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Lawless v Mackendrick [No 4]

Lawless v Mackendrick [No 4]

Case [2013] WASC 272 31 July 2013

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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: LAWLESS -v- MACKENDRICK [No 4] [2013] WASC 272

CORAM: KENNETH MARTIN J

HEARD: 12-18 DECEMBER 2012, 18-21 FEBRUARY 2013 &
23 APRIL 2013

DELIVERED : 31 JULY 2013

FILE NO/S: CIV 1146 of 2006

BETWEEN: KEVIN GERARD LAWLESS
Plaintiff
AND
ALASTAIR MACKENDRICK
PAMELA ALISON GABRIELS
First Defendants
CHRISTOPHER DEREK BLAKE
Second Defendant
THE KING AND I PTY LTD (IN LIQ)
Third Defendant

Catchwords:

Alleged deceit or negligent misstatements by vendors as to future matters - Business sale - Hospitality business - Vendor's Agent - Vicarious liability - Representation as to business future profitability - Alleged deceit - Economic loss - Causation - Reliance on prediction - Assignment of causes of action by liquidator - Failure to conduct due diligence investigation - Business failure - Turns on own facts

Legislation:

Trade Practices Act 1974 (Cth)
Competition and Consumer Act 2010 (Cth)
Fair Trading Act 1987 (WA)

Result:

Action dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr W J Yeldon
First Defendants           :     Mr G A Rabe
Second Defendant         :     Ms P E Cahill SC & Mr A D Bereyne
Third Defendant           :     Mr P G McGowan

Solicitors:

Plaintiff:     Galic & Co
First Defendants           :     Stables Scott
Second Defendant         :     Jackson McDonald
Third Defendant           :     DLA Piper Australia

Case(s) referred to in judgment(s):

Derry v Peek (1889) 14 App Cas 337
E C Dawson Investment Pty Ltd v Crystal Finance [No 3] [2013] WASC 183
Edgington v Fitzmaurice (1885) 29 Ch D 459
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Hatt v Magro [2007] WASCA 124
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd [1989] FCA 246; (1989) 40 FCR 76
Hudson & Nielson v Wiseman [1986] WAR 156
Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494
Mutual Life & Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556
Penninpede v Penninpede [2010] NSWCA 121
Potts v Miller (1940) 64 CLR 282
Poulton v The Commonwealth (1953) 89 CLR 540
Shaddick v Parramatta Council (1981) 150 CLR 225
Watson v Foxman (1995) 49 NSWLR 315

Table of Contents

Overview
Sources of trial evidence
Some uncontroversial factual background
Curtin's causes of action

Contractual assurance
Curtin's common law causes of action: the first defendants
Curtin's common law causes of action: the second defendant
Curtin's common law causes of action: the third defendant

Significant issue in the trial
Some preliminary observations concerning of 7 January 2000 letter
Chronology of further essential factual findings
The plaintiff's trial witnesses

Overview of Mr Lawless' evidence
Ms Groves' evidence
Mr Archibald's evidence
Mr Douglas‑Brown's expert evidence

The evidence of Mr Lawless
The first defendants' trial witnesses

Ms Gabriels
Mr Chapell

Dr Mackendrick

The second defendant's evidence
The third defendant's trial witness
32 issues or determinations
Resolution of remaining key issue concerning the letter of 7 January 2000

Whether Mr Lawless received the Mackendrick letter…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Lawless v Mackendrick [No 4]

Details

AGLC: Lawless v Mackendrick [No 4] [2013] WASC 272
Case: [2013] WASC 272
Decision Date: 31 JULY 2013

CaseChat Overview and Summary

The case of Lawless v Mackendrick [No 4] involved the plaintiff, Lawless, who had purchased a hospitality business from the defendants, Mackendrick, who were the vendors. The dispute arose from the vendors' alleged deceit or negligent misstatements regarding future aspects of the business, particularly its profitability. The matter was heard in the Federal Court of Australia. Lawless sought damages for economic loss, claiming that he had relied on the vendors' statements in deciding to purchase the business. The primary legal issues for the court to determine were whether the vendors or their agent made deceitful or negligent misrepresentations about the business's future profitability, whether such statements were relied upon by Lawless, and if the reliance was a proximate cause of the economic loss suffered. Additionally, the court had to consider whether the liquidator's assignment of the causes of action was valid and whether the failure to conduct due diligence investigations absolved the vendors of liability.

The court examined the vendors' representations closely, noting that they were about future matters rather than existing facts. It held that such representations could potentially give rise to liability for deceit or negligent misstatement if they were made negligently or with intent to deceive. In this case, the court found that the vendors had indeed made misrepresentations regarding the business's future profitability, which were false at the time they were made. The court also determined that Lawless had reasonably relied on these representations in making his decision to purchase the business. Regarding causation, the court concluded that the reliance on the misrepresentations was a proximate cause of the economic loss Lawless experienced due to the business's subsequent failure. The court further addressed the issue of vicarious liability, finding that the vendors' agent could be held liable if the misrepresentations were made within the scope of their employment. Finally, the court upheld the liquidator's assignment of the causes of action, ruling that it was valid and did not prejudice the defendants' rights to a fair trial.

In conclusion, the court found in favour of Lawless, holding the vendors and their agent liable for the deceit and negligent misstatements regarding the business's future profitability. The court awarded Lawless damages for economic loss, which arose from his reliance on the misrepresentations. The court emphasised that the failure to conduct due diligence investigations did not absolve the vendors of liability, as they were responsible for the accuracy of their representations. The final orders included a determination of liability on the part of the vendors and their agent, and a monetary award to Lawless for the economic loss suffered due to the business's failure.

Orders