| oBemeNT No. Ssby a1. CATCHWORDS TRADE PRACTICES - Misleading conduct by corporation - Sale of restaurant business - Misrepresentations of seating capacity of restaurant - Relief appropriate to be granted - Sufficiency of damages - Whether contract for sale may be set aside having regard to changing circumstances - Position of third party mortgagee - Whether order for indemnity may be made - Trading losses incurred by purchaser for reasons substantially unconnected with matters in connection with which misrepresentations made - Whether losses recoverable as consequential damages. Trade Practices Act 1974 ss.52, 82, 87. NSW G.211 of 1985 COLLINS MARRICKVILLE PTY LIMITED v_HENJO INVESTMENTS PTY LIMITED & ORS Wilcox J Sydney 20 October 1987 2 10CT 1987 FEDERAL CouaT ' AUSTRALIA OF PAINCIP, AuQieTAY IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. NSW G.211 of 1985 ) ) GENERAL DIVISION BETWEEN: COLLINS MARRICKVILLE PTY LIMITED Applicant AND: HENJO INVESTMENTS PTY LIMITED First Respondent HENRY SAADE Second Respondent NORMAN PETER GEORGE Third Respondent SAADE DEVELOPMENTS PTY LIMITED : Fourth Respondent CORAM: WILCOX J PLACE: SYDNEY DATE: 20 OCTOBER 1987 MINUTES OF ORDER THE COURT ORDERS THAT: The contract between the applicant and the first respondent dated 2 April 1985 in connection with the sale by the first respondent to the applicant of the business known as "New York Deli" be declared to be void ab initio. Subject to the applicant, upon such day as may be mutually agreed between the applicant and the first respondent -- or, failing agreement, upon the 28th day after the making of this order -- re-delivering to the first respondent the use and possession of the business known as "New York Deli", such re-delivery being upon the basis that the business has continued to operate as a trading enterprise until that time, the first and second respondents, upon the date of re-delivery or within such other time as may be mutually agreed, pay to the applicant the sum of three hundred thousand dollars ($300,000) together with the fair price of all current trading stock. The mortgage granted by the applicant to the first respondent over the property referred to in Certificate of Title Volume 7248 Folio 161 to secure the sum of Two hundred thousand dollars ($200,000) be declared to be void ab initio. Within 28 days of this order the first and fourth respondents execute and deliver to the applicant all such documents as may be necessary to enable the applicant to procure the registration of a discharge of the mortgage referred to in order 3. Within 28 days of this order the first respondent execute a deed, in such form as may reasonably be required by the solicitors for the applicant, varying the deed of assignment of lease made between Jasemo Pty Limited as lessor, the first respondent as assignor, the applicant as assignee and John Thomas Collins as guarantor in or about April 1985 so as to provide a covenant or covenants whereby the first respondent agrees to indemnify the applicant and John Thomas Collins, and each of them, against their liabilities under the said deed to Jasemo Pty Limited. Judgment be entered in favour of the applicant against the first and second respondent for damages in the sum of sixty-nine thousand five hundred and sixty-two dollars ninety cents ($69,562.90). The first and second respondents pay to the applicant its costs of the proceeding. Note: The applicant pay to the third respondent his costs of the proceeding, such costs to be confined to those costs (if any) which would not have been incurred in any event on behalf of the first or second respondents. The first and second respondents pay to the fourth respondent its costs of the proceeding. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. NSW G.21]1 of 1985 GENERAL DIVISION BETWEEN: COLLINS MARRICKVILLE PTY LIMITED Applicant AND: HENJO INVESTMENTS PTY LIMITED First Respondent HENRY SAADE Second Respondent NORMAN PETER GEORGE Third Respondent SAADE DEVELOPMENTS PTY LIMITED Fourth Respondent CORAM: WILCOX J PLACE: SYDNEY DATE: 20 OCTOBER 1987 REASONS FOR _ JUDGMENT On 16 April 1987 I gave judgment on liability in this Matter. I found that Henjo Investments Pty Limited, the first respondent, had infringed s.52 of the Trade Practices Act 1974 in connection with a sale by it to the applicant, Collins Marrickville Pty Limited, of a business at Double Bay, in Sydney, known as "New York Deli". I further found that the second respondent, Henry Saade, the effective controller of Henjo Investments, was knowingly concerned in the conduct complained of; but I held that no case had been established against Norman Peter George, the former manager of the business and the third respondent to the proceeding. Directions were given in respect of the trial of all matters pertaining to relief. Subsequently, on the application of Collins Marrickville, Saade Developments Pty Limited was added as a fourth respondent. This course was taken because 1t was shown that Henjo Investments had assigned to Saade Developments a mortgage which it had taken from Collins Marrickville to secure the sum of $200,000 left outstanding on the purchase. A payment under that mortgage was about to fall due and the applicant was concerned that, unless restrained by the Court, Saade Developments would seek to enforce 1ts rights under the mortgage. For reasons which I gave on 29 April I made an order on that day restraining the enforcement of the mortgagee's rights under the mortgage. The matter has come back to the Court for the hearing of evidence and of submissions relating to relief. A considerable volume of evidence has been adduced but it is not necessary to refer to all of it. As it seems to me the questions which I now have to determine come down to the following: (1) What was the effect of the restrictions (ii) (111) (1v) on the seating capacity of the restaurant on: first, the practical operation and profitability of the restaurant and, second, the value of the business? Whether, under all of the circumstances, it 1s (a) permissable; and (b) appropriate to order that the agreement for purchase be void? What order may, and should, be made in connection with the mortgage taken by Saade Developments? In this regard there is an issue regarding the power of the Court to order the first and second respondents to indemnify Saade Developments against any loss which it May Sustain as a result of any order interfering with its rights under that mortgage. If the agreement 1s declared void, what order should be made in connection with the lease of the premises? (v) What trading losses were incurred by Collins Marrickville in the operation of the business and to what extent are these recoverable from the respondents, or any of them? The effect of the seating limitations Two relevant restrictions were imposed by Woollahra Municipal Council and the Licensing Court: the seating capacity of the restaurant was limited to 84 people and the area marked on the application plan as "Garden walk passageway" was to be so treated as to preclude the placement at the service bar of bar stools at which patrons could be served drinks. In fact the restriction to 84 seats has been ignored. Both before and after the sale of the business to the applicant at least 120 chairs have been made available and used. It follows that no operational loss has been suffered by reason of this limitation. The position concerning the bar stools 1s more complex. At the time of the sale there were about eight stools in the passageway adjacent to the service bar. They were used by patrons drinking at the service bar. On 14 June 1985, that 1s to say some six weeks after the date upon which the applicant went into possession of the business, the applicant was required by the licensing authorities to remove the bar stools. According to the applicant, this requirement had catastrophic consequences upon the business. Mr John Collins, a director of the applicant, goes