Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Bullabidgee Pty Ltd v McCleary [2011] NSWCA 259
• Hearing dates: 29 June 2011
• Decision date: 02 September 2011
• Before: Allsop P at 1; Basten JA at 86; Young JA at 87

Decision

On or before 23 September 2011 the parties place in the Court of Appeal submissions box and serve any submissions on the form of orders including costs, having on or before 16 September 2011 served on each other draft submissions.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: TRADE AND COMMERCE - Fair Trading Act 1987 (NSW) - misleading and deceptive conduct - representations concerning matters connected with purchase of rural land - and (second) as to reliability of valuations in existence - reliance on Act not waived.; TRADE AND COMMERCE - Fair Trading Act 1987 (NSW) - causation and relief - tortious analogue of loss not to be applied - misleading and deceptive conduct affected price negotiations - proper form of relief in circumstances - appropriate to order return of deposits.; CONTRACT - election - affirmation - no affirmation in circumstances where purchasers sought to enforce rights as qualified by statutory remedies.
• Legislation Cited: Conveyancing Act 1919 (NSW), s 55(2A); Fair Trading Act 1987 (NSW), ss 42, 68, 68(1), 72, 72(5)(a); Fair Trading Amendment (Australian Consumer Law) Act 2010 (NSW), Sch 1; Trade Practices Act 1974 (Cth), ss 82(1), 87
• Cases Cited: Abraham v Mallon (1975) 1 BPR 9157; Baird v Chambers (2010) 15 BPR 28,337; Barnes v Hay (1988) 12 NSWLR 337; Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592; Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304; Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; 202 CLR 45; Chappel v Hart [1998] HCA 55; 195 CLR 232; Chester v Afshar [2004] UKHL 41; [2005] 1 AC 134; Elbourne v Gibbs [2006] NSWCA 127; Environmental Agency v Empress Car Co (Abertillery) Ltd [1998] UKHL 5; [1999] 2 AC 22; Fitzgerald v Penn [1954] HCA 74; 91 CLR 268; Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; 160 CLR 1; Henville v Walker [2001] HCA 52; 206 CLR 459; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; 210 CLR 109; Janssen-Gilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526; Kizbeau Pty Ltd v WG & B Pty Ltd [1995] HCA 4; 184 CLR 281; Kuwait Airways Corporation v Iraqi Airways Co (Nos 4 and 5) [2002] UKHL 19; [2002] 2 AC 883; March v Stramare (E & MH) Pty Ltd [1991] HCA 12; 171 CLR 506; Marks v GIO Australia Holdings Ltd [1998] HCA 69; 196 CLR 494; McCarthy v McIntyre [1999] FCA 784; Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388; Rosenberg v Percival [2001] HCA 18; 205 CLR 434; Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332; Travel Compensation Fund v Tambree (t/as R Tambree & Associates) [2005] HCA 69; 224 CLR 627; Wardley Australia Ltd v Western Australia [1992] HCA 55; 175 CLR 514
• Texts Cited: J D Heydon Cross on Evidence (8th Aust Ed 2010)
• Category: Principal judgment
• Parties: Bullabidgee Pty Ltd (First Appellant) Towool Pty Ltd (Second Appellant) Towool West Pty Ltd (Third Appellant) Towool Water Pty Ltd (Fourth Appellant) Warrawool Pty Ltd (Fifth Appellant) Warrawool North Pty Ltd (Sixth Appellant) Warrawool Water Pty Ltd (Seventh Appellant) MHD Echuca Pty Ltd (Eighth Appellant) Ian Tayles (Ninth Appellant); Brian John McCleary & Peter Joseph Rae (First Respondent); JP & M Kerr (Billabidgee) Pty Ltd (Second Respondent); Bullatale Pastoral Pty Ltd (Third Respondent)
• Representation: R S Angyal SC, A D Justice (Appellants); B A Coles QC, S Galitsky (Respondents); Maurice Blackburn Commercial Lawyers, Melbourne (Appellants); Francis Kelly & Grant, Deniliquin (Respondents)
• File Number(s): 2008/278153

Decision under appeal

• Jurisdiction: 9111
• Citation: Bullabidgee Pty Ltd v McCleary; McCleary v Bullabidgee Pty Ltd [2010] NSWSC 145
• Date of Decision: 2010-04-19 00:00:00
• Before: Brereton J
• File Number(s): 1813 of 2008; 2244 of 2008

Judgment

1 ALLSOP P: This is an appeal from orders made by a judge in the Equity Division giving judgment for cross-claimants (being vendors of farmland near Deniliquin) against cross-defendants (being purchasers of the land) in the sum of $319,767.67, refusing to order the return of the deposit paid by the purchasers, and dismissing the claims brought by the purchasers against the vendors under the Fair Trading Act 1987 (NSW), as in force in 2007. (See Bullabidgee Pty Ltd v McCleary; McCleary v Bullabidgee Pty Ltd [2010] NSWSC 145.)

2 For the reasons that follow, the appeal succeeds in part, but the Court will hear further submissions on relief.

The nature of the dispute

3 The primary judge succinctly summarised the circumstances of the dispute at [1] of his reasons, as follows:

"The ninth plaintiff in proceedings 1813/08, Ian Tayles, is the sole director of the eight plaintiff companies, who together are the purchasers - under three contracts for sale of land made on 1 June 2007 - of three aggregations of land called Billabidgee, Towool and Warrawool near Deniliquin, and also - under a separate contract made on the same day - of the chattels located on them, from the first defendants Messrs McLeary and Rae who are trustees for sale of those properties - which were formerly in the ownership of the Kerr family, who are the beneficiaries - pursuant to an order of the Court made in earlier proceedings. The eighth plaintiff, MHD Echuca, as purchaser under the contract in respect of the chattels, paid the purchase price specified in that contract in full on 8 June 2007. On the same day, in accordance with the provisions of the land contracts, upon payment of the deposits, the Purchasers went into occupation and commenced to farm the properties, but they did not pay the balance purchase price on the specified completion date, namely 30 November 2007, nor at all. The Vendors claim declarations that they terminated the land contracts on 12 March 2007 (for failure by the Purchasers to complete on 7 March 2007 in accordance with Notices to Complete given between 14 and 20 February 2007), and that they are entitled to the crops grown and harvested by the Purchasers since then; and judgment for possession, damages for trespass, and damages for breach of contract. The Purchasers originally resisted the Vendors' claim for possession and sought, pursuant to the (NSW) Fair Trading Act 1987, s 72, an order varying the contract by reducing the purchase price and requiring the Vendors to complete at such reduced price. However, the Purchasers now accept that they cannot establish that they are ready, willing and able to complete, and claim - pursuant to Fair Trading Act, s 72 - an order declaring the contracts void ab initio , and damages; alternatively - pursuant to (NSW) Conveyancing Act 1919, s 55(2A) - discretionary return of the deposit."

The factual background and an outline of the relevant claims of the purchasers

4 In early May 2007, Mr Tayles, the principal of the purchaser companies read two advertisements in two publications, The Land and Stock & Land , for the sale of the land in question. The two advertisements are set out at [2] and [4] of the primary judge's reasons. Each advertisement contained an inaccuracy: that "around" 7,000 acres was "available to farm", including "the irrigation layouts". It was accepted at trial that the total acreage available to farm or "croppable" was in the order of 5,325 acres. Each advertisement contained a disclaimer in the following terms:

" DISCLAIMER: The printed information has been supplied to us by the Vendor. We do not accept responsibility to any person for its accuracy and do no more than pass this information on. Interested parties should make and rely on their own inquiries in order to determine whether or not this information is in fact accurate."

