TRADE PRACTICES - purchase of motor hotel business and property - false, misleading and deceptive representations about the condition and state of repair of the hotel - misrepresentations not relied upon therefore no loss or damage - false, misleading and deceptive representations with respect to transfer of business name - person involved. CONTRACT - breach of covenant to transfer business name - name owned by third party - assessment of damages. Trade Practices Act 1974 WILLIAM GROVE, JOHN WILLEM GROVE, SARAH LOUISE FARRIER and ALISON MAY SMITH Applicants - and - LAJA PTY LTD and SHELDONIAN PTY LTD First Respondents - and - RALPH LEWIS BROCKMAN Second Respondent - and - LAJA PTY LTD and SHELDONIAN PTY LTD Cross Claimants ~ and - WILLIAM GROVE, JOHN WILLEM GROVE, SARAH LOUISE FARRIER and ALISON MAY SMITH Respondents to Cross Claim + eR 1, 2 FORSTER J. PERTH 10 DECEMBER 1987 IN THE FEDERAL COURT OF AUSTRALIA ) ) WESTERN AUSTRALIA DISTRICT REGISTRY) No. WAG 79 of 1986 ) GENERAL DIVISION ) BETWEEN: WILLIAM GROVE, JOHN WILLEM GROVE, SARAH LOUISE FARRIER and ALISON MAY SMITH Applicants - and - LAJA PTY LTD and SHELDONIAN PTY LTD First Respondents - and - RALPH LEWIS BROCKMAN Second Respondent - and - LAJA PTY LTD and SHELDONIAN PTY LTD Cross Claimants - and - WILLIAM GROVE, JOHN WILLEM GROVE, SARAH LOUISE FARRIER and ALISON MAY SMITH Respondent to Cross Claim MINUTE OF ORDERS JUDGE MAKING ORDER 3 FORSTER J. WHERE _ MADE 3 PERTH DATE OF ORDER : 10 DECEMBER 1987 THE COURT ORDERS THAT: 2. Judgment be entered for the applicants against the first and second respondents in the sum of $40,000. The first and second respondents pay to the applicants one half of their costs of the proceedings to he taxed including the costs of the issues with respect to which payment into court was accepted. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION ) ) ) ) ) No. WAG 79 of 1986 ) ) BETWEEN: WILLIAM GROVE, JOHN WILLEM GROVE, SARAH LOUISE FARRIER and ALISON MAY SMITH Applicants - and - LAJA PTY LTD and SHELDONIAN PTY LTD First Respondents - and - RALPH LEWIS BROCKMAN Second Respondent - and - LAJA PTY LTD and SHELDONIAN PTY LTD Cross Claimants - and - WILLIAM GROVE, JOHN WILLEM GROVE, SARAH LOUISE FARRIER and ALISON MAY SMITH Respondents to Cross Claim REASONS FOR JUDGMENT CORAM: Forster, J. : DATE : 10 December 1987 The applicants a father William Grove (Grove), daughter-in-law Sarah Louise Farrier close family group consisting of a a son John Willem Grove (John), a (Louise) and a wife Alison 2. Mary Smith (Alison) were and are in partnership. Laja Pty Ltd (Laja) was the proprietor of the liquor licence and business of the Sands Motor Hotel (the hotel). Sheldonian Pty Ltd (Sheldonian) was the registered proprietor of the land on which the hotel was built. Ralph Lewis Brockman (Brockman) was a director of Laja and was also a real estate and business agent. Sheldonian had owned the hotel since 1982. It and Laja had purchased the hotel and the business with the intention of using the building as a vehicle for a time-sharing ownership scheme. They were never very interested in running the hotel as a hotel. As a result it had a poor occupancy rate and the owners of the hotel and the business were losing money. The time-sharing proposal proved impractical and it was decided early in 1984 that the hotel should be sold. This proved difficult to accomplish at least at the price initially being asked. There was a comparatively large capital sum tied up in the hotel and it was losing money. By the time the applicants showed interest in purchasing the hotel the owners were willing and anxious vendors. Negotiations of one sort and another were conducted so far as the applicants were concerned principally by Grove and John and so far as the respondents were concerned by Brockman over a period from October 1984 to March 1985. A form of offer and acceptance was signed by the applicants on 8 March 1985 whereby they offered to purchase the hotel and the business for $880,000 subject to certain express conditions to some of which it will be necessary to return later. This offer was finally accepted some time later. The precise date of acceptance is 3. uncertain but the offer and acceptance document was stamped on 15 May 1985, the date upon which settlement occurred and the applicants took possession of the hotel. It is said by the applicants that they were induced to enter into the contract by certain representations made by Brockman on behalf of Laja and Sheldonian and also by one Delmenico the manager of the hotel on behalf of Laja and Sheldonian. The misrepresentations alleged in the statement of claim to have been made are as follows : (i) In or about October 1984 Brockman said to Grove or John "It (meaning the hotel) could do with a coat of paint but otherwise it is fine - but an owner-manager would be the way to go" or words to this effect. (ii) In response to a further query by Grove Brockman said "No, we have maintenance contracts on the machinery and Ian is told to do all necessary maintenance. Don't worry everything is in good order". Ian means Ian Delmenico the manager. This representation is undated in the statement of claim. (iii) In the early part of February 1985 Brockman said to Grove and John "We are running it (meaning the business of the hotel) properly and all