Lord Buddha Pty Ltd (in liq) v Harpur

[2013] VSCA 101

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2011 0184

LORD BUDDHA PTY LTD (in liq)
(ACN 117 265 988)

Appellant

v

PAUL HARPUR

Respondent

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JUDGES	WEINBERG and TATE JJA and VICKERY AJA
WHERE HELD	MELBOURNE
DATE OF HEARING	20 March 2013
DATE OF JUDGMENT	9 May 2013
MEDIUM NEUTRAL CITATION	[2013] VSCA 101	1st revision:  9 May 2013 [216]
JUDGMENT APPEALED FROM	Lord Buddha Pty Ltd v Harpur [2011] VSC 366 (Robson J)

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TRADE PRACTICES — Misleading and deceptive conduct in a land sale — Section 52 Trade Practices Act 1974 (Cth) — Whether purchaser misled — Reliance on representations — Purchaser gives unsatisfactory evidence of reliance — Principles in Gould v Vaggelas (1985) 157 CLR 215 considered and applied — Inference of reliance able to be drawn — Inference of reliance not precluded by the unsatisfactory direct evidence of the representee.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr S A Glacken SC with Mr R S Hay	O’Donnell Salzano Lawyers
For the Respondent	Mrs S L Marks SC with Ms K E Foley	Mills Oakley Lawyers

WEINBERG JA:

1. I agree, for the reasons given by Vickery AJA that this appeal should be dismissed.

TATE JA:

1. For the reasons given by Vickery AJA, I agree that the appeal should be dismissed.

VICKERY AJA:

INTRODUCTION

1. As recited by the trial judge in his Honour’s reasons (the ’Reasons’),[1] in December 2007, the appellant Lord Buddha Pty Ltd, now in liquidation, (’Lord Buddha’) agreed to sell to the respondent Mr Paul Harpur (‘Mr Harpur’) seven hectares of undeveloped land at Portland (the ‘Portland land’).  Mr Harpur paid part of the deposit and then refused to proceed with the purchase.  The sale was effected by Mr Gordon Turner (‘Mr Turner’) a sub-agent of Forvale Pty Ltd, real estate agents (‘Forvale’).  Lord Buddha was controlled by Mr David Gibbs, a property developer (‘Mr Gibbs’).  Mr Harpur was a solicitor and property developer.

   [1]Lord Buddha Pty Ltd v Harpur [2011] VSC 366, [1]-[7].

1. Lord Buddha rescinded the contract and sued Mr Harpur for damages.  In his defence, Mr Harpur claimed that he validly terminated the contract of sale, or alternatively the contract was void or voidable and could be set aside on three grounds.

1. First, Mr Harpur alleged that certain statutory requirements of the Sale of Land Act 1962 were not observed in the contract.  He further alleged that, in that event, he validly rescinded and terminated the contract, or that it was void or voidable.  If the statutory breaches were made out, the relevant statutory law permitted the Court to excuse the failure to observe the statutory requirements.  If the breaches were made out, Lord Buddha sought to be so excused.

1. Secondly, Mr Harpur claimed that Lord Buddha and the real estate agent, Forvale, engaged in misleading or deceptive conduct by making misleading or deceptive representations about the Portland land that Mr Harpur relied on to enter into the sale agreement.  These representations included that Lord Buddha had ‘lined up’ a number of tenants for the property.  As a result, Mr Harpur claimed that he rescinded the contract or that he was entitled to do so.  He claimed that he was thereby entitled to the return of the deposit.

1. Finally, Mr Harpur contended that when he was dealing with Lord Buddha he was at a special disadvantage or disability flowing from a stroke he had in the late 1990s that was known to Forvale as the estate agent for Lord Buddha.  He said that Lord Buddha unfairly or unconscientiously took advantage of his special disadvantage in procuring the contract to buy the Portland land.  He said that as a result Lord Buddha was not entitled to retain the benefit of the contract.

1. Mr Harpur made a counterclaim against Lord Buddha and Forvale.  In his counterclaim he pleaded causes of action relying on the matters raised in two of his defences, namely that the contract breached the Sale of Land Act 1962 and the alleged misleading or deceptive conduct.  As a result, he claimed he was entitled to have the contract of sale set aside and he claimed the repayment of the deposit he paid of $425,000.  He claimed in the alternative, loss and damages of $425,000 and further damages for the loss of use of that sum.  Finally, he claimed each of Lord Buddha and Forvale aided and abetted each other in the misleading or deceptive conduct and were therefore liable for the misleading or deceptive conduct of each other.

1. Lord Buddha admitted that Forvale had been retained as its agent as at 3 December 2007.  Forvale admitted it acted as estate agent for Lord Buddha to sell the land to Mr Harpur.

BACKGROUND

1. The background to the proceeding is further recited by the trial judge, who made the findings which follow.[2]

   [2]Reasons [8]–[19]

1. The Portland land lies on the Henty Highway, being the main road that enters Portland for traffic travelling west along the Henty Highway from Hamilton and Heywood, and for traffic travelling west along the Princes Highway from Warrnambool and Port Fairy.  The property is zoned business four (B4).  That zoning entitled the land, with a permit from the council, to be used for the sale of bulky goods.  A business such as Bunnings, Mitre 10 or a bedding store could be operated on the site as a bulky goods business.

1. Lord Buddha, which was part of the IPC Property & Investment Group that was controlled by Mr Gibbs, purchased the Portland land for $1.21 million in March 2007.  After Lord Buddha took possession of the land in March 2007, Mr Gibbs and his associates set about investigating the possibility of developing it.  They came up with a preliminary concept plan that divided the land into several uses.  Under the concept plan, part of the land would be used for a bulky goods store such as Bunnings, another part would be used for a supermarket and ancillary shops which would require rezoning to business one (B1), a third part would be used for a petrol station, and a fourth part might be used for a retirement village that would require rezoning to residential.  Adjoining the southern side of the Portland land was land owned by the council that was zoned residential.  Mr Gibbs and his associates investigated whether that land could be acquired from the council and used with part of the Portland land to develop a retirement village.

1. In the second half of 2007, Mr Gibbs approached Mr Turner, a sub-agent engaged by Forvale, to assist him to sell the Portland land.  Forvale was established in about August 2007 by Mr Ronald Hutchins, an estate agent from Shepparton (‘Mr Hutchins’).  Mr Turner and Mr Hutchins agreed to work together for shared commissions.  Mr Turner had a sub-agent’s licence.  Mr Gibbs told Mr Turner that he wanted $5 million for the property and that if Mr Turner could sell the property for any more the surplus could be taken as commission.

1. On 3 December 2007, Mr Turner obtained an authority from Mr Gibbs to sell the Portland land for $6.5 million.  Mr Turner offered the land to Mr Harpur for that sum and he agreed to buy it without seeking to bargain it down.  Mr Turner had been dealing with Mr Harpur on other property developments.  A contract of sale was signed on 11 December 2007 and on 12 December 2007 part of the deposit was paid by Mr Harpur.

1. Mr Harpur alleged that Mr Turner gave him a coloured concept plan and other documents relating to the Portland land.  He alleged that Mr Turner made certain verbal representations in his negotiations with Mr Harpur that were misleading or deceptive.  Mr Harpur said that he relied on these misleading or deceptive representations to enter into the contract.

1. Mr Harpur had suffered a stroke in about 1999.  He claimed that the stroke had left him with certain disabilities; including that he is too trusting and that he was not able to judge other people, to his disadvantage.  Mr Harpur alleged that he told Mr Turner and Mr Hutchins about his disabilities and that unconscientiously they, as agents for Lord Buddha, took advantage of him in procuring him to enter into the contract.

1. In January 2008, several meetings took place between Mr Harpur and Mr Turner about the Portland land.  Mr Turner unexpectedly died on 27 January 2008.  Before he died, however, on 25 January 2008 Mr Harpur defaulted in the payment of part of the deposit.  His reasons for doing so included that he could no longer offer the property to his overseas partner Mr Peter von Stiegler (and through him to wealthy Indonesian investors), and a source of money he expected from another project was not available.  In February 2008, an extension of time to pay the deposit was negotiated with Mr Gibbs.  By a Deed of Variation made 1 February 2008, the parties agreed to vary the contract (the ‘Deed of Variation’).  The Deed of Variation varied the contact principally as follows:

(i)part of the deposit was changed to $325,000 of which $225,000 was to be paid to the vendor by the purchaser by 1 February 2008;

(ii)a further $100,000 of the deposit was to be paid to the vendor by the purchaser by 15 February 2008;

(iii)the balance of the 10% of the purchase price, being a further $225,000, was to be paid by the purchaser to the vendor on 31 May 2008;

(iv)on signing of the Deed of Variation by both parties, Mr Harpur would sign a s 27 statement allowing the release of the deposit monies to Lord Buddha;

(v)the settlement date would be changed to 31 October 2008 or earlier by mutual agreement.

1. Further deposit moneys were paid; but ultimately Mr Harpur defaulted.  Lord Buddha rescinded the contract.  Mr Harpur alleged that he had been misled.

1. Mr Harpur was an active property developer.  At the time of the purchase, he was involved in several projects.  One involved issuing shares in a company called Compound Property Investment Pty Ltd (‘CPI’), to raise money from wealthy investors to invest in property.  In November 2007, before Mr Harpur agreed to buy the Portland land, he sought to raise some $20 million by a share issue by CPI to invest in property.  To that end he prepared an information memorandum to be shown to investors and financial planners.  Under the proposal, Mr Harpur would manage the investments.  The proposed investments of CPI included land that lay within a ‘zone of growth’, as the Portland land did.  The role of CPI in the purchase of the Portland land was one of the issues in contention in this case.

1. If Lord Buddha validly rescinded the contract and Mr Harpur had no entitlement to damages, the parties were agreed on the damages to be paid by Mr Harpur for breach of the contract of sale.

1. Accordingly, the trial Judge identified in general terms that the case involved the following issues.

(a)Did Lord Buddha and Forvale engage in misleading or deceptive conduct contrary to the Trade Practices Act 1974 (Cth) and the Fair Trading Act1999 (Vic)?

(b)If so, did Mr Harpur suffer any loss or damage by the misleading or deceptive conduct?

(c)If so, did Forvale aid and abet Lord Buddha in the misleading or deceptive conduct?

(d)Was Mr Harpur labouring under a special disadvantage or disability that if known to Lord Buddha and unconscientiously taken advantage of by Lord Buddha, would entitle him at equity to avoid the contract to buy the Portland land?

(e)If so, did Lord Buddha know of the disability?

(f)If so did Lord Buddha unconscientiously take advantage of its knowledge?

(g)If so, would that entitle Mr Harpur to avoid the contract?

(h)Did Lord Buddha breach the Sale of Land Act 1962 in respect of the contract or the s 32 certificate?

(i)If so, should Lord Buddha be excused?

(j)If not, was the contract avoided?

