CATCHVORNS Misleading conduct - False or misleading statement - Lease cf shop — Damages - Subsisting claim by lessor in Supreme Court Seens 52(1), 53A(1)(b), 392 Trade Practices Act 1974. Lionel Brown and Marlene Penbow v Jam Factory Pronvrietary Limited and L. 7. Hooker (Vic.) Timited Fox J Melbourne 26 March 1981 IN Tilt FEDERAL COURT OF AUSTRALIA VG No. 16 of 1980 VICTORIAN DISTRICT REGISTRY ' BETWEEN: LIONEL BROWN and MARLENE BENBOW Applicants AND: JAM FACTORY PROPR [ETARY DiMmiTen and Lc. AOORrK LIMITL)D Respondents CORAM: FOX J. DATE OF ORDER: 26 March 1981 ORDER The order of the court is:- 1) That judgient be entered for the applicants in the sum of $17,000.00 2) That the first respondent by itself its servants and agents be restrained from continuing with Action No. 3774 in the Supreme Court of Victoria and from instituting or continuing any action to recover from the applicants or either of them any amount under an agreement for lease, or a lease, of shop No. 102 in the premises known as the Jam Factory, South Yarra, or for the occupancy of the said shop lume aw te ete ect Meena mR 3) 4) ty the applicants. That the respondents pay the applicants! co this action. That liberty to apply be reserved. s st s [e) f Whee mee I Ne NPM UE a a ek ee ee eer re) ae ere ae ee Sere IN THE FEDERAL COURT OF AUSTRALIA VG No. 16 of 1980 VICTORIAN DISTR: CT REGISTRY LIONEL BROWN and MARLENE BENBOW Applicants AND: JAM FACTORY PROPRIETARY LIMITED and L.J. HOOKER (VIC.)_ LIM11ED Respondents Coram: FOX, J. 26th March, 1981. MelLourne. The applicants, now husband and wife, seck damages under s.82 of the Trade Practices Act 1974 in respect of alleged breaches of s.S2 and s.53A of that Act. For a period between October 1979 and May 1980 they carried on in partnership a business of selling ladies'garments in premises leased for a term of three years frem the first respondent Jam Factory Proprietary Limited. Their shop was part of a large shopping complex developed by the first respondent in a fashionable part of Melbourne and opened in October 1979. The second respondent L.J. Hooker (Vic) Limited was formally appointed as agent for the cwners and as such was responsible for negotiating and arranging leases of the various shops in the centre. Jt did not have authority to conclude leases, this function remaining with the owners. The respondents filed a joint defence end appeared by the same counse]. One Mr. MacGiilivre> was ~¢: the relevant time one of two officers tee ee Ce ne a of the second respondent responsible for showing shops to prospective lessees and explaining to them the characteristics of the shops and shop area and the more important terms of ' the proposed leases. The central issue 1s whether Mr. MacGillivray, in the course of explaining relevant matters to the applicants in mid-July 1979,made certain oral statements. They are three in number: (a) That at that time all the shops in the centre (inclegantly named "The Jam Factory''} except two (Nos. 102 and 104) had been lct. (b) That when the centre opened to the public all the shops would be let, and open fer business. (c) That the lessor was obtaining permission from the relevant sovernment authority which would enable the applicants, as lessees, to trade 7 days a week. The responsibility of the respondents for what Mr. MacGillivray said on this occasion is not disputed, but 1t 1s denicd that he made any of the statements alleged. Argument was not developed on cither side concerning the construction or application of secs. 52 and 53A, 1t being assumed I imagine that if the making of the statements was proved, liability would follow, from at least one of the sections. The three statements are said to have been madc on the same occasion, te the applicants. No one else was mr me ee ee present. The applicants had met Mr. MacGillivray by appoint- ment at the Jam Factory. He first said the meeting was on 17th or 18th July, and then corrected himself to say it was on 19th July. The applicants were not sure of the exact date. I accept that the conversation was in mid-July, no later than 19th. It will be convenient to refer to 19th July from time to time, as if 1t were the correct date. The applicants give closely similar accounts of what happened, and what was said, but Mr. MacGillivray's evidence differs from theirs ina number of respects, and in particular with regard to the making of the statements in question. There were 58 shops and a kiosk in the Jam Factory. Two large areas had been "let" before the building commenced, one to "Georges", and the other to "Safeway", both well-known stores, and the former, at least, with a wide reputation for selling high-class products. In a central position in the com- plex there was what was called a fashion courtyard where 1t was hoped well-known entrepreneurs of high standing in the fashion business, such as Christian Dior and Prue Acton,would be "represented". It was an open area