maintenance is done on a regular basis. There is nothing you have to worry about. I am at the hotel one day a week and Ian (meaning the hotel manager) is authorised to do anything to keep the building and business in good order. I am a J.P. and I cannot afford to tell anything but the truth" or words to that effect. (iv) On or about 8 March 1985 immediately prior to the offer being executed by the applicants Brockman said to the applicants in response to the statement that the building was worth less than $950,000 as it looked run down "I take offence at that remark, it is not run down at all, everything is working perfectly". (v) During the period from October 1984 to February 1985 Ian Delmenico the manager of the hotel business stated to John that all maintenance to the hotel was done on a regular basis. It is pleaded that the representations were untrue, that they amounted to misleading and deceptive conduct by Laja and Sheldonian and thus constituted breaches of s.52 of the Trade Practices Act 1974. Damages are sought pursuant to s.82 of the Trade Practices Act. It is said also that Brockman was knowingly concerned in the contraventions by the two companies (s.75B of the Trade Practices Act). It is also claimed that the representations were made fraudulently or alternatively negligently. There were also claims with respect to alleged breaches of certain conditions of the contract. With the exception of one matter these claims have been settled and I amno_ longer concerned with them. In addition there was a counter claim by the respondents which is not now proceeded with. The claim with respect to an alleged breach of condition concerns the name "White Sands Motor Hotel". This claim arises from special condition 1(c)} of the contract which is as follows - "1. This offer is subject to the following conditions ... (c) The transfer of the buisness known as WHITE SANDS MOTOR HOTEL to the purchasers on or before the settlement date and such transfer to be pursuant to the usual terms and conditions contained in the Agreement for Sale of Business Form approved by The Real Estate Institute of W.A. (Inc) 1982." The form of Agreement to Purchase a Business approved by the Real Estate Institute of W.A. (Inc) 1982 has been tendered and, there being no argument to the contrary, I find without difficulty that this is the form referred to in condition 1(c). Condition 2 on that form contains the words "The vendor shall at settlement deliver to the purchaser a proper registerable and executed transfer of the business name in favour of the purchasers". Condition 10 is as follows - "10. FURTHER ASSURANCE Subject to the due and punctual performance by the Purchaser of all his obligations under the Contract the Vendor shall do all things necessary for effectively vesting in the Purchaser the property hereby agreed to be sold including a transfer of the said business name and an assignment of such of che said subsisting contracts and engagements as are capable of assignment and to ensure that all necessary licences (if any) in respect of the premises and business are granted to the Purchaser." 6. It is argued that the effect of special condition 1(c) of the contract combined with the terms of the Real Estate Institute approved form is that Laja and Sheldonian agreed to transfer the name White Sands Motor Hotel to the applicants. It is common ground that this has not been done and damages are claimed with respect to that breach of contract. I return to this matter later. I deal first with the claim under s.52 of the Trade Practices Act. The evidence as to what passed between Brockman and the applicants is principally that of Brockman and Grove and John although Louise and Alison give some relevant evidence. The evidence as to alleged misrepresentation (v) is that of Delmenico and John, The difficulties inherent in deciding what was. said during a period of between three and two and a half years ago are compounded by the fact that I found none of the witnesses to be satisfactory and reliable. The two principal witnesses Grove and Brockman have, in my view, permitted partisanship to affect their evidence and I think that the applicants other than Grove have permitted loyalty to him, who is plainly head of and leader of the family group, to affect their evidence. Brockman is no more anxious than any other business man to lose money and his anxiety to avoid this consequence has in my view led his evidence to be distorted in his favour. As I. said to the parties and their advisers at one stage during the hearing I considered that this case is almost to be decided on the balance of disbelief since I was disinclined to believe any of the parties on some 7. issues. However that may be I must do the best I can. Grove seemed to me to be clearly the dominant party in the partnership the shares in which were said in the contract to be held as to fifty five one hundredths by Grove as to twenty one hundredths by John and as to ten one hundredths by Alison and as to fifteen one hundredths by Sarah. It was apparent to me as he gave evidence that Grove expected his will to prevail over those of his three partners. A document of instructions for his solicitor (exhibit 5) is most revealing. I set 1t out in full —- "BUYING WHITE SANDS Family Agreement William Grove 55% Salary $30 000 