CATCHWORDS TRADE PRACTICES - misleading or deceptive conduct - representations to natural person concerning lease of a shop - whether company of which representee is majority shareholder and director can rely on representation for s 82 damages. DAMAGES - misleading and deceptive conduct - whether loss suffered before falsification of representation recoverable - measure of loss where there are concurrent causes of loss. Trade Practices Act 1974 ss 52 and 82 Precision Plastics Pty Ltd v Demir (1975) 132 CLR 362 Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514 Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526; (1992) 109 ALR 638 Emanuele v The Chamber of Commerce & Industry (1994) ATPR (Digest) ¶46-121 Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 69 ALJR 787 Netaf Pty Ltd v Bikane Pty Ltd (1990) 92 ALR 490 Jaldiver Pty Ltd v Nelumbo Pty Ltd(unreported, Heerey J, 2 December 1992, Melbourne) Gould v Vaggelas (1985) 157 C.L.R. 215 Marchv Stramare (E. & M.H.) Pty Ltd & Anor (1991) 171 C.L.R. 506 Fitzgerald v Penn (1954) 91 CLR 268 Finucane v New South Wales Egg Corporation (1988) 80 ALR 486 SUSAN PENDER JEWELLERY PTY LTD v MIRAGE (OPERATIONS) PTY LTD & ORS No. VG 241 of 1989 SPENDER J BRISBANE 5 AUGUST 1996 IN THE FEDERAL COURT OF AUSTRALIA) QUEENSLAND DISTRICT REGISTRY ) No. VG 241 of 1989 GENERAL DIVISION ) BETWEEN : SUSAN PENDER JEWELLERY PTY LTD Applicant AND : MIRAGE (OPERATIONS) PTY LTD First Respondent AND : BAILLIEU KNIGHT FRANK (GOLD COAST) PTY LTD Second Respondent AND : MIRAGE (MANAGEMENT) LTD Third Respondent AND : ANZ EXECUTORS AND TRUSTEE COMPANY LIMITED Fourth Respondent CORAM: Spender J PLACE: Brisbane DATE: 5 August 1996 MINUTES OF ORDER THE COURT ORDERS THAT: 1. Judgment for the applicant against the second respondent for $107,800.00. 2. Costs reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA) QUEENSLAND DISTRICT REGISTRY ) No. VG 241 of 1989 GENERAL DIVISION ) BETWEEN : SUSAN PENDER JEWELLERY PTY LTD Applicant AND : MIRAGE (OPERATIONS) PTY LTD First Respondent AND : BAILLIEU KNIGHT FRANK (GOLD COAST) PTY LTD Second Respondent AND : MIRAGE (MANAGEMENT) LTD Third Respondent AND : ANZ EXECUTORS AND TRUSTEE COMPANY LIMITED Fourth Respondent CORAM: Spender J PLACE: Brisbane DATE: 5 August 1996 REASONS FOR JUDGMENT This is an application in which the primary relief now sought by Susan Pender Jewellery Pty Ltd is against Baillieu Knight Frank (Gold Coast) Pty Ltd and is for damages under s 82 of the Trade Practices Act 1974 ( 'the Act') for an alleged breach of s 52. It is alleged that in March and April of 1988, during negotiations between Susan Margaret Pender ('Pender') and Mr Gregory Clyde-Smith ('Clyde-Smith') in respect of retail space available for lease in the Marina Mirage Gold Coast Retail Centre, Seaworld Drive, The Spit, Surfers Paradise, Queensland, Clyde-Smith made certain misrepresentations. An application seeking damages was filed on 17 August 1989 by Susan Pender Jewellery Pty Ltd ('the corporate applicant'). It is claimed that the alleged representations made to Pender, a director and principal shareholder of the corporate applicant, were relied on by the corporate applicant and induced it to open a retail outlet in Marina Mirage Centre and thereby incur certain losses. Pender was then a designer, importer, wholesaler and limited retailer of quality costume jewellery. Clyde-Smith was a real estate agent employed by the second respondent, Baillieu Knight Frank (Gold Coast) Pty Ltd ('BKF'). BKF was engaged by the owners of Marina Mirage as a leasing agent for the project. Max Christmas Pty Ltd was co-agent with BKF. Pender is not a party to the proceedings and one question in the proceedings is whether representations made to Pender personally can be, or were, relied on by the corporate applicant. A related issue is whether the claimed losses were incurred by Pender or the corporate applicant. The subject of the negotiations was a sub-sub-lease. The premises upon which the Mirage centre was erected were leased by the Crown, by agreement dated 21 April 1988, to The Gold Coast Waterways Authority which covenanted to grant to ANZ Executors and Trustee Company Limited, the fourth respondent, a sub-lease of the premises and the adjoining marina. The fourth respondent empowered Mirage (Operations) Pty Ltd, the first respondent, to grant, and obtain the grant of, sub-sub-leases. The third respondent was Mirage (Management) Ltd who acted with the first respondent in procuring and directing the services of BKF and Max Christmas Pty Ltd as real estate agents for the leasing of the centre. The first and third respondents were members of the Qintex group of companies. Bates Corporation Ltd ('Bates') was employed as the agent of Qintex Ltd to manage the project and is not a party to these proceedings. The precise distribution of responsibilities between the first, third and fourth respondents is not relevant as proceedings against those parties were settled prior to the trial. The court is here concerned only with the alleged liability of the second respondent, BKF. The Representations The representations, as originally alleged, were in two categories. First, there are those as to the calibre of tenants committed, the viability of the complex and the potential volume and nature of customer traffic expected; secondly, it was alleged that, in essence, Clyde-Smith represented to Pender that her outlet would be the only retailer of costume jewellery in the centre. Despite the range of misrepresentations alleged in the statement of claim, it was conceded on behalf of the applicant that the first category of misrepresentations were not being pursued as such, but had a contextual relevance to the alleged "exclusivity" representation which forms the nub of its case against BKF. The relevant portions of the statement of claim are as follows: " 16. The negotiations consisted of: (a) telephone conversations in mid to late March 1988 between Pender in Melbourne and Clyde-Smith in Gold Coast City; (b) conversations on 8 April 1988 between Pender and Clyde-Smith at the Sheraton Mirage Hotel and at the partly-constructed Centre. 