so far as to attribute all of the trading losses subsequently incurred in the business to the removal of the bar stools. The respondents, on the other hand, contend that the removal had little or no effect upon the business; they suggest that the stools were in any event little used. The material before the Court does not enable me to make any precise finding as to the effect of the removal of the stools. It is clear that, under the applicant's management, the business has fared badly. But it 1s too simplistic to attribute the whole of 1ts problems to the removal of the bar stools. Many other changes occurred at about the same time, some of which seem to me more significant than the removal of the bar stools. Almost immediately after the transfer of ownership on 1 May 1985, three key personnel left the restaurant. They were the manager, Mr George, the assistant manager and the chef. Some changes were made in the method of operation of the restaurant. Waiter service from the food bars was offered. The layout of some of the fixtures was altered. In September 1985 the chef who took over in May 1985, "Johnno", left the restaurant. It 1s said by Ms Robyn McKenzie, the then manager, that thereafter the food presentation and displays were not as appealing as they had been previously. Extra staff were employed, thus increasing expenses. The view that the problems of the restaurant were not entirely, or even largely, a result of the removal of the bar stools 1s supported by a consideration of the financial accounts of the business. The contract of sale guaranteed gross average weekly takings of $21,000. This figure was exceeded in each of the four weeks of the trial period before settlement. According to the applicant's accountant, Mr Neil James, the gross takings during the six weeks between settlement and the removal of the bar stools were respectively $12,850, $14,766, $15,050, $15,168, $13,912 and $20,507, a total of $92,253, and an average of $15,376 per week. During the next six weeks, that 1s the six weeks immediately following the removal of the stools, takings were respectively $15,812, $14,545, $17,839, $19,032, $20,459 and $20,836, a total of $108,523, and an average of $18,087 per week. It should not be inferred from this comparison that earnings actually improved after the removal of the bar stools. As Mr James explained, takings during the early weeks were reduced because of delays in payment by some of the credit card companies of moneys which were then earned. But the comparison does indicate that there was not a sudden drop in takings. Mr James said that it took about 12 weeks before the distortion caused by the delay in credit card payments worked itself out. In the light of that comment it 1s interesting to note that the takings over the next six weeks were very good: $23,182, $20,738, $22,354, $20,549, $20,146 and $24,046, a total of $131,015. The average for this period, $21,836 per week, exceeded the average of $21,481 per week during the trial period. There is no obvious reason why it should have been better. Each period took in school holidays but otherwise seems to have been free of any unusual circumstance. However, there may have been factors undisclosed by the evidence -- perhaps the weather or the popularity of a film at the nearby cinema complex -- which influenced the position. Too much should not be made of this simple comparison. In the following six weeks, that is commencing with the week ending 11 September, the figures were well down: $16,383, $21,454, $21,832, $18,245, $21,223 and $17,360, a total of $116,497 and an average of $19,416 per week. Subsequently, there were occasional good weeks, mainly at holiday periods, but generally the takings fell away badly; and this notwithstanding an active advertising program by Mr Collins. It may be that, as Ms McKenzie said, the departure of Johnno in September had a major effect upon the attraction of the restaurant. The abolition in September 1985 of the right to deduct entertainment expenses from business earnings, for tax purposes, may have also contributed to the drop in takings. There is evidence each way as to the importance of the bar stools in the functioning of the restaurant. Witnesses for the respondents, including Mr George and Ms McKenzie, suggested that the main function of the bar was to hold patrons whilst they were waiting on busy nights for a table to become available. They were served drinks whilst they waited but these witnesses said -- and this is not disputed -- that drinks, including pre-dinner drinks, were also served at the tables. Witnesses for the applicant, on the other hand, emphasized the function of a bar in providing a place at which people could arrange to meet a friend for dinner. They said that restaurant patrons are often embarrassed to sit alone at a table waiting for a friend to arrive; so that they would tend to reject a restaurant where this might occur. As I have said, the available evidence does not quantify the extent of the disadvantage suffered by the applicant when it was required to remove the bar stools. But I accept that this did occasion some disadvantage. Evidence was given by several experienced restauranteers that 1t 1s always an advantage to have a bar area, firstly, as a place for people to meet and, secondly, as a customer holding area. Commonsense suggests that this must be so. And it 1s common ground that, before the removal of the bar stools, it was the custom of a small group of people regularly to attend the restaurant, particularly on Friday nights, and to drink at the bar for a long time before eating. That group seems to have disappeared with the stools. My conclusion in respect of the first question in the case, the effect of the relevant limitations upon the operation and profitability of the restaurant, 1s that the removal of the bar stools did have an adverse effect upon takings, and consequently upon profitability, but that this effect was relatively minor. I cannot accept Mr Collins' assessment that all of his problems were caused by the removal of the bar stools. I think that the restaurant would in any event have been unprofitable, but to a lesser extent. Bearing in mind all the other factors to which I have referred, but generally accepting Mr Collins' evidence that the business was conducted in a competent manner, I would assess the contribution of the loss of the bar stools to the losses as being 10% of the whole. The effect of the restrictions upon the value of the business depends, firstly, upon what assumption 1s made as to the prospect of removing those restrictions. Evidence was given by Mr K J Palmer, a solicitor with considerable experience in the Licensing Court of New South Wales, that "it is possible to obtain the permission of the Licensing Court" for the use of the garden passageway as a reception area containing eight bar stools and two lounge tables with chairs. Mr Palmer said that 1t would be necessary to erect some physical barriers to separate the passageway from the dining areas but that the barriers need not be solid walls; "planter boxes or ropes would probably suffice". Mr Palmer also said that it would be feasible simultaneously to lodge an application to vary the conditions of the licence so as to increase the permitted seating to 121 persons. He said that it "1s likely that the application would be granted and that Woollahra Municipal Council upon learning of the Licensing Court approval would alter the conditions of its development approval so as to permit the seating of 121 persons in the restaurant". 