approximately rectangular in shape, to which the shops had a frontage. In the south-west corner,divided from the rest of the centre by "malls" at right angles to each other, provision was made for a group of shops in what has been called a "fashion block", it being intended that this area be occupied by shops carrying on a fashion business, whose proprietors had experience in that field and could be relied upon to maintain a reasonably high standard of goods for sale and of presentation. Shops in other parts of the complex were intended to be for a wide varicty of purposes, including a restaurant and coffee shops and what generally ne ee ee de ee a tne abe nane lel ah ee Sakhalin PNA A ie ila a nally Raha aA es ARE, EIT SA see es ton anennlintt ne a ae A HN ene have been called "service" shops. The applicants in August 1979 signed an agreement for the lease of a shop in this area, No. 102, and the lease was executed in October of that year. In July 1979, at the time Mr. MacGillivray met with the applicants, the building of the complex was not finished; quite an amount of internal work remained to be done by the owner and few, 1f any, shops were fitted out. However, the general layout including the configuration of the shops was clear and many had their glass fronts. It was then expected that the Jam Factory would be ready for a gala opening early in September. This proved to be too early, and the opening took place on 9th October; even then some parts of the common areas had not been finished. Under the agreement for lease, which seems to have been in common form, the applicants were required to fit out their shops, before the opening date, and to do so in "a proper and workmanlike manner and to a standard set by and to the satisfaction of the lessor's architects.". All that the applicants did in fitting out their shop was approved, except for the seagrass floor cover on the main floor (there was also a small mezzanine) and this has been the subject of some criticism 3n this case, as not being up to standard, and a possible contributing cause to loss of business. The shop was also, under the lease, to be stocked by the date of opening to the public and in fact the applicants' shop was ready to open as at the original opening date. The lease was to commence from the date of the public opening. The resoondents had been taking positive steps ree Simtel ae ede ome eetlaee for nine months or more to obtain tenants for the various shops, but with little success. The principal tenancies, those of Georgcs and Safeway,were secure, but as at 19th July only 5 of the remaining 56 were the subject of agreements for lease. It seems a reasonable conclusion from the subscaucnt letting pattern, and is the gencral effect of evidence given on behalf of the respondents, that a number of people, perhaps a dozen or so, had as at the date in question manifested a serious interest in taking leases. There was a marked slow- ness on the part of prospective lessees in taking the critical step of entering into agreements for leases, and this was causing considerable concern to the respondents. The agreement signed by the applicants provided that three months" notice of the estimated opening day would be given by the lessor (cl. 7({a)). This 1s perhaps some indication of how far fulfilment was falling behind expectations; on 19th July notice of that length could not have been given of the then scheduled opening date, or even of the actual opcning date. There is a conflict of evidence as to the number of shops which were open for business on that day, varying between 7 or 8, and 32. There.were then 25 agreements for lease (includ- ing Georges and Safeway) and 5 more were entered into later in October. My conclusion is that the number of shops open for business on 9th October was about 25. On any reasonable view, the centre, excluding the area occupied by the two major stores mentioned, must have looked half empty. Of the 15 shops in the south-west ("fashion") block, 8 were the subject of agreements for lease as at 9ih October, and it may be concluded that approximately that number was open [or business on that day. Sate tea whee Seren sates Having in mind the nature of the applicants' intended business it 1s unlikely that they would have sought accommodation elsewhere than in the fashion court (which they preferred) or the fashion block. They probably would not at any stage have been regarded by the lessor as qualified for allotment of a-shop in the fashion centre, and, in accordance with policy, were not offered one. They had between them limited experience in the trade, and did not have the experience of having conducted a retail women's fashion boutique, such as they planned. Mr. Brown, whose relevant experience was the greater, had another business at the time and, as they were about to get married, it was thought that, with capital owned or borrowed by him, his wife, with occasional