5 The first part of the purchasers' case was that the representation as to acreage (referred to in the proceedings as the "first representation" or "first misrepresentation") was, in the circumstances, conduct that was misleading or deceptive or likely to mislead or deceive in contravention of the Fair Trading Act , s 42 (in the form that it appeared prior to its amendment by the Fair Trading Amendment (Australian Consumer Law) Act 2010 (NSW), Sch 1) upon which the purchasers, through Mr Tayles, relied to enter into the relevant contracts. No proceedings were taken against the agent.

6 In early May 2007, after seeing the advertisements in The Land and Stock & Land , Mr Tayles was sent by one of the trustees for sale the special conditions of the contracts which included cll 3.3 and 8 as follows:

"3 Acceptance of improvements, encroachments and area ... 3.3 The purchaser has entered into this contract following his detailed inspection of the property and acknowledges that there shall be no reduction in price should it be found that the area of the property is less than that area set out in the description of property or in the Crown and other plans attached to this contract. ... 8 Written contract constitutes whole agreement (a) This contract will supersede any and all prior agreements, understandings, arrangements, promises, representations and warranties of any form or nature whatsoever, whether oral or in writing and whether explicit or implicit, which may have been entered into prior to the execution hereof between the parties, their officers, directors, or employees as to the subject matter hereof. (b) Neither of the parties hereto has relied upon any oral representation or oral information given to him by any representative of the other party. (c) No warranties shall be deemed to have been given or implied, as to any matter or thing relating to the subject property, from any map, advertisement brochure or any written or oral statement otherwise than is written herein. (d) No amendment of this contract shall be valid unless made in writing and duly executed by the parties hereto."

7 At [5] of his reasons, the primary judge described Mr Tayles' investigation of the property in May 2007, as follows:

"On 11 May, Mr Tayles travelled to Deniliquin and inspected the properties, in the company of Mr Macleod and Mr Greg Kerr. In the course of this inspection, he obtained from Greg Kerr further details of the croppable area of each of the paddocks, which he noted on a plan of the property. On 26 May, Mr Tayles inspected the properties a second time, spending the best part of a day doing so, this time unaccompanied."

8 What Mr Tayles did and what was said to him (and by whom) in May is of some importance. There was a dispute in this Court about it. I will return in a little more detail to this at an appropriate time in the narrative.

9 At [6] of his reasons, the primary judge described what Mr Tayles did in the evening of 31 May 2007, before the auction on 1 June 2007:

"Based on information provided to him by Greg Kerr during the first inspection, and on further information provided to him by the agent, and on inquiries made of another agent as to the selling price of comparable lands, Mr Tayles on 31 May made an assessment of the value of the property. He did so on the basis that there were 1,145 acres of irrigation paddocks, to which he attributed a value of $400/acre; 1,200 acres of eaten out lucerne, to which he attributed $300/acre; 4,500 acres of dry cropping, to which he attributed $300/acre; and 2,271 acres of bush, roads, channels, yards and partly cleared land, to which he attributed $100/acre. These calculations totalled 9,116 acres, of which 6,845 were croppable (close enough to the 7,000 referred to in the advertisements), and a total value of $2,395,100 - to which he added $745,150 for the water rights and $300,000 for the buildings, to derive a total value of $3,440,250. He wrote in his journal '$3.44m' to remind him at the following day's auction."

10 It is to be noted at this point that the assessment of value carried out by Mr Tayles was by reference to croppable acreage, together with the value of water licences, thus revealing a direct relationship, to him, between croppable acreage and land value. I should add that Mr Tayles gave his evidence about this assessment undertaken on 31 May 2007 by reference to a document created for the purpose of the case, said to be a reconstruction of what he did on the evening of 31 May. He was not cross-examined upon it. It was submitted on appeal by Mr Coles QC, who, with Mr Galitsky, appeared for the respondents, that we should pay little regard to this document and this evidence in support of any conclusion that croppable acreage was an important (or at least relevant) consideration for Mr Tayles' decision on behalf of the purchasers as to whether to buy the land and at what price. Plainly from [6] of his reasons, the primary judge accepted that Mr Tayles had carried out this exercise. There is no appeal from these findings. They should be accepted.

11 At [7]-[9] of his reasons, the primary judge conveniently summarised what occurred on 1 June 2007 at the auction:

"[7] The auction took place on 1 June 2007. Mr Tayles was the only person bidding. He opened bidding with a bid of $3.44 million. There were no further bids. The Vendors bid $4 million and the properties were passed in to them.

[8] Negotiations ensued. Initially, Mr Tayles maintained his position that the property should be sold to him for $3.44 million in the absence of any higher bidder. Mr Macleod maintained that the starting point was the Vendors' bid of $4.0 million. There was a stalemate, until Mr Macleod said "We have two sworn valuations which give the value of the property as $4.28m", later explaining that one was at $4.28 million and the other at $4.15 million. Although Mr Tayles emphasised that no one at the auction thought it was worth anything like that, Mr Macleod maintained that the Vendors would not sell for less than $4.28 million. Mr Tayles asked what else could be thrown in on a "walk-in walk-out" basis. The Vendors sought $550,000 for the plant and equipment on the property. After inconclusive negotiations on that topic, an all-in price was discussed. Mr Tayles was eager to reach a resolution, so that he could commence sowing the rest of the crop the following week; otherwise it would be too late to do so. On a walk-in walk-out basis, inclusive of plant and equipment, Mr Tayles raised his bid to $4.3 million and then to $4.4 million; this was influenced by his acceptance that there were sworn valuations at $4.15 million and $4.28 million. Then, the Vendors proposed to apportion only the depreciated value of the plant and equipment to the chattel contract, and the remainder of their value across the land contracts. Eventually, the parties agreed upon a total price of $4.488 million for the land and chattels, of which $120,000 was apportioned to the chattel contract. Mr Macleod and Mr Tayles agreed that certain of the chattels on the properties would be excluded from the sale and Mr Macleod made a list of the excluded chattels.

[9] Mr Tayles proposed, and the Trustees agreed, that instead of one contract, there should be a separate contract for each property. Three separate land contracts were exchanged, for $830,000 for Billabidgee, $1,970,000 for Towool, and $1,568,000 for Warrawool. They included special conditions, which were amended at Mr Tayles' request, but they continued to include the special conditions 3.3 and 8 set out above."

12 It is convenient at this point to recount evidence of My Tayles (that was not the subject of cross-examination) about the post-auction negotiations. The following discussion was recounted by Mr Tayles in his affidavit of 14 July 2008 (Blue Book Vol 3 pp 2-3) as having been had with the agent, Mr Macleod:

"During these negotiations, I repeatedly maintained my position that the property should be sold to me for $3.44m since there were no higher bidders. Macleod maintained the starting price for negotiation was his vendors' bid of $4.0m. This stalemate persisted until Macleod and I had a conversation with words to the following effect:

Macleod: 'We have two sworn valuations which give the value of the property as $4.28m.'

Tayles: 'They're not relevant. They're superseded by my bid of $3.44m. This morning you had a room full of people at a well advertised auction, and no one bid higher than $3.44m. That's the new valuation. It's a more current valuation than your two valuations.'

Macleod: 'Peter and Brian [the trustees] are acting under a court order. They can't sell it for less than the valuation.'

Tayles: 'You said you had two valuations. If one was $4.28m, what was the other one?'

Macleod: '$4.15m.'

Tayles: 'Can I see the valuations?'

Macleod: 'You can believe me.'

Tayles: 'I'd like to see them.'

Macleod: 'You can trust me. You can see them after you buy it.'

Tayles: 'I've got to convince a lender of the value. Not just myself. No one else there today thought it was worth $4.28m, $4m or even $3.5m.'

