Tringas, G. v Ansett Transport Ind.(Operations) Pty Ltd

[1986] FCA 328

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I	CATCHWORDS
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Trade Practices - misleading and deceptive conduct - sale of

i business - clalm by guarantor - whether able to prove loss by

giving guarantee - whether loss separate and distinct from

that suffered by contracting party - representations not

misleading - reliance on own investigations - representations in form of agreements not included in written contract.

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Trade Practices Act 1974 ss.52, 82, 87

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i	Gould v. Vasselas (1984) 56 A.L.R. 31
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l	Bill Acceptance Corporation Ltd. v. GWA Ltd.

I	(1983) 50 A.L.R. 242.
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GEORGE TRINGAS STAVROULA and TRINGAS Applicants

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ANSETT TRANSPORT INDUSTRIES (OPERATIONS) PTY. LTD.

and ANSETT TRANSPORT INDUSTRIES LIMITED Respondents

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ANSETT TRANSPORT INDUSTRIES (OPERATIONS) PT'I. LTD.

1 I Cross-Applicant

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i GEORGE TRINGAS and STAVROULA TRINGAS Cross-Respondents

V. No. G 99 of 1982

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I	NORTHROP J.
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1	8 AUGUST 1986
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MELBOURNE
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* Not consldered approprlate for further distributlon.
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IN THE FEDERAL COURT OF AUSTRALIA )

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VICTORIA DISTRICT REGISTRY	)	V. No. G 99 of 1982
)

DIVISION	GENERAL	)
BETWEEN:

GEORGE	TRINGAS	and	STAVROULA	TRINGAS	Applicants
and

ANSETT TRANSPORT INDUSTRIES (OPERATIONS) PTY. LTD.

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and ANSETT TRANSPORT INDUSTRIES LIMITED Respondents

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and

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ANSETT TRANSPORT INDUSTRIES (OPERATIONS) PTY.	LTD.
Cross-Applicant I

and

GEORGE TRINGAS and STAVROULA TRINGAS

Cross-Respondents

COURT: NORTHROP J.

U: 8 AUGUST 1986	t..
PLACE: MELBOURNE

REASONS FOR JUDGMENT

number proceedings and it will be helpful to set out A of unusual features affect these

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in broad

outline the background facts. At all material times Ansett

Transport Industries (Operatlons) Pty. Ltd. ( "Ansett

Operations") was a corporatlon under the Trade Practlces Act

1974 ("the Act"). Among other activities Ansett Operations conducted the business of providing road passenger services

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under the business name of Ansett Pioneer. Those services

included tourist coach travel packages, tours and express

services. In additlon to providing those services, Ansett

Operations carrled on the business of travel agents from

retail outlets in the capital cities of Australia. Among

those were retail outlets situate at 147 King Street, Sydney,

59 Swanston Street, Melbourne and 37 St. Georges Terrace,

Perth. At each of these retail outlets Ansett Operations

carrled on travel agency businesses from which they sold to

members of the public travel services both international and

domestic including the coach services provided under the name _.

Ansett Pioneer. In conducting those travel agency

businesses, Ansett Operations were in competition with other

travel agency businesses, some	of which also sold to members	I .
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of the public coach services provided under the name Ansett

Pioneer.

By a deed Operations sold to Magpie Wild Pty. Ltd. the three businesses made on 20 November 1981, Ansett

then being carried on by it at Sydney, Melbourne and Perth

respectively. Magpie Wild Pty. Ltd. had been incorporated on

22 June 1981. On 4 December 1981, its name was changed to

Coles Travel Pty. Ltd. On 17 December 1981, its name was

changed to Coles Travel Services Pty. Ltd. On 28 May 1982,

its name was changed to Newtons Travel Services Pty. Ltd.

Hereinafter, this company will be called "Newtons". At all

material times, the applicants, Mr. and Mrs. Tringas, who are

husband and	wife, were	the directors	of	and controlled
Newtons.

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Under the businesses on 20 November 1981. Newtons was to pay deed, Newtons took possession of the

$330,000

for the goodwill of the businesses together with the sum of

$25,420 being the value of the fixtures and fittings.

Pursuant to the terms of the deed, on 20 November 1981,

Newtons paid $135,420 to Ansett Operations. The balance of

the goodwill, namely $220,000 was to be paid later. Under

the deed, Mr. and Mrs. Tringas jointly and severally

unconditionally guaranteed unto Ansett Operations the due and

punctual performance contained in the deed. by Newtons of all its obligations

Newtons conducted the three businesses until July 1982. By letter dated 12 July 1982, the then solicitors for	..	-
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Newtons wrote to Ansett Operations alleging that Newtons had
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been induced to enter into the deed by representations made	L
by officers of Ansett Operations which representations were false and misleading and that accordingly, Newtons rescinded the deed. By the letter, Newtons demanded repayment of the

moneys paid by it and sought damages to compensate it for the

losses suffered by the misrepresentations. The letter stated

that Newtons would continue to operate the businesses for a

period of ten days to enable Ansett Operations to retake

possession of the premises. Ansett Operations did not take

possession of the businesses which then closed down.

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On 21 July 1982, an application was Issued in the

Federal Court in which Newtons and Mr. and Mrs. Tringas were

named as Transport Industries Llmited were named applicants and Ansett Operations and Ansett

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as respondents. By

the application, the then applicants sought a declaration

that the respondents, in trade or commerce, had engaged in

conduct that was misleading or deceptive or was likely to

mislead or deceive in contravention of 5.52 of the Act,

damages pursuant to 5 .82 of the Act, orders declaring the

deed Including the guarantee void and to have been void ab

initio and an order directing the refund of the sum of

$135,420 to Newtons.

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Later in the year 1982, Ansett Operations commenced proceedings against Newtons in the Supreme Court of Victoria

claiming moneys due under the deed. On 30 March 1983, the

Supreme Court granted leave to Ansett Operations to enter

final judgment against Newtons in the sum of $406,042.90, but

granted leave to Newtons to defend the proceedings for the

balance of the claim by Ansett Operations. On 18 April 1983,

Ansett Operations entered judgment against Newtons in the sum

of $406,042.90. No part of that sum has been paid.

On 30 June 1983, the Supreme Court of Victoria, in

separate proceedings, pursuant to the provisions of the Companies Code (Vic.). ordered that Newtons be wound up

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Also in the year 1982, Ansett Operations commenced proceedings against Mr. and Mrs. Tringas in the Supreme Court	l
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of the Australian Capital Territory claiming the sum of

$585,639.37 being the amount alleged to be owing under the

guarantee contained in the deed.

In the Federal Court proceedings, and following

orders made directlng Newtons to give security of the costs

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of Ansett Operations, ordered by consent that the proceedings in the Federal Court, insofar as they were brought by Newtons, be dismissed with costs. Thereafter, the applicants In these proceedings have the Court, on 17 February 1984,

been Mr. and Mrs. Tringas, although Ansett Transport

Industries Limited has remained a respondent.

On 26 April 1984, the Court, by consent of the parties, ordered that until the hearing and determination of

the application by Mr. and Mrs. Tringas or further order,

Ansett Operations refrain from proceeding further in the

existing proceedings in the Supreme Court of the Australian

Capital Territory and gave directions that Mr. and Mrs.

Trlngas deliver an amended application and amended statement

of claim, that Ansett Operations deliver a defence to that

amended statement of claim and any cross-claim against Mr.

Tringas directions were complied with and the cross-claim made by	and	consequential	directions.	These	I~
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and Mrs.

Ansett Operations was, in substance, the same claim as that

pending in the Supreme Court	of	the Australian Capital
Territory.

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Thus when the matter came on for hearing, Mr. and

Mrs. Tringas were claiming, in substance, damages against

Ansett Operations under 5 . 8 2 of the Act and an order under

s.87 of the Act declaring the guarantee contained in the deed

to be void and Ansett Operations was claiming to enforce the

guarantee against Mr. and Mrs. Tringas. At the close of the

case for the applicants, which extended over ten days, the no case to answer reserving the question of whether they

should be put to their election to call evidence or not.

After full applicants and for the respondents, which extended over four and helpful submissions by counsel for the

days, the Court announced that it would not put the

respondents to their election to call evidence or not and

that the Court had formed the view that on the facts and the

law, the respondents had no case to answer and that the

application should be dismissed. The Court announced also

that it would reserve its reasons for judgment and would

extend the time in which the applicants could appeal from the

judgment until twenty-one days after the reasons for judgment

were published. The Court then proceeded to hear the

cross-claim and gave judgment for Ansett Operations against

Mr. and Mrs. Tringas in the sum of $974,800.66. The Court

stayed that judgment until twenty-one days after publication

of its reasons for judgment on the application and extended

the time in which the applicants could appeal from the

judgment on applicants were ordered to pay the costs of Ansett Operations the cross-claim until the same time. The

and Ansett Transport Industries Limited of the applicatlon

and the cross-claim.

This outline has been given to assist in the

understanding of the evidence before the Court. To a great

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i	extent, the presentation	of	the case for the applicants was
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made confusing by the fact that the case appeared to be

i l presented as if Newtons was the applicant and was seeking rescission of the deed and damages although there was no evidence led to establish what was the real value of the

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businesses. It is clear from what was said in Gould v. f

Vacrcrelas (1984) 56 A.L.R. 31 that Mr. and Mrs. Tringas cannot

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recover damages merely because Newtons has suffered damage

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and cannot recaver damages which are merely a reflection of

the loss suffered by Newtons. Nevertheless, they may have	a
remedy for what they have suffered and that remedy is

separate and distinct from the loss suffered by Newtons; see

Gibbs C.J. at pp.33-34. See also Wilson	J. at pp.53-54 and
Brennan J. at pp.59-61.