assistance from him, could conduct tie boutique. The fact is that the business failed within about eight months, and the applicants claim that this was due to the fact that the Jam Factory was not as busy as it had been made by the lessor's agent to appear it would be; particularly was this so during the crucial first few months. A writ claiming possession and arrears of rent, with other amounts allégedly payable under the lease, was issued by the lessor out of the Supreme Court of Victoria on 7th May 1980. The claim for possession would seem to be conclusive as to forfeiture and re-entry by the lessor, but the view presented by the applicants in this case was that they had at a later uncertain date surrendcred the lease in order to mitigate damage, and this view was not challenged The applicants remained 3n occupation for at least several weeks after the writ was :ssued, and may to some extent have me oe aang aha meen. Rate ee A ete a ot et ee te ee IE baie nial traded there up to 20th June. There is no doubt on the evidence that the attractiveness of a shop complex such as the Jam Factory to a potential buyer of goods is increased by the number and variety of shops in it. Other factors, such as the nature and qualitv of what-is sold, price levels, presentation, and compatibility with the neighbourhood from which the buyers come are also important. However the success of any one shop is likely to depend 1n no small measure on the total number of people attracted to the centre. In this sense, the shops are mutually supportive, even although they may also be in com- petition. It is also clear from the evidence that if a substan- tial percentage of shops stand empty, this 1s likely both to discourage prospective buyers, and to discourage other possible lessees. A point is reached when the enterprise looks as if it is failing, or may not succeed, and this is apt to put people off and seriously affect the business of the shops which are open.- All these matters were well known to the respondents and, as at July 1979, completion of the building being so close, they were anxious both to let shops as soon as possibie, and to have as many in-operation as possible as at the opening date. The applicants say that when they saw Mr. MacGillivray he told them that all the shops 1n the Jam Factory were "let'', save two, - Nos. 102 and 104. They soon dismissed No.104 as a possibility and concentrated their attention on No. 102, which was larger, had a strect frontage as well as a customer's entrance from the lower part of the majl, and had a mezzanine floor within the shop. They had at wie i. er first inquired concerning the fashion court, which was obviovsly the best place to be, but, so they say, were told that it was all "let". Mr. MacGillivray says that they went from No. 104 past Nos. 105 and 106, which adjoined and which he says they were told were available to let, and that he discussed with them No. 114, after passing through No. 108. Both Nos. 114 and 108 were in fact available. His evidence is that he did not say that all were let except two, and he dad not designate Nos. 104 and 102 as those two. He did say that the shops in the fashion centre were "committed". This latter accorded in terms with the instructions his superior, Mr. Allen, of L.J. Hooker (Vic) Limited, had given him. There are what secm to be irrational aspects of both accounts, but on balance I accept that of the applicants. I am satisfied that Mr. MacGillivray did say on the day in question that only two shops were to let, namely Nos. 102 and 104. The statement was very important and the applicants took it seriously as, in my view, they were entitled to do. The evidence does not really leave scope for the view that Mr. MacGillivray used some other form of words, which the applicants understood to be the equivalent of the shops being "let". Doubtless that word was not meant, or understood, in its strictest legal sense; as already mentioned the agreements provided that leases were to commence from the date of the public opening. Nevertheless, on any reasonable construction of the word the statement was grossly inaccurate at the time it was made. I should explain brieflv why I prefer the account of the applicants on this matter. In the first place they gave their evidence on the subject with firmness and clarity, and showed no doubt or confusion when the matter was put to them in a number of different ways in cross-cxamination. Mrs. Brown (formerly Miss Benbow) did agree to a proposition put to her in cross-examination that Mr. MacGillivray had said the shops in the fashion centre were "committed" but her attention was not then being directed to the contrast of "committed" as against "let''. Mr. MacGillivray was I thought less convincing, and on some matters his evidence was in substance contradictory and unsatisfactory. He had of course the disadvantage from the point of view of accurate recollection, that