SUMMARY OF FINDINGS OF THE TRIAL JUDGE

The Representations Originally Pleaded

1. There were 13 representations alleged by Mr Harpur at the commencement of the trial, which were said to comprise the misleading or deceptive conduct contrary to the Trade Practices Act 1974 (Cth) (the ‘Act’)and the Fair Trading Act1999 (Vic) (which for present purposes shall be treated as giving rise to the same issues and considerations as arise under the Act). They were pleaded as follows:

Lord Buddha represented that:

(1)Lord Buddha had a magnificent opportunity to buy some land ready for development at Portland;

(2)the plan entitled ‘Preliminary Site Development Plan’ showed the sorts of uses the property could be put; (withdrawn)

(3)the Plaintiff and its principal David Gibbs held an option over the land directly to the south of the property which was owned by the local council which land could be purchased by him as well;

(4)there were other people who were interested in purchasing the property including Mark Casey;

(5)the property could be used for:

(i)       a bulky goods store;

(ii)      a shopping centre;

(iii)     a residential development, including an aged care village and assisted care facility; (withdrawn)

(6)the Plaintiff had a number of tenants lined up for the site including ‘restricted retail tenants’;

(7)Coles and Aldi were available, and wanted to go there, as tenants;

(8)Cheap as Chips, Mitre 10 and Bunnings wanted to go there to take a lease for a bulky goods store in the project;

(9)there were other prospective purchasers who were interested or keen to buy the property at a price of $6.5 million;

(10)there was a valuation in existence which valued the property at $6.5 million;

(11)there were buyers for a retirement village at the other end of the property; (withdrawn)

(12)the Defendant could sell the retirement village to Mark Casey; (withdrawn)

(13)the local council were prepared to rezone the property to allow development of a shopping centre. (withdrawn)

1. The representations were alleged to be partly in writing, partly oral and partly to be implied.

1. Insofar as they were in writing, they were pleaded to have been contained in:

(a)the Preliminary Site Development Plan that was handed to Mr Harpur by Mr Turner at the offices of Forvale in or about early December 2007;

(b)a document showing calculations and projections made by Mr Turner in respect of the property and its developments;

(c)a note made by Mr Harpur on Sahid Jaya Hotel paper.

1. The calculation document was not tendered.  It was lost.  Mr Harpur gave evidence of its contents.  During the case Mr Harpur also relied on the promotional brochure and the concept plan.

Withdrawal of Five Representations

1. During final addresses, five of the alleged representations were withdrawn by Mr Harpur, as indicated above, namely pleaded representations 2, 5(iii), 11, 12, and 13.

1. In his Reasons the trial judge made the following central findings.[3]

   [3]Reasons [20]-[25]

Representations

1. His Honour was satisfied that Lord Buddha engaged in misleading or deceptive conduct towards Mr Harpur in breach of s 52 of the Act and s 11 of the Fair TradingAct 1999.  In particular, he was satisfied that Lord Buddha falsely represented to Mr Harpur that:

(a)Coles and Aldi were available, and wanted to go there [to the Portland land], as tenants (pleaded representation 7);

(b)Cheap as Chips, Mitre 10 and Bunnings wanted to go there to take a lease for a bulky goods store in the project (pleaded representation 8);

(c)Lord Buddha had a number of tenants lined up for the site (an adaptation of pleaded representation 6); and

(d)      Lord Buddha had some land ready for development at Portland (an adaptation of pleaded representation 1).

1. Representation (c) as found by his Honour was noted in the Reasons to be supported and made out by representations (a) and (b).  Representation (d) as found by his Honour was noted in the Reasons to be also supported by and made out by representations (a), (b) and (c).

1. Mr Harpur did not satisfy the trial judge that the other representations alleged by him which had not been withdrawn, namely the pleaded representations above being 3, 4, 5(i) and (ii), 9, and 10, had been made by Lord Buddha.

1. The appeal focussed on representation (a) (called for these purposes the ‘Supermarket Representation’) and representation (b) (called for these purposes the ’Hardware Representation’), and was argued on this basis. It was common ground that if his Honour’s finding that the Supermarket Representation and the Hardware Representation had been made and could not be sustained, then representations (c) and (d) could equally not be permitted to stand.

1. Mr Harpur did not satisfy the trial judge that Forvale had engaged in misleading or deceptive conduct.  Nor did he establish that Forvale was liable for aiding and abetting, counselling, procuring, inducing or being in any way directly or indirectly knowingly concerned or a party to, or had conspired with others to effect, any contraventions of the relevant sections.

Falsity of the Representations

1. As indicated, the trial judge found that the four representations were false and misleading.  He said:[4]

The representations were false or misleading.  I find that the land was not ready for development.  Contrary to the representations made to Mr Harpur, Coles and Aldi were not available and did not want to go to the site. Cheap as Chips, Mitre 10 and Bunnings did not want to take a lease for a bulky good store in the project. It was not contended by Lord Buddha that if these representations were made they were true.

[4]Reasons [377].

1. Further, earlier in the Reasons his Honour found specifically in relation to Bunnings:[5]

As indicated above, Bunnings was not a prospective tenant.  It had rejected the proposal of taking a tenancy at that time. There was no basis for Mr Turner to inform Mr Harpur that Bunnings was a prospective tenant for the bulky goods store.

[5]Reasons [346].

1. These findings as to the falsity of the representations were not challenged in the appeal, nor could they have been.  At the trial, neither Lord Buddha or Forvale contended that the representations, or any of them, were true.

1. The findings as to falsity were supported by the detailed analysis of the evidence on the issue which preceded them.[6]  There was ample evidence adduced to support the conclusion that the representations, as found, were untrue.  This analysis concluded with a finding made by the trial judge in the following terms:

As can be seen from this evidence, by December 2007 no prospective bulky goods tenant had expressed an intention to be part of the development nor had a B1 tenant [referring to the zoning which would permit a supermarket to operate]. [7]

[6]Reasons [100]–[118].

[7]Reasons [118].

Causation and Reliance

1. The trial judge further found that by reason of the misleading or deceptive conduct, Mr Harpur paid the deposit and had lost the use of that money.

1. In particular, his Honour found that Mr Harpur relied on the representations in entering into the contract for the purchase of the Portland land.  The following passages summarize his findings on the issue:

I find the misleading representations made by Lord Buddha, as referred to above, were made to induce Mr Harpur to enter into the contract for the sale of the Portland land.  I find that Mr Harpur relied on these representations and I infer that he did enter the contract based on these inducements.  I find that Mr Harpur did not have actual knowledge of the true facts in relation to the above representations and therefore the inference has not been rebutted.

I find that the representations were not the sole inducement.  I find, however, that they played some part in contributing to Mr Harpur’s decision to buy the property. [8]

[8]Reasons [397]–[398].

Amadio Defence

1. Mr Harpur did not satisfy the trial judge that he was suffering under a special disadvantage or disability.  Further, if he was suffering under such a disadvantage or disability, he did not satisfy the Court that Mr Turner or Mr Hutchins knew about it, or that they ought to have known about it.

Alleged Breach of Sale of Land Act 1962

1. In the circumstances, the trial judge did not find it necessary to deal with the alleged breaches of the Sale of Land Act 1962.

Orders

1. Consequent upon these findings, Lord Buddha was ordered to pay Mr Harpur the sum of $425,000 together with interest and costs.

GROUNDS OF APPEAL

1. The respondent, Mr Harpur, has withdrawn his notice of contention dated and filed 27 April 2013.

1. Accordingly, this appeal proceeds pursuant to the amended notice of appeal against Mr Harpur confined to the following grounds:

1.The primary Judge erred in finding that Lord Buddha had, through Forvale Pty Ltd, (Forvale) as its agent, represented to Harpur that:

(a)Coles and Aldi were available, and wanted to go there [to the Portland land], as tenants;

(b)Cheap as Chips, Mitre 10 and Bunnings wanted to go there to take a lease for a bulky goods store in the project;

(c)Lord Buddha had a number of tenants lined up for the site;

(d)Lord Buddha had some land ready for development at Portland;

because there was no, or no adequate, evidence upon which to base such findings.

2.Alternatively to [1], the primary Judge erred in holding that if Lord Buddha made those four representations to Harpur:

(a)they involved conduct that is misleading or deceptive or is likely to mislead or deceive within s 52 of the Trade Practices Act 1974 (Cth) (or s 11 of the Fair Trading Act 1999 (Vic));

(b)Harpur suffered loss or damage by that conduct within s 82 of the Trade Practices Act 1974 (Cth) (or s 159 of the Fair Trading Act 1999 (Vic)) in making payments under a contract, as varied, for the sale of the Portland land;

because:

(1)there was no, or no adequate, evidence upon which to find that Harpur had relied on and been misled by those four representations, or upon which any finding could be made as to what Harpur would have done or not done if the true position with respect to the subject of those four representations had been known to him;

(2)the primary Judge considered that it was open to infer that Harpur had entered into the contract and paid the deposit moneys because of the four representations that were found by the primary Judge to have been proven despite:

(A)having earlier found that Harpur was not a reliable witness, that he had failed to adequately explain why he bought the land, that if Lord Buddha had, through Forevale, made all of the 13 representations alleged by Harpur, and Harpur believed them, that did not explain why he behaved as he did, that Harpur was not being fully frank with the Court in saying that he bought the land because he believed and trusted the maker of the representations, and that the explanation probably lies in his own evidence that he expected the land to be acquired through his overseas partner;

(B)the primary Judge rejecting Harpur’s claim that he had believed what Mr Turner (deceased) of Forvale had told him in the terms of the 13 alleged representations and had trusted Turner because he suffered health disabilities of which Turner was aware, the Judge having found, in that respect, that Harpur exaggerated his disabilities;

(C)evidence by Harpur that he had relied on, and signed the contract quickly because of, and would not have entered the contract had he known the true situation with respect to representations he alleged had been made by Lord Buddha other than, or in terms different to, or not confined to, the four representations that were found by the primary Judge to have been proven;

(D)evidence by Harpur that he had entered into the deed of variation made on 1 February 2008 that altered the terms of the contract respecting the amount and time for the payments in circumstances where, on Harpur’s evidence, by then he believed that he had been misled and he entered into the deed of variation in order to have more time to assess his position;

and the Judge failed to consider, or consider sufficiently, those findings and that evidence when holding that Harpur had relied on the four representations and  had entered into the contract, as varied, and made the payments because of their making.

1. The appellant seeks orders that the appeal be allowed with costs.  It also seeks orders setting aside the orders of the trial judge and in lieu thereof it seeks the following orders:

(a)     entry of judgment for Lord Buddha against Mr Harpur for damages agreed at $1,075,000 with interest;

(b)    an order that Mr Harpur pay Lord Buddha’s costs of the proceedings at first instance.

APPEALS ON QUESTIONS OF FACT

1. This is an appeal following a trial without a jury on the ground of errors of the trial judge in finding the facts, where the facts were in dispute at trial.  It is submitted by the appellant that critical findings were erroneous and had they been found correctly judgment would have gone the other way.

1. A party who appeals on the ground that a finding of fact of the Judge below is wrong has the burden of satisfying the appellate court of the error.

1. If the decision of the trial judge on the facts is shown to be wrong, the appellate court must set aside the judgment and give the judgment that ought to have been given by the Judge.

1. It is well accepted that the onus of establishing appealable factual error is particularly heavy where the finding in question is based upon the evidence of witnesses whom the Judge has had the advantage of seeing and hearing.

GROUND 1 - WHETHER THE REPRESENTATIONS WERE MADE

Representations – Submissions

Appellant’s Submissions

1. The appellant made the principal submissions on the question as to whether the representations were made, which are described below.

1. The fact that there was no contemporaneous record of the representations in issue may be seen to reflect the fact that either they had not been made, or the fact that they were not material.

1. It was submitted that an inference that a party has relied on a representation depends on it being material.  It was contended that Mr Harpur’s case was that he relied upon a series of 13 misrepresentations about an opportunity to develop the land and that he relied upon them altogether.  He also had initially advanced a case that he had been misled by representations that were either later withdrawn in closing address, or found not to have been made. In these circumstances, it was not possible to assess whether the remaining and proven representations were material.

