Oraka Pty Ltd v Leda Holdings Ltd - [1997] FCA 297

CATCHWORDS

Trade Practices Act, s 52 - shopping centre lease - predictions by agent as to shops that would be occupied, made on reasonable grounds at time, but falsified by events - misrepresentation by failure to correct statements when they became known to be false - effect of clauses purporting to exclude liability for representations and to represent and warrant that none have been made - causation - construction of s 87 - effect of assignment of lease, vulnerable to setting aside under s 87, to a third party - power to order contravener to indemnify an applicant against liabilities under the assigned lease.

Trade Practices Act 1974, ss 52, 87

Elconnex Pty Limited v Gerard Industries Pty Limited (1991) 32 FCR 491
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Winterton Constructions Pty Ltd v Hambros Australia Limited (1992) 39 FCR 97
Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367
Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535
GIO Australia Holdings Limited v Marks (1997) ATPR 43,541
Brookteck Pty Limited v Lumocol Australia Pty Limited (unreported, Tamberlin J, 23 October 1996)
Krambousanos v Jedda Investments Pty Ltd (1996) 64 FCR 348
Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274
Deane v Brian Hickey Invention Research Pty Ltd (1988) 10 ATPR 49,608

ORAKA PTY LIMITED & ANOR -V- LEDA HOLDINGS PTY LIMITED

NG 403 of 1995

Burchett J
Sydney
4 April 1997

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    NG 403 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:ORAKA PTY LIMITED

First Applicant

AND:BRYAN CLIFFORD JOHNSON

Second Applicant

AND: LEDA HOLDINGS PTY LIMITED

Respondent

CORAM:    Burchett J.
PLACE:    Sydney
DATE:     4 April 1997

MINUTE OF ORDER

THE COURT ORDERS THAT the applicants bring in on a date to be fixed short minutes of orders appropriate to be made pursuant to the reasons of the Court.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    NG 403 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:ORAKA PTY LIMITED

First Applicant

AND:BRYAN CLIFFORD JOHNSON

Second Applicant

AND: LEDA HOLDINGS PTY LIMITED

Respondent

CORAM:    Burchett J.
PLACE:    Sydney
DATE:     4 April 1997

REASONS FOR JUDGMENT

BURCHETT J.:

Though named for a Spartan queen, Leda Holdings Pty Limited ("Leda") determined to gratify the customers of its shopping centre at Rosemeadow near Campbelltown by an appeal to the pleasures of their mouths. It invited a well-known purveyor of soft-serve ice-creams, known as "Wendy's", to open a shop with exclusive rights. Rosemeadow Marketplace was to be billed as an exciting new shopping centre, embodying a new marketing concept. But the lures thrown out by Leda to the second applicant, Mr Johnson, the managing director of the first applicant Oraka Pty Limited ("Oraka"), which is the master franchisee for New South Wales…

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: [1997] FCA 297
Decision Date: 4 APRIL 1997

CaseChat Overview and Summary

The case of Oraka Pty Ltd v Leda Holdings Ltd involved a dispute between Oraka, a franchisee for Wendy's ice-cream shops, and Leda, the owner of a shopping centre at Rosemeadow. Oraka and its managing director, Mr. Johnson, alleged that misleading and deceptive conduct by Leda had induced them to enter into a lease for a shop at the shopping centre. The primary legal issues in the case were whether Leda had engaged in misleading and deceptive conduct in breach of section 52 of the Trade Practices Act 1974, and if so, whether the court could grant relief under section 87 of the Act given that the lease had been assigned to a third party. The court found that Leda had indeed engaged in misleading and deceptive conduct by failing to correct false statements about the leasing prospects of the shopping centre when they became known to be untrue. The court held that the lease could be set aside to the extent of relieving Oraka and Mr. Johnson from any liability under the lease, and ordering Leda to indemnify them against any liability to a third party assignee. The court also found that Oraka was entitled to damages for losses incurred as a result of the misleading conduct. The final orders were to be made in accordance with the reasons provided by the court.

Orders