The two main witnesses called on behalf of the

applicants were Mr. Tringas and Mr. Dennis Pappas. Each was

of Greek origin and had some difficulty with the English

language. Each gave lengthy evidence in chief and each was

cross-examined vigorously and at length. Each was an

unsatisfactory witness, being evasive in answering questions

and giving many unresponsive answers which suggested that the

answers had been learnt by heart to be given at every

opportunity. This matter has been decided on a no-case basis

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and for that purpose, I must accept the evidence of those two

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witnesses. Nevertheless, where that evidence conflicts with

contemporaneous documentation, I have accepted the written

those evidence through an interpreter. She had no direct dealings with any officers of Ansett Operations. She relied upon what documents. Mrs. Tringas gave

word appearing in

her husband told her.

statement referred to the three retail outlets at Sydney, Melbourne and of claim, the applicants

By their

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Perth and alleged that Ansett Operations at these outlets:-

"sold by retail to the public, inter alia -

(a)	various tourist coach travel packages, tours,
charters, accommodation and other services

marketed by the Ansett-Pioneer Division of the

firstnamed respondent under the logo

'Ansett-Pioneer' (hereinafter referred to as

'the Ansett-Pioneer products');

(b) domestic and international travel tickets;

(c) Pioneer Touring C l u b travel tickets;

(d) group and charter travel;

(e) accommodation associated with travel."

The respondents admit that allegation.

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The applicants alleged that between about August

1981 and November 1981 (note those dates), the respondents

entered into negotiations with Newtons and the applicants for

the purpose of selling those businesses to Newtons and

procuring the applicants to guarantee the performance by

Newtons under its agreement to purchase the businesses. The respondents admit those allegations.

The applicants alleged that between about August

1981 and November 1981, the respondents represented and made

the applicants. Twenty-four representations and statements are then set out in paragraph form. These can

statements to

be summarised. Two paragraphs, 9(a) and 9(b), were to the

effect that the overall retail sales originating from the

businesses amounted to $6,852,543 pet- annum. It is accepted

by the parties that that sum relates to the financial year

ending 30 June 1981 and was in fact the actual amount

involved. Two paragraphs, 9(c) and 9(d), were to the effect

that the originating from the businesses amounted to gross retail sales of Ansett-Pioneer products

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$2,784,232 per

annum. It is accepted by the parties that that sum relates

to the financial year ending 30 June 1981 and was in fact the

actual amount involved. One paragraph, 9(e), was to the

effect that the gross overall income derived from the sales

referred to in 9(a) and 9(b), amounted to $575,613 per annum.

It is accepted by the parties that that sum relates to the

financial year ending 30 June 1981, that it refers to the

gross commission received on sales and was in fact the actual amount involved. One paragraph, 9(f), was to the effect that

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the gross income derived from the sales referred to In 9(c)

and 9(d) amounted to $278,423 per annum. It is accepted by

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the parties that that sum relates to the financial year

!	ending 30 June 1981, that it refers to the gross commission
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received on sales and was in fact the actual amount involved.
It should be noted that the commisslon was 10% of the total
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sales of the Ansett-Pioneer products.

Six paragraphs, 9(aa), 9(bb), 9(cc), 9(dd), 9(ee),

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the effect that there was no reason why the amounts mentioned

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in paragraphs 9(a), 9(b), 9(c), 9(d), 9(e) and 9(f)

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each of those six last mentioned paragraphs. Each of those

allegations is in dispute. One paragraph, 9(g), was to the

1	effect that the total net income	or profit derived from the
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businesses for the financial year ending 30 June 1981

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amounted to $85,673. The parties accept that figure but

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little relevance can	be placed upon it since the items of	!
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expense taken into account in deriving net income can vary

from proprietor to proprietor. The same paragraph alleged

that the weekly average sales for the Sydney, Melbourne and

Perth outlets were $21,067, $62,810 and $40,173 respectively.

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l	financial year ending 30 June 1981 and is the break up	of the
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sum of $6,852,543 referred to in paragraphs 9(a) and 9(b).

Paragraph 9(g) then alleges that in the period June 1981 to

November 1981, the businesses had continued to trade in the

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manner and at the level indicated by those figures. That

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last allegation is In dispute.

Paragraphs 9(h) and 9(i) alleged that the

businesses were trading profitably and that in the four

months from August to November 1981, they were trading

profitably. Paragraphs 9(j) and 9 ( k ) alleged that the net

income or profit was running at a rate of about $86,000 to

$90,000 per annum as it was also for the four months from

August to November 1981 and there was no reason why that net

income or profit should not continue to be made. Paragraph	i- ,
9(1) alleged that in the four months from August to November
1981, the gross sales figures for the businesses and for the

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Ansett-Pioneer figures respectively each gave a true and

accurate indication of the goodwill of the businesses.

Paragraph 9 ( m ) alleged that the respondents desired to sell the businesses because they wanted to withdraw from the

business of business of retail travel agencies. retailing Ansett-Pioneer products and the

The remaining parts of paragraph 9 of the statement

of claim alleged statements of opinion or statements as to

by alleged that upon the sale of the businesses, the respondents the respondents. Paragraph 9(n)

the future conduct

would cease operating retail travel agencies at which

Ansett-Pioneer products were sold and would not open any such retail outlets or other retail travel agencies. Paragraph

9(0) alleged that upon the sale of the businesses, the

respondents would continue to refer persons who made

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enquiries to them about the possible purchase of

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Ansett-Pioneer products to each of the three businesses

i	respectively, as had been done previously. Paragraph 9(p)
alleged that upon the sale of the businesses, the respondents
would use their best endeavours to ensure that the gross
I	sales of the said businesses were maintained and increased,
while paragraph 9(y ) alleged that upon the sale, the
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respondents would not do anything which would affect
adversely the sales from the businesses. Paragraph 9(r)
alleged that upon the sale of the businesses, the respondents
would, for twelve months, advertise Ansett-Pioneer in the press and otherwise publicise the services provided by Ansett
Operations under the name of Ansett-Pioneer.

By paragraph 10 of the statement of claim, the I

I	applicants alleged that they relied upon the representations
and statements referred to in paragraph 9 and as a result,
Newtons purchased the businesses and the applicants gave
their guarantees. By paragraph 11, the applicants allege
that each of the allegations was misleading or deceptive or likely to mislead or deceive. Particulars were given of the
allegations and separate representations alleged in paragraph 9. were based on each of the twenty-four

Insofar as

the allegations contained in paragraph 9 related to

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l	statements of opinion or statements as to the future conduct
by the respondents, the particulars to paragraph l0 alleged
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the respondents did not time the representations were made, the
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i	have the opinion expressed and did not
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I	intend to carry out the future conduct	as stated.
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By paragraph applicants alleged that they were mislead or deceived by the representations referred Lo in paragraph 9 and as a result, 12 of the statement of claim, the

Newtons entered into the deed dated 20 November 1981 to

purchase the contained in the deed, paid the	businesses	upon	the	terms	and	conditions
sum of $135,420 in accordance

with the terms of the deed and the applicants gave the

guarantee contained in clause	15 of the deed. By paragraph	L
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13 of the statement of claim, the applicants alleged the I .

respondents engaged in conduct in contravention of s.52 of

the Act. By paragraph 14 of the statement of claim, the

applicants alleged that as a result, the applicants suffered

loss and damage “for which the respondents are liable to them

pursuant to section 82 and 87(d) of the Trade Practices Act

1974“. The reference to s.87(2)(d) of the Act. reference to s.87(d) of the Act must be a

In partlculars given as

to the loss claimed, the applicants alleged that the

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applicants gave a guarantee to Cornelius Properties Pty. Ltd.

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with respect to the performance of obligations by Newtons

under a lease from that company for the premises at King Street, Sydney, from which the Sydney business was being

conducted, that Newtons defaulted in the payment of rent

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company the amount of rent owing by Newtons, $32,000 and

costs $1,685.27 amounting in all to $33,685.27.

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By paragraph applicants alleged that Newtons validly rescinded the deed, 15 of the statement of claim, the

the guarantee contained in clause 15 of the deed is not

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enforceable and that the applicants are entitled to an order

declaring the guarantee void. The last allegation is based

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presumably upon s.87(2)(a) of the Act, although no specific

reference is made to that paragraph.

It should be noted that the statement of claim is in a form similar to that which applied when Newtons was an

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l	applicant in the proceedings.	The form of the statement of
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claim, by making all the specific references to Newtons, was

instrumental in leading to the confusion which arose at the hearing resulting in much of the evidence being directed to

an issue of whether Newtons was entitled to relief under the

provisions of the Act. It should be noted further, that

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1	although the High Court gave judgment in Gould	v. Vaqcrelas,
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above, in consideration to its application to the present case until at November 1984, the parties did not give

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least the hearing of the action. Certainly no reference was

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made to that case in February 1986 when the Court, as

I	presently constituted,	refused	leave to the applicants to
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amend their pleadings in conformity to a principle that the

applicants could set off against the respondents cross-claim,

any amount they were liable to the respondents by reason of

their guarantee; February 1986, unreported. see reasons for judgment given on 12

No reference was made to v.

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I	Vaqcrelas in the course	of submissions on that motion or	in
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for conclusion of those submissions. A copy of those reasons judgment given immediately after the

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annexed to these reasons for judgment.

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Mr. Tringas and businessmen, although before 1981, neither had had business experience in the travel industry. Early in the year 1981, Mr. Pappas are each experienced

Mr. Tringas invested $200,000 in Parthenon Travel Services

Pty. Ltd. ("Parthenon"), a company which carried on extensive

businesses in the travel industry throughout Australia.	As a
result of the investment of that money, Mr. Tringas was

supposed to become a director of Parthenon with a 25%

shareholding upon apparently this did not eventuate although the money remained invested in Parthenon until sometime in the year 1982. After payment of a further $500,000, but

the investment of the $200,000, Mr. Tringas became involved

in the management of Parthenon, but mainly in the real estate

and importlexport aspects of the Parthenon business. In that

aspect of his management, he was helped by Mr. Pappas. Mr.

Tringas had known Mr. Pappas previously as a friend only.

Mr. Pappas had commenced working for Parthenon in September

1980 as a	public relations officer.
As a result of discussions held in March 1981

between Mr. Pappas and Mr. L.S. Keith, the manager of the

Ansett-Pioneer outlet in Swanston Street, Melbourne, Mr.

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Pappas discovered that Ansett Operations would sell the I .

travel agency business being conducted by Ansett Operations

at Swanston Street and that Parthenon might be interested in

purchasing that business. During that month, Mr. Keith told

Mr. Pappas that the Swanston Street business was a profitable

outlet selling international and domestic packages. Mr.