17. In the course of the negotiations, Clyde-Smith orally made the following express representations ('the representations') to Pender: ... (b) that having investigated the matter they had determined that the Applicant was the only one in Australia in the jewellery design field who came up to their standards; (c) that there was one space for a retailer of high class fashion/costume jewellery in the Centre and that they wanted the Applicant to take that space; ... 18. By making the express representations specified in sub-paragraphs 17(a) to (c) inclusive, Clyde-Smith impliedly represented that the Applicant would be and would remain the only retailer of fashion/costume jewellery in the Centre. " The relevant portions of the defence are: " 13. As to paragraph 17 of the amended Statement of Claim, the second respondent: ... (b) denies that express representation alleged in sub-paragraph (b) but says that Clyde-Smith did make oral representations to the effect that he had been speaking to a number of fashion accessory jewellers from the Double Bay and Toorak areas but he had been unsuccessful in securing any of them as tenants for the Centre and that Pixi Skase had suggested that Pender would be a suitable tenants (sic); (c) denies the express representation alleged in sub-paragraph (c) but says that Clyde-Smith did make oral representations to the effect that he and others wanted Pender to take a space in the Centre, and that there was no exclusivity granted to any tenant within the Centre (with an exception) and that Hardy Bros. were going into the Centre and that he was having discussions with Toscana who would be involved in fashion jewellery and fashion accessories generally; ... " The representations were allegedly made during a telephone conversation on 30 March 1988 and during a visit by Pender to the site on 8 April 1988. The issues that fall for determination are whether the alleged "exclusivity" representation was in fact made; whether that representation constituted misleading or deceptive conduct; whether representations made to Pender personally can be relied on by the corporate applicant; if so, whether there was such reliance; and, depending on the answers to those questions, the quantum of any damage suffered by the corporate applicant. Background The Mirage complex on the Gold Coast combines a Sheraton Hotel, a marina, condominiums and a shopping centre. It is an "up-market" environment located on the Spit between the ocean and the Broadwater and adjacent to Sea World and the Fisherman's Wharf complex. The shopping centre, Marina Mirage, ('the centre') has two levels. The ground level - or 'Boardwalk Level' - was marketed as being predominantly food orientated with four restaurants, a food court and coffee lounges. That floor was also intended to house souvenir and gift shops as well as utility stores like chemists and newsagents. The first floor - or 'Lobby Level' - was fashion oriented and marketed as being dedicated to exclusive stores for jewellery, fashion, haute couture, accessories, art, antiques, etc. The focal point of the first floor was a "Fashion Court" where the fittings and appointments were to be of an especially high standard and was where world renowned labels could be found. It was intended to have an air of sophistication and elegance. The shop which was the subject of negotiations between Pender and Clyde-Smith was located in the Fashion Court. In July or August 1987, when the construction of the centre was nearing completion, BKF and Max Christmas commenced the process of obtaining tenants. Initially, the tenants targeted were contained in a list of nominated tenants and usages prepared in accordance with the views of Mr Christopher Skase and his wife, Pixie as to the standard of tenant that would suit the Mirage concept. Mr Skase was the controlling figure of the Qintex group of companies. In the early stages, it seems that BKF were not entirely confident that the success of Marina Mirage was guaranteed. In a letter dated 4 August 1987 to Bates from a Mr Brad Moore, Associate Director of BKF, the following concerns were expressed: " As a brief example the above rentals indicate that the proposed rentals for Marina Mirage are too high with the current layout and location of the centre. We recognise the very strong tourist attraction that Seaworld represents. However we would not envisage that Marina Mirage, as a shopping environment, could expect to attract large numbers of these patrons. The Sheraton International Hotel will obviously provide customers for the centre, and we would expect these to be of a high unit of expenditure level. However we would not consider these would be sufficient in numbers to support a centre in excess of 100 tenancies. ... The existing design, at this initial review period, needs to be more open and requires additional escalators to encourage visitors to shop on the first floor levels on a regular basis. Having only viewed the floor plans supplied, we are concerned about this design and would prefer it to be built around a concept as already mentioned. After competion (sic) of the centre, and assuming a success rate of 100% leasing up, the centre would still need ongoing promotions to attract the continual flow necessary for the shops to succeed. It cannot rely on the permanent population or even the tourist population travelling to the centre without the continual awareness to its concept. From the preliminary information given we are unable to provide sufficient evidence to indicate the rental rates proposed are feasible. ... We found with the tenancy mix supplied that a number of operators were best suited for suburban and regional shopping centres and were not tourist oriented. Also there were a number of tenant mix duplications which would not survive in this environment, eg. Shops 15 and 149, swimwear; shops 20 and 27, gifts; shops 39 and 147, sunglasses; shops 4 and 103, books. Also there were a number of shops that could be catered for in one tenancy, eg. Shop 10 bookstore, shop 19 newsagent and shop 25 cards. " Clyde-Smith did not commence work with BKF until about October 1987 and was apparently unaware of this document until shortly before the trial. At the time of the trial, Clyde-Smith had had about 15 years experience leasing space in shopping centres. According to his statement he had, within 4 to 6 weeks of joining BKF, almost "assumed total control of BKF's involvement" with the Marina Mirage project. The project kept him very busy because "the joint leasing agents...