Macleod: 'They won't sell it for less than $4.28m. They've got a sworn valuation saying that's what it's worth.'"

13 The trustees most certainly had two valuations: one from Riverlink Valuers as at 13 February 2007 for $4,150,000 (with a "value range for sale purpose" identified as $3,700,000 to $4,500,000); and one from HMC Valuers Pty Ltd as at 16 May 2007 for $4,280,000. Both valuations assumed a farmable or croppable acreage in the order of 7,000 acres (though expressed in hectares). Both valuations ascribed a value per hectare of croppable area as a central consideration in reaching value.

14 The exchange between Mr Tayles and Mr Macleod showed that what could be called a stand-off or stalemate in the negotiations was ended by the evident importance of the valuations to the trustees. As the primary judge found, the raising by Mr Tayles of his bid to $4.3m and then to $4.4m was influenced by his acceptance that there were sworn valuations at $4.15m and $4.28m.

15 The second part of the purchasers' case relevant to the appeal concerned the valuations and their deployment. The purchasers pleaded that the trustees for sale impliedly represented, through the conversation between their agent, Mr Macleod, and Mr Tayles, in all the circumstances, that the sworn valuations were soundly based. That representation was, it was argued, inaccurate and thus misleading or deceptive or likely to mislead or deceive by reason of the incorrect assumption and valuation integer that there were 7,000 croppable acres on the land, when in fact there were 5,325.

The primary judge's rejection of the purchasers' claims

16 The two parts of the purchasers' case at trial failed. The first failed because the primary judge concluded that Mr Tayles did not rely upon the advertisements in purchasing the land for the price he did. This was so, it should be appreciated, notwithstanding that the primary judge accepted that the price he bid and the higher price that he agreed to pay was influenced by a belief that the property comprised a total of 7,000 croppable acres. That belief, his Honour found, came from other information.

17 The second failed because the primary judge concluded that the implied representation was not made in the circumstances. His Honour found, at [40] of his reasons, that Mr Macleod said that the vendors had two sworn valuations (which was true), and that this "amounted to no more than that the valuations had been obtained by the vendors and expressed opinions" as to the value of the property.

18 The primary judge concluded that in any event no loss had been suffered in the purchase of the land, because he said there was no evidence that the land was worth less than the purchasers paid for it.

19 Further, the primary judge concluded that even if the purchasers had relied on contravening conduct in entering into the contracts, they elected to affirm the contracts and lost thereby, by their conduct, the right to complain about and seek relief in respect of contravening conduct.

20 Having rejected the purchasers' claims, the primary judge made orders on 19 April 2010 consequent upon what he found to be effective termination of the contracts by the trustees: (a) damages by way of unpaid interest on the contracts, unpaid rates and unpaid water charges and interest thereon ($319,767.67); (b) damages for trespass after the lawful termination, though these were eliminated by setting-off the value to the trustees of the crops grown on the land during that period; and (c) the refusal to order the return of the deposit.

The appeal

21 The appellants (purchasers) submitted that the primary judge committed six errors in his conclusion that Mr Tayles did not rely upon the first representation, being the relevant advertisements in The Land and Stock & Land newspapers. The Court refused leave to the purchasers to argue the sixth of those grounds, that Mr Greg Kerr (one of the beneficiaries of the trust property for sale) had been fraudulent in passing on information about croppable acreage. Fraud had not been pleaded, particularised, run at the trial (in the cross-examination of Mr Kerr or otherwise) or referred to in the written submissions in this Court. There was no foundation to allow this to be relied upon in these circumstances. For these reasons, the Court refused to permit fraud to be argued on appeal.

22 The purchasers submitted that his Honour should have found that the second (implied) representation was made.

23 The purchasers further submitted that there was evidence of loss and damage and that there was no relevant operative affirmation of the contracts.

24 On appeal the purchasers limited their claims to relief to avoidance of the contracts and return of the deposit moneys.

25 Resolution of the appeal concerning reliance upon the first representation and concerning the so-called affirmation of the contracts and relief generally requires close examination of the findings of the primary judge and the evidence. It is to be recognised at the outset of, and at all times during, the analysis that the case was one in which credit was important.

The reliance or not on the first representation

26 The primary judge accepted that Mr Tayles entered into the contracts influenced by a belief that there were 7,000 croppable acres: [46] and [53] of his reasons. Mr Coles QC submitted that this finding fell short of material reliance. I reject that submission. Croppable acreage was a key integer in Mr Tayles' assessment of the value of the land on 31 May. It was a key integer of both valuations. As the primary judge said at [45] of his reasons, the area of croppable land was, objectively, obviously highly material to a potential purchaser.

27 Mr Tayles was cross-examined to the effect that the croppable acreage was not a relevant consideration to him in entering the contracts. (See for example Black Book pp 61(13)-62(10) and 126(30-35).) The primary judge's findings can be understood to be a rejection of that attack. The croppable acreage was a relevant factor to Mr Tayles. The primary judge found, however, that the belief that the property comprised 7,000 croppable acres came from sources other than the advertisements in The Land and Stock & Land .

28 The primary judge dealt with the question of reliance on the first representation at [44]-[53]. At [44], the primary judge noted that orders under the Fair Trading Act , s 72, such as under s 72(5)(a) depended on the Court finding that a person has sustained, or is likely to sustain, loss or damage by the contravening conduct. At [45], his Honour noted that, ordinarily, contravening conduct in the form of a misrepresentation will not be productive of loss or damage unless "the recipient acts in reliance upon it". His Honour then explained the importance of the disclaimer at [45] as follows:

"The Stock & Land advertisement was no doubt calculated to arouse interest in the properties. The area of croppable land was, objectively, obviously highly material to a potential purchaser. It could have induced an erroneous belief that the property comprised 7,000 croppable acres. However, it also included the disclaimer, set out above, which told readers to make and rely on their own inquiries in order to determine whether or not the information in the advertisement was in fact accurate. Mr Tayles did just that. He checked the areas of the allotments. He checked and validated other matters important to him. During his inspection of the property, he sought and obtained from Mr Kerr information as to the size and croppable area of each of the paddocks, which he recorded on a map. It was on the basis of that information, rather than the advertisement in Stock & Land , that he proceeded to prepare his assessment of value, which informed his bid at the auction, and his starting point for the subsequent negotiations."

29 The primary judge continued at [46]:

"It needs to be borne in mind that the relevant conduct is not any statement calculated to arouse or confirm a belief that the properties comprised 7,000 croppable acres, but the specific statements in Stock & Land - no other statement is pleaded as relevant contravening conduct. The advertisement may have aroused his interest in the property, but while I accept that the price that he bid - and the (higher) price that he eventually agreed to pay - was influenced by a belief that the property comprised a total of 7,000 croppable acres, that belief was ultimately based on the information provided by Mr Kerr rather than on the contents of the advertisement, containing as it did the disclaimer. Because of the disclaimer, this is to be distinguished from a case in which the original representation persisted along with subsequent representations [cf Morton v Black 183-4]; here, the later information superseded that in the advertisement."

30 At [53] of his reasons, the primary judge said:

"I accept that Mr Tayles entered into the contracts influenced by a belief that there were 7,000 croppable acres available. However, although that belief was initially generated by the advertisements in The Land and in Stock & Land , Mr Tayles knew that he had to rely on his own inquiries, and by the time of the auction his relevant belief was founded on what he had ascertained by inquiry from Mr Kerr and Mr Macleod and by inspection. Moreover, he believed from the contractual provisions that he was not entitled to rely on representations dehors the contract, and that he did not do so is confirmed by the absence of complaint on his part until the completion date - despite his discovery that there was a shortfall against his expectations as early as June 2007, and despite his having raised all other manner of complaints with the Vendors. He did not rely on the contravening conduct complained of in the proceedings, namely the advertisement in Stock & Land , and that conduct was therefore not productive of loss or damage."