he had seen many prospective lessees of various shops in the Jam Factory over a period of about nine months (he volunteered 200 as a rough estimate}. His account of the inspection did not support very well his evidence that he had said, or left it open to inference, that many shops were available; they discussed No. 204 briefly, but passed the others rather quickly, and indeed went through No. 108, apparently without pause or comment, to No. 102. He gave as a reason for saying that the fashion centre was "committed" the wish to avo people waiting to,see if the desired tenants would sign leases, or agreements for lease. He mentioned several names (e.g. Christian Dior), obviously as an attractive feature. Yet he says that he explained to the applicants that negotiations were continuing with the named firms (and others) and that they might not accept. He agrees that he said Nos. 102 and 104 were available, yet they happened to be two shops in respect of which deposits had teen paid by prespective tenants. This was perhaps not particularly significant in itself, as steps were in train to treat the deposits, or at least that for No. 102, as 1eferable to other shops. He did not however mention to the applicants the deposits, or the possible interest in the respective shops of those who had paid them. It seems strange that he would limit what could be leased to two places in respect of which deposits had been paid, but this consideration is I believe outweighed by the fact that he did treat them as available. Mr. MacGillivray said in his evidence that he did not expect the applicants to accept without another inspection, and it may be that he intended to be more precise and accurate when he saw them on that occasion. In fact, they had already had one look over the centre and received a brochure in connection with it. At the conclusion of the inspection on 19th July, they .aid that they would let him know, and he impressed upon them the need for an early decision. There 1s no doubt that during the inspection he endeavoured to represent the centre and its prospects in the best possible light. He agrees that he recognised the urgent need to get more people to sign agreements for leases. Mr. Brown rang Mr. MacGrilivray a day or two later and said he and Miss Benbow wanted to go ahead with No. 102. The agent said he would put the matter before the hoard of directors (of the first respondent) and within days he rang back to say the applicants had been accepted. He said then, and may have mentioned before, that if the agreement for lease (to which the lease document was attached) was signed by the e applicants and returned within 10 days of their acceptance as tenants they would be exempt from the payment of rent for the first three months of the lease. This happened, with the resuit 11 - that they were not charged rent for the period between 9th October and 9th January. This concession was probably made to other tenants as well. The annual rental payable by the applicants was $20,800, due by monthly instalments in advance. They were also liable for a percentage of the lessor's out- goings and during the period January-May 1980 these were charged at $331 per month. The exemption applied to both items. It was valuable, and was a reflection of the high degree of urgency the respondents placed on the early signing of leases. I am satisfied that the evidence of the applicants that Mr. MacGillivray had said all shops but two had been let was not a conscious or subconscious attempt on their part tc justify retrospectively the failure of the business. There 15s firm evidence, which was not challenged, that Mr. Brown had repeated the substance of the statement to his solicitor as early as August 1979, in the course of persuading the solicitor to give the matter urgent attention, - which she did. A complaint to similar effect was made ro an officer of the respondents early in January 1980 and one or more had probably been made before. Why Mr. MacGillivray confined attention to two shops out of the 15 or so which might then have been suitable to be shown to the applicants as letting prospects must remain conjectural. A possible explanation is that he thought finality may be reached earlier if the options were reduced, especially when combined with the powerful effect of represen- ting that the centre was so very populat with shop-owners and assured of success, A puzzling matter concerns evidence given by Mr. Ca ey aw Me ee a Re ete WR Sa ee Pet enet ee ates oy ee ee eee ee MacGillivray that when asked at an early stage by him as to the applicants' previous experience, Mr. Brown said they (or he) had conducted "Sammy's Boutique of Old South Head Road, Bondi Junction" (NSW). Checks made on behalf of the respondents failed to produce information about any such place, and, so far as appears, it may never have existed. The applicants deny connection with or knowledge of any such