[BKF and Max Christmas]... were very much behind with the promotion work that was necessary". During the quest for tenants to fill the centre, regular meetings were held at which representatives from the Mirage companies, Bates, Max Christmas and BKF discussed the progress that had been made. Clyde-Smith regularly attended, and produced reports for, these meetings. Leasing schedules and reports were maintained outlining the tenants which had been, or would be, approached and the status of any negotiations. The schedules were structured using shop numbers corresponding to floor plans for the centre. Shop numbers and shapes were not fixed from the outset and changed over the period in question. The method of construction used for the centre was, as described by Clyde-Smith, "a fast-track system which meant that they were designing the thing as they went...". The shop that was eventually occupied by the applicant was variously referred to as shop 157 or shop 153A. In some floor plans it was absorbed to form part of its neighbour, shop 153. The tenants targeted for the area in and around the fashion court included Laura Ashley, Charles Jourdan, Oroton, Yves St Laurent, Wiess, Christian Dior, Cartier, Carla Zampatti and Gucci. There was an obvious emphasis on "names". This focus was not concerned at all with the legal title of the organisations targeted. By early February 1988, there was a sense of urgency about the search by Clyde-Smith for tenants; at that time the centre was scheduled to open on 31 March 1988. The pressure was apparently increased by a lack of clear communication between Clyde-Smith and the Mirage/Qintex management. In some handwritten notes, headed "Project Problem Areas - Retail Leasing", dated 9 February 1988, Clyde-Smith made the following points: " 1. Many tenants have been messed around since October/Nov 87 because Qintex refused to accept their tenancies . They were either. not good enough . not Christophers (sic) favourite . Christopher/Tabart refused to deal with any other than their specific targets Eg. Canterbury . Morrisons . Kodak . Angus. Robertson . Local fashion . French restaurants) . Italian restaurants) All now acceptable . Ice cream shops ) and we now have to . Health food shops ) try & chase JP . Australian Horizons) after they have . Exec. V. Games ) gone very cold . Buckleys Cards ) . Fraser Edmiston ) Advised of . Opal Shops ) acceptance in last . Raymond Castle ) 2-3 weeks 2. Continuing changes to shops - ie where tenants allowed to go - confusion/frustration Eg. Kodak Shop 4 - 5 - 6 Lacrosse? 123 - 122 - 123 (now lost) ... 5. Amount of time concentrating on specific Skase wanted tenants. Eg. Mario ) Lots of Covers ) alternatives = Louis Vuitton ) to or better L'Homme ) Not allowed to Umano ) follow up/or Don Figgins ) could follow up but wasting time because not ... 6. Failure by Qintex to negotiate quickly & recognise key tenants are only won with good deals. They want cake and eat it too. 7. Constant involvement with Skase nominated tenants who were financially unable to proceed without Qintex assistance. Eg. L'Homme Mario Fishcaf Umano Queens Staley Family Very good alternatives were previously available & now lost. ... 10. Totally inadequate executive staff level of Qintex. Decisions . Skase ) Contradict each ) other. Constant Tabart ) change of ) direction This has caused numerous delays because they are very difficult to get to. ... 12. Had many of the original tenant applications been accepted. We would not have had to spend double time now to get them signed up all at once. Fittout (sic) time inadequate now. 13. Opening date of 31st March a joke . Tenants walking away Because it cant (sic) be done 14. Totally inadequate lead time to lease project. Especially time of year. Xmas etc Fashion shut down - mid Dec - end Jan. Only now are we able to get the majors here. 15. I believe everyone involved is doing their best however the shortage of time causes pressure on all. When tenants receive premature pressure they walk away. 16. Failure by Qintex to recognise that the location from a retail point of view is perceived in the market place as bad. Difficult to overcome when Qintex short on retail experience. ... 21. Still waiting for lease document to peruse. Still waiting for offer to lease document. We developed our own & are using that. 24. The opening date is critical should be approx. May 30th to get max tenants committed & fitted out. Earliest may be possible is May 1st. Also, in a memorandum to Bates, dated 26 February 1988, Clyde-Smith reported that: " 1. Attached charts tell the tale. 2. Negotiations proceeding well but slowly. 3. Experiencing a reluctance from tenants to commit before others do. 4. Being realistic. A. Expect less than 20% to be fitted out by 21st April. B. Expect close to total committment (sic) by that date. C. Expect 3 weeks to lease up top floor. - 6 weeks to lease up ground 5. Tenant fittout (sic) process needs speeding up dramatically! 6. Have launched a huge mail out programe (sic) to fashion etc to try and flush out some more prospects. 7. Retailers generally reluctant to expand into more centres. Rather most are looking to contract. 