Pappas inspected financial records kept by Mr. Keith with

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respect to that outlet for the year to 3 0 June 1980 and to

the end of December 1980. He inspected also the weekly

takings sheets up to March 1981. Mr. Pappas believed that

the outlet was making a net profit of about $10,000 a year

and that the turnover was about $2,000,000 domestic and about

$1,500,00 international. Mr. Pappas was told that the asking

price was about $110,000 to $150,000.

As a result of those discussions with Mr. Keith,

Mr. Pappas prepared a report for his “boss“ at Parthenon, a

Mr. Alexandratos, the managing director of Parthenon. Mr. Alexandratos told Mr. Pappas to make an offer which he did,

namely $60,000. It is interesting to note that this offer

was six times the estimated net profit of the business. Mr.

Keith told Mr. Pappas that he had no authority and that Mr.

Pappas should speak to a manager with Ansett Operations.

Nothing further meantime, Mr. Tringas told Mr. Pappas that he was interested in getting into the travel industry. happened until about July, but in the

l In July 1981, him the Swanston Street business Mr. Keith rang Mr. Pappas and told

was still for sale and gave

him the name of a person to contact to discuss a possible

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purchase. After the phone calls, Mr Pappas	was directed	to	..
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speak to a Mr. R. Thornton. A conference was arranged to be

held at Mr. Thornton’s office head office of the respondents. That conference was held on at 501 Swanston Street, the

29 July and was attended by Mr. Tringas, Mr. Pappas, a Mr.

Kalliakoudis, a director of Parthenon, Mr. Thornton on behalf

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respondents. At the conference, Mr. Thornton said Ansett

Operations did not want to conduct retail travel outlets

under the name Ansett-Pioneer and that Ansett Operations

wanted to concentrate on providing the wholesale product of

tours and other coach services. He said they had outlets in

of Ansett Operations and possibly other officers of the well as in Melbourne and were wanting to sell them. He said

Parthenon was big enough to buy other outlets as well as

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Melbourne. Mr. Thornton said that the outlets were conducted under the name "Ansett-Pioneer" and were typical travel

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agency businesses. Ansett-Pioneer travel agencies were the same As Mr. Pappas said in evidence, the l .

as any other

travel agency, "they have computers, all the accreditations,

P & 0, airline tickets, domestic, international, Greyhound t .-

overseas, buses, packages, accomodation, just any other

product which every other travel agency 1s dealing with."

Mr. Thornton told the conference that the Ansett-Pioneer

outlets concentrated on selling their own products, those

produced by Ansett Operations, both through Ansett-Pioneer

and Ansett Airlines, which were sold through other agencies

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as well. A general discussion took place as to the size of

Parthenon, the number of outlets it had, the proportion of takings by Ansett-Pioneer outlets between international and

domestic products, how Parthenon and Ansett Operations would

benefit if products, Parthenon by its commission on sales and Ansett Parthenon concentrated on the Ansett-Pioneer

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Operations by extra use of its services. Figures relating to	i'
turnover were mentioned, including Ansett-Pioneer products	I

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which essentially were the tours and coach services provlded

by Ansett Operations but did not include Ansett Airlines, as

well as mention those figures since subsequently they were reduced to international figures. It is not necessary to

writing and are not in dispute. Mr. Tringas said that Mr.

Thornton said that the gross takings of the business was

about 8.4% of turnover. The commission on sales varied, but

on Ansett-Pioneer products was 10%.

After officers of Parthenon discussed the proposal and figures supplied, decided that the possible purchase of the three outlets looked good and decided to recommend to the other directors that Parthenon should purchase the three outlets in the conference with Mr. Thornton, the

Sydney, Melbourne inspected the Perth outlet and Mr. and Perth. Thereafter, Mr. Pappas

Pappas and Mr. Tringas

inspected the Sydney office. Mr. Pappas prepared a report

dated 8 August 1981 relating to the three businesses. The

report set out the current position with respect to each of

them and figures showed great increases in turnover, particularly in the international field. The projected figures were based on increasing the sales of international travel. It was a very projected revenue and profits. The projected

optimistic report. For instance, it describes the King

Street Sydney site as being in a "Rolls Royce" position. It I

describes the Swanston Street Melbourne site as being "Ideal

for Retail shop for Expertours", apparently part of the

Parthenon business. It describes the St. Georges Terrace

Perth site as "The office is magnificent and it is capable of

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increasing the International Business".

A further conference was held on 12 August at the

head office of the respondents, attended by Mr. Thornton, Mr.	t
Tringas, Mr. Pappas and Mr. Kalliakoudis as well as other

officers of the respondents including a Mr. Madden. At this

conference, Mr. Thornton produced a draft of a letter on the

letterhead of Ansett Transport Industries Limited. It is

dated 11 August. It is addressed to Mr. Pappas and formed I

the basis f o r the discussions on the proposed sale. It was

not signed. The contents of the letter are of vital

importance and are set out in full:-

"Dear Dennis ,

Attached is a rough proposal and a starting point

for	our	discussions	relative	to	your	Company	I .
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taking over our three retail operations (in , .'.

Sydney, Melbourne and Perth).

The basis of the plan revolves around your company

owned and agency travel outlets, relative to the

future sale of Ansett Pioneer products.

It is our understanding that your are able to

influence the selling policy of 129 Travel Agents

in Victoria, 75 in N.S.W., 6 in the A.C.T.	and 32
in Western Australia.

Our enquiries and sales results show the following agents during the financial year 1980/81:

Parthenon Traded Retail Mathematical

Outlets With Revenue Projection

Available Ansett Result of Revenue

13 Vic. 129 $ 92,000 912,923

N.S.W. 75 10 $ 39,961 299,700

A.C.T. 6 4 $ 53,635 80,452

W.A. 32 7 $ 26,000 118,857 . . . ,

34 TOTAL 242 $211,596 1,411,932.

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Further we know the retail sales of Ansett Pioneer

products through the three retail outlets in

question produce as follows:

Melbourne

$ 847,619

Sydney

$ 668,104

Perth

$1,268,509

$2,784,232.

Dennis, you will appreciate the earnings potential if you combine the commission earnings of Ansett

Pioneer sales at 10%, $278,423 plus the latent

potential of your 242 other outlets of

conservatively $141,193 to provide a gross	income
total of $419,616.

Combined with your other sales activities this

proposition looks promising to both Parthenon and

Ansett Pioneer.

I::

Yours sincerely,

R. THORNTON

Att.

Ansett Pioneer agree to:

1.

Assign where possible the existing leases on (Annexure ' A ' ) .

2. Release the Ansett Pioneer employees to

Parthenon along with their accrued holiday, long service and other entitlements.

3. Allow Parthenon Travel to sell Ansett Pioneer products at usual commission rates.

4.	Rent to Parthenon the Visual Display Units in
association 'Ansamatic' with computer
facilities on a year to year basis.

I

- 21 -

Parthenon Travel agree to:

1. Assume control of the businesses at the

locations referred to and promote travel sales

in a manner whlch is of the high standard and

image of Ansett Pioneer.

2.	Assume responsibility of the leases	of	the
properties.

3 . Pay the employees a remuneration equal to

their current basis and review the salary

levels from time to time, in accordance with

award conditions as a minimum requirement.

4. Provide a superannuation scheme to those

eligible employees similar in context to the

current Ansett Transport Industries package.

5 . Abide by the terms of the lease providing

insurance, public risk and other requirements

as stated.

6. To promote Ansett products in the first

instance, only selling competitive services as c

a last resort. There is to be no direct

advertising of competitive services.

7. Ensure that operators of the V.D.U. Ansamatic

facilities are fully trained and approved by

Ansett Pioneer (A fee of $800 per person is currently charged to train employees on this system). i

8. To purchase all fixtures and fittings in the locations at book value. (Annexure 'C').

9. To operate the business as Parthenon Travel.

Ansett Pioneer and Ansett products being part of the range carried by Parthenon Travel.

F

L

I

l. The price of the goodwill associated with the . 11

three retail outlets is $330,000 cash.

2 . Through its Parthenon owned retail outlets and

associates, encourage and promote Ansett

Pioneer product sales.

I-

i'

S '

! . '

I - 22 -

3 . Providing that Parthenon Travel (Including 3

Ansett Pioneer shops) and lts outlets produce

the following annual sales results of Ansett

Pioneer products, then the price in paragraph

1. becomes void:

Year 1 : $4.2 million Year 2 : $4.8 million Year 3 : $5.3 million.

Commission at the rate of 10% would be paid on

these revenue achievements, to Parthenon.

4. For reasons unexplained, should Parthenon and its agents retail sales of Ansett Pioneer products not achieve the annual sales outlined Shortfall of sales contingency. table would apply, requiring cash payment in full of the balance due at the end of each year:

Year 1	$415,000 less 10% of Ansett Pioneer retail
sales thru Parthenon

that for outlets 8 -

financial (for year L ' ,

example see Annexure

l

'B' 1.	I
!

Year 2 $477,000 less 10% of

Ansett Pioneer retail

sales thru Parthenon

that	outlets	for
financial year.

Year 3	$548,000 less 10% of
Ansett Pioneer retail
sales thru Parthenon

that	for	outlets
financial year.

ANNEXURE A.

THE PROPERTIES ARE KNOWN AS:

a)	59 Swanston Street, Melbourne
b)	147 King Street, Sydney
c)	37 St. Georges Terrace, Perth.

I

l

I . .5

- 23 -

ANNEXURE B.

FOR EXAMPLE:

Retail sales achieved were	less than $4.2
million target.

Actual Parthenon

by Sales by 3 Ansett Pioneer Stores Group $ 211,596

$ 2,784,232

_-________-

$ 2,995,828

_----------

Installment Year l $ 415,000

Less 10% of sales achieved .$ 299,583 !

______----_

Cash Payment due ........ ........ ..$ 115,417".

-----------

Some comments should be made about that letter.

