ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :BLAXELL J
Citation  :ADAMS -v- MORELLINI [2010] WASC 61
File No  :CIV 1026 of 2008

Catchwords:

Trade practices - Share transaction induced by misleading or deceptive conduct - 'No transaction' case - Scope of the court's power to grant relief under s 77(1) of the Fair Trading Act 1987 (WA) - Whether the plaintiff required to demonstrate quantum of loss - Meaning of 'refund' and 'return' under s 77(3)(d) of the Fair Trading Act 1987 (WA) - Ordinary measure of damages under s 79 of the Fair Trading Act 1987 (WA) - Whether departure from ordinary measures of damages justified - Role of latent negative factors affecting value - Role of subsequent events affecting value - Whether plaintiff 'locked in' to the property - Causation

Legislation:

Fair Trading Act 1987 (WA), s 77, s 77(1), s 77(3), s 77(3)(d), s 79
Trade Practices Act 1974 (Cth), s 87(2)

Result:

Appeal dismissed
Notice of contention dismissed

Category: A

Representation:

Counsel:

Appellant:     Mr M L Bennett
First Respondent           :     Mr S Penglis
Second Respondent      :     Mr S Penglis

Solicitors:

Appellant:     Lavan Legal
First Respondent           :     Freehills
Second Respondent      :     Freehills

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

Fenech v Sterling (1984) 57 ALR 98
Haydon v Jackson (1988) ATPR 40‑845
Henville v Walker [2001] HCA 52; (2001) 206 CLR 459
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640
I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109
Kizbeau Pty Ltd v WG & B Pty Ltd [1995] HCA 4; (1995) 184 CLR 281
March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506
Peek v Derry (1887) 37 Ch D 541
Potts v Miller [1940] HCA 43; (1940) 64 CLR 282
Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254

McLURE P: The respondents were induced by the appellant's misleading or deceptive conduct to subscribe for shares in Meridian Mining Ltd (Meridian), an unlisted public company which proposed to list on the Australian Securities Exchange Ltd (ASX). The trial judge (Blaxell J) found that the respondents had suffered loss and damage and made orders under s 77 of the Fair Trading Act 1987 (WA) (the FTA) directing the appellant, Ron Morellini, to pay to the first‑named respondent, Henry Adams, the amount paid to Meridian for the shares, upon receipt of which Mr Adams was required to transfer to the appellant the shares held…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Morellini v Adams

Details

AGLC: Morellini v Adams [2011] WASCA 84
Case: [2011] WASCA 84
Decision Date: 6 APRIL 2011

CaseChat Overview and Summary

In the case of Morellini v Adams, the dispute centred around a share transaction that the plaintiff alleged was induced by misleading or deceptive conduct. The defendant had induced the plaintiff to purchase shares in a company, and the plaintiff sought relief under section 77(1) of the Fair Trading Act 1987 (WA). The court was tasked with determining the scope of its power to grant relief, the necessity for the plaintiff to demonstrate the quantum of loss, and the interpretation of 'refund' and 'return' under section 77(3)(d). Additionally, the court had to consider the ordinary measure of damages under section 79 of the Act, the justification for departing from these measures, and the impact of latent negative factors and subsequent events on the value of the shares. The court also examined whether the plaintiff was 'locked in' to the property and the issue of causation.

The legal issues included the scope of the court's power to grant relief under section 77(1) of the Fair Trading Act 1987 (WA), whether the plaintiff was required to demonstrate the quantum of loss, the meaning of 'refund' and'return' under section 77(3)(d), and the application of the ordinary measure of damages under section 79 of the Act. The court had to determine whether latent negative factors and subsequent events affecting the value of the shares should be considered, and whether the plaintiff was 'locked in' to the property. Additionally, the court had to examine the causation issue.

The court concluded that the plaintiff did not need to demonstrate the quantum of loss to be entitled to relief. The court also interpreted 'refund' and'return' to mean that the plaintiff should be restored to the position they would have been in had the misleading or deceptive conduct not occurred. The court found that the ordinary measure of damages under section 79 of the Act was not a strict rule and could be departed from if justified. The court considered latent negative factors and subsequent events affecting the value of the shares, as well as the issue of the plaintiff being 'locked in' to the property. The court also addressed the causation issue, finding that the defendant's conduct was a significant contributing factor to the plaintiff's decision to purchase the shares.

The court ordered that the defendant refund the purchase price of the shares to the plaintiff, less any dividends received, and that the defendant pay the plaintiff's costs of the proceeding.

Orders