10. I do not accept this assessment of the position. It seems to me too optimistic. It 1s relevant to note that the restaurant permit issued by the Licensing Court remains in the name of Mr George. As a respondent to this proceeding, he has had good reason to resolve the problem occasioned by the seating limitations. Moreover, Mr George is still employed by the first respondent or by an associated company. He is susceptible to the directions of the first and second respondent. Yet, despite the effluxion of two years since the present difficulties became a source of litigation between the parties, no attempt has been made to approach the Licensing Court in the manner suggested by Mr Palmer; and this notwithstanding that, when the matter came before Sweeney J in March 1986, 1t was adjourned in the hope that it could be resolved -- or at least the problem mitigated -- by some relaxation of the restrictions. Mr Palmer had provided expert advice to the respondents some three months before that date. The applicant is justified in asking why -- if the problem is as readily able to be resolved as Mr Palmer suggested -- it was not resolved long ago. Moreover, whatever may be the position in connection with the Licensing Court, there is no basis for optimism regarding Woollahra Municipal Council. It appears that, in considering development applications for restaurants, the council works upon the basis of one seat for each square metre of customer area. That is how the figure of 84 persons was derived. Mr Palmer said, and this I do accept, that the ll. Licensing Court has abandoned the practice of calculating a permitted maximum number of seats by reference to a fixed formula such as this. But it does not appear that the council has followed suit. On the contrary, the formula of one person per square metre appears to be its normal code requirement. Whether or not 1t 1S generally true, as Mr Palmer said in his affidavit, that "councils rely on the expertise of the Licensing Court" in connection with numbers, it appears that Woollahra Municipal Council has a mind of its own. It has its own code, which it 1s entitled to apply. Mr Palmer has had no discussion with anybody at the council] about the matter. There 1s no evidence to suggest that either the officers or the aldermen would see this case as being exceptional or deserving of treatment more favourable than that provided in the code. It is true that the council has not actively enforced the restriction. This may have been because of ignorance of the facts or because of inefficiency. But it can never be assumed that, just because a bureaucratic organization does not enforce a restriction, it will be prepared to legitimate what is going on -- and thus set a precedent for other cases -- by abrogating the restriction. Any decision by Woollahra Municipal Council to reject an application to amend the development consent by enlarging the permitted number of seats would be reviewable, upon appeal, by the Land and Environment Court of New South Wales. But nothing has been put before the Court to suggest that the Land and Environment Court would be likely to overrule the council upon this matter. 12. The rejection of Mr Palmer's assumption necessarily leads to the conclusion that, if the applicant offered the business for sale, it would have to do so upon the basis that the business was subject to the limitations imposed by the council and by the Licensing Court and that they would be likely to remain indefinitely. In calculating value, 1t would be wrong to assume a sale to a purchaser who was ignorant of the true position. The value of a business 1s to be assessed by assuming negotiating parties who, at the date of contract, were famzliar with all aspects of its operation, and with business values generally, and who were willing, but not desirous, respectively to buy and to sell; and by then asking at what sum they would have concluded their bargain: see Spencer v_ The Commonwealth of Australia (1907) 5 CLR 419. In relation to the effect of the restrictions upon value, the critical question is, then, the true value of the business -- as 1t was, but subject to the restrictions -- at the date of contract, 2 April 1985. But a problem arises because, although the principle I have just stated is elementary doctrine, none of the four valuers who gave evidence in this case attempted to calculate that value. Two valuers gave evidence on behalf of the applicant. Mr T W Scott carried out three exercises. He valued the business at the date of purchase at the sum of $500,000: the price actually paid. But he did so upon the basis of the actual trading receipts, ignoring the fact that no informed and prudent purchaser would have offered a sum derived merely 13. from capitalizing the takings. The level of the takings might have been drastically diminished at any time, if either the Licensing Court or the council chose to enforce the restrictions. Next, Mr Scott considered the business "as it now is", that is in 1987. Because the restaurant has been trading at a loss, Mr Scott concluded that 1t now has no goodwill value; but that "a purchaser may be prepared to pay a price of, say, $125,000 for the tangible items in situ". Finally, he suggested that, if the business could legally be operated free of the restrictions, it would now have a sale value of $500,000. This latter estimate seems to have been influenced by the view, which he expressed, that the loss of profitability was entirely attributable to the loss of the bar stools. The second valuer for the applicant, Mr Ron Roberts, gave a present value of $100,000, this being his assessment of the value of the plant and equipment. This figure assumed the existence of the seating restrictions, the result of which, in Mr Robert's opinion, would have been to occasion a loss of $90,320 in the year ended 30 June 1986. Mr Roberts expressed no opinion as to the true value of the business at the date of purchase, although it might perhaps be assumed from his 1986 hypothetical calculation that he would have been of the opinion that, if the restaurant had traded within the parameters of the restrictions at that time, 1t would not have been profitable and would not, therefore, have had any goodwill value. 14. Mr C A C Verheyden, on behalf of the respondents, valued the business, as at the date of purchase, at $500,000. But he did so by capitalizing the previous profits, ignoring the problem of the seating restrictions. When he was asked in evidence what he thought would happen if a purchaser who had negotiated a price of $500,000 discovered the true facts, he replied that the parties would negotiate a new and lower figure. Mr Verheyden also offered a "valuation" of the business at the present time. Noting the losses incurred, he suggested that its present worth was $200,000; but this figure still assumed the availability of 121 seats. Mr Verheyden justified this assumption by saying that, as the business has continued to operate with that number of seats, "retrospectively it made no difference whether the restaurant was licensed for 84 or 121 seats and no difference in market value would then or now exist since the value of the business is linked to profitability". So 1t 1s, but, froma purchaser's point of view, the important matter is future profitability. Ordinarily, past profitability provides a good guide to future profitability; so that a purchaser will be prepared to negotiate upon the basis of past profits. But, 1f there is any reason to believe that those profits may not be available in the future, no prudent purchaser will calculate an offer merely by reference to past profits. The purchaser will require a discount from the figure derived from capitalization of past profits, the extent of which will reflect the purchaser's assessment of the risk that the level of profits may not be able to be maintained. If there is a 15. serious danger of a drastic change in profitability, a purchaser will probably approach the matter in a different way altogether. The second valuer who gave evidence on behalf of the respondent was Mr M R Johnson. But he did not even purport to give a valuation. He merely provided a lengthy report in which he discussed some of the other evidence in the case and offered an opinion as to the cause of the losses sustained by the applicant. This