1. As previously noted, the pleaded case was that Mr Turner made the 13 representations to Mr Harpur.  These were said to be contained in three documents earlier identified, and in various discussions between Mr Harpur and Mr Turner in December 2007, before the contract was signed.  The three documents were a preliminary site development plan, a document showing calculations made by Mr Turner, and a note made by Mr Harpur of a conversation he had with Mr Turner.  At trial, Mr Harpur relied on two additional documents, being a concept plan and a promotional brochure.

1. Mr Turner died on 27 January 2008 after the contract of sale had been signed on 11 December 2007, and before the Deed of Variation was executed on 1 February 2008.  No third party was present during the conversations between Mr Turner and Mr Harpur.  The trial judge found Mr Harpur to be an unreliable witness who did not give evidence of his negotiations with Mr Turner in a clear and precise fashion, and that parts of his evidence had been reconstructed and exaggerated.  He  did not accept Mr Harpur’s evidence on the alleged representations unless supported by other evidence.

1. Having analysed the supporting evidence, the trial judge concluded that the four misrepresentations had been made out, noting that:

Due to the supporting evidence canvassed above and in particular the evidence of Mr Hutchins and the contemporaneous note, I am satisfied that in order to induce Mr Harpur to buy the Portland land, Lord Buddha marketed the Portland land to Mr Harpur on the basis that the land was ready for development.[9]

[9]Reasons [375] (emphasis added).

1. The trial judge continued:

Mr Hutchins’ conversations with Mr Turner before the contract was entered into support the inference that these representations were made.  Further, Mr Hutchins’ evidence on the post contract meetings also supports the inference that the representations were made by Mr Turner.  I have canvassed at length the occasions on which the prospective tenants were discussed and that the discussions did refer to those prospective tenants named above.[10]

[10]Reasons [376].

1. According to the trial judge, Mr Hutchins, a director of Forvale whom his Honour found to be an honest and reliable witness,[11] gave evidence of ‘his discussions with Turner about his pre-contractual negotiations with Harpur’ which was ’particularly helpful in assessing Harpur’s claims’.[12]  His Honour described this as evidence by Mr Hutchins ‘of conversations he had with Mr Turner about his dealings with Mr Harpur during the negotiations.’[13]

   [11]Reasons [31].

   [12]Reasons [202].

   [13]Reasons [326].

1. However, it was submitted by the appellant that the trial judge was mistaken about that because Mr Hutchins did not give evidence of discussions with Mr Turner about Mr Turner’s pre-contractual negotiations with Mr Harpur.

1. It was submitted that Mr Hutchins’ evidence was about Mr Turner’s concept of how the land could be developed.  It was submitted that Mr Hutchins made plain that he had not had any in depth conversations with Mr Turner about the land.  It was contended that Mr Hutchin’s evidence that Mr Turner had told him that the development was ‘ready to go’ was about planning controls, not tenancy arrangements.  That evidence did not support an inference that Mr Turner had told Mr Harpur that there were tenants available. It was submitted that Mr Hutchins’ evidence was that Mr Turner had told him that there were no tenancies in place, there were negotiations with Bunnings, Mitre 10 and Cheap as Chips, and subject to a rezone, they would push to get Coles or Aldi or IGA.  It was further submitted that the post contract meetings took the matter no further.

1. The other supporting evidence referred to by the trial judge[14] included a handwritten note made by Mr Harpur of a conversation he had with Mr Turner.  The note will be considered in some detail below. 

   [14]Reasons [375].

1. It was submitted by the appellant that the note afforded no evidence of representations being made in the terms found by the trial judge; it did not mention Coles and Aldi, and it said nothing about any tenancy arrangements.

1. The appellant also relied upon a letter written by Mr Harpur dated 1 July 2008 in which he complained of having been misled by Lord Buddha.  However, he failed to make reference to the specific representations which were ultimately found by the trial judge to have been proven.  

1. As for the other documents upon which Mr Harpur relied, namely the concept plan and preliminary site development plan, the appellant submitted that these went to the alleged representations which were withdrawn.  They said nothing about any tenancy arrangements.

1. Relying on established authorities,[15] the appellant submitted that any claim for misleading or deceptive conduct must be pleaded and proved with precision and, when based on conversations, faces serious difficulties of proof absent some reliable contemporaneous record or other satisfactory corroboration.  Apart from Mr Harpur’s evidence, which it was submitted only went to the relevant representations in part and barely ‘proved up’ his claim, and which the trial judge did not accept unless supported by other acceptable evidence, there was simply no evidence of representations being made in the terms of the trial judge’s ultimate conclusion.  Further, it was submitted that the written record contradicted the probability of their having been made.

   [15]         Watson v Foxman (1995) 49 NSWLR 315, 318-9; Camden v McKenzie [2008] 1 Qd R 39, 48-50 [33]- [34], [45]; Colin Lockhart, The Law of Misleading and Deceptive Conduct, (LexisNexis, 3^rd ed 2011), [3.33 ].

1. There being no relevant constraint on the ability of the Court to correct a conclusion of fact reached by the trial judge, it was submitted that the finding that the representations were made was glaringly improbable and ought be reversed.

Respondent’s Submissions

1. It was submitted on behalf of the respondent that it was open to the trial judge to find that the four misrepresentations were made, having considered the evidence as a whole, as his reasons indicate he did.  The findings were not ‘glaringly improbable’, as contended by the appellant.

1. The trial judge found that Lord Buddha made the misrepresentations to Mr Harpur through Mr Turner.  Although the trial judge accepted Mr Harpur’s evidence on the making of the misrepresentations only where it was supported by other evidence, it was submitted that the necessary support was there for each of the four misrepresentations.

1. The respondent referred to the trial judge’s reasons for accepting the evidence of Mr Hutchins which also included the following findings:

… Mr Hutchins gives evidence of conversations he had with Mr Turner about his dealings with Mr Harpur during the negotiations.  These conversations tend to corroborate Mr Harpur’s allegations of what he was told by Mr Turner.  There is also evidence of statements made by Mr Harpur in the meetings that followed the signing of the contract that tend to corroborate some of his evidence as to what Mr Turner told him during the negotiations. Mr Harpur has given some of this evidence.  Others who attended those meetings, in particular Mr Hutchins and occasionally Mr Gibbs, also gave evidence of Mr Harpur’s statements at those meetings that tends to support Mr Harpur’s allegations of what he was told by Mr Turner in the negotiations leading up to the contract.[16]

[16]Reasons [326]

1. The respondent also relied upon the following evidence to support his assertions that the four representations had been made:

(a)Evidence given by those who were not present at the time of the making of the misrepresentations indicated the context in which the relevant negotiations took place, supporting findings that the four misrepresentations were made;

(b)Evidence in relation to the misrepresentation that ‘Coles and Aldi were available and wanted to go there [to the Portland Land] as tenants’;[17]

(c)Evidence in relation to the representation that ‘Cheap as Chips, Mitre 10 and Bunnings wanted to go there to take a lease for a bulky goods store in the project’;[18]

(d)Evidence in relation to the representation that ‘Lord Buddha had a number of tenants lined up for the site’;[19]

(f)In relation to the representation that ‘Lord Buddha had some land ready for development at Portland’, the Trial judge found that this was ‘supported and made out by’[20] the other three misrepresentations.  It was submitted that this was open to him to find.[21]

[17]The trial judge summarised the evidence given in relation to Coles being available and wanting to go there as a tenant by Harpur (Reasons [169]-[171], [184], [265]), Gaucci and Barrett (Reasons [110]-[113]) and Hutchins (Reasons [281]). The Judge summarised the evidence given in relation to Aldi by Harpur (Reasons [171], [184], [265]), Gibbs (Reasons [92]), Gaucci and Barrett (Reasons [105]), and Hutchins (Reasons [281]).

[18]          The trial judge referred to the evidence given in relation to: Cheap as Chips by Harpur (Reasons [153]), Gaucci (Reasons [109]), and Hutchins (Reasons [194]); Mitre 10 by Harpur (Reasons [153]), Gaucci and Barrett (Reasons [114]-[116]), and Hutchins (Reasons [194] ); and Bunnings by Harpur (Reasons [153], [171]), Gibbs (Reasons [98]), Gaucci (Reasons [107], [430], [433]-[434]), and Hutchins (Reasons [194]).

[19]         The trial judge referred to evidence given about tenants being available (Reasons [141], [353]). He referred to evidence given in relation to tenants including Coles, Aldi, and Cheap as Chips, Mitre 10 and Bunnings by Harpur (Reasons [152]) and Hutchins (Reasons [210], [215], [233], [250]-[251]). He made express findings in relation to Coles, Aldi, Cheap as Chips, Mitre 10 and Bunnings (Reasons [349], [351], [377]), as well as specific findings concerning Coles and Aldi ]Reasons [340], [349], [351], [355], [377]), Cheap as Chips, Mitre 10 and Bunnings (Reasons [335], [345]-[346], [349], [351], [353], [377]). He recited evidence that supported Harpur’s evidence of how Turner marketed the property to him, including the reference to the zoning for bulky goods and ‘it was ready to go with tenants that fitted into the business 4 zoning’ (Reasons [341]).

[20]Reasons [20], [375].

[21]Reasons [341], [353], [354].

1. The respondent referred to Mr Hutchins’ evidence of his discussion with Mr Turner about his pre-contractual negotiations with Mr Harpur.  He challenged the appellant’s submission that ‘Hutchins’ evidence was about Turner’s concept of how the land could be developed’.  The respondent submitted that Mr Hutchins’ evidence went significantly further than this.  It was submitted that it included evidence about what Mr Turner said to Mr Hutchins he had been told by Mr Gibbs in the pre-contractual period.  This supported the inference that Turner passed those statements on to Mr Harpur (and corroborated Mr Harpur’s evidence relating to the four misrepresentations).[22]

   [22]         The respondent pointed to the following evidence: Hutchins said Turner told him that: during this period he had given Harpur the paperwork relating to the land that he picked up from Gibbs; that Gibbs had told Turner there were prospective tenants Lord Buddha had been negotiating with for some time; that the first time Hutchins heard about the prospective tenants for the property would have been ‘in a discussion with Mr. Turner prior to Mr. Harpur signing the  contract’; and that Turner thought in developing the project ‘you would commence with bulky goods because it was zoned and ready to go with tenants that fitted into that zoning’. Hutchins’ evidence of later comments by Turner (after the contract was entered into) also supported the finding that the representations were made at the relevant time: he referred to Turner speaking about ‘the potential tenants that…had been in negotiation with Mr. Gibbs that Mr. Turner had spoken about with Mr. Harpur; to Turner saying the day after the contract was signed ‘I’d like to introduce you to Mr. Gibbs…and [he] can confirm what I’ve told you about the prospective tenants.’ and talking to Tunbridge about the tenants Gibbs had been talking to; and to Turner asking Gibbs if he could explain ‘where he was up with the prospective tenants that [Turner] has been quoting on the property’.

1. In relation to the handwritten note written by Mr Harpur referred to by the trial judge[23] and the appellant’s contention that it afforded no evidence of representations being made in the terms found by the trial judge, the respondent submitted that the note was not evidence of the entirety of the representations, but it was part of the matrix of facts which it was open for the trial judge to take into account, as he did.  The respondent pointed to the note making mention of Cheap as Chips, Mitre 10 and Bunnings, three of the bulky goods stores about which  misrepresentations were found to have been made.  It was contended that the note corroborated Mr Harpur’s evidence that these stores were mentioned to him prior to the signing of the contract, and therefore provided some support for his account.

