as meaning a public company and, since the first respondent is not a public company, it is included in the prohibition contained in s.81.

2. In order to understand the appellants' argument on this point it is necessary to set out Cl.17 of the agreement and to refer to the terms of the proposed Management Agreement and Agency Agreement. Clause 17 is in the following terms:
   
   

"17. - MANAGEMENT AND AGENCY AGREEMENT

(a) The Purchaser agrees that on registration of the Building Units Plan the Vendor as sole proprietor may procure that the Body Corporate will enter into a Management Agreement and/or any Agency Agreement with such person, including the Vendor, as the Vendor may nominate in the form of Agreement respectively set out in the Fourth and Fifth Schedules hereto, for the purpose of better seeing to the proper functioning, operation and mangement of the said building and/or for the purpose of letting any part of the building and/or for the purpose of ensuring the smooth and proper functioning of the duties and powers of the Council of the Body Corporate.

(b) The Vendor shall be entitled to grant or procure that the Body Corporate shall be entitled to grant leases, licences or easements over common property for the provision of such services as will be of benefit to the Body Corporate or to members or future members of the Body Corporate or adjoining owners including any licence or licences to be granted pursuant to the terms of any Management Agreement and/or Agency Agreement provided for and referred to in paragraph (a) of this clause. This provision shall constitute notice to the Purchaser as a person having an interest within the meaning of Sections 22(6) and 23(4) of the Act, and consent and approval by such purchaser to any such proposed lease, licence or easement."

1. The fourth schedule to the agreement sets out the terms of a proposed Management Agreement between the Body corporate and a prospective manager. It is unnecessary to refer to the provisions of the proposed agreement in detail. It is sufficient to say that the proposed agreement contains provisions whereby the body corporate may appoint a manger to manage, administer and caretake the common property to keep it in good and serviceable repair and to maintain it. The manager is to be responsible, amongst other things, for supervising the body corporate's employees in gardening, cleaning and maintain ing the building and for its repair. The manager may pledge the body corporate's credit to obtain materials in the performance of his duties.

1. The fifth schedule to the agreement sets out the terms of a proposed Agency Agreement between the body corporate and an agent which it may appoint. Under the terms of the proposed agreement the body corporate may appoint the agent to carry on in the building the business of letting units, together with all associated services commonly rendered in connection therewith in the Maroochydore and nearby areas other than the provision of food and beverages. The agent is to provide this letting service for such of the owners of units in the building as may require it; to maintain and staff, either in the agent's own premises or in the common area in a location to be agreed upon, a reception desk to provide the proposed letting service, to supervise the standard of tenants of all such lettings, and to erect or procure the erection of signs in or about the building to promote and foster the letting business. The body corporate covenants with the agent that it will not lease or grant any licence in respect of any part of the common property of the building to any one other than the agent for the purpose of the business of letting units in the building; and that it will not grant to any one other than the agent any right to provide certain services without the written consent of the agent. The agreement is to remain in force for three years from its date unless sooner terminated in accordance with certain special provisions.

2. It was submitted on behalf of the appellants that pursuant to Cl.17 of the agreements and the Management and Agency Agreements the appellants were offered either rights to participate in or an interest in the profits of a financial or business undertaking or scheme, or rights to participate in or interests in a common enterprise in which they were led to expect profits or rents from the efforts of the manager or agent, or rights in an investment contract.

3. As the argument developed, little reliance was placed upon the terms of the Management Agreement. However, it was submitted that the scheme contemplated by the Agency Agreement was one of a pool of units which would be available to be let by a common agent for the profit of unit owners. It was submitted that the mere fact that the arrangement was prospective or contingent did not remove it from the scope of s.76 of the Companies Act. It was said that the proposed scheme went beyond making provision for common ownership of the common property and that s.76 should not be given an applic ation restricted by preconceptions of the policy which gave rise to its enactment. In support of this last submission reliance was placed upon the following passage in the judgment of Mason J. (with whose reasons for judgment Gibbs C.J. and Stephen J. agreed) in Australian Soft Wood Forests Pty. Ltd. v Attorney-General for New South Wales (1981) 148 C.L.R. 121 at p. 130:
   
   