31 A number of elements are present in this ultimate conclusion as to a lack of reliance by Mr Tayles:

(a) the disclaimer in the advertisements in both The Land and Stock & Land that interested parties had to rely on their own inquiries;

(b) the draft contractual provisions (special conditions 3.3 and 8) that he was not entitled to rely on representations dehors the contracts;

(c) the making of his own inquiries, being what Mr Kerr and Mr Macleod told him and what he saw on, and appreciated from, his own inspection;

(d) the lack of complaint about any shortfall in croppable acreage after June 2007, in circumstances where complaints about other matters were made; and

(e) an assessment of the evidence of Mr Tayles and necessarily, to a degree, a finding rejecting his evidence that he entered the contracts relying on the first representation.

32 The passages from [46] and [53] set out above, in particular [46], appear to contain a finding that Mr Kerr told Mr Tayles in May 2007 that the land comprised 7,000 croppable acres. The oral evidence of Mr Kerr (Black Book pp 105 and 106 (in cross-examination) and in particular 107 (in re-examination)) is support for such a finding. Mr Coles, in re-examination, elicited the evidence that in all likelihood Mr Kerr told Mr Tayles that the land comprised 7,000 croppable acres, he having (one can see from the cross-examination) provided that information to Mr Macleod (the agent) and the valuers. Yet, before this Court, Mr Coles submitted that there was no evidence that Mr Kerr said this to Mr Tayles and that from an analysis of Mr Tayles' affidavit (to which I will come) he was told other things about acreage (not being a complete description of the acreage) and land quality, which was the sole basis for Mr Tayles' deciding (on behalf of the purchasers) to buy the land. An acceptance of this submission would, it seems to me, have placed the respondents in the more vulnerable position of there being only one source of information to Mr Tayles of the 7,000 croppable acres - the two advertisements. Given that the primary judge in fact found the belief in 7,000 croppable acres materially relevant to the purchasers, that would or may have been sufficient to overturn the primary judge's conclusion as to reliance. In my view, however, there is no reason to conclude that the primary judge did not mean what he said in [46] and that (in accordance with Mr Kerr's own evidence, led by Mr Coles) Mr Kerr told Mr Tayles in May 2007 that there were around 7,000 croppable acres on the land.

33 It is to be noted at this point that no case was sought to be run at trial or on appeal that the vendors were in any way legally responsible for Mr Kerr (who managed the properties) in what he said to Mr Tayles, or to the land agent who placed the advertisements about croppable acreage: cf Janssen-Gilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 at 529.

34 The reference to information obtained by Mr Tayles from Mr Kerr and recorded on a map was based on the affidavit of Mr Tayles of 10 July 2008. Mr Tayles did not refer in his affidavit to all the paddocks, but rather some with an acreage totalling more than in the order of 1,000 acres. In inspecting the property with Mr Macleod and Mr Kerr, Mr Tayles asked many questions and was given information about the attributes of various paddocks and aspects of the property such as the growing capacity of the land. Whilst Mr Tayles' affidavit did not refer to Mr Kerr telling him on this occasion that there were 7,000 croppable acres, there was a finding that he did and that (as I have already said) is supported by Mr Kerr's evidence. Mr Tayles' affidavit (of 10 July 2008) at para 52 also recounts a conversation on the telephone with Mr Macleod on 14 May 2007 in which the following exchange took place:

"Tayles: 'Please ask them anyway. I still haven't got enough on the production figures. What can you tell me? How much can the property earn? How much rice can you grow on 400 acres?'

Macleod: 'At 4 tonnes per acre, that's 1600 tonnes at $300, that's $480,000, plus stubble $140 per tonne, 2-1/2 bales to the tonne, say 1000 tonnes at $140, that's $140,000. Pump bore water from October to March at a cost of $150,000, there's other costs, say $300,000 net. From 1500 sheep get say $20 per head for wool. 3000 acres of dry crop at 1 tonne per acre, plus irrigation on top of that. Lambs normally get 2500, based on 100%, no, make that 80% twin lambs. They're white Suffolk. Ultrasound scan them to confirm they're in lamb, say sell 2000 at $70 per head. From 150 cows & calves you'll get say 140 weaners, sell them at $400 per head.'

Tayles: 'You're ad says 7,000 acres in one place and 7,500 acres in another.'

Macleod: 'That's a typographical error.'

Tayles: 'How much does the property earn a year? What would you get off the dry land crops?'

Macleod: 'I'll be conservative. 3000 acres at 1 tonne per acre at $250 per tonne for wheat on farm gives $750,000. 2000 lambs at $60 gives $120,000. 100 yearlings at $400 gives $400,000. Rice 4 tonnes per acre at $200 per tonne, 400 acres gives $320,000, less the cost of the water. They get 20" rainfall down there. What does that come to?'

Tayles: '$1.23 million, gross, less water costs.'"

A contemporaneous note of Mr Tayles of the conversation was in evidence (Blue Book Vol 2 pp 336-337). Mr Tayles was not cross-examined to the effect that this conversation did not take place.

35 On 21 May 2007, Mr Tayles also received from Mr Macleod a facsimile which identified the production capacity of the then current cropping programme for dry land crops as 3,000 to 4,500 acres. (This did not include lucerne or irrigation paddocks.)

36 The conclusion as to lack of reliance was in part based on an adverse finding of credit made against Mr Tayles. Most crucially, this involved an episode in the evidence that concerned special conditions 3.3 and 8 of the contracts. He was cross-examined about his knowledge of these clauses before entry into the contracts. The purpose of this was to found the submission that Mr Tayles knew, before the contracts were entered into, that he had to make his own inquiries and obtain his own information about the property, and that because he knew he could not legally rely on the advertisements, he thus, as a matter of fact, did not rely on their contents. Parts of this cross-examination are set out at [47] of the primary judge's reasons.

37 In re-examination by his own counsel, Mr Tayles gave important evidence. He was asked the following questions and answered as follows:

"Q. What impact, if any, did the reading of the contract have in your mind on the truth or any other aspect of the reliability of the statements in the advertisement about acreage? ... Q. Is that question clear to you? I will put it again if it is not? A. I believed from the contract I had to make my own inquiries and I believed that having done so I couldn't complain about things in ads or said to me by the vendors."

38 The following day the appellants were given leave to adduce further evidence from Mr Tayles about what was said to be an error in that evidence. The further evidence was as follows:

"2 When I gave that answer I assumed that I was being asked about my state of mind when, after I signed the contract but before I obtained legal advice, I first realised that the plaintiffs had been sold land containing less than 7000 croppable acres. My answer related to that point in time, and not to the point in time when I agreed to buy the land and signed the contracts on 1 June 2007. 3. On 1 June 2007 although I had read the contract, it did not occur to me that what I had learned about available cropping acreage on the land from the advertisement might be something upon which I should not rely or on which it might be unwise to rely. ... 5. When, shortly after I signed the contract, I first ascertained that the land contained less than 7000 croppable acres, I re-read the contract and formed the view that because of its terms, I could not complain about the fact that less than 7000 croppable acres existed on the land. That is why I gave the answer at T71 referred to above."

39 Mr Tayles was then cross-examined, at some length. The primary judge set out that cross-examination over four pages at [50] of his reasons. Part of that cross-examination was to repeat the question I have set out at [37] above. To that question the following answer was now given:

"I believed the advertisements."

