Marlray Pty Ltd v Wilmink Constructions Pty Ltd

[1987] FCA 726

I-

IN THE FEDERAL COURT OF AUSTRALIA )
)

VICTORIA	DISTRICT	REGISTRY	)	No. VG 40 of 1986
)

GENERAL DIVISION	)
BETWEEN:

MARLRAY PTY LTD

Applicant

and

WILMINK CONSTRUCTIONS PTY LTD and W. THEUNISSEN

Respondents

MINUTES OF ORDER

COURT: Woodward J.

DATE:  18 December 1987

PLACE:  Melbourne

THE COURT ORDERS THAT:

of the Federal Court Rules.)

The applicant pay the respondents' costs.

(NOTE: Settlement and entry of Orders is dealt with in 0.36

r

IN THE FEDERAL COURT OF AUSTRALIA

)

VICTORIA	DISTRICT	REGISTRY	)	No. VG 40 of 1986
)

GENERAL DIVISION	1
BETWEEN:

MARLRAY PTY LTD

Applicant

and

WILMINK CONSTRUCTIONS PTY LTD and W. THEUNISSEN

Respondents

COURT: Woodward	J.
-	DATE: 18 December 1987
PLACE:  Melbourne
REASONS FOR JUDGMENT

This action arose from the sale of a sub-newsagency

business which included	a	Tattersalls agency. The applicant
purchaser, which	1 s stlll running the business, alleged that
the respondent company, in May 1984, just before	a	contract
was entered into on	1	June 1984, misrepresented its takings
and profits.

The principal of the appllcant company went into

occupation on 3 September 1984 after working in the business

r

r .

with the second respondent for at least two weeks. He said
in evidence that the takings seemed to be down at this time

but, after speaklng to his solicitor he decided to go ahead

with the settlement of the contract.	A	solicitors' letter
was sent on	9	October 1984, seeking accurate sales figures

for Tattslotto and Soccer Pools for the financial year

1983/84.	This was followed over a year later, on 13 November
1985, by	a letter of demand, alleglng mlsrepresentation and

claiming $96,876 damages.

An application was filed in thls Court on 11 March

1986 and the matter finally came on for trial on	3 December
1987. On the morning of the fourth and final day of the

hearing, after most of the evidence had been glven, the

applicant's counsel announced that	it	no longer wished to
proceed with the application.

However counsel submitted that the applicant should

not be ordered to pay the costs of the hearing (and indeed

should receive its costs) because an important document	- the
Respondents' Cash Payments Journal	- had not been discovered

before being tendered in evidence on the third day of the

hearing. After hearing argument, I ordered that the

application	be	dismissed	and	I reserved	the	questlon	of
costs.

Counsel for the applicant submitted that, had the

Cash Payments Journal been produced before the trial, the applicant would have discontinued its action and paid costs

D-

to that point. It therefore becomes necessary to consider

whether the book does in fact contain any significant

information which was not already available from other

sources. In my view it does not. While it is true that it

presents evidence of payments more conveniently than do the

respondents' cheque butts, which were discovered and

tendered,	the	information	is	the	same	for	all	practlcal
purposes.

There are records in the back of the book of

amounts said to have been banked on particular days, and

these may tend to confirm the general level of receipts of

the business (apart from the Tattersalls agency) which were recorded as a weekly total in another book; but many of the bankings are of round sums and, glven the primitlve nature of

the respondents' book-keeping, it would be difficult to

reconcile them with takings in any useful way. It is

significant that the respondents' counsel did not refer to

these records at all In tendering the book. Indeed the

respondents' counsel only sought to tender the document as

some corroboration of other contemporary records. Analyses

of the respondents' figures were prepared by expert

accountant witnesses from other records. Counsel for the

respondents informed me that the book only came to llght, in

the possession of a former accountant of the respondents, and
was placed in the hands of his instructing solicltors, three
days before the trial commenced.

. t

This does not excuse the solicitors, or counsel,

who should have made the document available to the

applicant's solicitors or counsel promptly after it came to

their notice. It may also be that the second-named

respondent was not sufficiently careful in informing his

solicitors of the books he kept and what might have happened

to them. Be that as it may, the book should have been

produced by the respondents' solicitors or counsel not later

than the eve of the trial.

However, in the light of the evidence tendered, I

think it is clear that the result would have been the same

whether the book was tendered or not. The applicant had

failed to make out, in any convincing way, his quite separate

case about the Tattslotto representations; and there was

clear evidence that the nett profits of the shop business

were as represented in the two months period before the

representations of "current turnover" per week and gross

profit per week were made.

It was never alleged that the weekly expenses of

the business had been misrepresented - indeed it was shown

that in two cases they had actually been overstated by reason

of mathematical errors.

I think the position can be summarised as follows.

The applicant began proceedings with a letter of demand over
14 months after going into occupation of the business. It
based its challenge to the represented Tattslotto figures

- 5 - .

(which constituted just over one quarter of its revised claim

for $77,000 as put to the Court) on an analysis of the

figures which were available to both sides. On a proper

examination it became apparent that the figures - which were

expressed in rounded terms - could be justified. There were

reasons beyond the control of the parties for a fall-off in

the takings of the respondents (and thus, in time, the

applicant) after the contract was entered into.

So far as the shop takings were concerned, the

applicant based its case largely on its own takings, some six

months after the period about which representations were

made. The application alleged, as one possibility, that the

takings had been knowingly misrepresented. Indeed the

applicant, to succeed, had to establish in effect that the

respondents' weekly entries of total takings were false.

These entries were recorded in	a book which was discovered to
the	applicant's solicitors and which provlded the basis for

the analysis of takings carried out by the accountants called

by the respondents.

What counsel for the applicant has said to me, in

effect, is that it would have pulled out of its action

earlier if it had realised the strength	of	the respondents'
defence. This strength became apparent in	a number of ways

on the second and third days of the trial.

In the normal course, costs follow the event.

Having considered the submissions on behalf of the applicant,

r

I find I am not persuaded that the appllcant would have

discontinued its action had it had access to the Cash

Payments Journal before the case began. It may have done so,

but	I	cannot be confident that it would have. The book in
question is in	no	sense crucial to the applicant's case;

indeed, I did not see its introduction as having any

noticeable effect	on	the strength of that case. The most
that can be said with confidence	is	that it was, to the

applicant and its advisers, the final straw which broke the

back of an already tottering camel. I am not persuaded that

it would have had the same effect at the outset of the

hearing.

The applicant should therefore pay the respondents'

costs.

I certify that this and the
five (5) preceding pages are a
true and accurate copy of the
Reasons for Judgment herein of

The non Mr Justice Woodward

Associate

Dated: 18 December 1987

Counsel for the Applicant: Mr F Davey

Solicitors for the Applicant: Messrs Abrahams, Meese & Co.

Counsel for the Respondents:  M r G. Ritter & Mr A Zilinskas

Solicitors for the Respondents: Messrs Doyle & Kerr