Miletich v Murchie

Case [2012] FCA 1013

FEDERAL COURT OF AUSTRALIA

Miletich v Murchie [2012] FCA 1013

Citation: Miletich v Murchie [2012] FCA 1013
Parties: KATHLEEN PHYLLIS MILETICH, ADRIAN MARK MILETICH and KALEL ENTERPRISES PTY LIMITED (ACN 121 109 108) v ALAN MURCHIE, WILMOT MURCHIE PTY LIMITED (ACN 103 108 603), 83 EAST PTY LIMITED (ACN 094 852 507) (IN LIQUIDATION) and STEPHEN FRANCIS DONNELLY
File number: VID 517 of 2010
Judge: GRAY J
Date of judgment: 17 September 2012
Catchwords:

TRADE PRACTICES – misleading and deceptive conduct – prospective operators of cafe franchise in new shopping centre development – representations about businesses of other tenants and extent of patronage – representations made by computer-animated video, brochure and orally – further representations in written landlord disclosure statement – whether misleading and deceptive – whether relied on – calculation of loss and damage – calculation of interest

TRADE PRACTICES – concurrent wrongdoers – apportionment of liability – letting agent and its director, developer and its director – whether necessary for respondent to plead and prove material facts relevant to apportionment – effect of provisions relating to vicarious liability

Legislation:

Evidence Act 1995 (Cth) ss 71, 161
Fair Trading Act 1999 (Vic) ss 9, 9(1), 159(1)
Federal Court of Australia Act 1976 (Cth) s 51A
Retail Leases Act 2003 (Vic)
Trade Practices Act 1974 (Cth) ss 51A, 51A(1), 51A(2), 52, 75B(1)(a), 75B(1)(b), 75B(1)(c), 82, 82(1), Pt VIA, 87CB, 87CB(1), 87CB(2), 87CB(5), 87CD, 87CD(1), 87CD(3)(b) 87CD(5), 87CI(a)
Wrongs Act 1958 (Vic) Pt IVAA, ss 24AF(2), 24AH(1), 24AH(2), 24AI(1), 24AI(3), 24AP(a), 24AP(b), 24AP(d)
Cases cited:

Boncristiano v Lohmann (1998) 4 VR 82 applied
Banque Keyser Ullman S.A. v Skandia (U.K.) Insurance Co. Ltd. (No. 2) [1988] 2 All ER 880 applied
GEJ & MA Geldard Pty Ltd v Mobbs & Ors (No 2) [2011] QSC 33 applied
Gunston v Lawley [2008] VSC 97 (2008) 20 VR 33 considered
Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289 (2003) 135 FCR 1 applied
Nemeth v Prynew [2005] NSWSC 1296 cited
Ucak v Avante Developments Pty Ltd [2007] NSWSC 367 considered
Townsend v Stone Toms & Partners (1984) 27 BLR 26 applied
Yorke v Lucas (1985) 158 CLR 661 cited

Date of hearing: 8 and 9 August, 20 October, 24 October, 26 October, 8 November 2011
Place: Melbourne
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 127
Counsel for the applicants: Mr M Garner
Solicitor for the applicants: Colin Biggers & Paisley
Counsel for the first and second respondents: Mr N Murdoch (8 and 9 August, 20 October, 24 October and 26 October 2011)
Solicitor for the first and second respondents: Sparke Helmore  
Counsel for the third respondent: Mr R Hay (8 and 9 August 2011)
Solicitor for the third respondent: McMahon Fearnley Lawyers Pty Ltd
Counsel for the fourth respondent: Mr P Lithgow (20 October and 8 November 2011)
Solicitor for the fourth respondent: John Dunne & Associates

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 517 of 2010
BETWEEN:

KATHLEEN PHYLLIS MILETICH
First Applicant

ADRIAN…

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AGLC
Miletich v Murchie [2012] FCA 1013
Case
[2012] FCA 1013
Decision Date

CaseChat Overview and Summary

In Miletich v Murchie, the applicants, prospective operators of a café franchise in a new shopping centre development, alleged that they were misled by representations made by the respondents about the businesses of other tenants and the extent of patronage. The misrepresentations were made through a computer-animated video, a brochure, and orally, as well as in a written landlord disclosure statement. The applicants sought damages for the misleading and deceptive conduct under the Australian Consumer Law. The court was required to determine whether the representations were misleading and deceptive, whether the applicants relied on them, and the amount of loss and damage suffered by the applicants. The court also needed to decide the apportionment of liability among the concurrent wrongdoers, including the letting agent, its director, the developer, and its director.

The court found that the representations made by the respondents were misleading and deceptive, as they were not based on any reasonable grounds and were likely to mislead the applicants. The court also found that the applicants relied on the representations when deciding to enter into the lease agreement. The court further found that the applicants suffered loss and damage due to the misleading and deceptive conduct, but the exact amount of loss and damage needed to be determined through further evidence. Regarding the apportionment of liability, the court held that the respondent letting agent and its director were vicariously liable for the conduct of the respondent developer and its director. However, the court found that it was not necessary for the applicants to plead and prove material facts relevant to apportionment, as the provisions relating to vicarious liability were sufficient to determine the liability of the letting agent and its director.