place, and deny that either used the name when speaking to Mr. MacGillivray on the occasion in question. The short written report made by the latter to his employers on 20th July sets out the name and address of that place. If the applicants' account of this matter were wrong, their credibility would of course be seriously affected. On the other hand, I hesitate to decide that Mr. MacGillivray manufactured the name and deliberately misled his employers, with a view to closing the transaction. There are other possibilities, one being that Mr. MacGillivray was given the name by another tenant or prospective tenant, and confused the entries when reporting. The evidence does not enable me to determine with any satisfaction how the name came into Mr. MacGillivray's report, but I accept the applicants' denials with regard to it. I am also satisfied that statement (b}, to the effect that the shops in the Jam Factory would all be let and open for business on opening day, was made by Mr. MacGillivray. That this would happen would have been to the applicants a probable consequence of all shops except two (No. 102, about to be let, and No. 104) being let on 19th July. If all agrecments for lease made with the owner were in the same terms as that MA Alt ain te Pr a. with the applicants, there would have been a contractual provision requiring them to be fitted out and stocked on opening day. The applicants were not however simply drawing their own conclusion from statement (a}. I am satisfied that a serious positive and meaningful statement to the effect mentioned, independent of his statement concerning lettings, was made by Mr. MacGillivray. He has said in evidence that he hoped it would be the fact. It was obviously an attractive feature to a potential lessce that all shops would be open for business. I doubt whether a reasonable business- man in the position of Mr. Brown would have expected every shop to be open; there were 58 of them and vicissitudes affecting plans are many. It is only necessary, however, to look at the substance of the matter. In fact, as I have said, fewer than half were open. I shall leave alleged statement (c) aside for the moment and examine the question whether statements (a) and (b) constitute breaches of s.52(1) and s.53A(1)}(b). Section 52(1) is a comprehensive provision of wide impact, which does not adopt the language of any common law cause of action. It d6ées not purport to create liability at all; rather does it establish a norm of conduct, failure to observe which has consequences provided for elsewhere in the same Statute, or under the general law. The possible width of its operation and the fact that 1t may overlap other sections in Div. 1 of Part V is recognised by sub-secn.(2). In my view effect should be given to the ordinary meaning of the words used. They should not be qualified or (1f it be possible) expanded, by reference to established common law principles of nie ema a ee oe liability. At the same time, known concepts, such as those concerning the torts of deceit and passing off and the analyses made of them over the years,may prove helpful in deciding a case under s.52(1). It does not matter that a representation constituting "conduct" relates to a future event, or that what 1s said may not amount to a warranty. The view has not been taken that "conduct" necessarily involves a continuing course of conduct, or of repeated events, or of conduct known to the public or a group of the public (see Annand and Thompson Pty. Ltd. v Trade Practices Commission (1979AT. P, R 40-116; Zanker v Tasmanian Truck § Tractor Pty. Ltd. 22nd May 1980, Federal Court of Australia unreported). Intention is not a necessary ingredient (Hornsby Building Information Centre Pty. Ltd. v Sydney Building Information Centre Ltd. (1977-1978) 140 CLR 216, 228). The tort 1s more objective, but 1t 1S not precisely correct to apply the concept of the hypothetical reasonable man. Onc looks to the audicuice, or the relevant part of it, and, eccentricities and absurdities aside, asks whether the conduct complained of was to them misleading or deceptive; but the question is not simply whether (or was) they (or he)were/misled. Whether the conduct was misleading or deceptive is a matter for the Court (McWilliam's Wines Pty. Ltd. v McDonald's System of Australia Pty. Ltd. (1980) A.T.P.R. 40-188). Doubtless, the audience to be considered can be classified as ""consumers'"'. Conduct will not mislead or deceive a person having a conscious awareness of the true facts or correct information. In the present case, what was said about the numher of shops let and about shops being open on opening day con- stituted conduct which was misleading. The applicants believed both statements (a) and (b). The statements helped to create in their minds, understandably and reasonably, the belief that the Jam Factory was likely to be a busy thriving shopping centre. They were induced by these