8. I am positive about sucess of centre however disaster will occur if we open before at least 80% fittout (sic) by tenants. + balance 98% leased. The opening date was ultimately extended to 12 July 1988 after an interim extension from 31 March 1988 to 16 May 1988. Prior to her contact with Clyde-Smith and the Mirage centre, Pender had an office on the 6th level of The Place in Toorak, Melbourne. From there she managed her primary business of wholesaling costume jewellery that she designed and imported. To a lesser extent Pender also made retail sales from this office but, being an office building, there was no passing customer traffic and retail sales were only made to people who discovered her through word of mouth. Pender was not considered as a potential tenant for the centre until March 1988. On 18 or 19 March 1988 there was a meeting of the kind earlier described to discuss leasing progress at which, amongst others, Clyde-Smith and the Skases were present; the meeting was chaired by Christopher Skase. When the question of potential retailers of fashion accessories was raised, Pixie Skase suggested two such stores that would be suitable for the centre and wrote the details of each on a sheet of paper for Clyde-Smith. One of these was "Tinsel trading"; the other was "Susie Pender". This was the first time Clyde-Smith had heard of Pender. Of the discussion regarding Pender at the meeting, Clyde-Smith said in his statement: " Christopher Skase was chairing that meeting and Pixie was beside him and the comment came up when the question of fashion jewellery was being discussed. When Christopher gave the directive that Susan Pender was the one we should go after for that role I took it as a principals' directive or instruction and when Skase gave such a direction you didn't argue, so my reaction was 'to tick that one off' and make it my business to find and negotiate with Susan Pender. ... There was an urgency factor because when Skase said 'do it' you didn't waste time. It was not for me under any circumstances to question Pixie Skase's judgement that this lady was the right person for the job in relation to the jewellery. " In a note later written by Clyde-Smith to his personal assistant, Brenda Williams, at the foot of the same sheet of paper on which Mrs Skase wrote Pender's details, he said: " These are fashion accessories shops Please locate and courier brochure to them today. Get phone nos. I will follow up this afternoon. " On 29 March Williams sent to Pender, by overnight courier, a letter dated 29 March 1988 enclosing Marina Mirage advertising brochures. It was addressed to "Susan Pender Jewellery" and marked for the attention of "Susan Pender" and invited Pender to participate in an exclusive retailing venture. Pender was phoned by Clyde-Smith from the Gold-Coast on 30 March 1988. It is alleged that, during this telephone conversation, Clyde-Smith made certain representations. The precise content of that discussion will be considered later. It was during this conversation that Pender accepted an invitation to inspect the premises; the details were arranged in subsequent communications. On 31 March 1988 there was a meeting, attended by representatives of Mirage, Clyde-Smith and others involved with the project. The status of the leasing project at that time, as reflected in the minutes of that meeting, show for 54% of the spaces there were no prospective tenants; for 23% of the spaces a good prospect had been located; for 8% of the spaces tenants had signed a letter of intent or offer to lease; and for 15% of the spaces an Agreement to Lease had been signed or the tenant was fitting out. Of the opening date the minutes record: " Centre must open with 64 outlets open and trading: 10 outlets fitting out and 7 outlets hidden behind false shop fronts. ... .... .... opening date of centre. Current proposal is 16th May, however depending on leasing progress in next 14 days ... June 6th - soft opening June 8th - main function June 22-24- International Opening - G.C. component Those minutes also refer to "Susan Pender Accessories" being targeted for shop 153A. Through other phone conversations between Pender and BKF it was arranged that Pender would attend the Gold Coast site for a video presentation, a tour and lunch on 8 April 1988. This was the procedure adopted by BKF for courting potential tenants in this project. Although many prospective tenants, when visiting the site, would stay overnight (or longer) at the Sheraton Hotel, Pender was unable to make use of the free accommodation offered because of prior personal commitments and was only at the site for a number of hours. Pender was flown first class to and from the Gold Coast on that occasion and was transferred between the airport and Marina Mirage by limousine. Further representations were allegedly made by Clyde-Smith on 8 April. The discussions that took place between Pender and Clyde-Smith on that day are considered below. By letter dated 22 April 1988, BKF offered Pender a 5 year lease of shop 157 with a clause allowing Pender to rescind the lease after the first year by giving 2 months notice, prior to the expiry of the year, of an intention to do so. That clause was not standard in the leases offered in the centre but was inserted as a result of nervousness on Pender's part about expanding her business by opening the retail outlet. The letter of offer made provision for Pender to nominate who would be the tenant: " Would you please indicate your acceptance of this offer by endorsing the copy attached and returning to us by return mail, together with the details required as follows: 1. Tenant - address, phone number etc. 2. Solicitor's name, address, phone number 3. Your fitout co-ordinator's name, address, phone number We confirm the opening date will be Tuesday 12 July 1988. " Pender accepted this offer by letter dated 18 May 1988. In this letter she nominated the corporate applicant as the tenant: " I accept subject to those terms and conditions being