Managing Director John W. Grove 20% Salary $25 000 Manager Louise Farrier 15% Salary $15 000 Assistant (wife of above) Alison Smith 10% Salary $ 5 000 Assistant (wife of W. Grove) Assets W. Grove $1.600 000 This includes about one million held in trust for Grove children John $ 70 000 Louise $ 25 000 John and Louise also manage Elsinore Holiday Units, income is $15 000 each Alison $ 30 000 Teacher, part time, income $10 000 W. Grove, who really owns the lot, wishes to retain absolute control and say who gets what. Reason being partners all have created unnecessary problems. All partners have to say in a private aside in a witnessed declaration that they will return their share to W. Grove on his say so. The thing is to be set up for minimum tax and minimum risk as the White Sands so far has been unprofitable and he's not sure whether we can turn it around. Accountant to check agreement." 8. Despite the protestations of John and Alison to the contrary I find that Grove made all decisions of importance to the partnership. I think that the sharing of profits in the partnership was an income tax matter rather than a matter of any degree of control or power to influence decisions. In any event Grove apparently held a majority interest. I h--re no doubt that matters were discussed between the four partners but ultimately what Grove wanted was what happened. Certainly Grove did all the negotiating concerning the obtaining of finance for the transaction. Even Alison who was the most firm about her part in the decision to buy the hotel conceded that she was never consulted by Grove as to the possibility of getting out of the transaction when some things went wrong with it. The evidence of any financial contribution by the partners to the capital of the partnership is vague. Alison said that she had her contribution available but that the money had not actually been paid over. Louise gave no evidence on the topic at all and neither did John. The hotel, the subject of the proceedings, was built in 1969 and by 1985 was showing signs of wear and tear in all sorts of ways. The applicants knew that it was an old hotel and expected or should have expected that signs of its age would be and were apparent. They did not and could not expect that the hotel would be in new condition when it was to Grove's knowledge at least fifteen or sixteen years old. Much of the equipment such as refrigerators and air conditioners was also old and thus prone to break down. It should be observed that by the early 1980's and probably earlier the hotel had a chronic leaking 9. problem with its roof which was nearly flat. Depending on the amount of rain and the strength and direction of the wind up to ten of the better rooms would be affected by incoming rain water. Walls and ceilings would be stained and carpets and furnishings affected. It is necessary now to consider the representations alleged to have been made to find whether they were made, whether they were true or false and if false whether also misleading or deceptive or likely to mislead or deceive and finally whether the applicants suffered loss or damage by their reliance on the misleading or deceptive conduct. I deal with the alleged misrepresentations seriatim bearing in mind that the only live issue concerning the state of the Hotel is now the leaking roof. (1) Grove says that Brockman said to him "It could do with a coat of paint but otherwise it is fine - but an owner-manager would be the way to go". Brockman says that he thinks he may have said these words to John. John says nothing about them having been said to him. I find that Brockman said these words or words to this effect to Grove. (2) Brockman admits that he told Grove "We have maintenance contracts on the machinery", does not remember saying "Ian is told to do all necessary maintenance" and denies saying "Don't worry everything is in good order". I find that Brockman did say words to the effect of "Don't worry everything is in good 10. order". (3) Brockman admits he could have said "We are running it properly and all maintenance 1s done on a_ regular basis". He does not think he could have said "There is nothing you have to worry about". He may have said "I am at the hotel one day a week and Ian is authorised to do anything to keep the building and business in good order". He admits that he mentioned that he is a J.P. which is the fact but denies that he said "I cannot afford to tell anything but the truth". Grove and John say that Brockman said all of these things and I find that he did so with the exception of the phrase "There is nothing you have to worry about". (4) Brockman denies that he said "I take offence at that remark, it is not run down at all, everything is working perfectly". Grove and Alison say that he did. Louise says that he said words to this effect and John's recollection of the incident is poor but he remembers a terse voice being used. I think it unlikely that Brockman ever said "Everything is working perfectly" even if he were provoked by something Alison said. What is more even if he did say it the applicants would not reasonably have interpreted what he said as indicating that plant and equipment some of which was sixteen years old were in perfect condition. He may have said that the hotel was working but I cannot find that he said "perfectly". (5) John says that Delmenico told him that all maintenance to the hotel was done on a regular basis. Delmenico was not ee | te emene Oe a eee 11. asked about this. I find that it was said. The only live question concerning the condition of the hotel and its plant and equipment is the state of the roof. If the applicants did not already know about the state of the roof, for Brockman to say as I have found he did say that "The hotel could do with a coat of paint but otherwise it is fine" would be false and misleading or deceptive as also would the words "Don't worry everything is in good order". Brockman gave some evidence which was unsatisfactorily vague that he had informed Grove at some time before the signing of the contract that the roof leaked. Grove denies this and on balance I do not believe that Brockman did so inform him. Delmenico who was a most unsatisfactory witness says that he told John and possibly Louise that the roof leaked and that they saw the water staining in some of the top storey rooms. He says this happened in January or February 1985 possibly earlier and possibly later. There was a heavy rain on 8 April 1985 after the signing of the contract and before settlement. If this conversation between John and Delmenico occurred at all I think it is most likely to have occurred after this rain. I find that the representations I have mentioned concerning the general state of the hotel were misleading and deceptive in that there was a_ serious leaking problem with the roof. The final question is did the applicants suffer loss or 12. damage because of this misleading or deceptive conduct in that they relied upon it when entering into the contract? Put in another way in this case did they enter into the contract to purchase the hotel and complete the purchase relying on the misrepresentations? Having reconsidered the whole matter I have reachec the conclusion that they did not and that had they known at the time of the contract the true position about the roof they would still have signed it. Grove's attitude to the leaking after he says he found out about it was simply to try and find a way to fix the problem. He never sought to avoid the contract. He said that if he had been told about the leaking before contract he would have saii "We'll have to fix it", "all right something has got to be done what would it cost to fix?". None of the applicants ever made any complaint about the condition of the hotel having been misrepresented to them until filing a defence in proceedings against them by the respondents in the District Court of Western Australia late in 1985. None of the applicants sought to re-negotiate the terms of the contract nor to avoid it after they knew of the leaking. There was a condition of the contract as signed which made the contract subject to the applicants obtaining a loan of $550,000 for a period of three years at 14% interest. As I have said there was a heavy rain on 8 April and on 12 April the applicants signed a memorandum waiving the condition as to 13. finance and making the contract unconditional. The applicants certainly knew of the leaking problem within one or two days of 8 April and by waiving the condition as to finance thus' forfeited an opportunity to avoid the contract because at the time they had no arrangement for a loan and had been refused by some' sources. Grove gave an explanation of the applicants putting themselves in a position whereby they could not take advantage of any unavailability of money at 14% to avoid the contract. He said that he had sold some shares and had paid Brockman a deposit and could not afford to let the contract be avoided. I find this reason entirely unconvincing. He admitted that he could have repurchased the shares and although he did not admit it he could have recovered his deposit. I think that the applicants denied themselves this opportunity to avoid the contract because' they wanted to go on with it notwithstanding the leaking roof and they cannot now be heard to say that the false representation as_ to the roof led them to enter into the contract. In addition there was a further opportunity to avoid the transaction two weeks after settlement when Brockman and Donald another man associated with the respondents called on Grove and offered him all his money back. Grove declined this offer and gave as his reason that there would have been a waste of some $80,000 unparticularised and undescribed. He says he cannot remember if he asked Brockman and Donald to reimburse him those expenses. I found Grove's account of this matter completely unconvincing and I think that he did not even consider the possibility of getting out of the transaction because he was pleased with it notwithstanding the leaking roof. 14. Both Grove and John say that they did not depend or rely on the truth of the representations but relied on the special clauses in the contract not one of which would in my opinion enable them to mount an action with respect to the leaking roof. Since I am for these reasons of the view that the applicants suffered no loss or damage because of the respondents' misleading or deceptive conduct the claim under s.52 of the Trade Practices Act fails and is dismissed. The claim in negligence also fails and is dismissed. No evidence or argument was directed to the