40 The discussion by the primary judge about this evidence was set out in [51]-[52] of his reasons, before his conclusion in [53], which I have earlier set out:

"[51] I do not accept Mr Tayles' belated attempt to suggest that he did not understand the impact of the special conditions on pre-contractual representations when he first read the contract, yet did so when he read it a second time after exchange. He was an uncommonly careful and cautious witness, who took great care to ensure that he understood questions before answering them. As the further cross-examination showed, the context of the question and answer that he later sought to qualify was quite clear; the timeframe to which it was addressed was plainly pre-auction, when he first read the contract; and there is no possible basis on which it could have been misunderstood, as Mr Tayles later claimed, as being referable to a second post-contractual reading of the contract. Moreover, his original cross-examination, which naturally preceded the answer in re-examination which he sought to explain away, contained similar statements plainly referable to a time before he executed the contracts ... Accordingly, I conclude that Mr Tayles entered into the contracts believing that he was not entitled to rely on pre-contractual representations dehors the contract.

[52] Mr Tayles suspected that there was a shortfall in croppable land as early as 5 June 2007, but he said nothing of it; he kept his thoughts to himself. Indeed, he effectively told the Vendors that the only impediment to settlement was the chattels dispute. He did not raise complaint about any shortfall of croppable land, despite agitation of other matters with the Vendors, until 10 March 2008, the date due for completion under the notice to complete - he says because only then did he receive legal advice that under the Trade Practices legislation he might be entitled to raise the matter notwithstanding the special condition. Yet he had not refrained from advancing all manner of other complaints, ill-conceived or not, and it is quite remarkable that they contained no word about the shortfall in croppable acres. Although he claimed that this was because he thought he was precluded by the contract from doing so, he felt no inhibition in raising the alleged "oral" deal in respect of plant and equipment, and his protestation that he did not raise the issue of croppable land because he thought he was precluded by the contract from doing so is not credible."

41 This evidence and these conclusions should not be misunderstood. The primary judge was not saying as a matter of legal syllogism that knowledge of the effect of special conditions 3.3 and 8 meant that as a fact Mr Tayles could not have relied on the first representation. Rather, his Honour was dealing with the late-given (and contradictory) evidence that Mr Tayles did not appreciate the effect of the contractual terms before he entered the contracts. That was rejected on credit. That meant that Mr Tayles knew (or thought - there being an error of law underlying his belief) he could not rely on or complain about the advertisements. That formed the foundation for the primary judge's conclusion, as a matter of fact, that Mr Tayles knew (or thought) he had to be otherwise satisfied of any relevant matter (one of which was the area of croppable land) from sources other than the advertisements.

The criticisms of the primary judge's conclusion of non-reliance on the first representation

42 The five criticisms made about the conclusion as to reliance and the reasoning underpinning it were as follows:

(a) the finding was inevitably infected by an adverse view of Mr Tayles' credit from evidence that he gave about the chattels contract and which was wrongly formed, in that it was illogical and in conflict with the evidence;

(b) the finding was affected by an incorrect treatment of the disclaimer in the advertisements that the effect of the advertisements could not persist;

(c) the primary judge misapplied the fact that Mr Tayles had read and understood special conditions 3.3 and 8 in concluding from that that Mr Tayles did not rely on the first representation. That involved, it was submitted, a non sequitur: he knew he could not sue on, therefore he did not rely on, the representation;

(d) the primary judge wrongly concluded that the information from Mr Kerr and his own inspection supplanted the effect of the first representation; and

(e) the primary judge wrongly concluded that, after he entered into possession of the property and came to suspect that there was a shortage of croppable land, Mr Tayles did not complain, when in fact he did.

43 These arguments are inter-related. The part played by the primary judge's view of Mr Tayles' evidence was important. The first of the above criticisms involved revealing that the credit finding about the chattel issue (which was otherwise substantially irrelevant to the resolution of the dispute - a "non-issue", as the primary judge called it in [34] of his reasons) was flawed. That finding did, as the primary judge said at [34], inform a judgment about Mr Tayles' credit. We were taken to evidence (the precise and exhaustive detail of which need not be traversed) that revealed the basis for the formulation of the purchase prices in the contracts for the sale of land and chattels. There was some evidence that the vendors perceived the market value of the chattels to be in the order of $500,000. The recorded value of the chattels in schedules relevant to taxation was, however, in the order of $120,000. Sale at $500,000 might have produced a taxable profit. This perception led to apportionment of $120,000 to the chattels contract as described in [8] of the primary judge's reasons (see [11] above).

44 Mr Tayles was cross-examined about the chattels and their price. At [35] of his reasons the primary judge dealt with what he referred to as Mr Tayles' "attempt to explain the apportionment of consideration between the land and chattels contracts" as "artificial in the extreme", and his Honour said:

"...he was well-familiar with the concept of apportioning consideration to separate contracts, and in this respect his evidence involved ex post facto invention."

45 The argument was that Mr Tayles' cross-examination, set out at length at [35] of his Honour's reasons, was in fact in accordance with his earlier findings. The answers in cross-examination were to the effect that the $120,000 (the documented value) being the whole of the expressed consideration in the chattel contract was only a partial payment for the chattels. It was this explanation that the primary judge found unsatisfactory.

46 There are at least two answers to this argument. First, the primary judge did not misunderstand or forget his earlier findings. Rather, the sophistication of Mr Tayles' experience and his demeanour assisted in the conclusion that he well knew that the written down value was the whole of the price for the chattels, even if the vendors thought them to be worth more. Secondly, even if the evidence revealed a misunderstanding only allowing more gentle conclusions as to Mr Tayles, it cannot be shown that this would have materially affected the primary judge's ultimate conclusions about reliance, to the extent that they were based on the assessment of Mr Tayles' evidence. From the reasons and the transcript, there are other occasions in which Mr Tayles' evidence and manner of approach to his answers probably gave ample foundation for the primary judge's view of Mr Tayles' lack of reliability; in particular, for instance, the evidence discussed above about when Mr Tayles appreciated the effect of special conditions 3.3 and 8. Thus, any error has not been shown to have had a material effect on the operative conclusions reached by the primary judge about reliance on the advertisements.

47 It should be said that at no place in his reasons did the primary judge say that because of his adverse view of Mr Tayles' credit, he did not accept Mr Tayles' evidence that he relied on the representation. That conclusion, however, was implicit in the reasons and conclusions (see especially [53]); both parties approached the appeal on that basis; the cross-examination of Mr Tayles was conducted on the basis that he should not be believed.

48 The other four criticisms ((b) - (e) in [42] above) are interconnected. Important to the assessment of these criticisms are [45], [46], [51], [52] and [53] of the primary judge's reasons that have been set out above.

49 The second and fourth criticisms ((b) and (d) in [42] above) involve the treatment of the disclaimer. The disclaimer was no doubt intended to protect the agent, by stating that the agent was not the source of the information and did not purport to do anything more than pass the information on: Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592 at 609 [51]. The disclaimer also asserted that the information came from the vendor. Importantly, however, the reader was told to make his or her own inquiries. The purpose of these statements was, of course, the protection of the agent. Mr Tayles did make his own inquiries. The primary judge found that what Mr Tayles in fact relied on was what he was told by Mr Kerr, in the course of his inspection of the property. The primary judge thus gave significant weight to the effect, and understanding by Mr Tayles, of the exhortation to find independent verification. It might be thought that this was nothing more than a confirming, rather than supplanting, role for the evidence of Mr Kerr as to croppable area. This is especially so since the disclaimer effectively told the reader to go to the source of the information and that the agent was only passing on information from that source. This is, in effect, what Mr Tayles did, speaking to Mr Kerr, who ran the properties. In that context, one view of the events may have been that Mr Tayles was confirming with the source of the information, the information in the advertisements. Nevertheless, the primary judge drew the conclusion of non-reliance, implicitly in part, on the basis of his evaluation of Mr Tayles' evidence and credit.