incorporated in the lease documentation and to my solicitors' approval of the lease documentation. The details which you requested are 1. Tenant. Susan Pender Jewellery Pty Ltd The Place 521 Toorak Road Toorak 3142 Victoria " The shopfitting for the Applicant's store commenced in late May 1988. BKF's 'Instructions to Solicitors', in respect of the lease, dated 15 June 1988, in the following terms: "DATE: 15/6/88SHOP NO.: 157AREA: 25m˛ LESSEE: SUSAN PENDER JEWELLERY PTY.LTD. 521 Toorak Road, Toorak. Vic. 3142 GUARANTORS:Susan Pender " The special condition was the clause allowing Pender to quit the premises after 12 months on 2 months' notice. The lessor's solicitors, Feez Ruthning, sent to the Pender's solicitors the lease documentation for execution. The covering letter contained the following paragraph: " As the lessee is a company please provide us with a copy of the Certificate of Incorporation certified by the appropriate Corporate Affairs Commission and up to date copies of the Memorandum and Articles of Association of the company certified as correct by a director or the secretary thereof. " A copy of the Deed of Agreement to Lease was sent to "Mrs. Susan Pender, Susan Pender Jewellery Pty Ltd" by Clyde-Smith on 4 July 1988. The parties to that deed were Mirage (Operations) Pty Ltd, Susan Pender Jewellery Pty Ltd and Susan Pender. The corporate vehicle adopted by Pender to take up the lease was not mentioned by Pender during the negotiations with Clyde-Smith. There was no discussed reaction by BKF, the landlord or the landlord's solicitors to the fact that the nominated tenant was the applicant and not Pender. On 1 July 1988, some months after Pender was shown around the site, Clyde-Smith made the following remarks in a leasing status report: " The Centre has been a difficult one to lease, primarily because it is in the wrong place, a view expressed by the majority of tenants. Even upmarket tenants require considerable numbers of customers and the Spit is not known for this. The primary reason for tenants achieved to date has been a combination of persistence and negotiating skills. All other normal criteria which would attract tenants in lacking in Marina Mirage. We propose to concentrate heavily on filling the lobby level, which we believe to be the most important to the future success of the complex. Considerable time in the next few weeks will be needed to clear up firm documentation for the tenants already in place, and we envisage that there will be little in the way of new tenancies achieved until after opening date. " The Applicant's store commenced to trade on or about 16 July 1988. The lease documentation was never executed. In about August-September 1988 another costume jeweller, Toscana, opened in the centre. There is no complaint by the applicant about the arrival of Toscana because, according to Pender, this shop sold a lower grade of costume jewellery and was situated in the centre about as far away from the applicant's shop as it could be. On 15 August 1988 Mr Michael Shaw ('Shaw') wrote to Max Christmas Pty Ltd requesting the opportunity to establish a "High Fashion Costume Jewellery Shop" called 'Deneuve' that also sold other selected fashion accessories, including watches, belts and bags, and precious jewellery. This request was accepted by Tony Dagg on behalf of Mirage Operations in a memorandum dated 7 September 1988 sent by facsimile to a representative of Max Christmas. The memo said: " Due to the existance (sic) of the other costume jewellery outlets we would prefer (and feel it would be more profitable for them) if there was more emphasis on belts and bag accessories. " Shaw signed an Offer to Lease on 9 September 1988 in respect of shop 155 which is opposite the applicant's store (and is the store that was discussed on the 'phone on 30 March). The lease was handled by Max Christmas, not BKF. On 3 October 1988, prior to Deneuve opening, Pender telephoned Clyde-Smith to complain about the fact that there was to be a competitor in a store adjacent to hers. She indicated to Clyde-Smith in that conversation that she would vacate at the end of 12 months, in accordance with the special clause in her then proposed lease, if Deneuve was allowed to sell competing products. Clyde-Smith passed her concerns on to Tony Dagg and, in their discussion, suggested a possible limit of 10-20% jewellery content for Deneuve. By facsimile on 4 October Tony Dagg sent Clyde-Smith a memorandum which contained the details of the permitted usage for the Deneuve outlet. The memo spoke of a restricting Deneuve's costume jewellery content to not greater than 60%. Clyde-Smith replied the next day, saying of the 60% restriction that it did "not go anywhere near compromising with Susan Pender - nor would it be fair to her". Around this time, prior to the opening of Deneuve, Pender wrote to John Tabart, the chief executive of Mirage Management Ltd. The letter was undated. It sought some indication of what the management intended to do about he competitor. Paragraph 2 of that letter said: " My problem is that I was brought into Marina Mirage on the understanding that there were no other good Australian costume jewellers and that consequently, there would be no other costume jewellers in the complex. " Of Deneuve the letter says: " However, I understand that the shop immediately opposite mine is to be leased to a man dealing in costume jewellery - & who also buys from one of my major suppliers. I object very strongly to having as my neighbour another costume jeweller. Later in the same correspondence Pender referred to Shaw's arrival in the centre as being "entirely contrary to [her] understanding when [she] first agreed to lease a shop". The letter Pender also described Toscana's arrival as being contrary to her "understanding". Toscana's arrival, as already noted, did not prompt her to complain as it was not in direct competition or proximity to her store. Her failure to complain in the