statements to take a lease, and commence business. It is not necessary in the circumstances that I explore at length the question whether the facts already recited also make a case within s.53A(1)(b). I shall content myself therefore with saying that I doubt whether either of the statements come within any of the formulations concerning which "a false or misleading statement" must be made, if it 1s to satisfy the paragraph. In particular I doubt whether representations concerning shops on other land can constitute a "characteristic" of the particular interest in land. Because the paragraph refers to false (or misleading) statements and because a breach has penal consequences (s.79) the courts applying s.53A and comparable legislation look to past or present facts, including therein, as facts, statements of present belief respecting future events, - along the lines long since developed in the law concerning misrepresentation (see Thompson v Mastertouch T.V. Service Pty.Ltd. (1977) ATPR 40-027). Statement (a) would be "a false or misleading statement". TI doubt however whether what was said concerning the shops being open on opening day would be. The last-mentioned is a statement concerning a future cvent and I am not sure whether it can or should be regarded as well as a statement of a present state of mind, or as representing that someone then possessed the power to bring it about. Although the matter 1s marginal, IT am not on the whole satisfied that the evidence concerning statement (c), relating tw 7-day trading, establishes a breach of s.52 or of s.53A(1)(b}). The conflict of evidence 1s, in essence, that the applicants say that they were told, firmly and unambiguously, that 7-day trading would be approved, while Mr. MacGillivray says that they were told by him only that it was hoped approval would be obtained. It was understood by the applicants that council permission had to be obtained before they (and most others in the centre, for whom permission was also necessary) could trade over the whole of the weekends. It is reasonable to assume that Mr. Brown, at least, knew or suspected that the necessary application had been made earlier, and had not to 19th July been successful. He also knew that approval was rarely granted. He would not I believe have regarded Mr. MacGillivray as giving a firm or positive assurance on the matter, or as stating a firm conviction or expectation of his own. Whatever he said must to a thoughtful or reasonably careful businessman, as Mr. Brown was, have appeared as nothing more than exaggerated salesman's talk, not to be taken as more than an expression of hope, and not something one could safely rely upon. The facts do not therefore satisfy the requirements of s.52(1) or of s.53A(1) (b). I proceed to the question of damages, so far as statements (a) and (b) are concerned. The right to damages is given by s.82(1)- "A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention." It is interesting that the sub-section does not refer to damage suffered "by reason of" the conduct (cf. s.74B, s.74F) or "caused by" the conduct. The significance of this may lie in the number and diversity of the provisions to which the section relates, and perhaps to the width of s.52. Obviously, however, some causal connection is necessary. It was stated by counsel for the applicants at one stage that the present claim would include an amount for personal injur), but this aspect was not pursued. The applicants were led to believe that the Jam Factory complex would be much busicr than it proved to be by reason of a statement of existing fact enhanced by an assurance concerning a future fact. In reliance on these statements they invested their money, lost it and fell into debt. The correct way to approach the assessment of damages in this case in my view is to compare the position in which the applicants might have been expected to be if the misleading conduct had not occurred with the situation they were in as a result of acting in reliance on that conduct (see Esso Petroleum Co. Ltd. v Mardon (1976) 1 QB 801). This is the same, or analogous to. the general principle respecting the measure of damages in tort. There was not anything promissory in the statements relied upon, and no basis exists for adopting the measure of damages applicable in contract. As an action based on s.52 is move appropriately classified as Hew eee Ne re ne emt me = et oe tem ce oe nT one of tort, 1t 1s possible that the measure of damages wi1l always, fundamentally, be based on principles affecting torts. During any period in respect of which the damages could properly be assessed, the applicants were making a loss, and during that period (except possibly for a few weeks) they had not expected to do otherwise. What happened was that the extent of their losses was increased. There should be a full allowance related to the inducement to enter into the agreement for lease, and