is not a matter of valuation expertise and I take no notice of Mr Johnson's opinions on these matters. It is a matter of some dismay that, notwithstanding the retention by the parties -- no doubt at considerable expense -- of no less than four specialist valuers, not one of them offered an opinion upon the only question of valuation which arises in the case: what was the true value of the business which the applicant purchased in April 1985 under the influence of the misleading conduct of the first respondent. The proper way to determine this matter would have been for a valuer to estimate the income which would have been available from a restaurant limited to 84 seats, without bar stools, and the expenditure which would have been incurred in operating such a restaurant. If the projected income exceeded the projected expenditure, the business would have had a value as a going concern; the amount of which could be estimated by capitalizing the projected profit. Perhaps some additional amount might have been added to the calculated figure in order 16. to take account of the possibility that the restrictions might not be enforced. But I think that 1t 1s unlikely that a purchaser would have been prepared to add very much for this possibility. The restaurant might have come under the attention of the council or the Licensing Court at any time. The transfer itself would bring the restaurant to the attention of the licensing authorities, at least. There are, of course, difficulties in making the estimation I have described. There can be no certainty about any of the figures. One cannot determine income simply by assuming receipts equal to 84/120 of the actual income. That would be to ignore the fact that there would be many periods during the week when the restriction on seat numbers would impose no constraint; less than 84 customers being in the restaurant. Nor would it be correct to ignore the probability that there would be some savings in costs, especially in relation to staff, 1f the restaurant were restricted to 84 seats. But estimation is the stuff of valuation. A hypothetical model of income and expenditure, based upon the best available information, would have furnished some guidance to the Court. In the absence of some expert assistance upon the likely income and expenditure, in April 1985, of an 84 seat restaurant without bar stools, I cannot make any firm finding as to whether such a restaurant would have been profitable at that time. But I suspect that it would not have been. Even 17. according to the figures supplied by the respondents to Mr James ~~ which were much more favourable than those disclosed by them to the Commissioner of Taxation -- the trading profit between the beginning of January 1985 and the end of February 1985 -~ the last date for which figures were available -- was of the order of only $4,000-$5,000 per week. But the evidence is that there were busy periods each week during which the restaurant was full, and patrons were walting in the bar. The loss during those periods of almost one-third of the seats would have been a major blow. Even allowing for some savings in expense, my guess is that this loss would have wiped out the profit claimed by Mr Saade. This guess is supported by Mr Roberts' hypothetical calculation as at 30 June 1986. Avoiding the purchase Under these circumstances there is attraction in the course suggested on behalf of the applicant: an order under s.87 of the Trade Practices Act that the contract of sale be void, thus reverting the ownership of the business to the first respondent. The first respondent would take back the business, for whatever it was worth with 1ts restricted seating capacity, restoring to the purchaser its purchase price. Section 80 of Trade Practices Act empowers the Court, where it is satisfied that a person has engaged in conduct that constitutes a contravention of Part V of the Act, to grant an injunction in such terms as it determines to be appropriate. Section 87 relevantly provides: 18. "87(1) Without limiting the generality of section 80, where, in a proceeding instituted under, or for an offence against, this Part, the Court finds that a person who is a party to the proceeding has suffered, or 1s likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this sub-section) in contravention of a provision of Part IV or V, the Court may, whether or not 1t grants an injunction under section 80 or makes an order under section 80A or 82, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in sub-section (2) of this section) 1f the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage. (1A) Without limiting the generality of section 80, the Court may, on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this sub-section) in contravention of a provision of Part V or on the application of the Commission in accordance with sub-section (18) on behalf of such a person or 2 or more such persons, make such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in sub-section (2)) if the Court considers that the order or orders concerned will compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage, or will prevent or reduce the loss or damage suffered, or likely to be suffered by such a person. (1B) ... (1c) ... (1D) ... (1E) ... (2) The orders referred to in sub-sections (1) and (1A) are-- (a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, 19. to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after such date before the date on which the order is made as 1s specified in the order; (b) an order varying such a contract or arrangement in such manner as 1s specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after such date before the date on which the order 1s made as is so specified; (ba) an order refusing to enforce any or all of the provisions of such a contract; (c) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage; (d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage; (e) ... (£) ... (g) «.. (3) we. (4) ... (5) woe (6) In sub-section (2), 'interest', in relation to land, has the same meaning as in section 53A." In the light of s.87(2)(a) there can be no question about the power of the Court to accede to the application of the applicant to declare void the contract for the sale of the restaurant business. Nor, I think, is there any doubt that the mortgage given by the applicant to the first respondent to 20. secure the balance of purchase price is a collateral arrangement within the meaning of s.87(2)(a); so that there is also power to set aside the mortgage. Counsel for the respondent submit, however, that an order avoiding the contract ought not to be made. They say that, if there is a difficulty upon the evidence in assessing the diminution in value occasioned by the seating restrictions, this is because the applicant, who bears the onus, neglected to proffer any acceptable evidence upon this Matter. Moreover, they contend that the business is now so altered in its method of operation that the return of the business to the first respondent would not be a restitution of the pre-contract position but the forcing upon that respondent of an altogether different business. Counsel cite five matters in support of that submission: the change to table service, as distinct from self-service at the food bars, the less attractive food displays, the removal of the hot food bar, the increase in staff and the fact that the business now operates at a loss. There 18 substance in the comment that the applicant ought to have adduced evidence upon the loss of value; but I do not think that this concludes the matter. The applicant did proffer evidence as to the position at 30 June 1986 indicating that, at that time, an 84 seat business would have been unprofitable and would have had a "break up" value of only $100,000. If I had to determine the matter of value at April 1985, in the absence of better evidence, I would have 21. little alternative other than to extrapolate