50 The third criticism ((c) in [42] above) was that Mr Tayles' belief (wrong in law as it happened) that if he relied on the advertisements he could have no legal remedy did not mean that he did not rely in fact on the advertisements, but rather that he could not complain about it. Thus, the lack of complaint said to be confirmation of non-reliance in the sentence beginning with "Moreover" in [53], may be consistent with in fact relying on the advertisement, but believing that complaint would be futile, rather than not relying at all on the representation in the advertisements. I would not attribute to the primary judge a logical fallacy in his fact finding that because Mr Tayles believed he had no legal ground to sue he could not, as a matter of fact, have relied on the information about croppable area in the advertisements. Nevertheless, his Honour's expression of reasons, especially in [53], is troubling.

51 As to the fifth complaint ((e) in [42] above), the lack of complaint, even if correct, is difficult to reconcile with other findings. If Mr Tayles thought he could not complain about the advertisements, a lack of complaint conforms to that assumption; but he would have complained, one would have thought, about what Mr Kerr told him. The lack of complaint might perhaps be seen as more potently relevant to an assertion that he did not rely on croppable acreage at all. Yet the primary judge, correctly, found that consideration to be highly relevant. Also relevant is the fact that the precise acreage from photographic mapping was not available until some time in late 2007 or early 2008.

52 Ultimately, however, there was a finding based implicitly on credit as to what Mr Tayles relied on. Whilst troubled by the reasoning of the primary judge, I would not allow the appeal on this basis. The finding of lack of reliance was one of fact, partly based on demeanour and credit. It has not been demonstrated that his Honour was wrong in that conclusion.

The second representation

53 The primary judge concluded that the second and implied representation that the valuations were soundly based was not made in the circumstances.

54 I respectfully disagree with that conclusion. There is no doubt that Mr Macleod was acting for the vendors. His part of the conversation referred to at [12] above carried the clear inference that the valuations were reliable. He called them "sworn valuations". This was to give weight to their formality, detail and reliability. The whole content of the discussion implied the reliability of the valuations. In my view, the implied representation was made. The characterisation of conduct as misleading or deceptive is to be taken from all the circumstances: Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 at 318-319 [24]-[25] (French CJ) and 341-342 [101]-[102] (Gummow J, Hayne J, Heydon J and Kiefel J). The conduct of Mr Macleod in this conversation was misleading in that it carried a representation as to the fundamental reliability of the valuations. In fact both were crucially flawed by reference to incorrect assumptions about there being 7,000 croppable acres.

55 There is no doubt from the uncontested events that the existence of and reference to valuations brought about a significant increase in price that Mr Tayles was willing to pay. In that respect, the conduct was clearly relied upon.

56 The primary judge found that in any event no loss was shown because of a lack of evidence that the land was worth less than the contract price. Yet, as the appellants submitted, there were two valuations in evidence - the contemporaneous valuations from which one could infer that, in the view of those valuers, the land would have had a significantly lower value if the croppable area was in the order of 5,325 acres. Parts of the land had different values ascribed to them per hectare by the valuers. The Riverlink valuation land values ranged from $650 per hectare to $1,200 per hectare. Given the acreage, something in the order of $750 per hectare as an average can be taken. That could lead to a variation in calculated value of something in the order of $500,000 or more. A slightly higher figure can be derived from the HMC valuation.

57 One can thus readily infer that had the valuations been about $500,000 lower, Mr Tayles may not have had to pay much more than he had bid at the auction. Mr Macleod would have had to put lower figures than he did to seek to extract a higher price from Mr Tayles. However, the nature of the misleading conduct was not a representation about value or about croppable acreage, but rather about the existence of reliable valuations. If the misrepresentation about having reliable valuations had not been made and no explanation given for why the vendors were refusing to budge from their bargaining position above $4m it is unclear what would have happened. There was evidence (from what Mr Macleod said) that the vendors would not go below the valuation sums. In these circumstances, it is problematic whether the contracts would have proceeded. Mr Tayles did not prove affirmatively one way or the other what would have occurred. Some evidence of a hypothetical character was rejected by the primary judge. (See Black Book p 3(36-45).) No complaint was made about this ruling. The Court was not shown the rejected affidavits. What can be said, however, is that the misleading conduct deprived Mr Tayles of the bargaining opportunity to argue for a lower price or to abandon the negotiation, without having his appreciation of the negotiation affected by the second (misleading) representation. One would need an evidential basis for any conclusion or even assumption that Mr Tayles would have paid significantly above the price he was offering, which was, in fact, not far off the valuers' (adjusted and imputed) views of full value.

58 It will be necessary in due course to say something more about loss and damage. It suffices to say for the present that it would be a curious conclusion that parties which had relied on misleading or deceptive conduct to enter valuable commercial contracts in circumstances where the conduct that was misleading or deceptive affected the negotiation of the price in a material way had not suffered loss, because it had not been shown on the balance of probabilities what would have happened in the negotiations had there been no misleading or deceptive conduct. Nevertheless, the proceeding was not conducted on the basis that the purchasers were entitled to recompense for the loss of that chance or commercial opportunity. Rather, as finally articulated at the hearing and on appeal, the purchasers sought the rescission of the contracts for the sale of land and the return of the three deposits, totalling $436,800.

59 The primary judge further found that as a matter of discretion no relief should be given because the purchasers had affirmed the contracts. At [57]-[60] of his reasons, the primary judge said the following:

"[57] As to discretion, it is well-established that, although affirmation may not necessarily be fatal to a claim for statutory avoidance under Trade Practices Act, s 87, and its equivalents, nonetheless the equitable principles concerning rescission provide safe if not exclusive guidance as to the exercise of the discretion given by that section [ Yorke v Ross Lucas Pty Ltd (No 2 [1982] FCA 180; (1982) 45 ALR 299; (1982) 69 FLR 116, 134-5; Myers v Transpacific Pastoral Co Pty Ltd (1986) ATPR 40-673; Crisp v Australia and New Zealand Banking Group (1994) ATPR 41-294 41,942; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd [1988] FCA 40; (1988) 39 FCR 546, 564-5; [1988] FCA 40; (1988) 79 ALR 83, 102-3; Munchies v Belperio , 705, 714].

[58] Assuming that reliance had been established, then - had a claim for avoidance been brought unequivocally, and before termination of the contracts - it may have been on strong ground. However, the Purchasers advanced no such claim before termination. To the contrary, far from rescinding the contracts when they discovered the shortfall in croppable land compared to what they had expected, they repeatedly affirmed them. Having gone into possession, they remained in possession, and asserted that they were entitled so to do. They cultivated the land, harvested the crops, and asserted that they were entitled to their proceeds. They lodged a caveat claiming an interest in the land. They sued for specific performance of the contracts (albeit at a reduced purchase price). They first mentioned rescission only much later, in their opening address at the final hearing on 16 March 2009; until then they maintained that they were ready, willing, able and entitled to complete the contracts.

[59] In that context, the Purchasers must be taken to have elected to affirm the contracts and sue for any damages occasioned by the misrepresentation - which, as already mentioned, are prima facie the difference between the contract price and the true value of the subject matter. It would be inappropriate now to permit rescission, in circumstances where it would properly be characterised as not being for the purposes of avoiding the consequences of the contravening conduct, but for the purposes of avoiding the consequences of a default attributable not to the misrepresentation but to the Purchasers' inability or refusal to complete, in accordance with their terms or at all, the contracts that they had elected to affirm.