   [23]Reasons [375]. See also Reasons [8] and [9].

Representations – Analysis and Conclusion

1. A central issue in this appeal is whether it was open to the trial judge on the evidence to find that the representations were in fact made, in the face of the appellant’s contention  that there was no, or no adequate, evidence upon which to base such findings.

Evidence of Mr Harpur on the making of the Representations

1. The trial judge was very critical of the evidence given by Mr Harpur, finding that:

Mr Harpur’s evidence was generally unsatisfactory.  His recollection of meetings held was poor. He was unclear on the circumstances surrounding the making of the contract.  Significant parts of his evidence were a reconstruction.  He often said “I would have”, indicating that he was only speculating.  He also often appeared to be formulating the context and his views before giving evidence of what he said.  He consistently failed to answer questions directly and without equivocation.  In many instances his evidence was contradicted by other witnesses, whose evidence I prefer.  I now turn to several specific aspects of his evidence which raise doubts about the reliability of his evidence. [24]

[24]Reasons [357].

1. In the light of these findings, his Honour approached Mr Harpur’s evidence in the following way:

Mr Harpur bears the onus of satisfying me on the balance of probabilities that Lord Buddha made the representations that he alleges.  For the reasons I have given, I do not accept Mr Harpur’s evidence on the alleged representations except where his evidence is supported by other evidence that I accept. [25]

[25]Reasons [374].

1. The appellant submitted that Mr Harpur’s evidence only went to the relevant representations in part and barely ‘proved up’ his claim.

1. In my opinion, it was open to the trial judge to approach the question as to whether the representations were made in the way he did.

1. Mr Harpur’s evidence on the matter was supported by other evidence which was accepted by the trial judge.  Further, to the extent that Mr Harpur gave evidence of the matter, in large part that evidence as to the making of the representations was at least consistent with the finding that the four representations were in fact made.

1. Mr Harpur said he trusted Mr Turner because they were ‘doing a lot of things together’[26] and especially, because of his experience working with Mr Turner on a Flemington property on which Mr Harpur perceived Mr Turner to have done ‘a great deal of work’ and which was ‘very well put together’.[27]  He said he believed what Mr Turner told him because ‘Everything else he'd ever done had been – had checked out, as he'd gone into it, everything he'd told me had proved up.’[28]  He said that he relied on what Mr Turner said and did not do anything to check the veracity of it and that ‘it’s vital to have people you can trust and be able to rely on them’.[29]

   [26]Harpur XXN 302:20.

   [27]Harpur XN 206:13.

   [28]Harpur XXN 307:29.

   [29]Harpur XN 238:8-10; 19-21.

1. Specifically in relation to the Supermarket Representations, Mr Harpur gave evidence that he was told by Mr Turner that ‘Coles were very enthusiastic to go’ to the site,[30] ‘wanted to go there’,[31] and had ‘committed to it’ [32] He was told ‘a very similar thing’ in relation to Aldi,[33] or in other words, ‘the claim was that Aldi and Coles… wished to go there’.[34]  He was also told that Aldi were ‘very keen to get into this area… and [Turner] said this was the next target for them [by which] I understood him to mean this project’ at the Portland land.[35]  Mr Harpur said he particularly recalled Mr Turner mentioning Coles and Aldi to him as tenants because ‘those names on a site are like gold’,[36] that Mr Turner told him that Coles wanted a 20 year lease and that ‘150 was the figure that Mr Turner represented would be the starting rent for the Coles store including any overage on that structure… He said… we can take that as being the figure that will be achieved from Coles in relation to this centre’,[37] and that Mr Turner ‘said that he knew that this was the basis on which Coles was prepared to go there’.[38]

   [30]Harpur XN 217:4.

   [31]Harpur XN 217:5.

   [32]Harpur XXN 306:25 and 413:14.

   [33]Harpur XN 217:15 and see also XXN 306:7.

   [34]Harpur XN 218:27.

   [35]Harpur XN 217:16 and 25.

   [36]Harpur XN 216:14.

   [37]Harpur Re-XN 412:18.

   [38]Harpur Re-XN 413.

1. In relation to the Hardware Representations, Mr Harpur said that Mr Turner, prior to signing the contract, ‘claimed [Bunnings] to be the anchor tenant’.[39]  Mr Harpur was told by Mr Turner that Bunnings ‘wanted to go there’[40] and were ‘committed to the site’.[41]  Mr Harpur discussed the rental rate with Mr Turner[42] and the floor size options for the Bunnings store.[43]  Mr Harpur particularly recalled Mr Turner saying that Bunnings ‘wanted to go there’ because its name ‘on a site [is] like gold’.[44]  Mr Harpur’s evidence was that Mr Turner told him that ‘Bunnings were available and… Mitre 10 were also [and that they] had negotiations in relation to taking a part of the site, and we discussed the fact, well, if we can get Bunnings, we wouldn’t be interested in Mitre 10’.[45]  He also gave evidence that he was told that Cheap as Chips were ‘interested in going’[46] and ‘wished to go to the site’.[47]  Mr Harpur wrote a note during a conversation with Mr Turner[48] ‘a couple of days prior to the signing of the contract’.[49]  It lists Cheap as Chips, Mitre 10 and Bunnings.

   [39]Harpur XN 218:25.

   [40]Harpur XN 216:21.

   [41]Harpur XN 216:24.

   [42]Harpur XXN 306:13.

   [43]Harpur XN 216:26.

   [44]Harpur XN 216:21 and 14.

   [45]Harpur XN 232:44.

   [46]Harpur XN 256:11.

   [47]Harpur XN 236:25.

   [48]Harpur XN 236:14.

   [49]Harpur XN 236:10.

Evidence of Mr Hutchins

1. His Honour placed particular emphasis on the evidence of Mr Hutchins in finding that the four representations were made.[50]  He said in relation to the evidence given by Mr Hutchins:

Mr Hutchins gave his evidence clearly and with precision.  He could recall the separate meetings after the contract was signed.  His evidence is not contradicted by other evidence.  The evidence he gave was against his interest as the owner of Forvale.  Generally, I have accepted his evidence.  Where it is inconsistent with the evidence of others, I have preferred his evidence. [51]  

[50]Reasons [375].

[51]Reasons [327].

1. It was submitted by the appellant that Mr Hutchins’ evidence as to the pre-contractual discussions between Mr Harpur and Mr Turner was confined to Mr Turner’s concept of how the Portland land could be developed.  It was further submitted that Mr Hutchins’ evidence about tenancies for the land was that Mr Turner had told him that there were no tenancies in place, although there were negotiations with Bunnings, Mitre 10 and Cheap as Chips, and subject to a rezoning, efforts were being made to get Coles or Aldi or IGA as tenants.

1. I have read the transcript of the evidence of Mr Hutchins with some care.  When that evidence is considered as a whole, I do not accept the characterisation which the appellant seeks to place upon it.

1. Relevant parts of the transcript of the evidence given by Mr Hutchins relating to prospective tenants for the Portland land are set out below.  Parts of the transcript have been underlined for emphasis.

Excerpts of the Evidence of Mr Hutchins

3 to 11 December 2007

Mr Turner and I discussed the project and how the project would move forward after it was sold and what the opportunities were with it.

Can you be a bit more specific about perhaps what areas were talked about before you look at the document, sir, just from your own recollection to begin with?---Well, I asked Mr Turner what he thought of the project and he thought that it was a project that was going to take a good bit of time, maybe up to ten years and he said the project was zoned Business 4 which allowed for bulky goods and he thought that with that - it was his opinion that with that zoning you could start work subject to getting planning permits and building approvals but you could go on with a bulky goods centre pretty much[ly] straight away and then once you've started with the bulky goods - you do it in stages because most developers have got a limited amount of cash flow and they put the stages in place to develop the property.  So you would commence with the bulky goods because it was zoned and ready to go with tenants that fitted [ing] into that zoning.   Once you had that established and the next stage while you were doing that you'd go on and apply to council for the rezoning of part of the property to B1 and while that was taking place, Stage 1's in progress then you're going to attract a much stronger tenant to the B1 zone because it's now adjoining a bulky goods centre and then you would probably look to put a service station in it some time as Stage 2 or 3, whichever way they fell together.

……..

Was there any discussion about tenants?---Yes.

What were those discussions?---Mr Turner told me that in his discussions with Mr Gibbs, Mr Gibbs had told him that there was prospective tenants that they'd been negotiating with over a period of time but there was no tenancies or anything in place with it, they were just perspective because at that stage you can't - you can't have a tenant until you can actually offer them something off their plans.

Do you recall whether he spoke about any particular tenants?---Ah yes Mr Turner said that Mr Gibbs had told him that they'd been talking to some hardware chains from memory Bunnings and Mitre 10 and I think there may have even been another one from a local guy.

So that was the particular type tenants, any other?---Yes they'd been talking to some bedding shops and I think it was somewhere at this stage Mr Turner also included that they'd had some talking with Cheap as Chips and that subject to a rezone they'd - they'd push hard to get Coles or Aldi or IGA on the site.

You mentioned earlier stores like Bunnings or Mitre 10, are they bulky goods stores?---Ah they fit into that category.[52]

[52]Hutchins XN 585–590.

12 December 2007

What happened at that meeting on the 12th?---When they - well, Gordon and I were in the office and Mr Harpur and Mr Tunbridge arrived and I was introduced by Mr Harpur to Mr Tunbridge.  That's the first time I'd ever met him.

What happened though?---We sat round and there was some general discussion about the property with - between Mr Turner and Mr Harpur and Mr Tunbridge was - - -

Can I take you to the Portland property, what happened at that meeting in relation to the Portland property?---Yes, well, that's - I'm getting there.  Mr Tunbridge was wanting - well, just wanting to hear.  He didn't have a lot of questions I think but more about the Portland property and Mr Turner spoke to him about the prospective tenants that Mr Gibbs had been talking to.  They spoke about - Mr Turner spoke about the need to rezone part of the property to Business 1 for a supermarket or the like.

…..

You mentioned there was some discussion about tenants, do you recall what tenants were discussed?---Look, I'm not that clear on which ones they were now but I know that the tenants that were discussed were the likes of Bunnings, Mitre 10, Cheap As Chips and I'm not sure of the exact name of a couple of other bedding shops.[53]

[53]Hutchins XN 591-592.

Meeting later in January 2008

Yes, what did Mr Turner say?---Oh, Mr Turner would have, ah - - -

Sorry - - -?---Sorry, Mr Turner spoke about, ah, the things that he wanted, ah, Mr Gibbs to clarify in relation to the rezoning and, ah, the potential tenants that, ah, that had been in negotiation with Mr Gibbs that, ah, Mr Turner had spoke about with Mr Harpur.[54]

[54]Hutchins XN 604–605.

Meeting of 1 February 2008

And you mention tenants, do you recall what tenants they were? ---Oh, look, ah, I've listened to them here over the last week and I don't recall just exactly what, but I know that there was just - the meeting revolved around, ah, Mitre 10, ah, the likes of Bunnings and, ah, and Supercheap for the bulky goods area and, ah, that was also discussed about, ah, discussions with Coles, Aldi and IGA for the - the, ah, B1 zoning to - once a rezoning was put in there.[55]

[55]Hutchins XN 604.

…..

Do you recall any other topics that were discussed at that meeting?---Yes, ah, Mr Harpur, ah, asked Mr Gibbs about the prospective tenants and could he have a list of the - of the tenants.  And Mr Harpur said, "Look there's" - he said, "I know who they all are" and they discussed them that - who they were going to be and what they were - and that.  And Mr Gibbs said, "You can have all the information relevant to Portland in regards to tenants when you pay the deposit."