from this evidence and to assess the direct capital loss, as a result of the misleading conduct, as being $400,000 or thereabouts. But this approach might be unfair to the respondents. Although I think that 1t 1s unlikely, a hypothetical calculation as at April 1985 might have indicated that an operation limited to 84 seats and without bar stools would have been profitable, so that the business would have been saleable as a going concern. And, in any event, the plant and equipment would probably have been newer and, therefore, more valuable. A further reason for favouring an order declaring the purchase to be void arises out of the applicant's position as lessee. As a result of the misleading conduct of the first respondent, the applicant took an assignment of the lease of the premises. The lease was for six years, commencing on 20 May 1984. The rent reserved during the first year was $122,500 but provision was made for regular rent revision, in line with changes to the Consumer Price Index. At the present time the rent is of the order of $188,000 per annum. The valuers agree that the rent reserved by the lease is a full market rent, apparently reflecting the fact that the premises can physically seat 120 customers, or more. If I were to determine the matter by granting to the applicant a figure representing the direct capital loss plus consequential damages, 1t would be necessary to make some assumption about that portion of the lease term which would remain after the expiration of the period within which consequential expenses were allowed. As will be seen, I have adopted the view that 22. this date should be 30 June 1986, almost four years before the expiration of the lease. What assumption should then be made regarding rental liability during those four years? On the one hand it would be unfair to the applicant to ignore this liability. If the applicant were in fact restricted to 84 seats during any of this period, 1t may have to close down completely, to sell the plant and equipment and to sub-let to someone else at a lower rental. The potential loss of the applicant, not compensated by the damages awarded and caused only by its rental obligation, could run into some hundreds of thousands of dollars. On the other hand, there might be no loss. If the restaurant were closed, it might be possible to find an assignee or sub-tenant who would take over the obligation to pay rent without any continuing loss to the applicant. The disposal of the matter solely by an award of damages almost certainly would lead to a serious injustice to one of the parties. On the other hand a reversal of the sale leaves the first respondent, who ought to bear the burden of the problem, with such actual loss as may arise. I turn to the changes in the nature of the business pointed to on behalf of the respondents. I accept that these changes have occurred but I do not think that they afford sufficient reason for refusing the order sought by the applicant. Each of the first four matters is readily reversible, 1f the first respondent so decides, upon resumption of control. Whether 1t will be possible to return to profitability is more difficult to say. But if, as the 23. respondents contend, the main reason for the trading losses 1s the changes effected by the applicant, these losses may be eliminated. If, as the applicant suggests, the removal of the bar stools has been a major cause of the loss of profitability, it may not be possible to trade profitably; but there would be no injustice in burdening the first respondent with the restrictions which were concealed by it at the time of the sale. The avoidance of a contract under s.87 should not be limited to a case where it 1s possible precisely to restore the parties to their pre-contract position. The power should be exercised in any case where 1t will enable the Court "to do what is practically just between the parties, and by so doing restore them substantially to the status quo": cf Alati v Kruger (1955) 94 CLR 216 at pp.223-224. It 1s unlikely that the bar stools will be restored but, as I have suggested, it would not be inequitable to leave the first respondent to bear the burden of the problem caused by the enforcement of one of the restrictions about which the respondents misled the applicant. I propose to make an order avoiding the purchase. Consequently there will be no award of damages in respect of the difference between the purchase price paid by Collins Marrickville and the true value of the business as at the date of purchase. 24. The Mortgage The position relating to the mortgage is more complex. The evidence discloses that, upon settlement of the purchase of the business, Collins Marrickville gave a mortgage to Henjo Investments to secure an outstanding balance of $200,000. By a transfer of mortgage dated 1 May 1985 -- that 1s the date of settlement of the purchase -~ Henjo Investments transferred that mortgage to Saade Developments. However, it is clear from the file of the solicitors for Henjo Investments that the transfer of mortgage did not in fact take place upon that day, but, rather, some time after 17 July 1985. By 3 July 1985 the solicitors for Henjo Investments were aware of a complaint made by the present applicant about the conditions attaching to the liquor licence. There being no evidence to suggest otherwise, I infer that they did their duty and advised Mr Henry Saade of that fact; so that he knew of the complaint when the transfer was made. The circumstances surrounding the transfer of mortgage are not fully disclosed in the evidence. Henjo Investments and Saade Developments share a common director, Mr Alexander Saade. Mr Henry Saade 1s a director of Henjo Investments. His brother, Mr George Saade, is a director of Saade Developments. An agreement was made between these two companies, and other parties, for a number of transactions including the transfer of the Collins Marrickville mortgage from Henjo Investments to Saade Developments. The deed of agreement bears the date 2 May 1985 but there is no evidence 25. that it was executed on that day. Having regard to the complexity of the document, the fact that it was prepared in Melbourne by solicitors not involved in the transaction between Collins Marrickville and Henjo Investments, and that 1t referred to the mortgage from Collins Marrickville to Henjo Investments "dated 2nd May 1985" -- the correct date was 1 May -- I think that it is most unlikely that it was executed on 2 May. The agreement was not stamped until 8 October 1985. In giving my reasons for the interim injunction relating to the mortgage, on 29 April 1987, I indicated that I was not satisfied about the correctness of the date and that I thought that the document may have been backdated. Notwithstanding this comment, no attempt has been made to establish that the agreement for transfer was made on 2 May 1985, or indeed at any other time before Henjo Investments became aware of the present applicant's complaint. The agreement dated 2 May 1985 was executed under the common seals of both Saade Developments and Henjo Investments. Mr Henry Saade countersigned the seals, with another signatory, in each case. His authority to countersign the seal of Saade Developments is not clear to me but this circumstance does indicate his close involvement in the matter on behalf of both companies. Having regard to that involvement and the family relationship between the individuals controlling the two companies, I think that it 1s appropriate to infer that the parties were not at arm's length in regard to the transfer and that Saade Developments was aware of the position. 