lease, and an allowance in respect of their subsequent losses as far as those losses can be attributed to the misicading conduct. No question of remoteness arises because the position was clear to them by January 1980, and they should have surrendered the lease no later than the date upon which they in fact ceased trading. While mitigation of damages was mentioned several times during the course of the hearing, no submission was made that particular action should have been taken by the applicants before the lease in fact came to an end. There is no question as to the amount any mitigation of damages might have cost them. The alleged surrender, previously mentioned, was in fact based on legal advice that they should give up the lease, and the business, in order to mitigate their continuing loss, and damages obtain- able in respect thcreof. There are many uncertainties and intangibles, but the most useful way in the present case to assess the applicants' loss is to start by looking at what they con- tributed, and compare that with what was left to them. This approach may not have been appropriate if the period in question had been longer, or there were evidence (which there is not) of substantial amounts being lost or paid away im- properly or for reasons unrelated to the ordinary conduct of the business. Nevertheless, for reasons J] shall give, I am of the opinion that the applicants have not shown that the whole of the trading loss should be attributed to the specific conduct complained of, and I shall apply a discount factor to allow for this circumstance. Mr. Brown borrowed $10,000 for the purposes of the business and contributed from his own resources a sum between $7,000 and $8,000. The applicants valued the trading stock which was left at $1,250, but this comprised 92 dresses-and the average price paid by them for dresses was $50. They have made desultory attempts to sell this stock from their home with no success. I think a value of $2,000 would be more realistic. The office furniture and fittings may be taken as having had a final value of about $1,300. In addition to the seagrass floor covering, display boxes, curtain racks and mirrors were left in the shop. The applicants' accounts show these as having had a total value to them (as written down to 20th June) of some $3,000, but nothing has been said of their value (if any) to the lessor. Creditors, other than the lessor, were owed a net amount of about $7,500 to which an amount is to be added for interest. Neither of the applicants received any wage from the business, or made any drawings, except for a few small amounts which were paid from funds of the business, some possibly for non-business expenscs of Mrs. Brown (the second applicant). It is not submitted that an amount should be allowed for their services, but I will - 20 - include an amount representing the interest it might be assumed Mr. Brown's money (which became committed to the partnership) would have carned. The writ issued in the Supreme Court claims a total of $11,642.42, being for rent from 9th January 1980, a proportion of lessor's outgoings over the same period, interest (at 14%) on unpaid rent, and costs and stamp duty ($960). If this amount is accepted as accurate and rounded to $11,600, an approximate final balance shect could be constructed as follows: Partners 'Capital $17,500 Residual stock, $3,300 fittings, etc. Outstanding debts $19,500 Loss $33,700 (including interest) $37,000 $37,000 The amount of the loss includes the outstanding claim for rent, etc. The existence of the Supreme Court action presents a complication. Its final outcome cannot be anticipated. For the purposes of the present proceedings, it has been accepted that the amount claimed or some amount approximating thereto, 1s arithmetically correct; or put another way, would be payable in the absence of a defence based on the statements in question. If I take the full amount into account in an award of damages, this could work unfairly against the respondents in the event of a lesser amount being awarded by the Supreme Court; if I do not do so the damages awarded may not take into account an amount which should properly be included. The amount owing for rent, etc. is an outstanding liability which increases the amount of the aries Som ns 3 le OR ree ge ones applicants' loss. At the same time, the liability having been acknowledged, and it being a liability to the first respondent, there must be a contra item which wil] reduce the damages now awarded. The award in this case cannot be left as contingent, or variable, depending upon the outcome of the Supreme Court action. Indeed, the latter has been stayed pending the outcome of these proceedings. In whatever way the matter was lcft in this court, there would be difficulties and complications for the Supreme Court. It has been suggested by counsel for the applicants that I might make an order under s.87(1A) rendering