Parthenon was a large organisation but only a small number of

Ansett-Pioneer promoted Ansett-Pioneer products through all its agencies, products. If Parthenon

its outlets sold

the potential turnover of those products was projected as

$1,411,932 per annum. At 10 per cent, that would produce a

gross income of $141,193 per annum. When added to the income

from the three sites the subject of the negotiations, a gross

income of $419,616 could be received. The increased sales of

Ansett-Pioneer products would benefit Ansett Operations by

I#.

increasing sales of the services provided by it. The !

purchase price was to be $330,000 but if sales increased as projected, no purchase price was to be paid, the benefit to

I	Ansett-Pioneer resulting from the increased sales of its
services. If sales did not increase as projected, the
l	purchase price was to be increased. The employees in the
three businesses were to become employees of Parthenon, which
was to have the benefit of the "Ansamatic" computer

. I

I . ,	- 24 -
I I

facilities to reservations of Ansett Pioneer products enable it to have instant access to

as well as Ansett

i

Airlines reservations. products in favour of its competltors. Ansett-Ploneer was not sellmg the name "Ansett-Pioneer'' as part of the goodwill Parthenon was to promote Ansett

I

of the busmesses.

I

It is not necessary to refer in detail to the

evidence as to the conversations that occurred at this

conference. After interested in the prospective purchase. Draft agreements were prepared. Discussions took place concerning terms to be included in the agreement. Discussions took place within the conference, Parthenon remained

Parthenon concerning the desirability of having a term in the

agreement relating to Ansett-Pioneer not opening new retail

outlets and Ansett-Pioneer or a purchaser from it reducing escape clauses in case of strikes or of

the supply of

services being becoming too dear or if the projected turnover was not Ansett-Pioneer products, or the services

achieved. Mr. Pappas knew of these discussions. Copies of

the accounts for each of the three business	for the financial	I.	-
I
L -.

year 1980/81 were supplied to the accountants of Parthenon.

i ,

By this stage, Mr. Pappas knew that the Sydney office was

being conducted at a loss but the turnover figures set out in

the letter of 11 August 1981 were taken from those accounts.

Those figures are not being disputed.

- 25 -

In mid September 1981, Parthenon decided not to

proceed with the purchase. Mr. Tringas and Mr. Pappas each

say they do not know why Parthenon so decided. Mr. Pappas

said that Mr. Thornton told him that Parthenon's accountants said that the profit of the three businesses was only about

$37,000, but Mr. Thornton said that figure was wrong.	In any
event, the purchase did not eventuate.

Late in September, Mr. Tringas told Mr. Pappas he

wanted to look at the possibility of buying the three

businesses, even though he did not know the reason why

Parthenon had not proceeded with the purchase. As a result, negotiations opened between Mr. Tringas, his solicitor, Mr.

Webb, and Mr. Pappas on the one hand and Mr. Thornton and the

solicitors for Ansett-Pioneer on the other. A number of

meetings occurred during October and November. Mr. Thornton

told Mr. Pappas another person was interested in buying the

business, which was a very good one. At other meetings,

discussions took place relating to the "Ansamatic" equipment

and also telephones, but it is not clear whether these were

discussed before or after Parthenon decided not to proceed.

The telephones were of importance since they came through the

Ansett rented telephone exchange but by dialling the correct numbers they went direct to the outlet sites. These direct

numbers were set out on business cards issued to employees at

the sites. Customers and prospective customers were given i .J

these cards. switchboard could be In addition, enquiries to the central I.

connected to the appropriate extension

.

at the site. The retention of this facility was of

- 26 -

importance. It was discussed between Mr. Tringas and Mr.

Thornton. Possibly it was discussed before Parthenon ceased

negotiating. The question of advertising was discussed and

Mr. Thornton said Ansett-Pioneer would continue to advertise

Its services. Mr. Tringas knew that the Sydney business had

made a loss, but overall a profit had been made from the

three businesses. He had participated in the earlier

negotiations involving Parthenon. that knew He

Ansett-Pioneer had Ansett-Pioneer to collect money for fares on international an IATA licence which enabled

travel and subsequently	to pay those fares, less commission,	,,,/
!

on receipt of accounts, to a collecting agency for payment to

the provider of that service. It is important that any travel agency conducting international travel arrangements should have such a licence. The IATA licence was with

respect to the Melbourne office. Mr. Tringas was to be able

to use the Ansett licence with the result that Ansett would

be charged for all amounts entered on that account.	Mr.
Tringas was also concerned to ensure that the sales were

! ..

rc

continuing at the same level as for the year 1980/81 and

would so continue into the future.

I .

I.

Mr. Tringas said that he made up his mind to buy

the businesses in October 1981. Thereafter figures were

discussed further and in particular the figures for the year

1980/81. These were well known to Mr. Tringas. They were

given to negotiations took place	his	accountant.	During	that	period	also,
with respect to the terms of the

contract. At this stage, reference need be made to two

- 27 -

I

aspects of those negotiations. They continued on the basis

of the draft letter dated 11 August 1981 even though Mr.

Tringas did not conduct a large travel agency business

similar to that being conducted by Parthenon. The other

aspect relates to the takings of the businesses after 1 July

1981. Draft agreements, based on the Parthenon drafts, were

being proposed. On 21 October 1981 Mr. Pappas wrote to Mr.

the guarantee from Ansett-Pioneer in relation to the sales of Ansett-Pioneer products. Ansett-Pioneer refused to give any Importance of obtaining a written

Webb concerning

such undertaking, but arranged for copies of the weekly and

cumulative statements kept by each of the businesses showing

the budget, actual and variation from budget of receipts,

revenue and expenses for the period 1 July 1981 to November

1982. These delivered to Mr. Tringas' accountant. Among other items, those accounts showed the weekly and cumulative takings from sales of Ansett-Pioneer products for that period and the accounts were given to Mr. Pappas to be

inference is clear that Mr. Tringas knew of those figures.

His accountant, Mr. Rockman, told him that the figures were

alright and that it was alright for Mr. Tringas to proceed

with the agreement. There may be doubt as to whether Mr.

i

Rockman gave that advice before or after he received the

accounts for the period July to November 1981, but on the

evidence I draw the inference that the advice was given by

, Mr. Rockman to Mr. Tringas after Mr. Rockman had examined

both sets of accounts. That inference is supported by a

letter dated 12 November 1981 from the solicitors of

Ansett-Pioneer to Mr. Webb, the solicitor for Mr. Tringas.

. . .*

Under cover of that letter, a further draft of the agreement

was forwarded to Mr. Webb with alterations from the previous

draft being identified. The letter contained the following

paragraph:-

"We are instructed that your client no longer

requires a warranty as to sales achieved by the

businesses as it has now inspected the books and

records maintained by our client."

That reference is to the copies of the accounts given by

Ansett-Pioneer to Mr. Pappas for the period after	1	July
1981. Mr. Webb, apparently, accepted that assertion since

nothing further was said or done in relation to this matter.

By 17 November 1981, the terms of the agreement

were acceptable and under cover of a letter of that date, Mr.

Webb forwarded the original agreement to Mr. Tringas for

execution. The letter stated that Mr. and Mrs. Tringas were to guarantee the contract. At all relevant times Mr. Tringas

understood that guarantee. The letter contains the

i'

paragraph:-

"The contract is in accordance with the draft

which we discussed with you on the 10th inst. In

our letter of the 10th inst., it sets out the

terms. A copy of the letter is enclosed and is to

be read with this letter."

I

. .

i - 29 -

The letter of 10 November 1981 is not in evidence. The

letter of 17 November contains a number of observations,

including the following:-

"The deed states that it constitutes the

entirety your of agreement, therefore all

warrantxes and representations do not carry any

effect once the agreement is executed and

exchanged. 'I

It is realised that clause and that sentence cannot

exclude the remedies conferred by the Act, but in the way the

present case is put, that clause and that paragraph of the

letter do have some effect. It should be noted further that

neither Mr. Webb nor Mr. Rockman gave evidence in these

proceedings.

The deed made on 20 November 1981, referred to at

the beginning of these reasons, contains the terms of the

agreement reached between Newtons as purchaser,

Ansett-Pioneer as vendor and Mr. and Mrs. Tringas as

guarantors. Under the deed, 20 November 1981 was the

completion date. The recitals state that Ansett-Pioneer for i

sometime has "been carrying on the business of a travel

agency selling Ansett Pioneer products" at the three

locations. It should be noted that many other services were

sold in addition to Ansett-Pioneer products. There are

recitals referring to the sale, the employees at the three

locations, and the leases of the three outlets. Clause 1 of

the deed provides that Newtons purchases the goodwill of the

three businesses for the price "calculated in accordance with

I

I

. * I - 30 -

!

,

the provisions of clause 2", and the fixtures and fittings

valued at $25,420.00. Under clause 2, the price for the

goodwill is $330,000, the same as the price discussed in the

Parthenon negotiations. The purchase price was to be paid by

$110,000 on 20 November 1981, $110,000 on 20 November 1982

and $110,000 on 20 November 1983, with a provision that the

last two amounts were to be reduced in accordance with the

formula specified Ansett-Pioneer products exceeded $2,800,000 in the year to in the deed if the gross sales of

20

I

November 1982 and exceeded $3,000,000 in the year to 20

November 1983. It should be noted that this proviso is

!

similar to that contained in the letter of 11 August 1981 but

the amounts were based on the sales by Ansett-Pioneer at the

three locations for the year 1980/81 only and not on the

projected sales formula was different also. Clause 2 defines &sett-Pioneer from the other Parthenon agencies. The

products. Under clause 3 , the benefits of the businesses

vested in Newtons on 20 November 1981.

There contained in the deed and it is not necessary to summarise each of them. On 20 November 1981, Newtons was to pay Ansett-Pioneer the instalment of $110,000 and the cost of the are a large number of lengthy clauses

fixtures and fittings, $25,420, less an amount of some

$22,000 being the existing entitlement to annual leave and

long service leave of the employees being taken over by

Newtons. Newtons was to take an assignment of the existing leases of the businesses. Under clause 8, Ansett-Pioneer

gave a lease of its Ansamatic Visual Display Units at each of

l

I ; - 31 -

the businesses at monthly rentals and undertakmgs were given

I by Newtons in relation to personnel using those Units and

l strict conditions were imposed on the use of the Units.

I ..

conditions Ansett-Pioneer to terminate the leases immediately. Clause 9	and	entitled	1 -
L
I,
c: I .

