Yenald Nominees Pty Ltd v Como Investments Pty Ltd
[1996] FCA 377
•17 May 1996
CATCHWORDS
PRACTICE AND PROCEDURE - Court's discretion to vary or amend a judgment that has not been entered.
TRADE PRACTICES - misleading conduct - assessment of loss suffered by reason of such conduct - degree of connection between misleading conduct and the loss claimed.
Trade Practices Act 1974
Federal Court Rules O 35 r 7
Allstate Life Insurance Co v Australia and New Zealand Banking Group Limited (1995) 133 ALR 667
Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1
Henjo Investments Pty Limited v Collins Marrickville Pty Limited (No 2) (1989) 40 FCR 76
The Texas Company (Australasia) Limited v FCT (1940) 63 CLR 382
YENALD NOMINEES PTY LTD (ACN 008 871 225) v COMO INVESTMENTS PTY LTD (IN LIQUIDATION) (ACN 008 732 223) & ORS
WAG51 OF 1994
LEE J
PERTH
17 MAY 1996
IN THE FEDERAL COURT )
OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY )
GENERAL DIVISION ) NO. WAG51 OF 1994
B E T W E E N: YENALD NOMINEES PTY. LTD.
(ACN 008 871 225)
Applicant
and
COMO INVESTMENTS PTY. LTD.
(IN LIQUIDATION)
(ACN 008 732 223)
First Respondent
and
RICHARD ELLIS (WESTERN AUSTRALIA)
PTY. LTD.
(ACN 008 912 641)
Second Respondent
and
GIACOMO BEVACQUA AND LIDIA BEVACQUA
Third Respondents
and
COMO INVESTMENTS PTY. LTD.
(IN LIQUIDATION)
(ACN 008 732 223) AND
GIACOMO BEVACQUA AND LIDIA BEVACQUA
Cross Claimants in
First Cross-Claim
and
RICHARD ELLIS (WESTERN AUSTRALIA) PTY. LTD.
(ACN 008 912 641)
Cross Respondent in
First Cross-Claim
and
RICHARD ELLIS (WESTERN AUSTRALIA)
PTY. LTD.
(ACN 008 912 641)
Cross Claimant in
Second Cross-Claim
and
COMO INVESTMENTS PTY. LTD.
(IN LIQUIDATION)
(ACN 008 732 223) AND
GIACOMO BEVACQUA
Cross Respondents in
Second Cross-Claim
AMENDED MINUTE OF ORDER
JUDGE MAKING ORDER: LEE J
DATE OF ORDER: 17 MAY 1996
WHERE MADE: PERTH
THE COURT ORDERS THAT THE ORDERS MADE 25 MARCH 1996 BE VARIED AS FOLLOWS:
There be judgment for the applicant against the first and second respondents and the first-named third respondent in the sum of $350,885.65.
The applicant's claim against the second-named third respondent be dismissed.
The first and second respondents and the first-named third respondent pay 90% of the applicant's taxed costs.
The first respondent and the first-named third respondent indemnify the second respondent in respect of any sum paid by the second respondent to the applicant to discharge the judgment, interest on the judgment and costs.
The cross-claim by the first and third respondents against the second respondent be dismissed with costs.
The first respondent and first-named third respondent pay the second respondent's costs of the second respondent's cross-claim against the first respondent and the first-named third respondent.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT )
OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY )
GENERAL DIVISION ) NO. WAG51 OF 1994
B E T W E E N: YENALD NOMINEES PTY. LTD.
(ACN 008 871 225)
Applicant
and
COMO INVESTMENTS PTY. LTD.
(IN LIQUIDATION)
(ACN 008 732 223)
First Respondent
and
RICHARD ELLIS (WESTERN AUSTRALIA)
PTY. LTD.
(ACN 008 912 641)
Second Respondent
and
GIACOMO BEVACQUA AND LIDIA BEVACQUA
Third Respondents
and
COMO INVESTMENTS PTY. LTD.
(IN LIQUIDATION)
(ACN 008 732 223) AND
GIACOMO BEVACQUA AND LIDIA BEVACQUA
Cross Claimants in
First Cross-Claim
and
RICHARD ELLIS (WESTERN AUSTRALIA) PTY. LTD.
(ACN 008 912 641)
Cross Respondent in
First Cross-Claim
and
RICHARD ELLIS (WESTERN AUSTRALIA)
PTY. LTD.