And was there any discussion - you mentioned tenants, were there any specific tenants mentioned?---Ah, look, it was just a, ah, tenants as in - as in, ah, Bunnings, Mitre 10, Cheap as Chips, um, and - and potentially Coles and, um, ah, Aldi had been - were discussed, but that required the rezoning and Mr Harpur again, um, assured Mr - Mr Gibbs assured Mr Harpur that anything to do with the rezoning he was available for at any time to drive to Portland and discuss it with him.[56]

[56]Hutchins XN 608–609

Meeting of 20 February 2008

What was the purpose of the meeting and who called it?

---Mr Harpur asked me if he could - if we could have a quick meeting with Mr Gibbs.

Do you know why?---Look he just wanted a little bit of reassuring on - mainly on the rezoning and he was - and he also wanted to talk about the tenants.

…..

All right. Was there anything else discussed at that meeting?

---Um, there was just a bit more discussion about the tenants and David said, "Look, we've discussed the - the, ah, the perspective tenants on lots of occasions and as I've said to you, Mr Harpur, they're available when you pay your deposit."  He said, "Everything we've got will be at your disposal."[57]

[57]Hutchins XN 612–613.

Meeting of 1 February 2008

You've given evidence of tenants being mentioned at this meeting and you've given evidence of particular tenants being mentioned at other meetings as well, is that correct?---yes.

Mr Hutchins, you don't recall specifically which tenants were mentioned at which meetings, do you?---The tenants didn't vary, but I – I don't recall the exact tenants, but I can tell you the ones I do recall.

Why don't you tell me the ones you do recall?---We – there was – Mr Gibbs spoke about Bunnings, he spoke about Mitre 10, he spoke about Cheap As Chips.  Thinking about the meeting I believe that he also spoke to us about BCF Boating was another one that was there and he spoke to us that – when he was speaking to Mr Harpur he also said that they'd had, had been having discussions with Coles and Aldi.

This was all you remember, the first time all of this came up that you heard it was at the 1 February variation meeting?---No, I didn't say that.

I'm sorry.  I was asking you about the 1 February variation meeting?---This – this was discussed there.

Had these tenants been discussed by Mr Gibbs in front of you prior to that meeting?---Yes.

When had Mr Gibbs spoken to you about these clients before?

---It was, look, approximately 20 February or thereabouts at the Glassworks Café in Gipps Street.

And Mr Gibbs was quite consistent in continuing to refer to these tenants as being potential tenants for the site over that period?---That's right.  You're correct, potential tenants for the site.[58]

NOTE: There was evidence that the meeting at the at the Glassworks Café took place late in January 2008 [Reasons 226]

[58]Hutchins XXN 683–684.

Meeting of 20 February 2008

Approximately the 20th, did Mr Gibbs say something to Mr Harpur in relation to tenants?---To tenants?

Yes?---Yes.

Your recollection is that he said what at that meeting?---At the meeting we - the discussion was there and there was you know, they - it was just a meeting where everybody was introduced.  They talked - Mr Gibbs - sorry Mr Turner asked Mr Gibbs if he could explain where he was up to with the prospective tenants that Gordon had been quoting on the property and Mr Gibbs said that the - there'd been talks with a lot of tenants and he proceeded to tell us who they were in the Bunnings, the Cheap as Chips and so on with those.  And he discussed it that they'd also had discussions with Coles, Aldi and IGA in regard to rezoning part of the complex.  Mr Harpur and Mr Gibbs spoke about that in the view that - and Mr Gibbs explained to him that you'd never get the whole site rezoned to Business 1, it would only be a partial rezone and - - -

I'm just actually at the moment asking you about the tenant situation.  You recall that Mr Gibbs told him that Lord Buddha had been in discussion with potential tenants including Coles, is that right?---Yes.

Including Aldi?---Yes.

Including IGA?---Yes.

Including Bunnings?---Yes.

Including Cheap as Chips?---Mitre 10, Cheap as Chips.

And other tenants as well?---I think BCF, boating and - - -

Did Mr Gibbs tell him then that he would give him his file in relation to the conversations with those prospective tenants?---Mr Gibbs told Mr Harpur that all the prospective tenants that he'd been dealing would be available to Mr Harpur when he paid the full deposit.

Did Mr Gibbs say to Mr Harpur at that meeting that there were tenants who were interested in taking leases at that property, once it was developed?---Yes, they were - there was an interest from these people to go to the site.

Did he say they were tenants who were interested in taking leases?---Yes.

Did he say he had a file of some sort in relation to his communications with the prospective tenants?---I don't believe he spoke about a file.  But he just - he said all the tenants that he's been dealing with will be made available.

And what did you understand him to - when he said, "Would be made available", did you - did he say anything about how they'd be made available, what that encompassed?---Ah, I - I was of the opinion that - that on paying of the full deposit, ah, there'd - there'd be a - a meeting at some stage and Mr - Mr Gibbs would, ah, would tell Mr Harpur, ah, where he was up to and in - with - with the tenants that he was talking about.[59] 

[59]Hutchins XXN 719–721.

1. The thrust of the evidence of Mr Hutchins was that both prior to entry into the contract and prior to execution of the Deed of Variation there were current negotiations on foot with Bunnings, Mitre 10 and Cheap as Chips, Coles and Aldi as prospective tenants, who it must be inferred, were at that time continuing to express interest in proceeding to take up a tenancy in the Portland land.  This was manifestly not the case.

1. Examples of the evidence given by Mr Hutchins as to the making of the representations include the following: Hutchins said that all of the tenants listed in the misrepresentations found to have been made  had been said by representatives of Lord Buddha to be ‘interested in taking leases’ [60] He said that at a meeting with Mr Turner shortly before the contract was signed, he and Mr Turner discussed tenants: ‘Turner told me that… Gibbs told him that there was [sic] prospective  tenants that they’d been negotiating with over a period of time.’[61]  Mr Hutchins said that prior to the contract being signed, Mr Turner told him that Mr Gibbs had said that Lord Buddha had ‘been talking to some hardware chains from memory Bunnings and Mitre 10.’[62]  Mr Hutchins gave evidence that ‘Turner spoke to [Harpur] about the prospective tenants that Gibbs had been talking to’ at a meeting on the day after the contract was signed.[63] Mr Hutchins said that at that meeting he witnessed Mr Turner speaking with Mr Harpur. Mr Hutchins said, ‘I know that the tenants [discussed at that meeting] were the likes of Bunnings, Mitre 10, Cheap as Chips…’[64]  He said that at the meeting on 3 January 2008 ‘Gibbs said to Harpur that there were tenants who were interested in taking leases at that property’.[65]  Mr Hutchins said that the mid-January 2008 meeting ‘revolved around… Mitre 10… the likes of Bunnings… and Supercheap [Auto] for the bulky goods area and… Coles, Aldi and IGA’.[66]  Mr Hutchins said that at the meeting in mid-January 2008, ‘Turner asked Gibbs if he could explain where he was up to with the prospective tenants that Gordon [Turner] had been quoting on the property’, including ‘Bunnings, the Cheap as Chips and so on.’[67]  Mr Hutchins said that all of these tenants were specifically mentioned by Mr Gibbs in that conversation, at which he was present.[68]  At a meeting that took place at the Glassworks Café in later in January 2008, shortly before Mr Turner passed away,[69] Mr Hutchins said in cross-examination that Mr Gibbs was ‘quite consistent in continuing to refer to these tenants as being potential tenants for the site over that period.’[70]  Mr Hutchins said that these tenants were mentioned again on 1 February 2008.[71]  Mr Hutchins witnessed Mr Gibbs speak with Mr Harpur about ‘Bunnings, Mitre 10, Cheap as Chips’.[72]  He said that at that meeting Gibbs said to Harpur ‘you can have all the information relevant to Portland in relation to tenants when you pay the deposit’.[73]

   [60]Hutchins XXN 720:18.

   [61]Hutchins XN 589:22.

   [62]Hutchins XN 589:31.

   [63]Hutchins XN 592:4.

   [64]Hutchins XN 592:19.

   [65]Hutchins XXN 720:18.

   [66]Hutchins XN 605:1.

   [67]Hutchins XXN 719:22.

   [68]Hutchins XXN 720:5.

   [69]Reasons [226].

   [70]Hutchins XXN 684:15-18.

   [71]Hutchins XXN 683:29.

   [72]Hutchins XN 609:5.

   [73]Hutchins XN 609.

1. Although the evidence of Mr Hutchins did establish that there were no tenancies yet in place, and some of the evidence pointed to the interest of Coles and Aldi being likely to contingent upon rezoning of part of the Portland land, the making of each of the four representations found by the trial judge is supported by his evidence when it is read as a whole.  In particular, the central representations to the effect that Coles and Aldi were available, and wanted to go to the Portland land as tenants, and Cheap as Chips, Mitre 10 and Bunnings wanted to go there to take a lease for a bulky goods store in the project, are supported by the evidence of Mr Hutchins.

The Note of Conversation with Turner

1. The other supporting evidence referred to by the trial judge[74] was the handwritten note made by Mr Harpur during a conversation with Mr Turner[75] ‘a couple of days prior to the signing of the contract’, which has been earlier referred to.[76]  The note read:

   [74]Reasons [375].

   [75]Harpur XN 236:14.

   [76]Harpur XN 236:10.

Gordon

0417564613
Cheap as Chips
Mitre 10
Bunnings
Mitre 10
3000
120 day

$6.5m

1. It was submitted by the appellant that the note afforded no evidence of representations being made in the terms found by the trial judge; it did not mention Coles and Aldi, and it said nothing about any tenancy arrangements.

1. However, on its face the note did not purport to provide a complete record of all that was said in this conversation.  Indeed, given its character as a contemporaneous jotting, it could not be relied upon as containing a complete notation of even all of the important things mentioned in the conversation as it was being conducted  In this regard, the fact that the note does not mention Coles and Aldi does not mean that these entities were not discussed, or mentioned in the conversation.  All that can be positively said is that the note did not record that Coles and Aldi were discussed in the conversation.

1. Although the note makes no mention of tenancy arrangements, it does establish that at least three enterprises, namely Cheap as Chips, Mitre 10 and Bunnings, were noted as being mentioned in the conversation as a relevant attribute of the land being sold, consistently with those enterprises being prospective tenants of the land.  The figure ‘3000’ mentioned in the note is to be read in the context of the evidence of Mr Hutchins who explained that Bunnings at the time was proposing a scaled down model business to take up tenancies on certain sites, reduced from the usual 6000 square metres to 3000 square metres.  Further, the note indicates that these enterprises were mentioned by Mr Turner in the context of informing Mr Harpur of some important characteristics of the land, alongside two other critically important elements of the transaction, namely the asking price ($6.5 million) and the terms of sale (120 days).

1. When the note is read as a whole, and in its context, it is consistent with other evidence that Mr turner told Mr Harpur that each of Cheap as Chips, Mitre 10 and Bunnings wanted to go to the Portland land to take a lease for a bulky goods store in the project.