Breach those undertakings of

is set out in full:-

"9.	The Vendor agrees to make available to the
Purchaser the use of telephone switchboard
facilities in the Businesses (comprising 6
lines in Sydney, 5 lines in Melbourne and 5
lines in Perth) at a monthly rental of $100
each line for used. The Purchaser
acknowledges that these telephone lines will be barred to prevent dialling outside the Businesses and the Purchaser covenants that it
will not take any action to remove such
barring and further that it will not use the telephone numbers of Ansett Pioneer in any of its promotional or advertising literature."

Clause 10 is a long clause	containmg covenants given by	. .
_ .

Newtons.	It covenants to "conduct the Businesses in a manner	I':;
._

consistent with the maintenance and enhancement of the

reputation of Ansett Pioneer and in accordance with the

procedures and

conditions accredited to Ansett Pioneer". This accreditation is of importance since it enables the accredited agency direct access to the Ansamatic system, to receive payment of fares from the public and to pay over those fares, less commission, on receipt of statements from Ansett-Pioneer. Newtons was prescribed for travel agents

;:

I -

required at all times to "vigorously promote Ansett Pioneer !.: ,

products and services competitive with those offered by Ansett Pioneer". ... refrain from selling any products or

Ansett-Pioneer was given the right to approve "all

,

. m

. I

c

- 32 -

advertising and display material used in the marketing and	!
promotion of Ansett Pioneer products and that such material shall not be used without the prior approval of"

Ansett-Pioneer. Failure to obtain the prior approval gave

the right to Ansett-Pioneer immediately to "terminate the

right of the Purchaser to sell Ansett Pioneer products and to

'Ansamatic' the use VDU's". Under clause lO(2)

Ansett-Pioneer undertakes to continue to sell Ansett-Pioneer

products at	commission rates not being less than ten per
cent.

Clause 11 provided for the termination of the deed

and in any event the liability of Newtons to pay goodwill to Ansett-Pioneer shall cease if Ansett-Pioneer should cease to

carry on business under that name. Under clause 12(b)

Ansett-Pioneer warranted that it would use its best

endeavours to transfer IATA Licence No. 02-3-1541-2 to

Newtons. In the meantime, Newtons was able to use that

licence for international travel and charge the amounts to Ansett-Pioneer. The licence was not transferred to Newtons until July 1982, just before Newtons purported to rescind the

agreement.

Under clause 13, Ansett-Pioneer warranted that it would retain the New South Wales Travel Agents Licence then

held by it. That licence was necessary to enable a person to	i:.
carry on a travel agency business in New South Wales. Under

clause 14(1), Newtons agreed that it would not conduct the t L

businesses "under any name or logo which includes words or	:.
I. '

- 33 -

or Clause 15 contained the guarantee given by Mr. and Mrs. Tringas. Clause 17 contained the provision excluding to phonetically similar to 'Ansett

letters visually

Pioneer' 'I.

the extent possible by law all warranties and representations

except those contained in the deed. The schedule and the

appendices to the deed need not be summarised.

i-

L .

I

L .

It becomes necessary to consider the evidence in support of each of the representations alleged in paragraph 9

of the statement of claim. The representations alleged in

! -

paragraphs 9(a), (b), (c), (d), (e) and (f) were each made by

Ansett-Pioneer. They are contained in the records provided

by Ansett-Pioneer to Mr. Tringas as well as to Mr. Pappas.

They relate to the year 1980/81. Mr. Tringas knew of them.

The actual figures were not alleged to be incorrect. The

,

representations alleged in paragraphs 9(aa), (bb), (cc),

I :

(dd), (eel and (ff) each relate to the continuation of the sales referred to in paragraphs 9(a), (b), (c), (d), (e) and (f) respectively. There is no evidence of express statements

being made to that Thornton said that the businesses were profitable, would be effect. There is evidence that Mr.

a

L '.

good buy and matters	of that kind, but the evidence does not	..
3 -

support a claim that they constitute conduct within s . 5 2 of

the Act. Those statements are in the nature of puffing.

Newtons wanted a warranty about future takings to be included

in the deed. Ansett-Pioneer refused to give any such

warranty. They supplied to Newtons the financial records

- 34 -

setting out the takings subsequent to 1 July 1981 and up to

early November 1981. These were given to the accountants for

Newtons and finding that these representations were made. Mr. Tringas. The evidence cannot support a

l

If in fact

they were made, the evidence shows that they were not relied

upon by Mr. and Mrs. Tringas. The examination of the actual

records replaces any statement of opinion.

l

Likewise with respect to the allegations contained

in the s l x paragraphs (g) to (1) inclusive. They are based

on the actual figures for the year 1980/81. Insofar as they

are based on the period July to November 1981, the actual

. (

figures were contained in the records supplied to Newtons and	. ._ .* - 1
Mr. Tringas. Ansett-Pioneer refused to give any warranty in this regard. Newtons and Mr. Tringas relied upon the records supplied to them.

Ansett-Fioneer did desire from the business of retailing Ansett-Pioneer products and to withdraw altogether

the business of retail travel agencies as alleged in

paragraph 9(m). There is no evidence to show that at the

time that desire was expressed to Newtons and Mr. Tringas,

Ansett-Pioneer did not have that desire. Both Mr. Tringas

I I

and Mr. Pappas knew other travel agencies sold Ansett-Pioneer

products. Each knew tickets through agencies conducted by Ansett Operations. Mr. that Ansett Operations sold airline

I	Pappas knew that Ansett Operations, through Ansett Airlines,
i	sold Ansett Pioneer products including the existing Ansett
I
i	Airlines agencies in Melbourne. There was no suggestion that

I

- 35 -

Ansett Operations would cease those actlvities. Similar

conclusions are contained in paragraph 3(n), which, essentially, 1s the same reached with respect to the allegation

allegation as that contained in paragraph 3(m).

There is no evidence to support the allegation

contained in negotiations relating to the possible purchase by Parthenon, reference was made to referral of enquiries received at the Ansett switchboard but the only matter specifically agreed to paragraph 3 ( 0 ) . In September 1981, during

was that contained in clause 9 of the deed. The deed makes

to negotiations on the draft deed on 7 October 1981, Mr. Webb, referral generally. In fact, during

no reference

I

the solicitor for Mr. Tringas, wrote to Ansett-Pioneer this matter. The relevant part on

of the letter is:-

"With respect to the telephone switchboard

facilities it is suggested that a clause be added

to the effect that the Vendor refers all enquiries

with respect to Ansett Pioneer products to the

Purchaser. A proposed clause is attached."

The proposed clause is not in evidence. The deed does not

contain a clause to that effect. There is no evidence of any statement to that effect made to Mr. Pappas or Mr. Tringas. There is no evidence to support the allegations made. The direct lines through the swithchboard to the businesses

remained.

- 36 -

allegation nebulous. There is no evidence that the representation was contained in paragraph 9(p) is

The

made In the form alleged. The allegation is consistent with

the basic principle behind the negotiations, namely that

increased sales of Ansett-Pioneer products would result In a

! -

reduction of the purchase price, that Newtons would promote

and give preference to Ansett-Pioneer products and that as a

result, Ansett-Pioneer would receive the benefit of greater

sales of its services. That, added to inflation increases,

L .

would be to the benefit of Newtons. Mr. Pappas understood

I .

i

this. In the context, these discussions could not and did

not constitute conduct by Ansett Operations under s . 5 2 of the

Act. At the most, statements made on behalf of Ansett

Operations were mere puffing. Likewise, there is no evidence

to support the allegation contained in paragraph 9(q). In

any event, any such statement would amount to mere puffing.

Further, each of these allegations in reality amounts to

allegations of

agreements. negotiations concerning the draft deeds, it is most unlikely that if agreements were reached, they were not included in the terms of the deed which was executed. Except in clear In view of the detailed

cases, and this	is	not one of those cases, negotiations	:
I

resulting in agreements cannot amount to conduct within s . 5 2

of the Act when the terms of the agreement are reduced to

writing, signed by the parties, and the relevant alleged

agreements are not included in the written agreement. This I '

is so particularly, as in this case, when the parties have

retained solicitors to prepare, discuss and amend the terms

of the written agreement to ensure all agreed terms are

I

- 37 -

included in the agreement.

The allegation alleged in paragraph 9(r) is a clear

example of an alleged agreement not constituting conduct.

The paragraph alleges conduct being an agreement by

Ansett-Pioneer to advertise its products for a period of

twelve months. Clause 10 of the deed relates to advertising

by Newtons. If there had been an agreement by Ansett-Pioneer

to advertise, it would be expected to be included in the

deed. It is not in the deed. Further, none of the evidence

supports the allegation contained in this paragraph.

The allegations contained in paragraphs 9(m) to (r)

inclusive relate to representations as to future events or

conduct. They raise issues as to the state of mind of the

officers of representations of this type may form the basis of a the respondents. In an appropriate case,

valid

claim for contravention of 5 - 5 2 of the Act but only in the

event that it is established that the belief of the officers

of the respondent was, at the time the representations were

made, different from what was stated, or that the officers

did not

believe indifferent as to what was stated or were recklessly

what was stated. The mere fact that the

representations as to future conduct or events do not come to

pass does not make them misleading or deceptive. Generally

I .

see Bill Acceptance Corporation Ltd. v. GWA Ltd. (1983) 50

A.L.R. 242. These allegations all come within this type of

case - representations as to future events or conduct.

Although the statement of claim alleged that at the time the

l	1.
I ,:
I '

- 38 -

representations were made, the respondents did not have the

opinion expressed and did not intend to carry out the future

conduct as stated, there is just no evidence to support that

allegation. Apart from what has already been said with

respect to these allegations, in my opinion, there was no

evidence to support the allegation that the officers of the

respondents did not intend to carry out the future conduct or

made the representations recklessly, indifferent as to what

was stated. Further, I was not satisfied on the evidence

that the representations as to future conduct as contained in

these allegations did not come to pass, but having regard to

the other findings made, I do not consider it necessary to

examine the evidence in these reasons to show	how I came to
that view.

In their submissions, counsel for the applicants contended, quite correctly in my opinion, that in considering

the evidence, the Court should have regard to the impression

conveyed to Mr. Tringas and Mr. Pappas by officers of the

respondents during the whole of the negotiations from July to

November 1981. The particulars of the conduct are limited to representations but nevertheless, each representation should

not, it was contended, be considered separately but as

forming part of continuing conduct over the lengthy period.

There is force in these contentions, but the impression I

have formed from the whole of the evidence is that Mr.