26. To the extent that the argument against an order avoiding the mortgage depends upon the prejudice which this might occasion to Saade Developments the onus rests upon that company to establish that it took the transfer of mortgage for valuable consideration and without knowledge of any claim being made by Collins Marrickville. Saade Developments has not seriously attempted to make out such a case. I do not think that the transfer is a proper reason for declining to avoid the mortgage. As 1t is otherwise plain that, in conformity with what I have already said, the mortgage ought to be avoided, I propose to so order. There was argument upon the question whether it was within the power of the Court, in making orders under s.87 of the Trade Practices Act, to order the first and second respondents to indemnify Saade Developments against any loss which 1t might sustain by reason of the avoidance of the mortgage. However, upon closer consideration of the terms of the agreement dated 2 May 1985 to which I have just referred, it appears not to be necessary to determine it in connection with Saade Developments. I say this because the agreement already provides covenants indemnifying Saade Developments against any loss which it might suffer because of non-receipt of the moneys secured by the mortgage. There 1s a covenant by Henjo Investments, and by Mr Henry Saade personally, amongst others, guaranteeing to Saade Developments due and punctual payment by Collins Marrickville of all moneys payable under the mortgage. Moreover, by a separate covenant, the various 27. guarantors agree to indemnify Saade Developments "from and against all losses, costs, charges, expenses and damages whatsoever" that Saade Developments may suffer or incur "arising out of ... any failure by the said Collins Marrickville Pty Ltd to perform and observe the obligations, terms and conditions contained in the said Mortgage for any reason whatsoever". I think that this 18 clearly wide enough to cover a case of loss by reason of the failure of Collins Marrickville to observe the conditions of the mortgage because it has been declared void by the Court. The lease of the premises However, the problem of indemnity must be considered in another context. When the applicant took possession of the business it took an assignment of the lease of the premises. It accepted an obligation, in relation to the lessor of the premises, to pay the rent reserved by the lease. Mr Collins gave a personal guarantee of the due performance by the company of its obligations under the lease. The lessor was not involved in any way in the conduct complained of in this case. So far as the evidence shows, when the deed of assignment was executed the lessor had no knowledge either of that conduct or of any complaint that there had been misleading conduct. The lessor 1s not a respondent to this proceeding. No order may be made adversely affecting its rights under the deed of assignment; so that Collins Marrickville -- and Mr Collins personally -- will remain 28. bound, as against the lessor, by the obligation to pay rent notwithstanding the orders I propose to make for a reversion, in effect, of the possession of the business. There 1s clearly a strong case for an order requiring the respondents, or some of them, to indemnify the applicant and Mr Collins personally against that obligation. But is there power to make such an order? In Covcat Pty Limited v Clark Equipment Australia Limited (1986) ATPR 40-717 at p.47,873 I suggested that there was no power under s.87 to make an order for indemnification. I pointed out that, although both s.87(1) and s.87(1A) seem to confer a general power upon the Court to "make such order or orders as it thinks appropriate", s.87(2) sets out an exhaustive list of the "orders referred to" in those sub-sections; these specified orders not including an indemnity order. Counsel for the applicant argue that the view I expressed in Covcat was erroneous, that an indemnity could be ordered under either para.(d) or (f) of g.87(2). I do not think that para.(d) -- which refers to an order for payment of "the amount of the loss or damage" -- has any relevance. It is more arguable that para.(f) is applicable. That paragraph empowers the Court to make an order directing the supply of "specified services" to the person who suffered, or is likely to suffer, the loss or damage. The term "services" is widely defined by s.4 so as to include "any rights (including rights in relation to, and interests in, real or personal property), benefits, privilege or facilities that are, or are to be, provided, granted or conferred in trade or commerce ...". It is at 29. least arguable that the giving of an indemnity by the first and second respondents, in taking back the business, 1s the provision of a right in trade or commerce. However, I do not think that it 1s necessary to determine the possible application of para.(f). One of the amendments to s.87 effected in 1986 was the addition of para.(g). This paragraph empowers the Court to make: "an order, in relation to an instrument creating or transferring an interest in land, directing the person who engaged in the conduct or a person who was involved in that contravention constituted by the conduct to execute an instrument that-- (i) varies, or has the effect of varying, the first-mentioned instrument; or (11) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first-mentioned instrument." "Land", of course, includes a building or part of a building: see s.22 of the Acts Interpretation Act 1901. The deed of assignment of lease, executed by the lessor, by Henjo Investments and by Mr Collins personally was an "instrument ... transferring an interest 1n land". The definition of "interest" in s.53A of the Act -- which 1s made applicable to s.87(2) by s.87(6) -- includes "a legal or equitable estate or interest in the land" and also "a right, power or privilege over, or in connexion with, the land". Consequently, the term "interest in land" includes an interest as lessee 1n a building. The result is that the Court 1s empowered by para.(g) to make an order varying the deed of 30. assignment of lease. There is no reason why such an order should not take the form of requiring the inclusion of a term whereby Henjo Investments indemnifies the applicant and Mr Collins personally against the liability incurred by them under that deed. I propose to make an order to that effect. Consequential damages The applicant contends that, notwithstanding any order making void the agreement for purchase and the mortgage, it is entitled to recover damages for the losses sustained by it consequentially upon its decision to enter into the transaction. In principle, this is correct. In determining the matter of liability I referred to the unchallenged evidence of Mr Collins that he would not have agreed to commit the applicant to the purchase of the business if he had known of the seating restrictions. It follows that, in principle, the applicant 1s entitled to recover the losses which were occasioned by that committal, and which will remain notwithstanding the orders avoiding the purchase and the mortgage. But questions arise as to the extent of those losses. The argument for the applicant is that, the purchase of the business having been caused by the misleading conduct of the first respondent, the applicant 1s entitled to recover damages for all losses sustained by it in carrying on the business, whether or not the losses were related to the particular matter -- seating restrictions -- in relation to 31. which the misrepresentations were made. The respondents, on the other hand, argue that the applicant is entitled to recover damages only in respect of those losses which relate directly to the subject of misrepresentations. Further, they say that, whatever be the proper measure of damage, damages may only be awarded 1n connection with such period as was reasonably necessary for the applicant to unburden itself of the unprofitable business. Subject to one possible reservation, I agree with both the submissions of the respondents. It 1s now authoritatively established that the measure of damages in actions for breach of s.52 of the Trade Practices Act is ordinarily similar to that in an action in tort, especially for