ON APPEAL FROM THE SUPREME COURT OF SOUTH AUSTRALIA. Fraud-Measure of damages-Misrepresentation inducing party to enter into
agreement-Agreement to purchase business as going concern-Price appor- tioned as between goodwill, plant and stock-Misrepresentation only going to goodwill.
T. was induced to enter into a contract for the purchase of a business as a going concern by the fraudulent misrepresentations of A., the vendor, as to the profits and takings of such business. The memorandum of agreement between the parties apportioned the total price of £2,200 between goodwill £200, plant £1,750, stock £250. The fair value of the business as a going concern was £900. In an action for deceit the trial judge, taking the view that the misrepresentations went only to the value of the goodwill, and not to the value of the plant and stock, awarded as damages £200, being the amount apportioned in respect of goodwill.
Held that, since the misrepresentation induced the entire purchase, the damages to which T. was entitled were £1,300, being the difference between £2,200, the price paid, and £900, the real market value of the business as a going concern, and it was immaterial that the memorandum of agreement apportioned the sum of £2,200, in the way in which it did.
Decision of the Supreme Court of South Australia (Mayo J.) reversed.
APPEAL from the Supreme Court of South Australia.
Denu Toteff, on 9th March, 1950, commenced an action, as plaintiff, in the Supreme Court of South Australia against Michael Elias Antonas, as defendant. The plaintiff alleged that, by reason of certain fraudulent misrepresentations made to him by the defen- dant, he had been induced to enter into an agreement, dated 12th
November, 1949, with the defendant, the material clauses of which were as follows:
1. The vendor will sell and the purchaser will buy the goodwill of the business of a fish cafe and restaurant including grills and the sale of non-intoxicating beverages of every description now carried on by the vendor at the shop situated at and known as No. 2 Main Street Henley Beach South Australia together with the tenant's fixtures and fittings and chattels specified in the schedule hereto (hereinafter called the plant ") and stock of the said business on the completion date.
2. The price for the said goodwill plant and stock shall be the sum of two thousand two hundred pounds which is apportioned as to personal goodwill the sum of one hundred pounds, as to local goodwill the sum of one hundred pounds, as to plant the sum of one thousand seven hundred and fifty pounds and as to stock the sum of two hundred and fifty pounds.
The action was tried before Mayo J. who, in a judgment delivered on 25th September 1951, found that the plaintiff had been induced to buy the business as a going concern by the following false and material misrepresentations (a) that the business had made a profit of £1,200 during 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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AGLC
Toteff v Antonas [1952] HCA 16
Case
[1952] HCA 16
Decision Date
CaseChat Overview and Summary
This case involved an appeal to the High Court of Australia from a decision of the Supreme Court of South Australia. The appellant, Mr. Toteff, had purchased a fish cafe and restaurant business from the respondent, Mr. Antonas. Mr. Toteff alleged that he was induced to enter into the agreement by fraudulent misrepresentations made by Mr. Antonas concerning the business's profits and takings. The agreement apportioned the total purchase price of £2,200 between goodwill (£200), plant (£1,750), and stock (£250).
The High Court was required to determine the correct measure of damages to be awarded to Mr. Toteff in his action for deceit. Specifically, the court had to consider whether the damages should be limited to the portion of the purchase price attributed to goodwill, as determined by the trial judge, or whether the damages should reflect the difference between the total price paid and the actual market value of the business as a whole.
The High Court reasoned that in an action for deceit, the measure of damages is the difference between the price paid by the plaintiff and the real market value of the property acquired, provided the transaction is not rescinded. The court held that it was immaterial that the agreement apportioned the purchase price between goodwill, plant, and stock, or that the misrepresentations specifically related only to the goodwill. The fraudulent misrepresentations induced the entire purchase of the business as a going concern. Therefore, the damages should be calculated based on the total sum paid (£2,200) and the actual value of the business as a going concern, which was assessed at £900.
The appeal was allowed, and the judgment of the Supreme Court of South Australia was varied. The damages awarded to Mr. Toteff were increased from £200 to £1,300, representing the difference between the purchase price and the actual market value of the business.