Tringas was determined to purchase the business when he first learned that Parthenon was not proceeding with its proposed

I

purchase. He said he did not know the reason why Parthenon

l

I - *

- 39 -

dld not proceed. He was determlned to proceed irrespective

of what officers of the respondents did. This impression is

supported by the evidence that although he sought to have

additional terms included In the deed, he proceeded with the

purchase even when his requests for those additional terms

were refused. He clause inserted in the agreement about those matters, he accepted and must be taken to have acted upon the weekly was concerned about the takings of the

businesses from 1 July 1981, but when he could not get a

statements of the three businesses for that period. Those

records showed that commencing In about September 1981, there

was a sharp decline in takings, not only in fact but also

against budget being the projected figures. Mr. Tringas

decided to proceed with the purchase. Further in 1982,

Newtons purchased another travel agency business in Oakleigh,

a suburb of Melbourne, for $20,000 even though Mr. Tringas

knew that that business was operating at a loss. The reason

given for the purchase of that business was that it would

assist in the sale of international travel. The evidence

suggests that Mr. Tringas concentrate on and to increase the international travel area of the businesses, but it is not necessary for the Court to speculate why Mr. Tringas wanted Newtons to purchase the three businesses. They were purchased and the Court, on the and Mr. Pappas planned to

no case submission, must accept the evidence given by Mr.

Tringas and contradicted by contemporaneous documentary evidence. The Mr. Pappas except where that evidence is

evidence shows that Mr. Tringas did not rely upon any of the

representations made to him. He had all the documents

I

! , ; " * - 40 -

relating to the receipts of the businesses supplied to his

accountant. He attempted unsuccessfully to have some matters

relating to future takings included in the terms of the

agreement. He had received the warning from his solicitor

about the terms of the deed and about representations. In

all these circumstances, there is no evidence to support a

finding, even by inference, that he relied upon the

representations. He made his own investigations. The

figures given to him were not challenged.	He	wanted the
businesses at any cost.

On the whole of the evidence before the Court at

the close of the applicants' case, and making all reasonable

inferences in favour of the applicants which were open on

that evidence, probabilities, that the applicants had established their I was not satisfied, on the balance of

claim against the respondents or either of them. The

respondents had made full disclosure of all relevant

financial material. I was not satisfied that either Ansett

Operations or Ansett Transport Industries Limited had, in

trade or commerce, engaged in conduct that was misleading or

deceptive or was likely to mislead or deceive with respect to

the sale to Newtons of the three businesses being conducted

by Ansett Operations at Sydney, Melbourne and Perth. I was

either Transport Industries Limited had, in trade or commerce, engaged in conduct that was misleading or deceptive or was Ansett Operations or Ansett

not satisfied that

i	likely to mislead or deceive with respect to the guarantee
given by the applicants and as contained in clause 15 of the

I

9

. B

1 - 41 -

deed. It follows that the applicants had failed to prove, on

I

I	the balance of probabilities, that they or either of them,
had suffered loss or damage by conduct of the respondents or
either of them that was done in contravention of s.52 of the
Act; see s.82 of the Act. Accordingly, the Court dlsmissed
the application.

Further, even if the applicants had proved that the

respondents or either of them had engaged in conduct in

contravention of s.52 of the Act, the applicants had not

proved that they had suffered loss or damage as a result of

that conduct. There can be no doubt that the businesses

purchased by Newtons under the deed were of some value.

There was no evidence before the Court that the value of the

goodwill of the businesses was less than $330,000. There was

no evidence before the Court that the value of the fixtures

and fittings of the busmesses was less than $25,420. In

fact, there was no evidence at all directed to showing what

was the true value of the businesses. The applicants did not

purchase the punctual performance by Newtons of its obligations under the businesses. They guaranteed the due and

I !'.

deed. In these proceedings the applicants are claiming

damages under s.82 of the Act. The claim by Newtons for an

order declaring the deed void and to have been void ab initio

was dismissed and the applicants cannot pursue that claim on

I

behalf of Newtons. Nevertheless, the applicants are entitled

to recover the amount of loss or damage they personally have

suffered. They may be entitled to an order under s.87(2)(a)

of the Act if they have suffered loss or damage. Those

i.

i 8 ,

! '

! - 42 -

damages are separate and distinct from the loss suffered by

Newtons; see Gould v. Vasselas, above, per Gibbs C.J. at

I

p.33. In a claim for damages for deceit where the plaintiffs are not the purchasers under a contract of sale, "the measure I

of damages is the sum which represents the loss which the

plaintiffs have suffered because they altered their position

in reliance on the fraudulent misrepresentation"; see per

Gibbs C.J. at p.36. See also Brennan J. at pp.59-60.

Similar principles apply with respect to claims based upon

contravention of 5 . 5 2 of the Act.

In an action for deceit by a plaintiff who has been

induced to guarantee a third party's liabilities, prima facie

the plaintiff must prove "that he has paid or is liable to pay more under the guarantee than the value of anything he acquired by giving the guarantee and by meeting his liability

under it" - per Brennan J. at p.60. Similar principles apply

with respect to a claim based on a contravention of s.52 of

the Act where a	guarantor is claiming damages under	s.82 of
the Act.

The applicants are claiming damages in the sum of

$33,685.27 being the amount paid by the applicants to

:

Cornelius Properties Pty. Ltd. under a guarantee given by the no sufficient evidence to prove the facts of that payment,

applicants to that company with respect to a lease for the

but in any event, the payment was made pursuant to a

different guarantee entered into after the deed of 20

. . O

- 43 -

November 1981. There is no evidence to show that the

applicants suffered loss or damage by giving the guarantee

contained in clause 15 of the deed. There is no evidence to

I

show that the true worth of the businesses purchased by

Newtons was less than the amount Newtons agreed to pay for

them under the deed. The applicants have not proved they I

have suffered any loss or damage under s.82 of the Act.

Having held that the applicants have not proved

that they have suffered loss or damage by the conduct of the

respondents or either of them that was engaged in in

contravention of s .52 of the Act, the Court is not empowered

to make orders under 5 - 8 7 of the Act. This is made clear

from the wording of sub-section 87(1) namely:-

' I . . . where, in a proceeding instituted under

is a party to the proceeding has suffered, or is	... this Part, the Court finds that a person who
likely to suffer, loss or damage by conduct of
another person that was engaged in ... in
contravention of a provision of ... Part V, the
Court may ... make such order or orders as it
thinks appropriate ... (including all or any of
the orders mentioned in sub-section (2) of this
section) . . . 'I.

For present purposes, the relevant order sought by

the applicants is an order declaring the guarantee contained

in clause 15 of the deed to have been void ab initio; see

paragraph 87(2)(a).	Here, that order cannot be made because	! :	.
? '

the applicants have not brought themselves within sub-section

87(1).

- 44 -

It should be noted that since this application was

dismissed, the High Court, on 26 June 1986, gave judgment in

v. Jet Corporation of Australia Pty. Ltd., in which the

nature of s.87 of the Act was considered.

I

In making the findings set out above, I have been

conscious of the fact that in the cross claim, Ansett

Operations is suing the applicants on the guarantee contained

in clause 15 of the deed. Judgment for Ansett Operations has

been given on that claim. That judgment was given on the

basis that the applicants could not succeed in establishing a

case that the guarantee should be treated as being void ab

initio. It is possible that the applicants could have

submitted that they suffered loss or damage under 6.52 of the

Act, the loss or damage being their liability under the

guarantee. In my opinion, any such submission would fail

because of the findings made in relation to the alleged

conduct by the respondents and in relation to the absence of

I '

evidence proving that the value of the businesses purchased

was less than that agreed to be paid by Newtons under the	i .
deed.
!
I

IN THE FEDERAL COTJRT OF AUSTRALIA )

VICTORIA DISTP.ICT REGISTRY V. No. G 39 of 1382

1

GENERAL DIVISION

BETWEEN	:
GEORGE TRINGAS and STAVROULA TRINGAZ Applilza11ts

and

ANSETT TRANSPORT INDUSTRIES (OPERATIONS) PTP. LTD.

I and ANSE’IT TRANSPORT INDUSTRIES LIMITED Respondents

COURT: NORTHROP J.

m: 12 FEBRUARY 1386

PLACE : MELBOURNE

I .

M TEMPORE REASONS FOR JUDGMENT !

By deed of agreement dated 20 November 1981 Ansett Transport Industries (Operations) Pty. Ltd. agreed to sell a

business to Newtons Travel Services Pty. Ltd. At all

material times the applicants, George Tringas and Stavroula

Tringas, were the directors and two of the principal

shareholders of Newtons.	The applicants were parties to the
deed of agreement dated	20 November 1381 and under that

agreement Jointly and severally guaranteed to Operations the

due and punctual performance by Newtons of all its

obligations contarned in that deed. Under the deed of

agreement the laws of the Australlan Capital Territory were

I - 2 -

1	deed.
to apply to the rights and obligations of L l i r pdrties to the
l	I

In July 1982, Newtons and the applicants commenced

these proceedings applicants sought damages against Operations and its parent in the Federal Court. The then three

company Ansett Transport Industries Limited, pursuant to 5.82

of the Trade Pr.actices Act 1974 based in substance on

breaches of s.52 of the Trade Practices Act and in addltion, sought orders declaring the deed of agreement including the

guarantee void ab Initio pursuant to s . E J of the Trade

Practices Act and an order directing the repayment of the

moneys paid by Newtons to Operations. It should also be

noted that it was claimed that Newtons had validly rescinded

that deed of agreement.

i

Operations commenced proceedings in the Supreme

Court of the Australian Capital Territory against the two applicants, Mr. and Mrs. Tringas, on their guarantee. The

amount claimed was for $585,639.37 being the amount alleged

to be owing by Newtons to Operations under the deed	of
agreement.

I By order made on 29 October 1982, the Federal Court

ordered that Newtons provide security for the costs of

Operations and ordered further that until security was given,

the action by Newtons be stayed. See 0 .28 r.5	sub-rule	(1)
paragraph (a) of the Federal Court Rules.