The court ordered that judgment be entered against the letting agent and its director in favour of the applicants. The court also ordered that the applicants file and serve an affidavit detailing the terms of settlement reached between them and the developer and its director, and, if necessary, set out the amount they claimed to be entitled to deduct from any lump sum settlement by way of costs. The applicants were also ordered to file and serve minutes of proposed orders that reflected the reasons for judgment. The proceeding was listed for further hearing on a suitable date, on which submissions as to the appropriate orders could be made. The court also ordered that the letting agent and its director pay the applicants' costs of the proceeding, so far as those costs had been incurred in relation to the claim against the letting agent and its director.

Orders

Orders of the court

1. On or before 25 September 2012, the applicants file and serve on the liquidator of the third respondent and on the fourth respondent:

(a) an affidavit detailing the terms of settlement reached between them and the first and second respondents and, if necessary, setting out the amount the applicants claim to be entitled to deduct from any lump sum settlement by way of costs; and

(b) minutes of proposed orders that reflect the reasons for judgment published this day.

2. The proceeding be listed for further hearing on 28 September 2012, for submissions as to the appropriate orders to be made in the proceeding.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

These are the principles that should be applied in the present case in assessing the amount for which judgment is to be given against 83 East and Mr Donnelly, and the amount of interest. It will therefore be necessary for me to be told the details of the settlement achieved between the applicants and Mr Murchie and Wilmot Murchie.Conclusion For the foregoing reasons, I propose to order that judgment be entered against 83 East and against Mr Donnelly in favour of the applicants. Further evidence will be required before the amount of that judgment and, consequently, the amount of interest to be included in the judgment, can be determined. The appropriate course is to order that the applicants file and serve an affidavit detailing the terms of settlement reached between them and Mr Murchie and Wilmot Murchie and, if necessary, setting out the amount they claim to be entitled to deduct from any lump sum settlement by way of costs. The applicants should also be ordered to file and serve minutes of proposed orders that reflect these reasons for judgment. The proceeding should be listed for further hearing on a suitable date, on which submissions as to the appropriate orders can be made. I also propose to order that 83 East and Mr Donnelly pay the applicants’ costs of the proceeding, so far as those costs have been incurred in relation to the claim against 83 East and Mr Donnelly.

Ratio Decidendi

Legal Principle Established

Towards the end of the document appears the following:PART 10 − DECLARATIONS BY THE LANDLORD OR THE LANDLORD’S AGENTI acknowledge that this Statement contains all representations in relation to the proposed lease by the Landlord and the Landlord’s Agent and I am satisfied that all agreements are fully reflected in this statement.I have not knowingly withheld information which is likely to have an impact on the Tenant’s proposed business.Signed by the Landlord or the Landlord’s Agent for and on behalf of the LandlordBelow that are spaces provided for a date and a signature of the landlord or the landlord’s agent. The following page contains a declaration to be made by a tenant or the tenant’s agent. The first sentence of that declaration invites information as to whether the tenant has or has not obtained independent legal and financial advice before entering into the lease. The second sentence states:I acknowledge that this Statement contains all representations in relation to the proposed lease by the Landlord and I am satisfied that all agreements made with the Landlord are fully reflected in this Statement. The declaration in Pt 10 of the form was apparently signed by Mr Murchie after his email of 13 December 2006. His signature appears beside the handwritten date “18/12/06”. The signed version is the same as the version emailed on 13 December 2006, at least so far as the passages quoted in [37] above are concerned. On 15 February 2007, Mr Murchie emailed Mr Brusch, saying:Hi Tony still no DS so as discussed here is another copy. Please can you print up and execute then fax back to me thanks [sic] Please include an initialled copy of the plan I subsequently faxed through. AlanThere were no alterations to the passages quoted in [37] above. Also on 15 February 2007, Mr Brusch signed the declarations by the tenant or tenant’s agent on behalf of Foodco, but without indicating whether Foodco had or had not obtained independent legal and financial advice by striking out either “has” or “has not”. The version of the statement that he signed had various handwritten alterations and additions. The only addition relevant to this case is in relation to the last of the items quoted in [37] above, concerning changes to the tenancy mix. At the foot of the text in the right hand column, Mr Brusch added an asterisk. In the left hand column, he added another asterisk, with the words “It should be noted that the decision to lease was based on the confirmation of only one other cafe in the Lt Collins St Level” and his initials. By letter dated 18 January 2007, the Jamaica Blue company forwarded to Ms Miletich and Mr Miletich a disclosure statement. The first three pages were prepared on the Jamaica Blue company’s letterhead and referred to 83 East as the head landlord and the Jamaica Blue company as the landlord. Copied into the third of those pages was the extract from 83 East’s disclosure statement containing the information about the proposed opening date in June 2007, about the possibility of delay and about the expectation that there would be 40 premises available for leasing, a number that may change or be increased or decreased prior to the commencement of or during or after the term of any lease. The remainder of the disclosure statement is a direct copy of the disclosure statement received by Foodco from 83 East, and therefore contains the statements quoted in [37] above as to the tenancy mix.