the lease void, ab initio or as at a later date, but this would not be helpful. The lease has come to an enc. It secms to be the fact that the lessor does not intend to claim any amount by reason of a breach of a term or covenant of the lease, o1 agreement for lease, or any amount for the applicants' occupancy,beyond the amount already claimed. In any event, I am of the view that I can make an order restraining any such further action (see St. Justins Properties Pty. Ltd. v Rule Holdings Pty. Ltd. (1980) A.T.P.R. 40-146). To make an order avoiding the lease would still leave the consequences to be worked out. If I deal with the question of damages in the way already mentioned, it will of course be necessary to restrain the lessor from proceeding with the Supreme Court action, but this, as it seems to me, will be the most satisfactory course from the point of view of all concerned. A further complication arises because in my view it would not be correct to attribute the whole of the loss Aa Wi ten Fite Aina Leal, Medina a NEES Aca nC Oe Ma a Hee wee ite et re en an anes ee ee A ell A ete ka ems ee te ee Uk ae nate a A Ae on ene: to the misleading statements. It is important to bear in mind that it is loss from the particular statements relied on which 1s in question, and not loss from the wider conclusion the applicants drew from them. It 1s, for example, by no means clear what the effect would have been on the applicants' business if the Jam Factory as a whole had been as busy as the statements made it appear to them that it would be. Shop No. 102 was the second last shop at the end of a passageway, and a customer approaching from within had to pass a pillar and go down a short flight of steps to reach it. It was not possible to see into it to any extent, if at ail, from the higher level, as could be dcne with shop No. 114, which was opposite and appears to have been successful. As previously mentioned, the applicants were without experience in conducting such a shop, and some of its set-up and management has been the subject of informed criticism. While I believe that they made a conscientious attempt to keep proper books, the fact is that it is not possible to arrive at final figures from them. They did budget in a crude way, but did not methodically pian or study their cash flow position. Their capital resources seem to mc to have been very slim, having in mind the likely calls upon it. Just how appealing their shop or the service it gave was to those potential customers who came their way is not capable of ascertainment. The trade in the shop during the first three weeks after opening was regarded by them as reasonably satisfactory for such a period, but thereafter it dropped away. On 7th January the applicants unsuccessfully sought exemption from, or diminution wee me ne oe Bea eb ow aap at NAL aie ae EAN tet of, rent, which to that date they had not been liable to pay. In the event they did not pay any. Although by the end of the year about 46 shops were leased, or occupied, the applicants' business did not improve, except that their sales for January were about $200 more than for Necember, doubtless due to a sale. Several other shops nearby, with similar business, seem to have prospered. In my opinion the trading loss should be discounted by 20%. As I have said this loss cannot be precisely ascertained. The 20% discount should however exclude the amount ($957.90) claimed in the writ for stamp duty and costs in connection with the agreement for lease because this was an initial liability which the applicants were induced to incur. Similarly an amount of $4,000 should be excluded as relating to initial costs and establishment expenses. The foregoing references to figures should not be taken as suggesting that the final award of damages 1s capable of precise calculation. This is largely a matter of estimation; it has been said to be a "jury question" (Doyle v Olby (Ironmongers) Ltd. (1969) 2 QB 158, 167, 169. Taking all these circumstances into account I am of the view that the amount to be awarded pursuant to s.82 1s $17,000. I propose at the same time to 1ssue an injunction restraining action, or further action, to recover any amount under the lease. I order that judgment be entered for the applicants in the sum of $17,000. I further order that the first respondent by itself its servants and agents be restrained from continuing with Action No. 3774 in the Supreme Court of Victoria and from instituting or continuing any action to recover from the applicants or either of them any amount under an agreement for lease, or a lease, of shop No. 192 in the premises known as the or Jam Factory, South Yarra, or/the occupancy of the said shop by the applicants. The respondents are to pay the applicants' costs of this action. I reserve liberty to apply. _ and tne 2 3 a true copy of tne of his Howl Uxharrt & Associate pated: 2G March 1q&\ t certify that this . 6s are