claim in the statement of claim made in fraud and it therefore also fails and is dismissed. There remains the claim with respect to the name "White Sands Motor Hotel" which is founded both in contract and as a claim under s.52 of the Trade Practices Act. I have set out above the argument put by the applicants that the effect of special condition 1(c) combined with the provisions of the Agreement for Sale of Business Form is. that Sheldonian and Laja have agreed to transfer the business name "White Sands Motor Hotel" to the applicants. In addition to special condition l(c) it should be observed that the form of offer and acceptance is on its face an offer to purchase the "White Sands Motor Hotel". * Lae 15. The hotel business had been carried on by the predecessors of Laja under the name "White Sands Motor Hotel". Until Observation City was built and this was opened in the last few months the White Sands Motor Hotel was said to be the biggest and most prominent building in Scarborough. The hotel was known generally 1n common parlance as the "White Sands". A certificate dated 26 February 1981 found in the hotel offices by the applicants when they took over records that a renewal of the registered business name "White Sands Motor Hotel" was registered on 6 February 1981 and was current until 6 February 1984. The evidence is that the respondents carried on the business under the name "The Sands Motel" and it is said that the business was carried on under that name since 1982. If it were so carried on the registration of "White Sands Motor Hotel" was not apparently cancelled. There was much confusion in the use of names. There were signs on the outside of the hotel which said "The Sands" or "The Sands Hotel" but there was a stylised logo of the White Sands also on the outside of the building and a sign "Sands Inn" over the door. The accommodation charts and much other stationery in regular and common use at the hotel when the applicants took over either had the White Sands logo or the name White Sands Motor Hotel on them or both. This stationery includes a memorandum for sending with a cheque in payment of an account, a suggestion sheet, forms of account, forms of receipt and some boxes of envelopes. A sheet of writing paper has the White Sands logo and records a telegraphic address of "Whitesands" Perth but is headed "Sands Motel". Newspapers have 16. been tendered which indicate that in some stories at least the name "White Sands" has been used to describe the hotel from May 1985 to March 1987. A number of independent witnesses for instance Urquhart and Hughes the valuer called by the respondents referred to it and knew 1t as the "White Sands". The evidence satisfies me that partly no doubt because it was thought expedient by the respondents to use up stocks of stationery the hotel was generally known as the "White Sands" or "White Sands Motor Hotel". Compelling evidence in this regard is that of Delmenico the respondents' manager who agreed that almost every week during his managership correspondence would be received addressed to the White Sands. The following exchange occurred between him and counsel for the applicants - "And the hotel was generally known by people in Perth as the White Sands and has continued to be so known, has it not, from your experience?---Yes, that is true. When I said that I worked at The Sands - - - There had been some difficulty fixing Sands or The Sands in people's minds as the name of the hotel. They continue to think of it as the White Sands, do they not?---Yes, that is possible." It seemed to me at the time that Delmenico was admitting these matters with the greatest reluctance and trying to play down their significance but I find his evidence on this topic to be true. The fact is that from some time in 1984 the name "White Sands" has been owned by the owner of a tavern hard by the hotel. 17. How this came about was not explained in evidence but at relevant times until today the respondents have not been ina position to transfer the business name "White Sands Motor Hotei" to the applicants. Brockman says that he knew this from the start and told Grove that the hotel was known as "The Sands" and that was how it should be described in the contract and that was the only name the ownership of which could be transferred to the applicants. He says that Grove took no notice of this and insisted that "White Sands Motor Hotel" is what the applicants were buying. This is denied by Grove and John and Ido not think that it happened. What happened in my view was that the applicants wished to buy the hotel bearing the name which to their knowledge it had always borne. Being most anxious not to lose a sale Brockman accepted the offer and procured the acceptance of the offer by Laja and Sheldonian. He said that he thought if he refused, the sale would be lost. Brockman must have thought at the time that he could buy the name from the owner of it and then be in a position to transfer the name to the applicants. I cannot believe that otherwise Brockman a business man of some experience would permit the acceptance of the contract to occur thinking that the respondents would be able to honour their commitments to transfer the name or careless as_ to whether they would be able to or not. I find without difficulty that the special condition