(ACN 008 912 641)
Cross Claimant in
Second Cross-Claim
and
COMO INVESTMENTS PTY. LTD.
(IN LIQUIDATION)
(ACN 008 732 223) AND
GIACOMO BEVACQUA
Cross Respondents in
Second Cross-Claim
CORAM: LEE J.
DATE : 17 MAY 1996
PLACE: PERTH
REASONS FOR JUDGMENT
Reasons for judgment in this matter were delivered on 25 March 1996. A minute of the terms of the judgment to be entered was attached to the reasons and, therefore, judgment was pronounced in the terms of the minute on that day. Pursuant to the minute the parties were required to file proposed orders by consent in respect of costs or, alternatively, submissions in that regard.
Judgment has not been entered in the terms pronounced. The parties have filed submissions in respect of costs. In addition, pursuant to O 35 sub-r 7(1) of the Federal Court Rules the applicant ("Yenald") by motion seeks an order varying the judgment pronounced.
I will deal first with Yenald's motion that the judgment be varied. Before a judgment has been entered the Court, in its discretion, may vary or amend the judgment, such discretion to be exercised judicially. (See: Allstate Life Insurance Co v Australia and New Zealand Banking Group Limited (1995) 133 ALR 667.)
An order varying the terms of a judgment that has not been entered will be made to correct error or oversight or to give effect to a review of the contemplated order so that the orders made deal more adequately with the matter as litigated by the parties before the Court. (See: The Texas Company (Australasia) Limited v FCT (1940) 63 CLR 382 per Starke J at 457.)
The parties agree that the judgment be varied by including interest on the sum found to be the loss sustained by Yenald, such interest to be calculated at 8 percent per annum for the period 27 January 1994 (date of settlement of the purchase) to 25 March 1996. The parties have agreed also that the order that the first respondent ("Como") and the first-named third respondent ("Mr Bevacqua") indemnify the second respondent ("Richard Ellis") in respect of any sum paid by Richard Ellis to Yenald to discharge the judgment obtained by Yenald, include an indemnity for the payment of interest on that judgment.
The judgment as pronounced against Como, Richard Ellis and Mr Bevacqua was for the sum of $286,000. Yenald seeks variation of that amount by including a further sum said to represent the difference between the amount of stamp duty assessed ad valorem on the purchase price and paid by Yenald and the amount of stamp duty that would have been paid if the purchase price had been equal to the value of the property as found in the reasons. The amount of the difference has been calculated at $13,217.50. The calculation is not in issue but Como and Mr Bevacqua oppose the variation sought by Yenald. Yenald included a claim for overpaid stamp duty in the particulars of loss supplied before trial but the claim was not quantified at trial nor referred to in closing submissions.
The loss Yenald is entitled to recover under s 82 of the Trade Practices Act 1974 ("the Act") is a loss suffered by reason of the contravention of s 52 of the Act by Como and Richard Ellis. The assessment of the loss involves consideration of that which is reasonable having regard to the degree of connection between a loss claimed and the contravening conduct and to any steps that could have been taken to reduce the loss suffered. (See: Henjo Investments Pty Limited v Collins Marrickville Pty Limited (No 2) (1989) 40 FCR 76, 93.)
Under the analogous measure of damages for deceit under the general law, a plaintiff would be entitled to recover all foreseeable consequential loss which flowed diectly from reliance upon such conduct. (See: Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1 per Mason, Wilson and Dawson JJ at 12.) The principal object of the measure of damages in deceit is to restore the injured party to the position that person would have occupied if the transaction had not occurred. However, if restitution is not effected by the rescission of the transaction, the award of the difference between the amount paid and the value of the property acquired, and no more, may not restore the claimant to a position that is unaffected by the consequence of relying upon the misleading conduct. For that reason further consequential losses may be added to the measure.
In the present case it may be said that the amount of stamp duty paid by Yenald resulted from the conduct upon which Yenald relied to enter the transaction upon which the duty was levied. Although rescission has not been ordered and the transaction, therefore, is, in effect, affirmed by Yenald, it is proper to regard the amount of stamp duty paid by Yenald as a sum that Yenald was caused to pay by the conduct of Como and Richard Ellis. To the extent that the sum paid exceeded the stamp duty that would have been paid on a purchase price fixed at true value, it is a loss sustained by Yenald by reason of the conduct of Como and Richard Ellis
notwithstanding that if the conduct upon which Yenald relied had not occurred Yenald may not have been able to conclude a transaction with Como to purchase the property at a price which reflected the true value of the property.