On 30 June 1933, the Supreme Court of Victorla

ordered that Newtons be wound up and Mr. D.P. Tonkin was

appointed liquidator of Newtons. By notlce dated 15 December

1983, Operations gave notice that it would move the Court for

orders that pursuant to the order of unless Newtons provided security for costs

29 Octoher 1982, the application of

Newtons be dismissed with costs. On 17 February 1984, the

Court ordered by consent that the proceedings, insofar as

they were brought by Newtons, be dismissed with costs. That

order was made by consent and on the face of the record must

have been made with the consent of Mr. Tonkin, the liquidator

of Newtons, and the order must have been made pursuant to

0 . 2 8 r.5 sub-rule (1) paragraph (b) of the Federal Court

Rules. This is S O , even though the wording of paragraph (b) is as follows:-

"5. (1) Where the Court orders that the

applicant prooide security for costs, it may order-

... L.

(b) that if the applicant fails to comply

with the order to provide security within

the	time	limited	in	the	order,	the	' .
L .

proceeding be thereafter stayed or

dismissed.	!. I
I '

Counsel for Operations and Ansett in the present case has

argued that this is an inference which cannot be drawn

because on the face of it the record merely says, by consent

the proceedings be dismissed. But having regard to the

motion which was before the Court and to the existence of the

earlier order for the giving of security for costs and the

staying of the action, ~t is apparent, in my opinion, that in

dismissing the proceedings, by consent, the Court was

. . e

- 4 -

exercising the power conferred by	0.28	r.5	sub-rule	(1)
paragraph (b).

In the proceedings in the Supreme Court of the Australian Capital meantime, Operations had commenced

Territory against the applicants based on the guarantee given

by them. Apparently with the consent of the parties, the

clalm by Operations was to be brought by way of cross-claim

in the present proceedings in lieu of continuing with the

a summary of the pleadings as between the two applicants and the respondents, Operations and Ansett,

proceedings in the Supreme Court of the Australian Capital the following is

immediately prior to the present motions before the Court:-

, i

1. Further Amended statement of claim in which the .. _.

two applicants are George Trlngas and Stavroula Tringas. It

is dated 1 May 1384. This statement of claim is similar to

the	original	statement	of claim	and	in	substance	the	!
I '

applicants are seeking orders that the deed of agreement is

rescinded; they are claiming damages and are seeking an order

that the guarantee is not enforceable against them, and an

order declaring the guarantee void ab initio. The last order

being apparently under s.87 of the Trade Practices Act.

2 . A defence to that statement of claim. The

defence is dated 10 May 1384 and is in substance a denial of

the facts upon which the applicants' claims are brought and

are based.

- 5 -

3. A cross-claim Operatlons is seeking $585,639.37 under the guarantee given dated 10 May 1'384 by which

by the applicants and is contained in the deed of agreement.

I

In substance, the cross-claim is the statement of claim that

had been used in the Supreme Court of the Australian Capital

Territory proceedings.

Defence to the cross-claim dated 19 May 1984. In this defence the applicants rely upon an allegation that

4.

the guarantee was resclnded by notice dated 12 July 1982,

given by Newtons with respect to the deed of agreement. In

addition, the applicants say that by reason of the matters

raised in the statement of claim, they are not liable to

Operations.

By notice of motion dated applicants sought the following orders:- 25 November 1985, the

I.

"1. That the Cross-Applicants be granted leave to

deliver and file an Amended Defence to

Cross-Claim and Cross-Claim in the form of the

exhibit marked 'SEG 10' to the affidavit of

Sean Elwin Grant sworn the 25th day of

November 1965 and filed herein.

2. That the self-executing order of Mr. Justice Northrop made the 17th day of February 1985 herein be set aside.

!

. . e

- 6 -

I

1	3 .	Alternatively, that the self-executlng order
of Mr. Justice Northrop made the 17th day of
February 1385 be varied so as to enable the
Cross-Applicants to raise m thelr Cross-Claim
I
i	against Ansett Transport Industries
I	(Operations) Pty. Ltd. the Cross-Respondent
herein the former claim of Newtons Travel
Services Pty. Ltd. (in liquidation) for
damages for contraventions of Section 52(1) of
the Trade Practices Act 1374 (Cth.).
4.	For such further orders as the Court considers
appropriate. 'I

It is difficult to understand the reference to the self-executing order referred !

to in each of orders 2 and 3 as

sought by the applicants. The order made on the 17th day of

February 1984 was an order by consent dismissing the claim by

Newtons. It was in its terms final and absolute and was not

and could not be described as a self-executing order to

operate in the future.

By notice of motion dated 29 November 1985,

Operations and Ansett are seeking orders that the proceedings

be set down for trial. The two motions came on for hearing

on 6 February 1386. In support of order 2 the applicants

I

- 7 -

relied upon 0.28 r.5	sub-rules ( 2 ) and ( 3 ) .	The whole of r.5
should be read:-

"5. (1) Where the Court orders that the

applicant provide security for costs, it may order- (a) that the proceeding on any claims by the

applicant for relief be stayed until

security is provided; or

(b)	that if the applicant fails to comply with the order to provide security within
the time limited in the order, the
proceeding be thereafter stayed or

dismissed.

( 2 ) Subject to sub-rule (l), the Court may

set aside or vary any order made under this Order.

( 3 ) Where a proceeding stands dismissed

pursuant to an order under this Order, that order

shall not be set aside or vaqied except in special

circumstances. ' I

It should be noted further that under 0.28 r.1 a

reference in that Order to an applicant extends to any person

who makes a claim for relief in any proceeding and

accordingly would apply to a respondent who is seeking by way

of cross-claim, relief against a respondent.

The motion to set aside the order of 17 February

1984 is refused. Newtons is in liquidation, the motion is

not made on behalf of Newtons. The liquidator presumably

does not desire to proceed with the proceedings. There is no

basis for the motion to obtain an order that Newtons be made an applicant. To do so would make a mockery of the order for

security for costs. Newtons would become an applicant.

Newtons is insolvent. The liquidator who controls Newtons

should not be compelled to continue with proceedings which it

I

I i

I I ‘ 9

i	’	!.
I

i	- 8 -
i

does not want to take and accordingly, thc-cs 1s no basis for

the order seeking t~ set aside the judgment.

The substance of the submissions made the applicants in relation to the other matters on behalf of

can be

summarised. In the present case I do not express any final

or concluded views on the questions of law raised, and any

views I so express are nature of interlocutory matters before the Court, and would on the basis that they are in the

not in any way prevent the Judge hearing the action from

expressing views contrary to them.

The cross-claim brought by Operations is based on a

guarantee. Counsel for the applicants concedes, quite

correctly, that in answer to a claim on the guarantee, a

guarantor cannot avail himself of remedies the principal

debtor may have against the creditor to whom the guarantee is

given. Counsel does contend that there is an exception to

that rule, namely the existence of an equity arising from the

insolvency of the principal debtor which allows the guarantor

to raise as a defence to an action based on the guarantee, a

claim which the principal debtor may have had against the

guarantee and arising out of the transaction in which the

guarantee was given. Counsel relied upon a number of

authorities including Cellulose Products Ptv. Ltd. v. Truda

(1970) 92 W.N.(N.S.W.) 561, and authorities referred to

therein and to authorities in the United States of America.

There is much to be said for that contention. To some

extent, the applicants have relied upon that principle in the

- 3 -

exlsting statement of claim and in their defence to the

cross-clalm.

existence of the exception arises from the insolvency of the principal debtor and is based on the equity

The

that if a principal debtor, normally guarantor is required to pay a debt of the

he can claim that amount so paid

from the principal debtor. But if the principal debtor is

insolvent, his only remedy would be to sue or to claim in the

insolvency, and in those circumstances, it would be

inequitable for the guarantor not to be able to rely upon any

defence or claim that the principal debtor may have against

the creditor if the creditor was to sue the principal debtor.

The existence of the equity attempts to work out what is fair

and just as between the guarantor and the creditor.

However, the form of the order sought in order 3 of

by reference is made to Aurel Forras Ftv. Ltd. the applicants is not appropriate, and

the motion

v. Graham Karp

Developments Fty. Ltd. E19757 V.R. 202 at p . 2 2 0 where

Menhennitt J. said, and I quote:-

"It fol~ows from the foregoing that, if a

plaintiff, in reply to a defendant's counter-claim, seeks to rely upon a claim which arose before the

issue of the writ, he should, in general, apply for

leave to amend his statement of claim, but that, if

he seeks to rely upon a claim which arose after the

issue of the writ, the only way in which he can do

so, in the absence of consent by the defendant, is

in a counter-claim by the plaintiff and it was

decided in v. Andrews (1882) 8 Q.B.D. 428 that

he was entitled to raise it in a plaintlff's

counter-claim. "

See also Bate v. International Computers (Aust.) Ptv. Ltd.

(1984) 2 F.C.R. 526 per Woodward J. at p.532.

I

i	$
I

I - 10 -

Accordingly, the further hearing of the motion was

adjourned to today to enable the legal advlsers of the

applicants to consider the position of the applicants.

On the resumption of the hearing of the motion

today, the applicants sought leave to amend the application,

the statement of claim and the defence to the cross-claim.

In substance, what was sought by the applicants was the

inclusion of certain claims contained in paragraphs 15 to 22

of the document handed to the Court this morning.

By paragraph 15, the applicants sought to allege an

agreement between Newtons and Operations containing a number

of terms being the terms of the representations constituting

the conduct alleged which was entered into by Operations in

breach of 5.52 of the Trade Practices Act.

Paragraph 16 alleges breaches of those terms.

Paragraph 17 alleges a collateral agreement between Newtons

and Operations; the terms of the agreement being the

representations which constitute the conduct, the basis	of
the 5.52 Trade Practices Act claims.

- 11 -

Paragraph 18 alleges breaches of those collateral

warranties. Paragraph	19	alleges damages - and I will read
that paragraph:-

"19. In the premises Newtons has suffered loss and

damage. PARTICULARS OF LOSS AND DAMAGE

Full particulars of loss and damage will be

provided prior to trial."

Interrupting the examination of the proposed amendments, it should be noted that paragraph 19 includes the claim for

damages based on s.52 of the Trade Practices Act which was a

claim made by Newtons in the original statement of claim when

Newtons was an applicant. That claim has been dismissed by

consent. Faragraph 19 also claims damages based upon the

terms of the agreement referred to in paragraph 15 of the

proposed amendment and also damages for breach of the

collateral warranties alleged in paragraph 17 of the proposed

amendment. Neither of those causes of action were pleaded by

Newtons in its origlnal statement of claim.

l Coming back to the proposed amendments, paragraph

20 alleges that Newtons was wound up on 30 June 1983.

