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Murphy v Overton Investments Pty Ltd

Murphy v Overton Investments Pty Ltd

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HIGH COURT OF AUSTRALIA
GLEESON CJ,
McHUGH, GUMMOW, KIRBY, HAYNE, CALLINAN AND HEYDON JJ
JOHN JAMES MURPHY & ANOR   APPELLANTS
AND
OVERTON INVESTMENTS PTY LIMITED   RESPONDENT
Murphy v Overton Investments Pty Ltd
[2004] HCA 3
5 February 2004
S78/2003
ORDER
1.   Appeal allowed with costs.
2.   Set aside pars 5(viii), (ix), (x) and (xi) of the orders made by the Full Court of the Federal Court on 22 June 2001 and, in lieu thereof, order that:
(a)Appeal allowed with costs.

(b)Remit the applications in Matters N159 of 1999 and N946 of 1999 to the trial judge for consideration of the assessment of damages and interest to be allowed to the appellants conformably with the reasons given by this Court, and entry of judgment accordingly.

(c)Costs of the original trial and of the further proceedings on remitter to be in the discretion of the trial judge.

On appeal from the Federal Court of Australia
Representation:
R J Ellicott QC with G A Moore for the appellants (instructed by The Aged-Care Rights Service Inc)
J C Kelly SC with A J McInerney for the respondent (instructed by Gadens Lawyers)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

GLEESON CJ, McHUGH, GUMMOW, KIRBY, HAYNE, CALLINAN AND HEYDON JJ. In 1992, the appellants, Mr and Mrs Murphy, were considering moving into a retirement home. The respondent, the developer and then owner of the Heritage Retirement Village, at Padstow Heights, a suburb of Sydney, gave the appellants an information brochure about the village. The brochure explained that the respondent was selling leasehold interests in units at the village. (The leases were to be registered leases for a term of 99 years.)
The brochure said that there would be an "on‑going management and maintenance program" at the village. It said that "[p]resent budget figures would indicate" that, for a unit of the kind that the appellants were considering leasing, a pensioner would incur a weekly cost of $55.71.
The lease which the respondent offered obliged the lessee to contribute to outgoings. The relevant provision of the lease (cl 5) gave a long, but not exhaustive, list of items which could be included in the amount of outgoings. They included such things as rates, insurance premiums, and a great variety of maintenance and like expenses, but in effect extended to all expenditure incurred in carrying on the operations of the village. The lease provided that the respondent would make a periodical estimate of likely outgoings, which tenants would then pay by monthly or other instalments, and that, as soon as practicable after the end of the period, the respondent would charge or credit tenants with the amount of any difference between the estimate and the actual outgoings incurred.
In 1992, the appellants agreed to take a lease of Unit 53 in the village. Before they executed the relevant documents, which they did on 20 October 1992, the appellants sought legal advice about the…

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.

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Details

Case: [2004] HCA 3
Decision Date: 5 February 2004

CaseChat Overview and Summary

The parties in this matter were Murphy (the appellants) and Overton Investments Pty Ltd (the respondent). The dispute concerned a lease for a unit in a retirement village, where the lessees were liable to pay a proportionate part of the village's operating expenditure. The appellants alleged that an estimate of likely expenditure provided to them by the respondent was misleading, as it did not include all operational expenses. The respondent accepted that it had engaged in conduct in contravention of Part V of the *Trade Practices Act 1974* (Cth). The case was heard by the High Court of Australia.

The central legal issues before the High Court were whether the appellants had suffered "loss or damage" within the meaning of sections 82 and 87 of the *Trade Practices Act 1974* (Cth), whether such "loss or damage" was confined to economic loss, and whether incurring unexpected expenditure constituted loss or damage. The court also considered whether "loss or damage" was necessarily singular, whether it was constituted solely by a diminution in the value of the lease, and whether increased future contributions could be awarded as damages.

The High Court reasoned that while the difference between the price paid and the value of property at the time of agreement, and consequential losses, are often relevant in assessing damages for misrepresentation, they are not necessarily the only forms of compensable loss under Part VI of the *Trade Practices Act 1974*. The court cautioned against applying the "rule in Potts v Miller" rigidly to claims under this Act, noting that the Act provides a wider range of remedies than the common law tort of deceit. The trial judge had concluded that the appellants had not suffered loss or damage, partly on the basis that there was no difference between the price paid and the property's value, and partly because the appellants were receiving value for the maintenance fees and their obligation to pay was undertaken at the time of the lease. The High Court found this reasoning to be too narrow.