"There are real difficulties in the suggestion that the court can read down the very comprehensive definition of 'interest' by reference to the supposedly unintended consequences of literal reading on everyday commercial transactions. The definition is so general and all-embracing that it is impossible to say that it necessarily excludes particular transactions which appear to be covered by the general words. The hazards of adopting such course are not dispelled by the absence of a supporting context. It would be different if we could glean from the legislative provisions an overall purpose which, being limited in scope, justified a reading down of the definition. Unfortunately in this case the search for a legislative purpose takes us back to the very words of the definition for the intended scope of the operative privisions depends so heavily on the comprehensive language of that definition. As Young CJ observed in A Home Away Pty. Ltd v Commissioner for Corporte Affairs (1980) 5 ACLR 299 at 302; (1980) CLC 34,444 at 34,446, in discussing the meaning of 'interest' as defined in s.76(2): 'If it were said that we should give effect to the purpose Parliament wished to achieve, we must first ascertain the purpose and that can only be ascertained from the language used."

1. Section 76 has been considered in recent decisions of the Supreme Court of Queensland. In Munna Beach Apartments Pty. Limited v Kennedy (1983) Qd. R. 151 Macpherson J. held that the sale by a vendor, not being a company as defined in s.76(1) of the Companies Act, of a proposed lot to be registered under the Building Units and Group Titles Act together with an interest in common property pursuant to that Act is not the issue or offer of an interest or investment contract as defined in s.76(1). In that case only para. (c) of the definition of "interest" arose for consideration. In Applewood Pty. Limited v Dadinbridge Pty. Limited (1983) 1 Qd. R. 412 Connolly J. held that ownership of a home unit and a share in common property did not come within the kind of interest referred to in para. (a) of the definition of "interest" in s.76. It was further held in that case that neither para. (b) nor (c) of the definition applied to such ownership. The decision in that case was followed in Brisbane Unit Development Corporation Pty. Limited v Deming No. 456 Pty. Limited (24 March 1983, as yet unreported). At p. 15, Connolly J., in delivering the judgment of the Court, said:
   
   

"In giving the phrase ('a financial or business undertaking or scheme') the wide import which is called for there is, in my opinion, nothing about the ownership of a unit and a share in common property which answers the description financial or business undertaking or scheme. True it is that the unit holders through their elected body corporate must take appropriate steps for the management and maintenance of the building but this does not amount to the conduct of a financial or business undertaking or scheme. Paragraph (b) can have no application. The only common enterprise in which the unit holders will be involved is the running of the building and there is no suggestion in this case of any expectation of profits, rent or interest from the efforts of the promoter or a third party. Nor do I think that it is right to say that any unit holder will acquire a right to participate or an interest in an investment contract ... In my view the payment of the purchase price for real estate is not aptly described as the investment of money in circumstances in which the investor acquires an interest in property."

1. We do not understand the correctness of these decisions of the Supreme Court of Queensland to have been challenged by counsel for the appellant and, in any event, we respectfully agree with them. The adoption of the reasoning in those cases necessarily leads to the result that the agreements in the present case did not fall within s.76 insofar as they were for the sale of home units and interests in the common property. But this does not answer the argument for the appellant on the point. Counsel for the appellant argued that the provisions of the Maintenance Agreement distinguish the present case from the cases decided in the Supreme Court. It was the provisions of those agreements which were relied upon as giving rise to an "interest" within the meaning of s.76.

2. The provisions of the agreements should not be considered in isolation from the context which gave rise to them. Each purchaser of a home unit no doubt found it expedient that an arrangement should be made that proper care be taken of the common property. Since the building was erected in a holiday area it was likely that a unit owner might wish to let his unit. The Management Agreement made provision for the care of the common property. The substantial effect of the Agency Agreement was to give the owner of a unit the right (using that word in a loose sense) to use the services of a nominated agent who would use his best endeavours to let the owner's unit.

3. Construing the agreements in the context in which they were made, we do not think that they gave rise to any "interest" in terms of para. (a) of the definition of that term in s.76. The agreements do not give to a unit holder an interest in the agent's profit, nor his assets. Nor does he have any interest in the "realisation" of any financial or business undertaking or scheme of the agent, assuming the word "realisation" to refer (as we think it does) to the proceeds which would accrue to the agent if his business were wound up. We agree with the conclusion of the learned trial judge that the ownership of a unit and a share in common property together with the possibility of associated services for management and maintenance of the building and the letting of units do not answer the description of the phrase "financial or business undertaking or scheme", notwithstanding its wide import.