Evidence as to the Other Representations

1. In relation to the representation that Lord Buddha had a number of tenants lined up for the site, Mr Harpur said he was told by Mr Turner that there were tenants generally for the property.[77]  He said that Turner told him at the meeting at which he signed the contract that Mr Gibbs had files on his dealings with tenants and Mr Gibbs was prepared to be very helpful in relation to the project .[78]  Mr Harpur said that in discussions in the week prior to the signing of the contract,  Mr Turner told him what Mr Turner  believed could be achieved on rentals there, and which tenants they had for the property.  He also indicated that the tenants were committed to the property.[79]  Mr Harpur said that he knew leases had not been signed but said that, in his experience, if the tenants were committed to the site ‘you end up with a deal.’[80]

   [77]Harpur XN 216:10 and XXN 404:10.

   [78]Harpur Re-XN 418:14-19.

   [79]Harpur Re-XN 412:8, 413: 9-15, Reasons 171.

   [80]Harpur XXN 306: 25-28.

1. Mr Gibbs gave evidence that, in relation to the Portland land, ‘we’ve always had interest from different tenants’.[81]  Mr Gibbs said he spoke with Mr Harpur about tenants for the land on 3 January 2008.[82]  He also said that at the meeting on 30 April 2008, he, Mr Gaucci and Mr Harpur discussed the tenants Gaucci ‘had’.[83]

   [81]Gibbs XN 43:23.

   [82]Gibbs XN 48:28-30 and XXN 94:12.

   [83]Gibbs XN 52.

1. Mr Kenneth Tunbridge (‘Mr Tunbridge’) was Mr Harpur’s accountant and business assistant.  He also acted as a director of most of Mr Harpur’s companies. Mr Tunbridge was a Certified Practising Accountant and at one stage was a Chartered Accountant.[84]  Mr Tunbridge said that at the mid-January 2008 meeting, ‘prospective tenants’ in relation to Portland were discussed.[85]

   [84]Reasons [36].

   [85]Tunbridge XXN 556:21.

1. In relation to the representation that Lord Buddha had some land ready for development at Portland, Mr Harpur said that Mr Turner ‘knew I’d done some developments in bulky goods [and] he told me this one [the Portland land] was ready to go’ [86] Mr Harpur said ‘[i]f the information I had been given wasn’t in place, then… I was buying, a paddock. There’s a massive difference, you’ve either got a development, or you haven’t.’[87]  Mr Harpur also gave evidence that ‘develop[ing] a reasonably complex project [was] exactly what I wanted to do’ with the site.[88]  All of these statements are inherently plausible, and have a ring of truth.

   [86]Harpur XN 215:23.

   [87]Harpur XN 240:26.

   [88]Harpur XXN 274:20.

Formulation of the Representations

1. The appellant also placed reliance on the text of the pleaded representations.

1. It was submitted by the respondent that two of the representations in issue were pleaded in the conjunctive: Coles and Aldi being available in representation 7, and Cheap as Chips, Mitre 10 and Bunnings wanting to go there in representation 8.

1. The point was made that, to the extent that Mr Harpur advanced  evidence given in the disjunctive, this did not correlate with the pleaded representations, which were pleaded differently.  In other words, the relevant pleaded representations were those referred to in sub-paragraph (7) and (8) of [22] above.  It was then submitted that the evidence advanced by Mr Harpur on the reliance issue was, at best, to the effect that he relied on either Coles or Aldi being available, and either of Cheap as Chips, Mitre 10 or Bunnings wanting to go there.

1. However, the Supermarket Representation and the Hardware Representation as found by the trial judge were framed in the conjunctive, as referred to in [28] above.  This was consistent with the way they were pleaded.  It was open on the evidence for the trial judge to make such a finding.

1. Further, there was no direct evidence of reliance which was accepted by the trial judge which was expressed in the disjunctive.

1. Accordingly, this submission of the appellant is not accepted. 

1. The second element referred to by the appellant in relation to the representations as pleaded involved the phrase in Representation 7, ‘were available as tenants’, Representation 8, ‘wanted to go there’.

1. It was submitted that what was involved in this case was the making of oral representations by one individual to another.  It was said that the representations as pleaded were, in effect, too vague to found an actionable misrepresentation.  It was submitted that the meaning of these phrases was not to be determined by the ‘subjective whim’ or unexpressed opinions of the person to whom they were made, in this case Mr Harpur.  They were not in the category of statements made to the public or a section of the public, such as a particular market or class of consumers, where one may look to extrinsic evidence to ascertain meaning.

1. However, it was clearly open to the trial judge to ascribe meaning to the representations as pleaded, and as found.  They were not so vague as to be devoid of meaning, and it was open to his Honour to find that they were capable of having induced Mr Harpur to enter into the contract.  Accordingly, this submission is also rejected.

Analysis and Conclusion - Ground 1

1. In my opinion, it was open to the trial judge, on the evidence, to find as he did that the representations were made.  I reject the appellant’s submission that there was no, or no adequate, evidence upon which to base these findings.

GROUND 2 - WHETHER THE REPRESENTATIONS WERE RELIED UPON

Reliance – Submissions

Appellant’s Submissions

1. The appellant made three principal submissions on the issue of reliance.

Direct evidence of Reliance by Mr Harpur on all Representations

1. First, the respondent having withdrawn in final address five of the alleged representations, and the trial judge having found only four of the remaining alleged representations to have been proven, there could be no finding of reliance on the part of Mr Harpur in relation to these four representations, based on inference, given his direct evidence of reliance upon all 13 of the representations allegedly made. 

1. In other words, it was put that it was not open to the trial judge to draw the inference that he did, in relation to some of the misrepresentations alleged, which were found proven, when faced with the direct evidence of Mr Harpur that all of the representations in the package were relied upon, and that he would not have entered the contract had he known the truth as to all of the representations alleged.

1. To explain the point, it was submitted by the appellant that there was no evidence that Mr Harpur had in fact relied upon and been misled by the relevant (proven) misrepresentations.  His evidence about reliance was directed generally to all of the alleged representations, including those withdrawn or found unproven, and the information he said he relied upon was in terms different to, or at the least not confined to, the proven misrepresentations.[89]

   [89]Transcript 237:22-238:7, 239:11-28, 240:7-21; Reasons [181]-[185].

1. Further, in a letter of 1 July 2008, complaining of have been misled, Mr Harpur stated that he had been misled by representations that were either not pressed, or were found unproven.[90]

   [90]Reasons [78], [378]-[388]

1. It was also submitted by the appellant that it was necessary for Mr Harpur to establish that acts done by him in reliance upon the relevant (proven) misrepresentations provided a connection to resulting loss.[91]  Mr Harpur’s pleaded case was that in reliance on the (13) alleged representations on 11 December 2007 he entered into the contract and on 1 February 2008 he entered into the varied contract (altering the amount and timing of deposit moneys).  His claimed loss was $425,00 paid over 12 December 2007 ($100,000), 6 February 2008 ($225,000), 3 March 2008 ($50,000) and 17 March 2008 ($50,000).

   [91]           Wardley Australia v Western Australia (1992) 175 CLR 514, 525-6; Henville v Walker (2001) 206 CLR 459, 468-9 [13]-[14].

1. To the extent that Mr Harpur gave any evidence about what he did, or would have done if he had known more about the relevant (proven) misrepresentations, that evidence was wrapped up with his alleged reliance on the withdrawn or unproven representations and was incapable of unbundling.  It was not open to the trial judge to infer reliance from his own assessment of the materiality of the proven misrepresentations.[92]

   [92]         Campbell v Backoffice InvestmentsPty Ltd (2009) 238 CLR 304, 353 [147] (‘Campbell v Backoffice’).

1. In that respect, on the second inquiry about causation of loss, his Honour referred to a line of authority that if a material misrepresentation is made that is calculated to induce someone to enter into a contract and that person enters into the contract, an inference may arise that the person was induced to do so by the misrepresentation.[93]  In this vein the trial judge concluded:

I find that the misleading representations made by Lord Buddha, as referred to above, were made to induce Harpur to enter into the contract for the sale of the Portland land  I find that Harpur relied on those representations and I infer that he did enter the contract based on these inducements. I find that Harpur did not have actual knowledge of the true facts in relation to the above representations and therefore the inference has not been rebutted. [94]

[93]Reasons [395] referring to Civoken Pty Ltd v Madden GroveDevelopments Pty Ltd [2006] VSC 283, [522] referring, in turn, to Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, 638 [150] (McHugh J in dissent).

[94]Reasons [397].

1. It was submitted by the appellant that an inference of the kind employed by the trial judge, borrowed from the general law on the (intentional) tort of deceit,[95] must be treated with care; it can be no more than a practical guide to the way in which inferences can be drawn.[96]  An inference is simply part of the process of fact finding[97] and depends on all of the evidence bearing upon the fact in issue.[98]

   [95]Gould v Vaggelas (1985) 157 CLR 215, 250-1 (‘Gould v Vaggelas’).  And in the past adapted to statutory trade practice claims: Butcher v Lachlan Elder RealtyPty Ltd (2004) 218 CLR 592, 638 [150] (McHugh J (in dissent) referring, at fn (149), to Sutton v AJ Thompson Pty Ltd (In Liq) (1987) 73 ALR 233. Some other cases in the line are collected in Colin Lockhart, The Law of Misleading or Deceptive Conduct, (LexisNexis, 3^rd ed, 2011), [10.14] fn (111).

   [96]         Ricochet Pty Ltd  v Equity Trustees Executor & Agency Co Ltd (1993) 41 FCR 229, 234 (‘Ricochet v Equity Trustees’).

   [97]         G v H (1994) 181 CLR 387, 390.

   [98]         Campbell v Backoffice (2009) 238 CLR 304, 351 [143].

1. It was contended by the appellant that the evidence about what Mr Harpur had relied upon suggested that his decision to enter the contract was based on matters that did not include, or at the least did not correlate with, what the Judge found to have been the relevant misrepresentations.[99]

   [99]Cf. Ricochet v Equity Trustees (1993) 41 FCR 229, 235.

Whether Properly Open to Draw the Inference

1. Secondly, it was put that, if a claimant leads evidence of direct reliance which is unsatisfactory, as Mr Harpur had done, then he should not be permitted to take advantage of the situation  by the Court disregarding his evidence in favour of inference.  It was submitted that it was not properly open to the trial judge to draw an inference as if there had been no direct evidence of reliance.  Whether the Direct Evidence Called Precluded the Inference

1. Third, it was submitted in relation to the case of Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Projects Pty Ltd) and Ors[100] the principal question before Keifel J was whether there was evidence of direct reliance.   It was submitted that her Honour held that the evidence given at trial on the matter should not be characterised as evidence of direct reliance, and as such it was open to apply the Gould v Vaggelas inference.

   [100](1999) 43 IPR 545 (‘Hanove’).

1. By way of contrast, reference was also made by the respondent to Campbell v Backoffice Investments[101]  This was a case where direct evidence of reliance was given at the trial.  It was noted in the judgment of the majority that the effect of the direct evidence (given by Mr Weeks) was that if two matters comprised in the representations had been known to him (being overstatement of sales revenue and overstatement of EBIT) he would not have made the share sale agreement in question. But as the facts were found at trial, only one of those matters, overstatement of sales revenue, was established.  There was no exploration at trial of what Mr Weeks' position would have been in these circumstances.  There was no evidence from Mr Weeks that he would not have proceeded with the purchase if he had known only that the sales revenue for December 2004 had been less than estimated.

   [101](2009) 238 CLR 304, 352-353 [145]–[146].

1. The majority in Campbell v Backoffice proceeded:

What is important in the present case is that the evidence that was given by Mr Weeks about what he would have done if he had known more than he did was expressed in a way that distinguished between cases where knowledge of either of two matters would have meant he would not proceed and cases where he attached significance to knowledge of both of two matters.  This being the only direct evidence on the subject it was not open to the Court of Appeal to infer, from its own assessment of the materiality of the representation and its own assessment of whether the representation was calculated to induce entry into a contract, that Mr Weeks would not have proceeded with the share purchase.[102]

[102]Ibid 353 [147] (emphasis in original).