On the date on which Yenald entered the transaction to purchase the property in reliance upon the conduct of Como and Richard Ellis, Yenald incurred an obligation to pay more for the property than its value and to pay more in stamp duty than would have been assessed if the property had been purchased at that value and became entitled under s 82 of the Act to be restored to a position in which such excess payments were recovered. Therefore, the sum for which judgment is to be entered should be varied to include the amount by which the stamp duty paid by Yenald was inflated by the transaction Como and Richard Ellis caused Yenald to enter.
Yenald also seeks to vary the amount of the judgment by including as part of the loss incurred by Yenald the cost incurred in complying with a Health Notice served on Como after the agreement to purchase the property had been entered into. The cost of the work carried out as directed by the Health Notice was said to be $22,500. The quantum is not in issue. Yenald submits that the valuers who gave evidence of valuation assumed that it was necessary to incur such expenditure to obtain the market rental on which the valuations were based. That is to say, it was assumed by the
valuers that unless the work was carried out the property could not attract the market rentals relied upon by the valuers to calculate the value of the property.
No valuer gave evidence to that effect and there was no evidence that to obtain a proper valuation the full cost of such work had to be deducted from the value of the property otherwise obtained. The method of valuation I adopted excludes consideration of that cost. The value of the property as at the date of the agreement to purchase the property is calculated according to the rent obtainable for premises of that type and purpose fitted out with appropriate fixtures and fittings. It is a hypothetical calculation based on a prediction of the amount of rent a building of that type would command if appropriate fixtures and fittings were installed and of the provision a prospective purchaser would make for the cost of acquiring and installing such fittings and fixtures in calculating an appropriate price to offer for the property if the property as sold did not include such fixtures and fittings.
The cost of complying with a work order imposed on the building after the agreement to purchase had been entered into had no relation to that calculation of value as described. It is an outgoing, like many others, for which a purchaser takes responsibility upon purchase of the property.
The work order was in respect of matters of health and hygiene related to the conduct of a business carried on by a tenant. It may be expected that the terms of an appropriate lease (cf. cl 7.5 of Exhibit G) would oblige a tenant conducting such a business to meet the cost of such work from time to time and that the rental payable under such a lease would be struck after taking into account the prospective liability of a tenant to meet those costs. In other words, the relevant market rental would take into account the likelihood of a lessee incurring such a liability.
The statement in the reasons that any claim of loss under this heading must be subsumed in the loss occasioned by conduct which caused Yenald to offer to purchase the property, alluded to the fact that if there was reliance upon conduct which concealed the imposition of the work order, the amount of loss caused by that conduct could be no more than the loss to be assessed as the difference between the purchase price and the value of the property acquired. At best, if the failure to reveal that a work order had been imposed after the agreement for purchase had been entered into did occasion loss, the amount of that loss was no more than the worth of the opportunity forgone to bargain for reduction of the purchase price agreed to be paid, having regard to my finding that Yenald would not have withdrawn from the bargain if it were permitted to do so under the terms of the contract.
The judgment pronounced should be varied by adding to the sum of $286,000 an amount of $13,217.50 for overpaid stamp duty and by adding the sum of $51,668.15 for interest payable on the sum of $299,217.50 between 27 January 1994 and 25 March 1996. Therefore, the amount for which judgment should be entered is $350,885.65.
With regard to the question of costs Como and Mr Bevacqua submitted that the costs recovered by Yenald should be reduced because Yenald's success in the action was based upon amendments made to the pleadings after the trial had commenced.
That submission does not reflect the reasons delivered. The liability of Como, Richard Ellis and Mr Bevacqua is based squarely on the pleadings as they stood prior to the commencement of the trial, namely, paras 8, 9, 9A and 10 of the statement of claim.
It was submitted that Yenald failed upon, and should not have the costs of, the issue relating to misleading or deceptive conduct involved in representations with regard to the ownership of fixtures and fittings installed in the premises made at the time of inspection and prior to the formation of the agreement for purchase.