[60] As I am not prepared to make an order avoiding the contract, it follows that the prima facie entitlement of the Vendors to terminate is sustained. Other than the relief sought under the Fair Trading Act , no basis was advanced on which the Vendors might not be entitled to terminate. It follows that the Vendors have validly and effectively terminated the contracts for default by the Purchasers, and have forfeited the deposits (subject to the claim for relief against forfeiture under s 55(2A), addressed below."

60 There is no doubt (and the contrary was not argued) that equitable principles provide guidance to exercising the discretion given by the Fair Trading Act , s 72. No detailed legal discussion of that proposition in the circumstances is thus required. A central consideration is that of restitutio in integrum .

61 The purchasers first took a view that they wished to enforce the contracts as varied under the Fair Trading Act at a reduced price. At all relevant times in the dispute the purchasers claimed a right to a price reduction as part of the measure of their damage, by the misleading or deceptive conduct. The primary judge's statement that the purchasers repeatedly affirmed the contracts is not, with respect, entirely correct. They did not seek to affirm the contracts unqualified by enforcement of statutory rights given by the Fair Trading Act . Rather, they sought a remedy under that legislation. At the commencement of the trial, they changed their minds as to the remedy they wished to pursue under that Act. They sought avoidance of the contracts, damages and return of the deposits. At no time did they waive or abandon their rights under the Act; nor did they affirm the contracts, without the legal affectation of a remedy under the Act.

62 The relief now sought is the avoidance of the contracts and return of the deposits, which were $83,000, $197,000 and $156,800, totalling $436,800.

63 It is first necessary to say something about causation under the Fair Trading Act before turning to relief.

Causation under the Fair Trading Act

64 Whether or not any, and if so what, relief should be given depends in significant part on the proper answer to the question as to what, on the evidence, is the loss or damage of the purchasers by the misleading and deceptive conduct of the vendors through their agent Mr Macleod. The relief sought was avoidance of the contracts and an order for the return of the deposits. The vendors resist that claim submitting that no loss or damage has been shown to have been caused by any misleading or deceptive conduct. Rather, they submitted, building on the findings of the primary judge regarding affirmation, the purchasers until the first day of the hearing of the case wanted to buy the land (albeit at a reduced price). They were unable to do so, it was submitted, for reasons unconnected with any misleading or deceptive conduct - that is their apparent inability (presumably financial) to complete.

65 It is first necessary to say something of the causal question embedded within the phrase "by conduct" in the Fair Trading Act , ss 68 and 72 (and the equivalent provisions of the Trade Practices Act 1974 (Cth), as then in force.

66 In Wardley Australia Ltd v Western Australia [1992] HCA 55; 175 CLR 514 Mason CJ, Dawson J, Gaudron J and McHugh J stated that the Trade Practices Act , s 82(1) (the equivalent of the Fair Trading Act , s 68(1)) should be understood as taking up the common law practical or common sense concept of causation discussed in March v Stramare (E & MH) Pty Ltd [1991] HCA 12; 171 CLR 506. One aspect of that case which remains uncontentious is that causation in terms of legal responsibility does not require the impugned cause to be the sole cause; it must be a cause: March v Stramare at 509. The same obtains in respect of the causation question embedded in the phrase "by conduct" in the provision under consideration: Henville v Walker [2001] HCA 52; 206 CLR 459 at 469 [14] (Gleeson CJ), 480 [59]-[60] (Gaudron J), 493-494 [106]-[109] (McHugh J), 509 [163] (Hayne J) and 507 [153] (Gummow J, agreeing with McHugh J and Hayne J).

67 In all causal inquiries, the legal framework that gives rise to the question is critical: Environmental Agency v Empress Car Co (Abertillery) Ltd [1998] UKHL 5; [1999] 2 AC 22 at 29 and 31 (Lord Hoffmann); Chappel v Hart [1998] HCA 55; 195 CLR 232 at 238 [7] (Gaudron J), 255-256 [62]-[64] (Gummow J) and 285 [122] Hayne J; Travel Compensation Fund v Tambree (t/as R Tambree & Associates) [2005] HCA 69; 224 CLR 627 at 642-643 [45] (Gummow J and Hayne J); Kuwait Airways Corporation v Iraqi Airways Co (Nos 4 and 5) [2002] UKHL 19; [2002] 2 AC 883 at 1091 [70]-[71] (Lord Nicholls of Birkenhead); Rosenberg v Percival [2001] HCA 18; 205 CLR 434 at 460-461 [83]-[85] (Gummow J); and see Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; 202 CLR 45 at 83-84 [98] and 85 [103] (Gleeson CJ, Gaudron J, McHugh J, Gummow J, Kirby J, Hayne J and Callinan J) and Elbourne v Gibbs [2006] NSWCA 127 at [74]. The legal context and relevant rule of responsibility direct one to the relevant legal policy and purpose of the causal question, thus affecting the evaluation of the extent of the required factual involvement of the impugned act or omission in assessing legal responsibility for the loss. An example of the relevance of the content of the rule of responsibility is the duty of a doctor to warn a patient of material risk inherent in proposed treatment. The causal conclusion of Gummow J in Chappel v Hart was founded upon the nature and purpose of the duty concerning the right to know of the risks in order to make an informed choice at 258 [70], as were the views of the majority in Chester v Afshar [2004] UKHL 41; [2005] 1 AC 134 at 146 [24] (Lord Steyn), 153 [55] and 154 [59] (Lord Hope of Craighead) and 163 [91] (Lord Walker of Gestingthorpe).

68 These are not new concepts. They can be seen to be encompassed within the value judgments and policy considerations referred to by Mason CJ in March v Stramare ; and see also Barnes v Hay (1988) 12 NSWLR 337 at 353 (Mahoney JA) and Fitzgerald v Penn [1954] HCA 74; 91 CLR 268 at 278 (Dixon CJ, Fullagar J and Kitto J).

69 The relevance of these considerations to the provisions providing for relief under the Trade Practices Act and its State and Territory companion legislation, such as the Fair Trading Act , can be appreciated from the fact that such legislation is "fundamentally remedial and protective legislation" giving effect to "matters of high public policy"; and is thus to be construed so as to give the fullest relief which the fair meaning of the legislation will allow: Marks v GIO Australia Holdings Ltd [1998] HCA 69; 196 CLR 494 at 528-529 [99]-[103]. These descriptors of the legislation are apt because the legislative purpose is to promote, in the broad sphere of Australian economic activity (trade and commerce), informed commercial activity, not based on misinformation, but rather on accurate information. That purpose goes beyond honest dealing in good faith.

70 In this context, the High Court has been clear that common law analogues for the understanding of application of Acts such as the Fair Trading Act cannot be imposed: Marks v GIO at 503-504 [15]-[17] (Gaudron J), 510 [38] (McHugh J, Hayne J and Callinan J), 528-529 [99]-[103] (Gummow J) and 549 [152] (Kirby J); Henville v Walker at 501-502 [130]-[131] (McHugh J); I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; 210 CLR 109 at 124-125 [42]-[48] (Gaudron J, Gummow J and Hayne J) and Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388 at 407 [44] (Gleeson CJ, McHugh J, Gummow J, Kirby J, Hayne J, Callinan J and Heydon J), though cf Campbell v Backoffice Investments at 341 [102]. One cannot argue from common law premises to a conclusion of the construction or application of relevant provisions of the Act. Earlier cases such as Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; 160 CLR 1, Wardley and Kizbeau Pty Ltd v WG & B Pty Ltd [1995] HCA 4; 184 CLR 281 must be viewed in the context and light of the later cases.