Paragraph 21 raises fairly and squarely the equity which has

been discussed earlier in these reasons. It reads as

follows : -

"21. In the premises the applicants are entitled to

set-off against the cross-claim of the

respondents so much of the claim of Newtons

for loss and damage arising by reason of the

matters contained herein as will be sufficient

to satisfy extinguish or said the

cross-claim. I'

- 12 -

By way of comment it 1s noted that this is stated

in the form of a cross-claim but is expressed as a set-off to

a cross-claim by Operations. It is based fairly and squarely

i	on the equity.	It is limited to the amount of the claim by Operations against the two applicants and even though Newtons
is not a party to the proceedings, that is not a fatal defect
i
having regard to the fact that Newtons is in liquidation.

Paragraph 22 although marked to be a new paragraph

is, on the face of it, almost identical to paragraph 15 of the statement of claim presently before the Court. It reads as follows:-

" 2 2 . Further, by reason of the matters aforesaid:-

(a) Newtons rescind the agreement embodied in the became entitled to, and did, I.

deed referred to in paragraph 12(a)

hereof ; " .

There is now inserted the word "hereof" which did not appear

in the current statement of claim.

"(b) the guarantee is not enforceable against

the applicants or elther of them; and (c) the applicants are entitled to an order

declaring the guarantee void ab initio."

So in reality, the amendments now sought to the

statement of claim are in relation to the terms of the

agreement between Newtons and Operations; the collateral

warranties, the terms of which are the same as those terms,

damages suffered by Newtons for breach of those collateral

warranties as well as for contraventlon of s.52 of the Trade

Practices Act and a set-off of the amount up to the amount of damages suffered bp Newtons.

I

Problems do arise in relation to a claim based on

s.52 of the Trade Practices Act by incorporating the same

facts as being terms of an agreement, particularly when, from

what appears from the pleadings, the agreement was reduced to

writing and became a deed of agreement, and these terms are

not those contained in the deed of agreement, as well as

alleging collateral warranties. But nevertheless, on the

face of it, if the applicant desires to amend and there is no i r ,

other reason why the leave should not be given to so amend,

leave would be given to raise those additional matters.

Likewise, from what has been said earlier, leave would

normally be given to ralse the set-off based on the equity

discussed earlier in these reasons.

The proposed amended defence to cross-claim is

complementary to the amendments to the statement of claim,

and what is sought is the addition of a further paragraph as

follows : -

"20. Further and in the alternative the

cross-respondents will seek to set-off so much

of their claim herein, including the claim of

Newtons' raised by them, as will be sufficient

to satisfy or extinguish the claim	of	the
cross-applicants herein."

That is a defence based fairly and squarely on the equity.

- 14 -

The proposed amendments to the application are to

I

insert new paragraphs (d), (e) and (f), and I will read:-

"(d) an order pursuant to sub-section R7(2)(d) of

the Trade Practices Act 1974 (Cth.) directmg

the respondents and each of them to pay to the

applicants the amount of any loss or damage

suffered by the applicants as a result of the

contraventions referred to in the Further

Amended Statement of Claim;".

This claim is brought under s.87(2) of the Trade Practices

Act because of problems that might arise in relatlon to

l

limitations of actions arising from the provisions of that

Act. At the moment the question a5 to whether the limitation

period is six years or three is pending in the High Court.	i:
r. c - I ,

"(e) an order setting off against any amount found

to be due upon the respondents' cross-claim so

much of the loss and damage suffered by

Newtons by reason of the matters referred to in the Further Amended Statement of Claim as will be sufficient to satisfy or extinguish

such cross-claim;

(f)	interest pursuant to Statute;".
Counsel for Operations and Newtons has opposed the

granting of leave on t w o principal grounds. The first: that

of futility. This is based on the principle that where a

claim is being made or sought to be made, which cannot

possibly succeed, the Court should refuse to give leave to so

amend a statement of claim a5 to raise that particular claim.

In elaboration of that submission, counsel argued

that the applicants cannot have any greater right than the right Newtons had, and even though Newtons is not a party to

the proceedings and need not be a party, the applicants

!

- 15 -

cannot raise any cross-claim by way of defence or set-of€

I

because Newtons claim for those very matters has been

1 dismissed by consent. He relies upon the principle that a

dismissal or judgment in an action, as this is, merges the

cause of action in the judgment, and that cause of action

i

I cannot then be relied upon by the party to those proceedings.

And of necessity, other persons cannot raise that same issue in other proceedings.

Counsel relied upon a series of authorities: Port

of Melbourne Authoritv v. Anshun Pty. Ltd. m the Supreme

Court of Victoria, McGarvie J., reported E19803 V.R. 321; an

appeal to the Full Court in C19813 V.R. 81, and in the High

Court, (1981) 147 C.L.R. 589. A number of general

I

propositions arise from those authorities. The first one,

which 1 s stated at p.324 of the judgment of McGarvie 3. is as I

! follows : -

I	“1.	Where a	cause of action is claimed upon
!

or put in suit in a proceeding and judgment is

I

obtained, the cause of action merges in the

I

judgment or is negated by the judgment and has no

i

!	later existence as a cause of action. Accordingly,
!	no proceeding can later be brought upon the cause
of action. ‘I
:

Accordingly, no proceeding can later be brought upon the

I i cause of action.

i :

I ‘ b . I .

In Anshun‘s Case, there had been a judgment of the

i

1	Court	after interlocutory judgment; there	trial.	In the	present	case,	there	is
I

has been no judgment on the

l

merits as opposed to an interlocutory judgment even though

I

final. In my opinion, that makes no difference to the

i

I

I

;

- 16 -

general principle, although problems do arise In the present

case because of equitles which I will explain in a moment.

It is submitted by counsel for Operations that the judgment obtained by Operations against Newtons is a bar to

...	, '<
:.i

any subsequent action brought by Newtons and, of necessity,

I'

is a bar to any claim brought by the applicants, the

Tringas', based upon a cause of action which has been barred

by Newtons agreeing to judgment being entered against it. He

contends that to enable the Tringas' to bring such a cause of

action would, in substance, place the respondents in a

position of being able to bring	an action on Newtons behalf	!
! '

when Newtons cannot bring that action where the Court has t ,

made an order for security for costs against Newtons, and, on ..

a motion to have the claim by Newtons dismissed, Newtons has

consented to the claim being dismissed; in other words,

judgment against it; that it would be unfair to allow Tringas

to bring that claim based on 5 . 5 2 of the Trade Practices Act,

and equally unfair to allow the applicants to bring a related

claim arising from the same facts based upon terms of	an
agreement, and collateral warranties.

As opposed to that, it must be remembered that

Operations is claiming under a guarantee. The guarantors, if

they are liable under guarantee, are paying a debt of the

principal debtor, the debtor is in liquidation, the I

guarantors have no way to ensure that the principal debtor

takes all steps to raise by way of defence or counter claim,

claims it might have against the creditor. That here, the

!

. c

- 17 -

liquidator can do what he likes and thls could well amount to

an unfair basis In which the applicants are unable to raise

defences which equity they are entitled to raise. It must be

remembered however, that the need for the guarantee was to

secure payment where, for any reason, the principal debtor

did not or could not pay the debt.

In fact, in the material in support of their

motion, the applicants alleged facts which suggested that

Operations was in soms way active in obtaining the winding up

order against Newtons as a step in defeating Newtons' claim

I..

against Operations. During the course of submissions, on

that issue, I expressed a view that there was no basis

whatsoever for any such suggestion. The whole purpose of the

security for costs being awarded against a corporate body was

because of the unique provision relating to corporations;

special provisions being made that if a corporation is unable

to pay its debts or pay the costs or give security, it should

not be allowed to pursue proceedings in the Court.

Nevertheless, one is faced with the problem of the

applicants, under normal circumstances, having a claim based

in equity to raise by way of defence, a claim that Newtons

may have against Operations being baund by actions over which

they have no control. Nevertheless, applying the principles

of law which are discussed in Anshun's Case, in my opinion,

the existence of the judgment or order against Newtons does

constitute a bar to the applicants in relying upon any claim

that Newtons may have against Operations.

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Likewise, in my opinlon, to allow the applicants to

brlng a related clalm based on breach of terms of an

agreement between Newtons and Operations or collateral

warranties between Newtons and Operations, would be a way to

I

avoid those principles of law which is not permissable, and

accordingly, in my opinion, the existence of the judgment is

a bar to the proposed claim of proposed amendment sought by

the applicants. This does n o t of necessity mean that the

applicants cannot rely upon the matters already raised by

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them in relation	to the recission of the deed of agreement,	i -
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including the terms relating to the guarantee.

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The other main matter raised by way of opposition

to the order sought was on discretionary grounds, namely that

because of the delay in the matter, the matter having been ready for trial, because of the problems associated with the

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fact that Newtons having been ordered to give security for	r:	. .
costs did not give them, and then subsequently had their

claim dismissed, as a matter of discretion the Court should

not allow the applicants to raise those same issues, as it

were, on behalf of Newtons, since to	do so would be to defeat
the orders already made.

!

Again, this raises a nice balancing exercise

between the equities of the applicants and the existence in

law of the judgment, and as a matter of discretion, if

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otherwise there is power to do so, I would refuse to grant

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leave sought to amend the statement of claim, the defence to

cross-claim and the application.

In all the circumstances, therefore, the motion

brought by the applicants and dated 25 November 1985, is

refused, with costs to be taxed.

Dates of hearing : 2 1 April 1986 - 9 May 1986

Judgment delivered : 8 August 1986

Counsel for "Tringas' " : Mr. P. Tribe and Mr. D. Salek

Solicitors for "Tringas'" : Messrs. J.B. Murphy, Boyd & Robb

13 Stanley Street,

WODONGA. VIC. 3690

Counsel for "Ansett" : Mr. P. Hayes and Mr. N. Lucarelll

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Solicitors for "Ansett" : Messrs. Dawson Waldron

60 Martin Place,

SYDNEY. N.S.W. ZOO0

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