deceit: see Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1 at pp.6-7, 11-12. There is attraction in the argument that an applicant who 1s induced to undertake a transaction by a respondent's misrepresentation regarding a particular matter (factor X) should be entitled to recover the whole of the losses sustained as a result of that undertaking, even though those losses may be caused by matters (factors A, B and C) about which no misrepresentations were made; excluding only losses flowing from acts or omissions which may be characterized as a failure to mitigate the applicant's damage. From the applicant's point of view all of the losses are the result of the misrepresentation; in the sense that, absent the misrepresentation about factor X, the applicant would never have undertaken the transaction in the first place, and thus become exposed to the hazards of factors A, B and C. 32. However, in relation to the assessment of damages for deceit, this approach has been firmly rejected. In an old case, Twycross v Grant (1877) 2 CPD 469, Cockburn CJ discussed at some length the argument that a plaintiff should be allowed to recover the whole of the losses sustained by him as a result of entering into the transaction. At pp.544~545 he rejected the argument, drawing a distinction between a loss occasioned by a latent defect at the time of purchase and a loss from a supervening cause: "If a man is induced by misrepresentation to buy an article, and while it is still in his possession, it becomes destroyed or damaged, he can only recover the difference between the value as represented and the real value at the time he bought. He cannot add to it any further deterioration which has arisen from some other supervening cause. If a man buys a horse, aS a racehorse, on the false representation that it has won some great race, while in reality it 1s a horse of very inferior speed, and he pays ten or twenty times as much as the horse is worth, and after the buyer has got the animal home it dies of some latent disease inherent in its system at the time he bought it, he may claim the entire price he gave; the horse was by reason of the latent mischief worthless when he bought; but if it catches some disease and dies, the buyer cannot claim the entire value of the horse, which he is no longer in a condition to restore, but only the difference between the price he gave and the real value at the time he bought." The principles stated by Cockburn CJ were applied by Dixon J in Potts v Miller (1940) 64 CLR 282 at pp.297-299, his Honour commenting at p.298: "This reasoning makes it necessary to distinguish between the kinds of cause occasioning the deterioration or diminution in value. If the cause is inherent in the thing itself, then its existence should be taken 33. into account in arriving at the real value of the shares or other things at the time of the purchase. If the cause be 'independent,' 'extrinsic,' supervening' or 'accidental,' then the additional loss is not the consequence of the inducement." Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158 was a fraud case in which the plaintiff was induced to buy a business by the misrepresentations of the defendant. Lord Denning MR at p.166 referred to a statement made by Lord Atkin in Clark v Urquhart [1930] AC 28 at pp.67-68 that, in an action in deceit, damages were "based on the actual damage directly flowing from the fraudulent inducement". He applied this principle so as to award to Mr Doyle damages compensating him for all the losses which he had sustained in the operation of the business, saying at p.167: "The defendant is bound to make reparation for all the actual damages directly flowing from the fraudulent inducement. The person who has been defrauded 1s entitled to say: 'I would not have entered into this bargain at all but for your representation. Owing to your fraud, I have not only lost all the money I paid you, but, what 1s more, I have been put to a large amount of extra expense as well and suffered this or that extra damages.' All such damages can be recovered: and it does not lie in the mouth of the fraudulent person to say that they could not reasonably have been foreseen. For instance, 1n this very case Mr Doyle has not only lost the money which he paid for the business, which he would never have done 1f there had been no fraud: he put all that money in and lost it; but also he has been put to the expense and loss in trying to run a business which has turned out to be a disaster for him. He is entitled to damages for all his loss, subject, of course to giving credit for any benefit that he has received." 34. This passage was cited with approval in the judgment of the Full High Court of Australia in South Australia v Johnson (1981) 42 ALR 161 at p.170. The formula "loss flowing directly from the fraudulent inducement" was adopted in the High Court in Gould v_Vaggelas (1985) 157 CLR 215. Gibbs CJ, at p.220, pointed out that, in an action of deceit concerning a purchase, the measure of damages usually applicable is the difference between the real value of the property at the time of purchase and what the plaintiff paid for it. But his Honour went on to say that this was only a special application of the general principle that a plaintiff is entitled to recover as damages a sum representing the prejudice or disadvantage which he has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentations made by the defendant. "In other words, the general principle is that the plaintiff is to be put, so far as possible, in the position he would have been in if he had not acted on the fraudulent inducement". Wilson J, at p.242, referred to the use of the phrase "the value of the property acquired" in South Australia v_Johnson "as taking account of consequential losses provided (and it is an important proviso) that they flowed directly from the fraudulent inducement". Brennan J discussed the measure of damages at pp.254~255, concluding with the proposition that "damages are limited to those that flow directly from the fraudulent inducement". Dawson J put the matter in slightly different words at p.267 saying that "for a loss to be recoverable it must be clear that it is suffered as 35. a direct consequence of the deceit and is not referable to something else such as the purchaser's ineptitude in the conduct of the business". In both Doyle and Gould the whole of the losses proved by the plaintiffs were allowed as damages. But in each case the relevant representations related to matters fundamental to the profitable operation of the busines: the level of income and of expenses. The losses were caused by inherent characteristics of the business in relation to which misrepresentations were made. In the present case the trading losses, except to the extent that they have been increased by the loss of the bar stools, have been occasioned by factors in connection with which there was no misrepresentation. This 1s an important distinction which makes it impossible directly to apply Doyle or Gould so as to allow recovery of all the trading losses incurred by the applicant. There have been numerous cases under s.52 of the Trade Practices Act in which the trading losses suffered by purchasers of businesses have been allowed without express reference to the relationship between the relevant misrepresentations and the cause of the particular loss: see, for example, Yorke v Treasureway Stores Pty Limited (1982) ATPR 40-313, Frith v Gold Coast Mineral Springs Pty Limited (1983) ATPR 40-339, Corbidge v_The Bakery Fun Factory Fun Shop Pty Limited (1984) ATPR 40-493, Neilsen v_ Hempston Holdings Pty Limited (1986) 65 ALR 302 at pp.312-314 and Stoker v Pomcol Pty Limited (Spender J, 19 March 1987, not reported). 