Again, the reasons delivered show that the representations Yenald claimed were made were found to have been made as alleged but by reason of the superior impact and consequence of other misleading conduct which left no room for the separate calculation of loss caused by representations as to ownership of fixtures and fittings, it was unnecessary to give any further consideration to that issue.
A similar submission on costs was made in respect of the claim of misleading conduct made by Yenald about Como's concealment of the imposition of the work order when the requisitions delivered by Yenald were answered by Como.
The finding in the reasons delivered is not that Yenald failed upon this issue but that it was unnecessary to spend time upon it when the amount of loss occasioned by that conduct would have to be measured as the value of a lost opportunity to reduce the purchase price, Yenald having succeeded on other issues in which the loss to be assessed absorbed any loss claimed to have been suffered under this head.
Yenald, by late amendment at trial, added a further pleading which alleged that Como engaged in misleading conduct by continuing to withhold disclosure of the tenant's default under the lease up to the settlement of the purchase. Once the principal claim by Yenald was upheld it was unnecessary to deal with a claim added as an alternative to ensure that the pleadings accorded with the facts Yenald set out to prove according to the case opened by counsel.
It is arguable that Yenald adopted a "belt and braces" approach to the litigation by including all claims capable of being argued instead of limiting itself to a principal issue. However, I am satisfied that Yenald was entitled to consider that the Court may regard all representational conduct as interdependent and to protect itself by pleading accordingly.
In addition, it was submitted that the dismissal of the claim against the second-named third respondent ("Mrs Bevacqua") should bring an order for costs against Yenald. Mr and Mrs Bevacqua were the two directors of Como and appeared jointly as third respondents. There is nothing to suggest that the costs of Mr and Mrs Bevacqua were divisible or that additional costs were incurred separately by Mrs Bevacqua.
At the same time Yenald should have been aware that in the absence of evidence able to show that Mrs Bevacqua had knowledge of the facts material to the misleading conduct of Como, the claim against her could not succeed and an order should be made that imposes a sanction to discourage the inappropriate use of the Court's process not being a sanction that delivers an undue windfall to the respondents.
In the end it is a matter of judgment as to a fair result in respect of costs and I have concluded that the appropriate order in the circumstances is that the costs recoverable by Yenald from Como, Richard Ellis and Mr Bevacqua be reduced by 10 percent.
Richard Ellis should be indemnified by Como and Mr Bevacqua in respect of any sum paid by it to discharge the costs payable to Yenald under that order.
Richard Ellis is to have the costs of its successful cross-claim against Como and Mr Bevacqua, and Como and Mr and Mrs Bevacqua are to pay the costs incurred by Richard Ellis in defending the cross-claim brought by Como and Mr and Mrs Bevacqua against Richard Ellis and dismissed.
It is not appropriate to order that Como and Mr Bevacqua pay the costs incurred by Richard Ellis in defending the claim made by Yenald. Richard Ellis was properly joined as a respondent and has had judgment entered against it accordingly. Although the instructions received by Richard Ellis from Como and Mr Bevacqua initiated the conduct of Richard Ellis which brought liability to Yenald, it made the choice to defend Yenald's claim and to deny Yenald's entitlement to relief. It is sufficient that the second respondent obtain the costs of defending the cross-claim against it by Como and Mr and Mrs Bevacqua and the costs of maintaining its own cross-claim against Como and Mr Bevacqua and be indemnified in respect of any costs it is required to pay to Yenald under the judgment for costs obtained by Yenald against Como, Richard Ellis and Mr Bevacqua jointly.
As to the costs of the motion to vary the judgment, apart from the variations to which the parties had already agreed, Yenald succeeded on one item and was unsuccessful on another. The parties should bear their own costs on that motion. The costs of the submissions on costs are to be costs in the respective causes of the claim and cross-claims.
I certify that this and the preceding twelve (12) pages are a true copy of the Reasons for Judgment of his Honour Justice Lee.
Associate:
Date:
APPEARANCES
Counsel for the Applicant: M.J. McCusker Q.C.
L.C. Evans
Solicitors for the Applicant: Clayton Utz
Counsel for the First and Third Respondents: R.I. Viner Q.C.
E.W. Nielsen
Solicitors for the First and Third Respondents: Nielsen & Co.
Counsel for the Second Respondent: P.C. Doherty
Solicitors for the Second Respondent: Minter Ellison Northmore Hale
Date of Judgment : 17 May 1996
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