first instance about Toscana, in my opinion, does not mean that she felt she had no right to. The letter ends with reference to phone conversations with Tony Dagg which Pender describes in the letter as inconclusive and unpleasant. On 13 October 1988 Tony Dagg spoke with the solicitors acting for his interests and advised them that it may be necessary to change the permitted use clause, in the lease to Shaw, to avoid a conflict with the store leased by the applicant. Pender wrote to John Tabart, Chief Executive of Mirage Management Ltd, on 15 November 1988. By inference from that letter Deneuve was, then, about to open. That letter said: " Today my manager at Marina Mirage told me that the other, neighbouring, shop is about to open and that they are stocking jewellery very much like mine (she was actually told by a former employee of the other shop that it was 'the same'). I am faxing you a copy of my earlier fax. I do feel very strongly about this. I was very diffident about going into the complex - even about going retail at all - and one of the persauding (sic) arguments put to me was that there were no other good Australian costume jewellers. The implication that there would be no other costume jewellers was very clear and well understood. When I first heard that it was proposed to lease the neighbouring shops to another costume jeweller I spoke to Tony Dagg and explained that - even though it was not in accord with my original understanding - I would not object to the jeweller being leased another shop somewhere else in the complex but that I did object very strongly to having him as my immediate neighbour. I feel that Mirage Management have failed to honour their understanding with me and I feel bitterly dissapointed (sic) and more than a little angry. " In a further expression of her dissatisfaction, on 16 November Pender wrote to Christopher Skase in similar terms to the letter of 15 november. She mentioned again her "understanding" on entering the centre and stressed that she would not hesitate to leave Mirage if her business is adversely affected by the competitor. The letter concluded: " I hope it is possible to do something to rectify this situation before it is too late. " Skase replied the same day indicating that Grant Hunt would meet with Pender "in order to resolve [her] problem". By letter dated 21 November 1988, Mr Hunt outlined a proposal designed to appease Pender. The thrust of the proposal was a restriction of Deneuve to 50% (by floor area) of costume jewellery, a restriction on Deneuve carrying certain lines which Pender also carried and 6 months of promotional experience to the value of $10,000. This proposal was rejected. It is not clear on the evidence whether the restriction in Shaw's lease was to 60% or 50% costume jewellery. By letter dated 6 December 1988, solicitors for Mirage wrote to solicitors for Shaw in the following terms: " We have been advised by our client that the reference to 60% in Item 3 of the Reference Schedule of the Lease documentation should be a reference to 50%. Could you please amend the Lease documentation accordingly. " On 8 December Grant Hunt wrote a memo to John Tabart which contained the following paragraph: " Mr Shaw's lease was forwarded to his solicitors on 27 October. He claims that he has changed solicitors and that he has not sighted a lease to date. He also states that the permitted use clause was inflicted on him after his committment (sic) to the shop and at a time when he was at the point of no return. Therefore, I feel that he will debate this point and protract lease negotiations. Nevertheless, I have made my position clear - if his lease says 60%, then I am required to enforce 60%. " Whatever the actual restriction in Shaw's lease was, it is clear that he was not complying with it. In another letter from Grant Hunt on 8 December, to the solicitors for Mirage, he said: " We have an extremely unpleasant situation with Michael Shaw (Shop 155) being located next to Susan Pender. Susan Pender may pull out and file for costs. There is a percentage allowance of costume jewellery in the permitted use clause of Shaw's lease (which he claims he has never sighted). This allowance should be no more than 50%. In any case, I need to know whether or not enforcement of this % allowance is viable. If you believe so, then I request that you draw to the attention of Shaw's solicitors the importance of this restraint. He is certainly not complying at present and I am obligated to insist he does. " Even if there had been no difficulty encountered in restricting the costume jewellery content of Deneuve, it seems that the applicant's store would still have been vacated. In a letter from Pender's husband to Grant Hunt of 8 December 1988, he said: " However, it is, and always has been, our view that even if Shaw is restricted, this will not enable Susy to resume viable trading. The irreversible damage has been to permit Shaw to trade next door to Susy. " On 5 December 1988, Pender and her husband indicated to Grant Hunt that they would close down the shop pre-Christmas. He persuaded them to stay on until the end of January. On 20 December, solicitors for the applicant wrote to Mr Hunt rescinding the lease agreement and giving notice that the shop would be vacated at the end of January 1989 and legal proceedings would be commenced. Pender conducted a closing down sale at the premises in an attempt to mitigate her losses prior to vacating at the end of January 1989. Because a fundamental question in this case is what was represented to Pender, it is necessary to refer to the evidence in some detail. Telephone Conversation on 30 March 1988 This was the first personal contact between Pender and Clyde-Smith. Of this conversation, which would have taken about 5-10 minutes, Pender said in evidence: " I wonder if you can tell me to the best of your recollection what the conversation was at that time?