Evidence of the Deed of Variation

1. It was further submitted by the respondent that the trial judge did not deal with why Mr Harpur entered into the Deed of Variation and made the payments when, it was submitted, according to Mr Harpur, by that time (1 February 2008) he believed he had been misled.[103]  I was submitted that an inference about reliance was not available given direct evidence to the contrary.[104]

   [103]Transcript 245:9-27, 246:18-25, 248:15-31; Reasons [257]-[263].

   [104]        MWH Australia v Wynton Stone Australia Pty Ltd (2010) 31 VR 575, 603 [106] (‘MWH’); Ford Motor Co of Australia Limited v Arrowcrest Group Pty Ltd (2003) 134 FCR 522, 535-7 [96]-[104].

Respondent’s Submissions

1. The respondent referred to the finding of the trial judge as to reliance on the representations as found.  The Reasons encapsulate the finding in the following statements:

Due to the supporting evidence canvassed above and in particular the evidence of Mr Hutchins and the contemporaneous note, I am satisfied that in order to induce Mr Harpur to buy the Portland land, Lord Buddha marketed the Portland land to Mr Harpur on the basis that the land was ready for development.  In particular I am satisfied that, as alleged, Lord Buddha did represent to Mr Harpur that: ………[Then follows the four representations as found][105]

…….

I find the misleading representations made by Lord Buddha, as referred to above, were made to induce Mr Harpur to enter into the contract for the sale of the Portland land. I find that Mr Harpur relied on these representations and I infer that he did enter the contract based on these inducements.  I find that Mr Harpur did not have actual knowledge of the true facts in relation to the above representations and therefore the inference has not been rebutted.

I find that the representations were not the sole inducement.  I find, however, that they played some part in contributing to Mr Harpur’s decision to buy the property.[106]

[105]Reasons [375].

[106]Reasons [397[-[398].

1. It was submitted by the respondent that these findings were open to the trial judge to be made.

Legal Analysis – Reliance and Inferences of Inducement in Misrepresentation Cases

The Issue of Reliance as it Presented in this Case

1. In the present case, Mr Harpur gave some evidence of his reliance on the representations found by the trial judge.  However, the evidence was unsatisfactory on its face to safely found the necessary finding.  So much was frankly conceded by his counsel on the appeal.  For example, at no point was Mr Harpur taken to any of the four representations as found by the trial judge and asked what he would have done had he known the truth as to those matters.  His evidence on the issue of reliance was, as submitted by his counsel, of a general kind.

1. In any event, the trial judge made adverse findings about the credit of Mr Harpur, which have been earlier referred to.[107]

   [107]See [72]-[73] above.

[165]Transcript 217:9-14

1. With respect to Bunnings, Mr Harpur said:

I’d done – been involved in bulky goods, I knew that if you had the zoning and you had a Bunnings in tow then at least the development for the bulky goods would be able to go ahead ….[166]

[166]Transcript 237:27-30

1. In relation to the identified potential tenants generally, Mr Harpur said:

… once they were identified as being, ah, prepared to go there interested in, ah, being on that site, ah, that – that carries with it a lot – an endorsement of the site.  It carries with it, um, the sort of, ah, leasing you can get on that site because once you’ve got a, ah, a prime tenant, then other tenants want to go there so that the leasing up of the rest becomes fairly straight forward.[167]

[167]Transcript 238:31-239:7

1. In cross-examination, it was put to Mr Harpur that ‘a shopping centre doesn’t occur overnight, does it?’.  He responded: ‘No, but if you have the major tenants that were claimed wanted to go there in Coles and Aldi, it would happen very quickly, very quickly, within 12 months’.[168]

   [168]Transcript 306:6-9.

1. In re-examination, in relation to ‘anchor tenants’, Mr Harpur said:

… the [tenants] that [Turner] mentioned to me, he said they were committed to the property and that he also understood that if you had anchor tenants like Coles or Aldi, Bunnings, then the development would be able to be to go forward because that anchor tenant always attracted a lot more participants and tenants for the development.[169]

[169]Transcript 413:13-19.

Whether Direct evidence of Reliance by Mr Harpur on all Representations

1. An issue arose as to whether the representations alleged and found are to be considered as a ‘package’ as contended for by the appellant, or separately, as contended for by the respondent.

1. If the former position is the case, in order to succeed it would have been necessary for Mr Harpur to prove that all of the representations comprising the package were made and found to be misleading or deceptive or likely to mislead or deceive, and that he relied upon all of them in entering the contract for the purchase of the Portland land, and suffered loss and damage thereby. If the latter is the position, Mr Harpur could succeed if he proved the making of only one or some of the representations found to be misleading or deceptive or likely to mislead or deceive, and is shown to have relied upon the proven representation(s) to the requisite degree, and suffered loss and damage thereby.

1. The relevant pleading in the Amended Defence to the Further Amended Statement of Claim as to reliance is contained in paragraph 24, which reads:

24Acting on the faith of the representations and in reliance thereon and in consideration thereof and being induced thereby:

(a)on or about 11 December 2007, the Defendant entered into the contract;

(b)on or about 1 February 2008, the Defendant entered into the varied contract.

1. On a strict reading, this plea of reliance may be taken to amount to reliance on all of the representations comprising the ‘package’ contended for by appellant. However, it is to be noted that the plea does not make any explicit reference to reliance by Mr Harpur upon all of the representations alleged.

1. However, it is clear that the case at trial was not conducted in the fashion suggested by the reliance plea.

1. First, no step was taken by Lord Buddha to make a no case submission against Mr Harpur upon his counsel withdrawing five of the alleged representations, which would have been open to it, had the case been conducted on the basis of the ‘package’ of representations contended for by the appellant.

1. Tellingly, in final address, senior counsel for Mr Harpur, Ms Marks, said this:

And, of course, Your Honour doesn’t have to find in any way that all of the representations that have been alleged were in fact made in an actionable way and relied on.  Your Honour need only find that one of them operated as an inducement to Mr Turner [Harpur] to find representations made out.  And Your Honour of course is invited to find that there were more. 

1. This statement of Ms Marks was made without challenge, objection or qualification  by counsel for Lord Buddha.

1. Further, the position adopted by counsel for Mr Harpur appears to have been accepted by counsel for Lord Buddha.  In paragraph 24 of Lord Buddha’s written closing address, the following is stated under the heading ‘Reliance’:

24       It is submitted that if the representations were made an experienced property developer, solicitor and director of successful companies would not have relied on any of the representations alleged.[170] 

[170](Emphasis added).

1. We were not taken to any part of this closing address which sought to make the point that reliance on the part of Mr Harpur on all components of a package of alleged representations was necessary to ground liability.

1. Accordingly, I am satisfied that the case at trial was in fact conducted on the basis of proof of the making of only one or some of the representations found to be misleading or deceptive or likely to mislead or deceive.

1. In the present case, Mr Harpur invites this court to approach the finding of an inference as to inducement leading to reliance grounded on the principle stated in Gould v Vaggelas that if a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation. He does so, in spite of the fact that at trial, he also led a body of evidence as to his personal reliance upon various statements said to amount to the impugned representations and in spite of the fact that only some of the representations he alleged were found to have been made and were also found to be misleading or deceptive in contravention of the Act.

1. As earlier observed, there were 13 representations alleged by Mr Harpur at the commencement of the trial, which were said to comprise the misleading or deceptive conduct contrary to the Acts.  During final addresses, and after the evidence had been called, five of the alleged representations were withdrawn by Mr Harpur.  Of the remainder, Mr Harpur did not satisfy the trial judge on the balance of probabilities that the representations were made by Lord Buddha.  This left four representations which were found to have contravened the Acts, centrally the Supermarket Representation and the Hardware Representation, and the two ancillary representations earlier described.

1. It was found that Mr Harpur did not give evidence in a ‘clear and precise fashion’.[171]  In particular, his evidence on the question of reliance did not detail each representation complained and describe how and in what manner he relied on each one and how he altered his position on the basis of each. It was of a general nature. 

   [171]Reasons [152].

1. Significantly, the evidence given by Mr Harpur on reliance did not identify any particular reliance on the Supermarket Representation and the Hardware Representation.  For example, no evidence was led by him as to what he would have done had it been brought to his attention prior to entry into the contract that one or other or both of these representations was untrue.

1. The trial judge referred to some of this general evidence in his Reasons, where his Honour noted:

Mr Harpur says that he did not ask for further information about the tenants who were interested in the property. Mr Harpur said that:

....once they were identified as being .... prepared to go there, interested in....being on that site, ....that carries with it a lot - an endorsement of the site. It carries with it....the sort of....leasing you can get on that site because once you've got a .... prime tenant, then other tenants want to go there so that the leasing up of the rest becomes fairly straightforward. [172]

[172]Reasons [182].

1. In these circumstances, having regard to the way in which the case was conducted at trial and having read the transcript of the evidence given by Mr Harpur, I am not satisfied that it is possible to conclude that it establishes that he relied upon all of the representations as he originally alleged them to be, or all of the representations which remained after the withdrawal of some during final address.

1. Further, the trial judge did not view the evidence given by Mr Harpur as proving that he relied upon all of the originally pleaded representations, or all of those which remained after the withdrawal of some. In my opinion, it was plainly open to the trial judge not to have made such a finding.

1. In short, this is not a case where there was direct reliance on the part of the representee on all of the representations as originally pleaded or on all that remained at the close of the trial.

Whether Properly Open to Draw the Inference

1. I do not accept the submission of the respondent to the effect that, by reason of  the representee going into evidence  on the issue of reliance and giving evidence which ultimately proves to be unsatisfactory, it was then not properly open to the trial judge to draw a Gould v Vaggelas inference and proceed as if there was no direct evidence of reliance.

1. It was submitted by the appellant in effect that, because Mr Harpur gave evidence as to his reliance on the statements said to comprise the representations, and because that evidence proved to be unsatisfactory, and lacked precision as to what exactly he did rely upon, he was precluded from calling in aid the Gould v Vaggelas inference.

1. I do not accept this submission. I can see nothing in Gould v Vaggelas or the cases which have since applied it with approval[173] to warrant such a conclusion. Indeed it runs counter to the principle earlier described to the effect that the question of reliance is to be objectively determined by examining the alleged conduct in the light of the relevant surrounding facts and circumstances.  The effect of any relevant statements or actions or any silence or inaction alleged to constitute contravening conduct must be deduced from the whole course of conduct which occurred and in its context.  Any inferences to be drawn from the making of the representations and their content cannot, with respect, be removed from that context.

   [173]For example: Morelend Finance Corp v Westendorp [1993] 2 VR 284, 304-5 (Fullagar J).

1. As earlier observed, the causative effect of misleading and deceptive representations is to be assessed as a common sense question of fact.

1. Further, as emphasised by the Chief Justice in MWH, the question of reliance is to be objectively determined by examining the alleged conduct in the light of the relevant surrounding facts and circumstances.  The effect of any relevant statements or actions or any silence or inaction alleged to constitute contravening conduct must be deduced from the whole course of conduct which occurred.  Her Honour observed in this respect:

As their Honours noted in Backoffice, ‘because the proposition is directed to the drawing of inferences, consideration of its application must always attend closely to all of the evidence that is adduced that bears upon the question being examined’. [174]

[174]        MWH (2010) 31 VR 575, 584.