71 The inquiry is for a sufficient and direct link between the conduct and the consequences: see McCarthy v McIntyre [1999] FCA 784 at [48] (Hill J, Sackville J and Katz J) in order that the purpose and policy of the legislation be vindicated. That policy can be seen to be the upholding of the norm of conduct laid down in s 42, as fundamental and protective legislation.

Relief

72 As the primary judge said, relief under the Fair Trading Act is premised upon there being a causal connection between the misleading or deceptive conduct and loss or damage, actual or anticipated.

73 The respondents submitted that the use of the contemporaneous valuations to impute a lower value was piecemeal and inadequate to prove the true value of the land at the time of entry into the contracts. Without such valuation evidence there could be no conclusion that the land that had been acquired had not been worth what the purchasers paid for it. That was the approach of the primary judge. With respect, this is too narrow a view of loss and damage and it imposes upon the Fair Trading Act a tortious analogue of damage. The misleading conduct affected the price negotiations to assist in the persuasion of Mr Tayles to offer more for the land, which he did. That he may have got something worth what he paid does not gainsay the imposition of the misleading conduct on his negotiation and the real likelihood that either he would not have entered into the contracts or would not have been persuaded to pay what he did for the land. In Marks v GIO at 514 [48] McHugh J, Hayne J and Callinan J said that:

" A party that is mislead suffers no prejudice or disadvantage unless it is shown that the party could have acted in some other way (or refrained from acting in some way) which would have been of greater benefit or less detriment to it than the course in fact adopted. " (Emphasis added.)

74 Once it has been shown that, in reliance on the misleading conduct, Mr Tayles raised his price and entered into the contracts, it was for the respondents to raise the issue and bring evidence, at least to discharge an evidential onus, that even had the misleading conduct not taken place, the purchasers would have entered into the contracts for the price they did: see generally J D Heydon Cross on Evidence (8 th Aust Ed 2010) at 311-313 [7210]-[7215]. The primary judge made no findings on this question. Nor was it put to him that he should so find.

75 It is unrealistic to attempt to unravel what would have happened in any such different negotiations. Although a loss of commercial opportunity case was not run, one can at least conclude ( Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332) that the inability to prove what would have happened in those negotiations does not cause the purchasers here to fail for having not proved any loss or damage.

76 There was evidence that Mr Tayles had a desire to subdivide the land, which reflected a potential for increased value. The purchasers remained in occupation of the land even after they became aware of the perceived misrepresentations. The doubt about the croppable area arose in Mr Tayles' mind shortly after the auction in mid 2007. He became aware of the precise croppable area in late 2007 or early 2008. He nevertheless wished to continue with possession and use of the land, but pressed for a reduction of price. These were commercial decisions made with due regard for self interest in circumstances of knowledge of what was viewed as the existence of misrepresentations.

77 The contracts contained special condition 20 providing for payment of 1 per cent interest per month from 31 August 2007 monthly in arrears on the balance of the outstanding purchase price. By special condition 23 the purchasers agreed to meet all outgoings in respect of the subject properties from 1 June 2007.

78 These sums were calculated by the primary judge as follows. First, as to interest, he calculated the sums owing under each contract for the period 1 September 2007 to 12 March 2008 when the contracts should have been completed. These sums totalled $251,089.55 and that sum carried interest from 13 March 2008. (See [76] of the primary judge's reasons.)

79 Secondly, various sums by way of outgoings in the form of council rates totalling $12,109.68 were not paid and carried interest from 1 September 2008.

80 Thirdly, there was a sum of $4,048.35 for water usage with interest thereon from 13 March 2008.

81 The claim for trespass from the period after 20 March 2008 to cessation of occupation of the properties on 6 April 2009 was provided for by an award of damages using as a measure the rental value of the land; but it was agreed, and noted by the primary judge in his orders, that the value to the vendors of the crops grown on the land during the period March 2008 to April 2009, which his Honour declared the vendors entitled to retain, exceeded those damages. Therefore no amount was ordered to be paid by the purchasers in respect of the trespass.

82 In this context what relief should be given?

83 Though the misleading conduct affected the entry into the contracts, the entry into possession, remaining in possession (after becoming aware of the perceived misrepresentations) and the farming of the land can be seen to a greater or lesser degree to flow from the commercial desire to occupy and employ the land. The misrepresentation went fundamentally to price, through its effect on negotiation. Special conditions 20 and 23 were bargained for and acceptable. The misleading conduct did not affect them. It is entirely just that a fee be paid for occupation of the land. The bargain for that was agreed as referable to the purchase price. It is also just that the outgoings and water used be paid for. It might be thought that an increment of interest should be deducted, being that reflecting what might be seen to be the increment of extra price that the misleading conduct brought about. On balance, I think that kind of precise refinement is unnecessary. This is especially so in circumstances in which the evidence of value of the land (imputed from the two contemporaneous valuations) was not the subject of direct evidence or cross-examination. An increment of monthly interest paid on the purchase price would be commercially fair and in accordance with the bargain of the parties.

84 Thus, in my view, an appropriate exercise of discretion would be to make an order for the return of the deposit, but not otherwise interfere with the orders of the primary judge. Though return of the deposit was approached at trial on the basis of the operation of the Conveyancing Act 1919 (NSW), s 55(2A), the use of the Fair Trading Act to achieve the same result is conformable with the conduct of the case and the appeal. If the judgment sum of $319,767.67 has not been paid, the $436,800 can be set-off. Interest should run on the return of the deposit from 14 July 2008 being the date of the filing of the amended statement of claim, first claiming its return.

85 Though the parties addressed the Court on relief, the form of relief that I have suggested was not addressed by either side. I would, therefore, make orders to give the parties an opportunity, to be taken within 21 days, to make submissions as to the appropriate orders and as to costs, having served on each other draft submissions within 14 days. The submissions on relief and costs should be no longer than five pages for each side and, subject to the views of the Court and any application that might be made, the remaining issues can be dealt with on the papers.

86 BASTEN JA: I agree with the orders proposed by Allsop P and with his Honour's reasons therefor.

87 YOUNG JA: I agree with Allsop P.

88 It is often useful, though not always so, to test statutory unfairness with the parties' rights under general principles of equity.

89 Before it was clear that the purchaser could not finance the purchase even at a reduced price, it sought specific performance with compensation.

90 It is doubtful whether this claim would have succeeded under general equitable principles (see eg Abraham v Mallon (1975) 1 BPR 9157) as there was no defect in title in view of the way the property being sold was described in the contract.

91 However, I would have thought that there was a good claim here for return of the deposit under s 55(2A) of the Conveyancing Act 1919.

92 The primary judge in [98] of his reasons said:

"There is no injustice or unconscionability in the Vendors retaining the deposit, in circumstances where they will incur holding costs, it is not apparent that they will receive a windfall, and the Purchasers, knowing of the misrepresentation of which they complain, elected to affirm the contracts, but thereafter defaulted in completion, and have not established that they would have suffered any loss on completion. I therefore decline to order return of the deposit, in whole or in part, under s 55(2A)."

93 Although there was a challenge to the decision, little was actually put with respect to it.

94 It is trite law that to succeed under s 55(2A), the purchaser must establish that it would be unjust or inequitable to allow the vendors to retain the deposit. The discretion under the section is a broad one. I agree, with respect, with the observations as to its scope and application made by Ball J in Baird v Chambers (2010) 15 BPR 28337 at [12] et seq.

95 Here as disclosed in the reasoning of the learned President there was unfairness which flowed from the vendor's camp. This unfairness seriously affected the purchaser. Even taking into account the factors mentioned by the trial judge, there was a good case for return of the deposit.

96 However, as the point was not strongly argued, I would merely join in the President's analysis based on the statutes.

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Amendments

07 September 2011 - grammatical
Amended paragraphs: 71

Decision last updated: 07 September 2011