---Greg Clyde-Smith phoned, introduced himself, explained that he was with Baillieu Knight Frank representing Marina Mirage, and asked if I had received the brochures which he's sent me by courier. I said I had; he asked if I'd read them. I said I hadn't; they were sitting in a pile of papers on the side of my desk, and that I wasn't interested in being a retailer, and he said, well, would I please just look at the brochures. Would I open one of them to a page which had a map - a plan of the complex in it? He said they had one designated spot for a top-quality costume jeweller. Would I open to this plan and find shop number - I think it was 155, and that that shop had my name on it. He asked you to do that. Did you open the brochure?---Yes, I did. Did you locate shop 155?---I did, and I said, 'Well-'. It was not to the front of the building, and I said if I did ever contemplate being a retailer I certainly wouldn't want a spot that wasn't in a prime position or at the front. What did he say in response to that?---He said it was in an area called the fashion court; that it was to be a very special area; that it was to receive special treatment and fit-outs and furnishings, and to have just top designers and retailers in it; that it was to be special. ... " Did he say anything else to you?---He said that it was to be a fashion court, a very exclusive and special fashion court, which was just to have top retailers, and they really would like me to look at it because they'd head-hunted and I was the only person who fitted their requirements or met their standards. ... Did you have any conversation with him concerning the possible rent or the physical dimensions of shop 155?---Yes. He proffered all that information and I wrote it on the catalogue - on the brochure as we talked. ... ...did you have any further conversation with Mr Clyde-Smith as to your interest or otherwise in his proposal?---I said that I really was not interested in retailing. He said would I - he had said actually when he had told me about the fashion court that I would need to see it to understand it, and then again he said would I please allow - just to fly me up to have a look, and that there was nobody else but me who was suitable. Right. Now, was that the end of the conversation?---I said that I would come to have a look, and he said he'd contact me about making a time. " The reception given by Pender to the idea of opening a store in Mirage was probably not as cold as she indicated in her evidence. A short file note Clyde-Smith made of the conversation described Pender as being "very interested". Clyde-Smith's recollection of the conversation was as follows: " Now can you tell his Honour as best you recall the conversation that passed between the two of you at that time?---It was a follow-up call pursuant to the call that Brenda Williamson had. I introduced myself as Greg Clyde-Smith coming from BKF on the Gold Coast, and mentioned that I was following up the information that Brenda had spoken to her about on the phone and that some had been sent to her. I invited - we talked very briefly. She indicated that she was surprised that she had been spoken to or contacted. I indicated again that Pixie Skase had recommended her so that is how we came to get in touch with her, and follow her up. I invited her to come to the Gold Coast at Mirage expense and also her husband if he wanted to come with her, spend the week-end - this was a normal practice - and view the shopping centre and have a look at and examine the possibility of taking a retail space in the shopping centre. Did you discuss anything else with her?---Only the potential timing of that. She indicated to me that her husband was fairly busy; he probably wouldn't be able to come. I suggested that it should be after Easter which it was, and she indicated that she wasn't in retailing at the moment. She didn't have a shop as such; it was just sort of for private clients and she was sort of in wholesaling, that she had not given a retail shop any thought at that time, but that she would think about it. Anything else?---I left the conversation on the basis that she was interested in coming up. She would check her arrangements and see whether it was going to be possible, and, if so, when, and I would get Brenda Williams to follow her up on that and see if we could make a final date. All right. And was that the end of the conversation?---Yes. " The respondents suggested that Pender was excited about having been suggested by Pixie Skase and was keen to be associated with them. " ...I suggest to you that he did in fact say to you that, 'As Brenda said, Pixie Skase has suggested that we get on to you,' and that you then said, 'Well, I'm flattered she remembered me; she only came into my shop a couple of times'?---I - Pixie never came into my shop. Well, she may or may not, but did you just - did you say to Mr Clyde-Smith, 'Well, I'm flattered; she only came into my shop a couple of times'?---No, I did not. All right. And he asked you if you knew Christopher?---He didn't ask me if I knew Christopher. See, I suggest that you said to him that you did not, and he said, 'Well, you'll get the opportunity to meet them if you take up a place in the centre'?---No. No, that's not correct. And he said to you that, 'We've been having trouble' - or, sorry, 'We've been seeking jewellery retailers for the centre, but we've been having trouble getting people.' Did he say that to you?---He didn't say 'trouble'. He said they couldn't find anybody suitable. And he said, 'I don't know anything about your product, but Pixie Skase has recommended you and told me to contact you, so I am'?---Words to that effect, the gist of that. Yes; yes, right. And you said, 'I'm only in wholesaling at the moment and attending to private clients'?---No; I said I was not a retailer. ... Did he say to you words to the effect. 'Please come up and see the resort; we'll pay for your air fares and put you up'?