The High Court allowed the appeal with costs, setting aside certain orders of the Full Court of the Federal Court. The applications were remitted to the trial judge for consideration of the assessment of damages and interest to be allowed to the appellants, in accordance with the High Court's reasons. The costs of the original trial and further proceedings were left to the discretion of the trial judge.

Orders

Orders of the court

1. Appeal allowed with costs.

2. Set aside pars 5(viii), (ix), (x) and (xi) of the orders made by the Full Court of the Federal Court on 22 June 2001 and, in lieu thereof, order that:

(a) Appeal allowed with costs.

(b) Remit the applications in Matters N159 of 1999 and N946 of 1999 to the trial judge for consideration of the assessment of damages and interest to be allowed to the appellants conformably with the reasons given by this Court, and entry of judgment accordingly.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

HUGH, GUMMOW, KIRBY, HAYNE, CALLINAN AND HEYDON JJ

Like many assessments of future economic consequences, a calculation of the present value of the difference between future outgoings assessed on alternative bases is not simple. As will be explained later, a calculation of that kind may well require a finding about how far into the future the obligation to pay outgoings (and thus the obligation to pay a larger than expected sum for outgoings) could be expected to endure. It appears that no evidence was led and no argument advanced at trial about those matters.Conclusions at trial The trial judge concluded[14] that the appellants had not proved that they had suffered any loss or damage. There were two steps taken to reach that conclusion. First, his Honour said that[15]:"When a claimant is induced by a misrepresentation to enter into an agreement that proves to be to his or her disadvantage, the claimant sustains a detriment, in a general sense, on entry into the agreement. That is because the agreement subjects the claimant to obligations and liabilities that exceed the value or worth of the rights and benefits that it confers upon the claimant. However, detriment in that general sense is not universally equated with the legal concept of 'loss or damage' – Wardley Australia Ltd v Western Australia[16] ... Where a misrepresentation induces a claimant to enter into an agreement to purchase property, the claimant's loss, apart from any question of consequential damage, is measured by the difference between the price paid or payable under the agreement and the value of the property at the date of the agreement – Potts v Miller[17]."As has been said above, there was no evidence of any difference between price paid under the agreement and the value of the property at the date of the agreement.[14][2000] FCA 801 at [221].[15][2000] FCA 801 at [215].[16](1992) 175 CLR 514 at 527.[17](1940) 64 CLR 282 at 297‑299. Secondly, it was said that, because the lease obliged the appellants to pay the sums claimed as outgoings, and there was no evidence that the appellants were "not receiving value for the maintenance fees that they [were] paying", they suffered no loss "by reason of the level of maintenance fees that they [were] liable to pay"[18]. It was said that the appellants had done nothing to their detriment after the respondent indicated that it intended to charge all that it was entitled to charge under the lease for outgoings[19]. Their obligation to make those payments was undertaken when they took their lease and that obligation was not "contingent in the sense that was referred to in Wardley"[20].[18][2000] FCA 801 at [213].[19][2000] FCA 801 at [214].[20][2000] FCA 801 at [220]. Two comments about this reasoning may be made at once. First, the difference between price and value will often be an important element in assessing the damage suffered by a person who, by a misrepresentation, has been induced to buy an item of property. As the trial judge said, there may also be questions of consequential damage. It would be wrong, however, to assume that in every case of misrepresentation (leave aside other forms of misleading or deceptive conduct) the only kind of damage which may be suffered, and compensated or redressed by orders under Pt VI of the Act, is any difference between price and value or any consequential losses. In particular, care must be exercised before seeking to apply what it described as the "rule in Potts v Miller"[21] to claims made for relief under Pt VI of the Act . This is especially so when it is recalled that while the only monetary remedy for the tort of deceit is damages, a far wider range of remedies is available where contravention of the Act has caused or is likely to cause loss or damage to a party to the proceeding.[21](1940) 64 CLR 282. See also Toteff v Antonas (1952) 87 CLR 647 at 650‑651.

Ratio Decidendi

Legal Principle Established

Established by: HUGH, GUMMOW, KIRBY, HAYNE, CALLINAN AND HEYDON JJ

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