coupled with the condition of the standard form of offer and acceptance for the sale of a business should be interpreted as an agreement by Laja and Sheldonian to transfer the business name "White Sands Motor Hotel" to the applicants. Indeed there has 18. been no strong argument to the contrary. There has been a breach of this aqreement and as a result the applicants are entitled to an award of damages with respect to such breach. The damages in breach of contract should be awarded against Sheldonian and Laja. I consider now the question of the claim under s.52 of the Trade Practices Act with respect to the business name. It is pleaded in para. 14(a) that the "first respondents were not the proprietors of the business name 'White Sands Motor Hotel' and could not transfer the name to the applicants". Paragraph 15 of the statement of claim is as follows "15. By reason of entering into the Agreement in the circumstances pleaded in paragraph 14 hereof the First Respondents engaged in conduct 1n trade or commerce which was misleading or deceptive or which was likely to mislead or deceive in contravension (sic.) of the provisions of Section 52 of the Act." I find that to enter into a contract promising through Brockman something which they did not know they could fulfil and which in fact they could not fulfil was misleading and deceptive conduct which in part induced the applicants to enter into the contract. The applicants are entitled to an award of damages under this head also. Brockman was clearly a person who was directly knowingly concerned in or party to the contravention of s.52 by Laja and Sheldonian so that with respect to this claim the order for damages should be against the first and second respondents. There are as I have said two bases of claim with respect 19. to the non-transfer by the respondents to the applicants of the business name one in contract and one under the Trade Practices Act. The applicants cannot however expect to receive two separate awards of damages. Since the award with respect to the Trade Practices Act involves Brockman the single award of damages with respect to the business name should be against Brockman as well as the two companies. The final problem 1s the assessment of those damages. The claim is put on two bases by the applicants. The first is the loss of custom because people, either old customers or new, could not find the "White Sands Motor Hotel" in the white or yellow pages of the telephone book. The second is put on the basis that for the applicants to get out of the difficulty which the respondents have put them in it will be necessary to change the name of the hotel and spend a good deal of money on advertising in order that the public at large may be informed of the change in that what they knew as the "White Sands Motor Hotel" or simply the "White Sands" has a different name. After settlement the applicants sought the insertion of the name "White Sands Motor Hotel" in the white and yellow pages of the telephone directory for Perth. At first neither application was successful because they could not produce a certificate of registration of the business name. However for no discernible reason last year the entry appeared in the yellow pages and this year in the white pages as well. This must at best be a precarious position subject to review at any time by 20. Telecom and is probably evidence of carrying on business by the applicants under a name other than their own which is not registered as owned by then. Rather the evidence 1s that the mame 1s owned by the proprietor of the tavern I have mentioned. During the nearly two anda half years of the carrying on of the business by the applicants there has been constant confusion with respect to the name. Supplies intended either for the hotel or for the tavern are misdelivered. There has been constant confusion by people seeking bookings. Bookings have been lost because people wanting the "White Sands Motor Hotel" could not find the name in the' telephone book. When there was a visit of an American fleet to Fremantle the hotel had practically no bookings when almost all the seaside hotels were booked out. Enquiries were made by Louise with the people in Fremantle who were looking after such things and she was told that they could not find the White Sands listed. As a result of this potential bookings which would almost certainly have been made were lost. Assessments of the applicants' damages must lack precision but I consider that I should award some sum with respect to the confusion and loss of business which I find must have occurred because they were unable to trade under the name "White Sands Motor Hotel" or any variant containing the words "White Sands". It must or should have been within the contemplation of the parties that if the applicants were unable to carry on business under the name by which the hotel was widely known then some loss would result. In the nature of things it 21. is virtually impossible to assess how many patrons have been lost. Indeed it 1s only possible in the somewhat special circumstances of the visit of the American fleet to know that there has been any loss of custom. I think I am entitled to assume that there has been some loss of custom. A good deal of confusion leading to inconvenience and financial loss has' been