4. As his Honour pointed out, if the Management Agreement is entered into by the body corporate with some manager, it will do no more than provide for the management and administration of the common property. Further, if the Agency Agreement is entered into by the body corporate with a letting agent it will do no more than provide a facility for the owners of units in the building, enabling them to use the services of the agent if they so wish. They will not be under any obligation to engage the agent and, indeed, they may choose not to let the units at all. If a unit owner elects to engage the agent, the terms of the Agency Agreement will be negotiated by the parties. In these circumstances we do not think it can be said that any interest within para. (a) of the definition arose from the execution of either the Management or the Agency Agreements.

5. Nor do the agreements give rise to any "common enterprise" within the meaning of para. (b) of the definition. The fact that several unit owners may utilize the services of a common agent does not give rise to a common enterprise. A distinction must be made between the employment by a number of unit owners of a common agent, and the engagement by the unit owners in a common enterprise. The arrangements envisaged by the agreements do not give rise to any contractual relationships between the owners of units inter se. There would be no sharing of rents or profits. Nor are the unit holders placed in a position where they could expect profits from or an interest in the efforts of the agent. We agree with his Honour's finding that the ownership of a unit and a share in common property, together with a possibility of associated services for management and maintenance of a building and the letting of units, do not answer the description of the phrase "financial or business undertaking or scheme" notwithstanding the wide import of those words.

6. Nor do we think that the appellants acquired rights to participate or interests in an "investment contract" in terms of para. (c). It was argued that the words "property ...which under or in accordance with the terms of investment will, or may, at the option of the investor, be used or employed in common with any other interest ..." in the definition of "investment contract" were wide enough to include the Agency Agreement because each unit holder's unit would form part of a pool of units which would be offered for letting by the agent. But the letting of individual units in a pool by an agent would not amount to the use or employment of a unit owner's rights in common with the rights of other unit owners. Each owner would let his unit if he so chose. If he chose to use the same agent as another unit owner, his rights could not be described as being used or employed in common with the rights of other unit owners.

7. Accordingly, we think the learned trial judge was correct in holding that the offer contained in the agreements for sale for the units did not involve the offer of an "interest" within the meaning of s.76 of the Companies Act. This being so, it is unnecessary to consider whether, even if the agreements did provide for the sale of an interest in terms of s.76, the provisions of the Act would have rendered the agreements void or voidable. Nor is it necessary to consider whether the provisions of the Building Units and Group Titles Act prevail over the provisions of the Companies Act.

8. It was further submitted that the trial judge erred in finding that the appellants did not rely upon the representations made to them as to the removal of the caravan park because this finding was in turn based upon a finding that they would have agreed to buy the units irrespective of the making of the representation. In the course of his judgment his Honour said that he was satisfied that the appellants "would have bought the units whether Mr Hawthorn's statements about the caravan park were made or not." It was submitted that this was an erroneous test for determining whether the appellants were entitled to rescind the agreements for the purchase of units. It was argued that the proper test was whether the making of the statements to them was a factor leading them to decide to buy. Barton v Armstrong (1976) AC. 104 was relied upon. In that case Lord Cross speaking for the majority of the Privy Council said (p.118-119):
   
   

"Had Armstrong made a fraudulent misrepresentation to Barton for the purpose of inducing him to execute the deed of January 17, 1967, the answer to the problem which has arisen would have been clear. If it were established that Barton did not allow the representation to affect his judgment then he could not make it a ground for relief even though the representation was designed and known by Barton to be designed to affect his judgment. If on the other hand Barton relied on the misrepresentation Armstrong could not have defeated his claim to relief by showing that there were other more weighty causes which contributed to his decision to execute the deed, for in this field the court does not allow an examination into the relative importance of contributory causes.

'Once make out that there has been anything like deception, and no contract resting in any degree on that foundation can stand': per Lord Cranworth L.J. in Reynell v. Sprye (1852) 1 De GM & G 660,708 - see also the other cases referred to in Cheshire and Fifoot's Law of Contract, 8th ed.

(1972), pp. 250-251. Their Lordships think that the same rule should apply in cases of duress and that if Armstrong's threats were 'a' reason for Barton's executing the deed he is entitled to relief even though he might well have entered into the contract if Armstrong had uttered no threats to induce him to do so."

