Reiffel v ACN 075 839 226 Ltd

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FEDERAL COURT OF AUSTRALIA

Reiffel v ACN 075 839 226 Ltd
[2003] FCA 194

TRADE AND COMMERCE – TRADE PRACTICES – consumer protection – misleading and deceptive conduct – statements in prospectus relating to property investment – financial forecasts – independent expert report in form of negative assurances as to financial forecasts – whether report was misleading or deceptive – whether caused loss – whether time barred

CORPORATIONS – prospectuses and disclosure – liability of independent expert for statements in prospectus in the form of negative assurances as to promoter’s financial forecasts – whether misleading and deceptive under Australian Securities & Investments Commission Act 1989 (Cth) s 12DA or Corporations Law s 995 – whether ought be excused pursuant to s 1318 – whether caused loss

Federal Court of Australia Act 1976 (Cth) Pt IVA
Trade Practices Act 1974 (Cth) ss 51AF, 52
Australian Securities & Investments Commission Act 1989 (Cth) s 12DA
Corporations Law ss 995(2), 1005, 1318

John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd (1993) ATPR 41-249 referred to
Heydon v NRMA Ltd (2000) 51 NSWLR 1 followed
Bowler v Hilda Pty Ltd (1998) 80 FCR 191 referred to
Escott v Barchris Construction Corporation 283 F Supp 643 (1968) considered
Bulfin v Bebarfalds Ltd (1938) 38 SR (NSW) 423 applied
Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 applied
Campomar Sociedad Limitada v Nike International Ltd (1999) 202 CLR 45 applied
Sykes v Reserve Bank of Australia (1998) 88 FCR 511 cited
Sydney Harbour Casino Properties Pty Ltd v Coluzzi [2002] NSWCA 74 cited
Karedis Enterprises v Antoniou (1995) 59 FCR 35 referred to
Blacker v National Australia Bank Ltd [2001] ATPR 41-817 referred to
Murphy v Overton Investments (2001) 112 FCR 182 referred to
Re International Vending Machines Pty Ltd [1962] NSWR 1408 considered
Gamble v Hoffman (1997) 24 ACSR 369 considered
Daniels v Anderson (1995) 37 NSWLR 438 followed
Kenna & Brown Pty Ltd v Kenna (1999) 17 ACLC 1183 followed
Circle Petroleum (Queensland) v Greensdale (1998) 16 ACLC 1577 followed
Arnison v Smith (1889) 41 ChD 348 applied
Aaron’s Reefs Ltd v Twiss [1896] AC 273 applied
Gould v Vaggelas (1985) 157 CLR 215 applied
Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 applied
Sibley v Grosvenor (1916) 21 CLR 469 cited
Dominelli Ford (Hurstville) Pty Ltd v KarmotAuto Spares Pty Ltd (1992) 38 FCR 471 cited
Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458 cited
Smith v Chadwick (1882) 20 ChD 27 cited
Barton v Armstrong (1976) AC 104 cited
Australian Steel & Mining Corporation Pty Ltd v Corben [1974] 2 NSWLR 202 cited
Duke Group Ltd (in liq) v Pilmer (1999) 153 FLR 1 cited
Henville v Walker (2001) 206 CLR 459 applied
I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 76 ALJR 1461, 192 ALR 1 applied

Ford et al, Ford’s Principles of Corporations Law 11th ed, 2003

MARLENE JOYCE REIFFEL (for herself and…

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Details
Case
[2003] FCA 194
Decision Date

CaseChat Overview and Summary

Marlene Joyce Reiffel has initiated proceedings against Pannell Kerr Forster Consulting Australia Pty Ltd and another respondent, alleging misleading and deceptive conduct. The primary focus of the case is to determine whether the actions of Pannell Kerr Forster Consulting Australia Pty Ltd were misleading or deceptive as claimed by Reiffel and, if so, to ascertain whether Reiffel has suffered any loss due to such conduct and, if applicable, to determine the extent of the loss. This contested hearing has been narrowed down to three main issues that need to be resolved.

The court was tasked with examining whether the conduct of Pannell Kerr Forster Consulting Australia Pty Ltd was indeed misleading and deceptive. The court considered the evidence provided by Reiffel, who was deemed a reliable witness, and also took into account the evidence of Mr Neil Ward. The court found that the applicant's evidence was convincing and aligned with inherent probabilities. Based on the established facts, the court was required to determine if Reiffel had suffered any loss as a result of the alleged misleading and deceptive conduct and, if so, to quantify the loss.

The court concluded that the conduct of Pannell Kerr Forster Consulting Australia Pty Ltd was misleading and deceptive. Furthermore, the court found that Reiffel had indeed suffered loss due to this conduct. The court will determine the exact amount of the loss in a subsequent stage of the trial. The matter has been adjourned to allow for the preparation of orders that will give effect to the court's findings and conclusions.

Orders

Orders of the court

The matter stand adjourned for orders to be brought in to give effect to these reasons.

Background

Background to the litigation

The particular applicant is Marlene Joyce Reiffel (hereinafter called “the applicant”). The second respondent, Pannell Kerr Forster Consulting Australia Pty Ltd (“PKFCA”) is the active respondent. The first respondent is the promoter company. As a result of interlocutory hearings, the issues to be determined have been narrowed and the trial is to proceed in stages. This contested hearing concerns the following issues:(1)Whether the conduct of PKFCA was misleading and deceptive as alleged by the applicant in the statement of claim.(2)If so, whether the applicant has suffered loss by reason of that conduct.(3) If so, the quantum of the applicant’s loss.Facts Before considering the issues arising in the pleadings more closely, it is convenient to deal with the facts. The facts which I find are based substantially upon the evidence of the applicant, who I accept as a witness of truth and who was generally reliable in her evidence. She gave her evidence convincingly and it accords with the inherent probabilities. I also generally accept the evidence of Mr Neil Ward. The applicant was born on 9 February 1948. She joined the Commonwealth Public Service in 1965, and, apart from periods of maternity leave and a period between 1979 and 1983 when she and her then husband were farming, she was employed in various positions in the Commonwealth Public Service, up to and including the period relevant to this case. By November 1994 she had some experience in property investment, including residential property which was leased to tenants. At that time she was living in Canberra. The Goldsbrough building was an old wool store situated at Darling Harbour in Sydney. It was to be converted into a block of residential apartments. In about November 1994 the applicant saw an advertisement in the Canberra Times newspaper regarding the sale of apartments in the building. She told Mr Neil Ward, a friend of hers, about the advertisement, and soon after she and he went to an exhibition in Canberra where they viewed pictures of the proposed building, building plans and a list of selling prices. The agents at the exhibition were representatives of Charles Stuart Real Estate. The applicant and Ward left their names with the agents, indicating an interest in the proposed building. In about December 1994 the applicant and Ward met Mr Andrew Veron on site, while the building was in the process of being constructed. He said he was employed by Charles Stuart Real Estate at the time. They also met Mr Kenneth Gresham in the same connection. Following this, the applicant and Ward contracted to purchase a one-bedroom apartment for $179,400. It was agreed between the applicant and Ward that they would review their ownership of the property at three stages – firstly, they would consider selling when the building was complete; secondly, they would consider selling before the Olympic Games; and thirdly, they would consider selling after the Olympic Games. It was arranged that if, at any stage, either wanted to sell the apartment he or she would consider buying out the share of the other.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

GYLES J

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Ratio Decidendi

Legal Principle Established

Established by: GYLES J

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