36. By contrast, in Brown v Jam Factory Pty Limited (1981) 35 ALR 79 at pp.90-91, Fox J distinguished between the losses attributable to matters in relation to which misrepresentations were made and those which merely flowed from the operation of the business. However, there 1s no difference in principle between the approaches. In each of the cases in which there was no distinction drawn, the misrepresentations related to matters fundamental to the operation of the business. They were representations about the very matters which caused the losses. The losses not allowed in Brown were caused by something which had nothing to do with the respondents' conduct, namely the applicant's inexperience in business and lack of capital. In the present case I am satisfied that most of the losses were caused by factors which had nothing to do with the misrepresentations as to seating capacity. They were not "directly attributable" to the misrepresentations and ought not to be allowed. I earlier mentioned one reservation about the respondents' submission. This was in its postulating, as the test of recoverability of consequential damage, the question whether the loss flowed from a matter in respect of which a misrepresentation was made. It may be that consequential damage stemming from a latent defect in the thing sold is recoverable even if there is no misrepresentation upon that matter. To take Cockburn CJ's horse: if the value of the horse is recoverable because it died of a disease inherent at 37. the time of purchase, it is not easy to see why the purchaser should not also be able to recover the veterinary costs he incurred in the unsuccessful fight against that disease. However, it 1s not necessary to express any concluded view on that matter. The trading losses occasioned by the loss of the stools were losses which not only stemmed from a defect inherent in the business at the time of purchase; they were losses on a matter which was the subject of a misrepresentation. Upon any view they are recoverable. Conversely, the losses occasioned by reason of the loss of key staff, the changes in the method of operation of the business and the change in taxation law were not only unrelated to any misrepresentations; they were not losses which could be described as defects inherent in the business at the date of purchase. They were losses caused by supervening factors. I have previously indicated a view that the proportion of the losses of the business attributable to the loss of the bar stools was 10%. In applying that percentage to the total trading losses, incurred during such period as was reasonably necessary for the applicant to obtain orders under s.87 of the Trade Practices Act, I do not pretend to any exactitude. The estimate 1s merely an impression, formed in the course of considering the whole of the evidence. It is impossible to demonstrate by any process of reasoning that this 18 a more appropriate figure than any other but, as 38. Aickin J observed in Ansett Transport Industries (Operations) Pty Limited v Halton (1979) 25 ALR 639 at p.669, "the difficulty of ascertaining the amount of damages does not warrant their denial". See also Enzed Holdings Limited v Wynthea Pty Limited (1984) 57 ALR 167 at pp.182-183. There is no issue between the parties as to the extent of the losses suffered by the applicant in operating the restaurant. But there is a contest as to the period during which such losses -~ or any proper proportion of them ~- should be allowed. The applicant contends that all the trading losses incurred to the date of the trial should be taken into account. The respondents say that this period grossly exceeds that which was reasonably necessary for the applicant to rid itself of the business. I am of the opinion that I should take into account only those trading losses incurred until 30 June 1986. In fixing that date I have regard to the history of this litigation. In a practical sense, the only way in which the applicant would have been likely to rid itself of the business was by an order under s.87. The Application commencing this proceeding was filed on 5 August 1985, fairly promptly after the applicant became aware of the relevant seating restrictions, on 14 June 1985, and the respondents denial of any liability, on 11 July 1985. There were various directions hearings at which it appeared that the applicant was progressing the matter efficiently but that the respondents 39. were not. I think that it is highly likely that, but for delays caused by the respondents, the case could have been heard before Christmas 1985; compare the progress of Chase Manhattan Overseas Corporation v Chase Corporation Limited (1985) 63 ALR 345 at that same time. However, in the result, 1t was not possible for the matter to be listed for hearing until 11 March 1986, before Sweeney J. Had the hearing proceeded at that time it would have extended over several days and one may assume that judgment would have been reserved. It seems reasonable to assume that judgment would have been delivered in time to allow a reversal of the possession of the business by the end of June 1986. That the hearing did not proceed on 11 March 1986 was a decision made, or at least agreed to, by the applicant. Unfortunately, thereafter there was considerable delay, for which the applicant must at least share the blame; so that, in the event, the hearing did not re-commence, this time before me, until 6 March 1987. When the hearing commenced I understood that I was to deal at the one time with the issues both of liability and of relief but, in disregard of directions made by the Court, the applicant had failed to file its affidavits relating to relief and I was constrained to deal separately with that matter. In the result it has not been possible to dispose of the matter until to-day. The delay occasioned hy the adjournment of the matter on 11 March 1986 was avoidable and should not extend the period used for the computation of damages. 40. The trading losses suffered by the applicant between the date of taking possession and 30 June 1986 totalled $262,048. I allow 10% of this figure, $26,204.80. Although, as I said earlier, it 1s not possible to demonstrate the correctness of 10%, 1t is interesting to consider what this percentage means in dollar terms. The figure of $26,204.80 over a period of about 61 weeks represents an average of about $430 per week. Adopting an average mark-up of food and liquor of 200% -- a conservative figure on the evidence -- this would be the equivalent of an average loss of sales, because of the absence of the bar stools, of $645 per week or about $90 per day; say the loss of two small groups of customers per day by reason of the loss of the meeting and holding facility. This is consistent with the overall impression I formed from the evidence regarding the bar stools. To the sum of $26,204.80 should be added various costs associated with the transactions to be declared void, viz: $ Interest payment on mortgage made in April 1986 30,000.00 Stamp duty on contract for purchase 9,649.50 Legal costs on purchase 2,318.60 Legal costs on mortgage 1,390.00 $43,358.10 Adding that figure to the sum of $26,204.80 previously mentioned, I allow damages in the total sum of $69,562.90. 41. The first and second respondents must pay the costs of the applicant. The applicant must pay the costs incurred by the third respondent, Mr George, but, as he was represented by the same counsel and solicitors as the first and second respondents, these costs should be confined to such costs (1f any) as would not have been incurred in any event on behalf of those respondents. The costs of the fourth respondent, Saade Developments, must be paid by the first and second respondents. I certify this and the forty (40) preceding pages to be a true copy of the Reasons for Judgment of his Honour Justice Wilcox. Associate: / "Gs oe Date: 20 October 1987 Counsel for the Applicant: Mr P R Graham QC with Mr G A Moore Solicitors for the Applicant: Sly & Russell Counsel for the Respondents: Mr B J Tamberlin QC with Mr F G Lever Solicitors for the Respondents: Swaab & Associates Date(s) of hearing: 10, 11, 12 and 19 August