1. Before considering this argument it is necessary to recapitulate the essential findings of fact which bear upon it. We have already referred to his Honour's findings that the male appellant was told by a salesman employed by the first respondent that the caravan park would be removed some time in the future, that this statement was not mere puffing, and that it amounted to a contravention of s. 52 of the Trade Practices Act. He further found that the appellants placed no reliance on the statement, that they were not induced by it to enter into the agreements, and that they would have agreed to purchase the units whether the statement had been made or not. On the basis of these findings he found that the appellants had not established any nexus between the offending conduct and the loss alleged by them.

2. We do not think the attack on this ultimate finding can be sustained. The male appellant's evidence that he relied upon the representation was expressly rejected. He was found to have given false reasons for asserting that the representation was material to him. The letter of rescission written on behalf of the appellants made no mention of a misrepresentation although it was written within a short time after the appellants were aware of the true facts as to the future of the caravan park. They made no complaint to the agent about the misrepresentation. Having regard to the evidence it was well open to the trial judge to find, as he did, that the appellants placed no reliance upon the salesman's statement about the caravan park when deciding to enter into the contracts and that they would have purchased the units whether the statements had been made or not.

3. The onus of establishing that they were induced by or relied upon the misrepresentation when entering into the agreements was on the appellants. See Holmes v Jones (1907) 4 CLR 1692 at 1706 per O'Connor J. and Smith v Chadwick (1884) 9 App. Cas. 187 at 190 per Lord Selborne and at p. 195-6 per Lord Blackburn, where his Lordship said:
   
   

"Whatever difficulties there may be as to defining what is fraud and deceit, I think no one will venture to dispute that the plaintiff cannot recover unless he proves damage. In an ordinary action of deceit the plaintiff alleges that false and fraudulent representations were made by the defendant to the plaintiff in order to induce him, the plaintiff, to act upon them. I think that if he did act upon these representations, he shews damage; if he did not, he shews none. And I think the plaintiff in such a case must not only allege but prove this damage. It is as to what is sufficient proof of this damage that I wish to make my remarks. I do not think it is necessary, in order to prove this, that the plaintiff always should be called as a witness to swear that he acted upon the inducement. At the time when Pasley v. Freeman (2 Sm. L.C. 66, 73, 86 (8th ed.)) was decided, and for many years afterwards, he could not be so called. I think that if it is proved that the defendants with a view to induce the plaintiff to enter into contract made a statement to the plaintiff of such a nature as would be likely to induce a person to enter into contract, and it is proved that the plaintiff did enter into the contract, it is a fair inference of fact that he was induced to do so by the statement. In Redgrave v Hurd (20 Ch. D. 21) the late Master of the Rolls is reported to have said it was an inference of law. If he really meant this he retracts it in his observations in the present case. I think it not possible to maintain that it is an inference of law. Its weight as evidence must greatly depend upon the degree to which the action of the plaintiff was likely, and on the absence of all other grounds on which the plaintiff might act. I quite agree that being fair inference of fact it forms evidence proper to be left to a jury as proof that he was so induced. But I do not think that it would be a proper direction to tell a jury that if convinced that there was such material representation they ought to find that the plaintiff was induced by it, unless one of the things which the late Master of the Rolls specified was proved; nor do I think he meant to say so. I think there are a great many other things which might make it a fair question for the jury whether the evidence on which they might draw the inference was of such weight that they would draw the inference."

1. Holmes v Jones and Smith v Chadwick were both cases where the causes of action relied upon were the tort of deceit, but a similar onus lies upon a claimant who alleges that he has suffered damage as a result of misleading conduct in breach of s. 52 of the Trade Practices Act. As those cases make clear, if a representation is proved which is of such a nature as to be likely to induce a representee to act upon it, the inference may be drawn, if the representee does act, that he has acted in reliance on the representation. But since the inference is one of fact it may be rebutted by other evidence which is inconsistent with the inference. See Holmes v Jones (supra) at p.1707 per O'Connor J. There was ample such evidence in the present case.

1. We do not think that what was said by the majority of the Privy Council in Barton v Armstrong (supra) conflicts with these propositions. When their Lordships said in that case that if the threats that were made were "a" reason for the execution of the deed by Barton then he ws entitled to relief, they must be taken, in our opinion, as saying that Barton was entitled to relief if he could show that the threats made to him played at least some part in his decision to execute the deed. In the present case the learned trial judge made a finding (which was clearly open on the evidence) that the appellants placed no reliance upon the misrepresentation as to the caravan park. The misrepresentation was not in any sense a reason for the appellants entering into the agreements to purchase the units. This finding is fatal to the appellants' argument on this point.

2. In the result, the appeal is dismissed with costs.