1. In the present case the direct evidence adduced in respect of the question of reliance through Mr Harpur was unsatisfactory to the point where it could not be viewed as sufficient to establish reliance and, by his approach to the making of the finding of reliance, can be taken as not having been accepted by the trial judge.  Indeed it was not relied upon by the respondent to establish reliance.

1. However, this did not result in the trial judge being precluded from drawing a Gould v Vaggelas inference if, as in this case, the conditions for the application of the principle were otherwise present.

1. In the circumstances of this case, it was open to the trial judge to rely upon the Gould v Vaggelas approach to inferring reliance.  The character of the particular representations as found, made in the context of negotiating a sale of the land in question, were clearly of a kind which would induce reliance upon them buy a prospective purchaser such as Mr Harpur, and accordingly were calculated to induce entry into the contract in the relevant sense.

1. Any inferences to be drawn from the making of the representations and their content cannot be removed from the evidence when considered as a whole in the light of the relevant surrounding facts and circumstances.

1. It was therefore open to the trial judge to infer that the statements were in fact relied upon by Mr Harpur and influenced his decision to proceed with the purchase of the Portland land.

Whether the Direct Evidence Called Precluded the Inference

1. Because of the imprecision of the direct evidence called on the question of reliance, the considerations raised by the majority in Campbell v Backoffice referred to above[175] do not arise.

   [175]Ibid 353 [147].

1. This was not a case where the evidence that was given by the representee Mr Harpur about what he would have done if he had known more than he did was expressed in a way that distinguished between the position where he had knowledge of any of a number of matters and the position where he where he attached significance to all of the matters represented.

1. Although the evidence given by Mr Harpur was general, vague and lacking in precision on the issue of his alleged reliance on any of the four misrepresentations found, in my opinion, nothing said by him in his evidence was inconsistent with the thrust of those representations, when his evidence is considered as a whole and in its context.  Indeed reliance on the misrepresentations was broadly supported by his evidence.

1. For this reason, the approach to the matter reflected in the majority judgment in Campbell v Backoffice Investments may be distinguished.

Reliance - Rebuttal Evidence

1. I shall now turn to particular elements of the evidenced relied upon by the appellant which, it was submitted, was inconsistent with the finding of reliance inferred by the trial judge, and was not properly considered by him, resulting in error.

The letter of demand- the rule in Browne v Dunn[176]

[176][1894] 6 R 67.

1. It was submitted by the appellant that after entry into the contract, the documentary record included the letter of 1 July 2008 from Mr Harpur complaining that he had been misled into entering the contract by documents alleged by him to have made representations that were either not pressed or were found unproven.[177]  Although Mr Harpur in the letter made a general allegation that he was misled about the ‘value’ of the land, no express representation was made to the effect of the misrepresentations ultimately found by the trial judge. 

   [177]Reasons [78], [378]-[388]

1. The respondent drew attention to the evidentiary difficulty which arises from this letter because the appellant now seeks to draw inferences from it to the effect that the precise representations found by the trial judge were either not made, or if they were made they not relied upon by Mr Harpur, when its contents were not put to Mr Harpur in cross-examination.  Nor was the letter referred to in any witness statement, making it clear that Lord Buddha would be seeking to draw adverse inferences from its contents and to attack the case sought to be advanced by Mr Harpur from these inferences.

1. As observed by Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (a firm)[178] the rule in Browne v Dunn[179] is a rule of fairness which requires a party or a witness to be put on notice that a statement made by the witness may be used against the party or witness or to be put on notice that an adverse inference may be drawn against the witness or an adverse comment made about the witness in order that the witness may respond to that issue and give an explanation.  The rule is intended to ensure that a witness is given an opportunity to give an explanation for matters that are later going to be alleged against him or her unless by some other means the point has been exposed in the sense that it was clear what was going to be said in advance of the witness giving the evidence and the nature of the attack was otherwise apparent to the witness.[180]

   [178](1998) 156 ALR 169, 216.

   [179][1894] 6 R 67.

   [180]Browne v Dunn (supra); Bulstrode v Trimble[1970] VR 840, 849; Karidis v General Motors-Holdens Pty Ltd[1971] SASR 422, 425-6; Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation (1983) 44 ALR 607, 623.

1. The rule does not require that there be put to the witness in cross- examination every point upon which his or her evidence might be used against him or her or against the party who calls the witness.  It is not a rule designed to encourage or condone excessive cross-examination.

1. I am not satisfied that Mr Harpur was put on notice of, or was otherwise alerted to the adverse inferences which could have emerged from his letter, and which, without explanation, were open to be drawn.  The Court was not taken to any pleadings, or any parts of the appellant’s opening, the way the case was conducted or any other matter which showed otherwise.

1. The present case is removed from the circumstances discussed by Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (a firm), where it was found that Flower & Hart and all its witnesses were on notice that White was seeking to rely upon a letter dated 18 December 1986 and the relevant contents of the particular opinions and advices of Mr Callinan for the purpose of establishing that Flower & Hart had the purpose of initiating the proceeding on behalf of its client to delay payment of the amount due to White in circumstances where it had formed the opinion that its client did not have a case that could be won.  It was found not to be unfair, in these circumstances, for White to invite the Court to draw inferences and make findings from the letter of 18 December 1986 and the opinions and advices of Mr Callinan adverse to him and to Flower & Hart and contrary to evidence otherwise given by its witnesses.

1. To my mind, in the circumstances of this case, which was conducted without the benefit of witness statements or affidavits, it is now unfair in this appeal to suggest that Mr Harpur was not telling the truth about the alleged proven representations in reliance upon the letter without at trial having first directed his attention to its contents by some well directed questions put in cross-examination.  Had this been done, it would have shown that that an adverse inference was intended to be drawn.  Mr Harpur would then have been given an opportunity to explain the letter, the circumstances of its creation and contents, either in answer to questions directly put to him, or in re-examination.

1. In my opinion it defies the notion of a fair process in this case to take the evidence of the letter and pass over it altogether unchallenged, and then, when it is impossible for Mr Harpur to explain it, to invite this Court on appeal to draw the adverse inferences contended for.

1. Pursuant to s 136 Evidence Act 2008 (Vic) I would engage the general discretion to limit the use of the evidence provided by the letter on the ground that, in all the circumstances, to rely upon the inferences contended for by the appellant would be unfairly prejudicial to Mr Harpur. For this reason, any adverse inferences which are submitted ought to be drawn from the letter are excluded from the body of evidence considered in this appeal.

Deed of Variation

1. It was submitted by the appellant that the trial judge did not deal with why Mr Harpur entered into the Deed of Variation and made the payments when, according to Mr Harpur, by that time (1 February 2008) he believed he had been misled.[181]

   [181]Transcript 245:9-27, 246:18-25, 248:15-31; Reasons [257]-[263].

1. I have read the passages of transcript relied upon by the appellant in support of this submission. In my opinion, this evidence does not go as far as suggested, when it is considered in the context of other evidence.

1. It was open to the trial judge, when considering in particular the evidence of Mr Hutchins, to take the view that there was a representation made by Mr Gibbs on behalf of Lord Buddha relating to the interest of the prospective tenants in the Portland land which continued at least up to the execution of the Deed of Variation on 1 February 2008.

1. Mr Harpur’s evidence, when considered in the context of the evidence as a whole, did not constitute anything in the nature of a rebuttal of the inference found by the trial judge.

1. At the time of entry into the Deed of Variation and making the payments, Mr Harpur’s evidence was to the effect that, although he was having doubts about some of the matters he had been told, he did not believe he had been misled. He said that at that time ‘I just didn't know enough about what I'd been told’.

1. Further, and pertinently, during the period between Mr Harpur entering the contract on 11 December 2007 and entering the Deed of Variation on 1 February 2008 and making payments, statements were made to Mr Harpur which supported and reinforced the four misrepresentations as found by the trial judge.  There was a considerable body of evidence to this effect, including the evidence of Mr Hutchins as set out in [83] above.

1. Accordingly, the evidence relating to the entry into the Deed of variation by Mr Harpur, did not constitute direct evidence to the contrary so as to rebut, or bring into question, the drawing of the inference

Competing Finding of Trial Judge

1. I now turn to the submission that the trial judge did not deal with the competing hypothesis that the explanation for Harpur entering into the contract was his own evidence that he expected the property to be acquired through his overseas partner.

1. It was submitted by the appellant that the trial judge did not deal with the competing hypothesis reflected this evidence about why Mr Harpur had entered into the contract, and which stood in the way of an inference that he did so because of the relevant (proven) misrepresentations.

1. However, the Judge did make the finding, as he was entitled to do, that ‘the representations were not the sole inducement.’  This was followed by a further finding that ‘…however, … they played some part in contributing to Mr Harpur’s decision to buy the property.’[182]

   [182]Reasons [398].

1. These findings made by the trial judge were entirely consistent with the alleged ‘the competing hypothesis’ relied upon by the appellant.  It was not incumbent upon the Judge to make findings as to what other considerations may have influenced Mr Harpur to proceed with the transaction.

Analysis and Conclusion - Ground 2

1. In Hanave,[183] Keifel J made the following observation as to the use of a Gould v Vaggelas inference in circumstances where, as in that case, direct evidence was also called on the issue of reliance:

The question of causation can sometimes be resolved not by direct evidence as to what part a misrepresentation played in the process of entry into contract, but by a Court determining what effect must be taken to have resulted. Indeed this course may sometimes be preferable to one which rested solely on evidence later given on the point. [184]

[183](1999) 43 IPR 545.

[184]Ibid 555-6 [45].

1. Formulaic direct evidence, sometimes given years after the event, as to precisely what influences worked on the mind of a representee when determining to enter into a contract, and what weight should be attributed to each, and what the person would have done had he or she been possessed of full knowledge in relation to one or more of any representations made, in many cases would be likely to be the product of re-construction well after the event.  As such, the tribunal of fact may need to approach such evidence with necessary caution. In undertaking this fact finding exercise, the tribunal may also be aided by considering the effect of the representation on the resulting transaction, when considered objectively and in its full context, applying the guidelines in Gould v Vaggelas.  This may give rise to an inference of reliance.

1. The two possible sources of evidence of reliance, namely any direct evidence which is given and evidence derived from any inference which may be open to be drawn, are not mutually exclusive, but are complementary.  Together or severally in their context they may comprise the body of evidence which calls to be assessed as a whole in order to determine whether the representee has discharged the burden of proof on the issue.

1. In the present case there are some considerations which tend to negative any reliance by Mr Harpur on the misrepresentations as found.

1. Nevertheless, after taking into account and evaluating the evidence as a whole, having regard to the likely and natural concern of Mr Harpur as to the financial value of the proposed tenancies for the Portland land, and the content of the representations as found, which were likely to have been calculated to influence the judgment of Mr Harpur in determining whether or not to purchase the land, I am not persuaded that the inference of reliance is displaced by the considerations advanced on behalf of Lord Buddha in this case.

1. I do not regard the representations as found to be uninfluential on the mind of Mr Harpur at the relevant time of him considering whether or not to purchase the Portland land, paying the deposit and entering into the contract.  On the contrary - common sense leads to the conclusion that the representations had some part to play in Mr Harpur making the critical decision. In my judgment, a fair inference arises that the representations as found operated as material inducements.

1. It was open to the trial judge to come to the view he did on the question of reliance, and he was not in error in the manner in which he approached the task.

ORDERS

1. I would dismiss the appeal and hear the parties on the question of costs.

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