proved. I assess the applicants' damages under the head of past loss on a conservative basis at $10,000. There remains the second limb of the expense of changing the hotel's name or more properly perhaps of getting rid of the name "White Sands" which 1t is thought will cure future problems of confusion and loss of custom. The applicants are the proprietors of the name "The Sands Motel" and it is said that they could carry on business under this name satisfactorily provided sufficient advertising is carried out to inform the public of the change. The expert evidence however is that for a satisfactory remedy it would be necessary to pick a name which is quite different to White Sands or The Sands. However this may be, it is argued, that none of this change of name would have been necessary if the respondents had transferred the name as they agreed to do. After considering the matter I have reached the conclusion that some allowance of damages should be made on the basis that the applicants change the name of the hotel in order to end so far as is possible the confusion. Estimates of the expense involved have been given by an expert Barry Urquhart. He puts the proper cost of a change of name for the hotel at $62,296 which is said by him to be a conservative estimate. He conceded in cross-examination that a fairly substantial deduction 22. should be made because the expense of ordinary advertising would be saved during the duration of the campaign with respect to the change of name. He estimates this deduction based on recent ordinary expenditure on advertising at $15,000. Grove said that he had not yet made up his mind whether the name of the hotel should be changed or not. I am satisfied however, that the applicants will continue to suffer damage in the future if they do not undertake the change of name campaign referred to by Urquhart or something like it. If they do undertake the campaign it is expected that this future damage will cease. Either way there will be loss or expense. I can think of no better way to quantify this loss of expense than by awarding a portion of the estimated cost of a change of name. Doing the best I can and adopting a conservative stance I assess damages under this head of future loss at $30,000. Adding these two figures together produces a result of $40,000. There will be judgment for the applicants against the first and second respondents in the sum of $40,000. I have heard argument as to costs on the footing that the applicants have been unsuccessful with respect to the large trade practices claim but successful with respect to the smaller claim concerning the business name. I put to counsel that the most practical way to resolve this matter was to make an award to the applicants of a proportion of their costs if any award were to be made. This was accepted. "wt «yarn Qa _ 23. There are many matters to be taken into account. The time occupied at the trial by what I have called the larger trade practices issue as a whole was considerably more than that occupied by the business name i1ssue. On the other hand the issue within that issue which took up a great deal of time as to whether representations as to the condition of the hotel were made was resolved in favour of the applicants. The issues as to the representations as to the condition of chattels in the hotel Must have occupied a good deal of time in preparation for trial and this was only concluded by the acceptance of money paid into court two days before trial. Pursuant to 0.62 r.27(1) and with the consent of counsel I order that the applicants do not tax their costs with respect to the issue concerning the chattels. I take them into account however when arriving at an order for the costs of the proceedings as a whole. Counsel for the respondents submitted that I should make no order as to costs. Counsel for the applicants on the other hand submitted that if I felt that I should make any reduction of the applicants' costs at all they should be awarded seven eighths of their taxed costs. As so often happens justice will, I think, be done by making an order somewhere between these two poles. The applicants have succeeded on one issue and failed on another. They have recovered damages somewhat less than they would have recovered if they had succeeded on both. It was, I think, advisable for them to take proceedings in this Court as had they not done so with respect to the issue on which they have "fee 24. succeeded they could not have obtained a judgment against Brockman under the Trade Practices Act. I have not found this matter easy to determine but considering all relevant matters and principles I have reached the conclusion that I should order that the respondents pay to the applicants one half of their costs to be taxed including the costs of the issues with respect to which payment into court was accepted and I do so order. I certify that this and the i» preceding pages are a true copy of the Reasons for Judgment of Mr Justice Forster. Associate Dated: © Counsel for the applicants : Mr. T.E. 0'Connor Solicitors for the applicants : Messrs McLeod & Del Piano Counsel for the respondents : Mr. R.H.B. Pringle with Mr.C.J. Sweeney Solicitors for the respondents : Freehill, Hollingdale & Page Dates of hearing : 5,6,7,8,9,12,13 October, 3 December, 1987. Sa SORE Te VEE