---I said several more times that I was not interested. He said there is nobody else who will do; we have your name on this shop. Did he say to you what I asked you, words to the effect, 'Come up and see it. We'll pay for your air fares and put you up.' Did he say something like that to you?---Not in those words. He did ask would I please come and have a look at it. And he said they would pay your air fares and your accommodation, did not he?---Yes. And you said that you would love to, but you thought it might be a waste of their money because you were not sure if you wanted to open a shop?---No; I felt obligated when he said that the shop had my name on it and that nobody else would do. I felt I should look. The shop had your name on it and no one else would do. Why did you feel obligated?---Well, I did. ... You were quite enthusiastic about taking up his invitation of free air fare and accommodation to have a look, were not you?---I - no. Because you were quite happy that - to think that Pixie Skase had recommended you, did not you?---No, it was not that. " Only once prompted did Clyde-Smith suggest that the Skases were discussed: " Could I just take you back to the first conversation of 30 March. How long did that conversation last for?---Oh, I guess around 5 minutes. And I should have asked you this before: during the conversation, was there any mention about the Skases?---Yes, there was. What was that?---Just in passing conversation, she remarked that she was surprised that we'd found her, that we'd contacted her, and I indicated that it was Pixie Skase who gave me her name. She said, 'Oh, well, that's surprising, because she's only been in the shop a few times. I hardly know the lady.' I said, 'Well, you'll probably get to know her a little bit better, and do you know Christopher?' She said, 'No, I haven't met him. ' I said, 'Well, you'll possibly meet him as well if you come up and have a look at the shopping centre. They have met some of the tenants. " Clyde-Smith made no mention in his account of a discussion about a particular store, floor area or costs. During cross-examination, Mr Cooper, counsel for BKF, put the following to Pender: " Now, I want to put to you as well that when you had this discussion on 30 March there was no discussion about the area of the shop or the outgoings or rental?---No, that is totally incorrect. I made pencil notes as we spoke. And he did not say anything to you at any time about you being the only suitable person for selling costume jewellery?---That was the very reason I went to look at the shop, because he said there was nobody else who was suitable. " One of the brochures sent contained a floor plan of the Lobby level. Below the plan are the pencil notes claimed by Pender to have been made during the conversation with Clyde-Smith. The notes suggest that the store discussed was 155 (which is almost a mirror image of the 153A/157 store that was eventually occupied by the applicant) and that the discussion included references by Clyde-Smith to the expected expenses of taking a lease, the floor area of shop 155 and the occupancy rates of the adjoining Sheraton Hotel. The floor area of 155, as noted in pencil by Pender, was 28 square metres. The floor plan, though, displays 155 as having a floor area of 25 square metres. It may be that this anomaly is consistent with the fact that, as already noted, the plans were somewhat indefinite as a result of the "fast-track" system of construction. The fact that the store apparently discussed on the phone, 155, was not the store eventually shown to, and occupied by, the applicant indicates that Pender's references to 'a store with her name on it' are not to be taken literally. The question is whether Clyde-Smith represented that there was only one space available for a retailer of high class costume jewellery and that they wanted Pender to fill it; in my view, it does not matter which space it was. Of the brochures, Clyde-Smith said in cross-examination: " And did you understand in the course of your conversation on 30 March that she had those brochures?---I didn't check because they were - they were only couriered to her the night before, but we were running out of - out of time and so I phoned her anyway. Had you, when you spoke to Susan Pender, identified a possible tenancy in the shopping centre - that is, a particular space in the shopping centre - that she could occupy?---We had identified that there was a - during the course of the - the meeting on the 18th at which Pixie Skase her name, we were going through and discussing each shop individually, and when we got to Shop 153A, I was asked the question of whether I had a tenant lined up for there or prospect, and I didn't, and they suggested that I approach her for that space, so yes, we tended to focus on that property. So she was, as it were, specifically targeted for Shop 153A?---Yes. Did you tell her that on 30 March?---I don't believe so. ... But at the time you spoke to her, you had, you said, couriered her brochures and the brochures contained a map of the centre?---Yes; it wasn't - wasn't an accurate map necessarily; it was one that was - was - because the - the plans were evolving and changing all the time. You see, you identified the shop for her and asked her to look at the brochure; do you recall that?---I don't recall that, but I may have done. " It is likely, I think, that the matters noted by Pender in pencil on the brochure were discussed. The brochures would have played an important role in the conversation and I do not accept Clyde-Smith's suggestion that he did not check whether or not Pender had them. Tour of the Site on April 1988 At some time around mid-morning on 8 April 1988 Clyde-Smith met Pender in the Lobby of the Sheraton Hotel. There was a limousine booked for 1.30pm to take Pender back to the airport that day so Clyde-Smith gave a more abridged presentation than was usual. After meeting her in the lobby Clyde-Smith claims he took her on a short tour of the hotel precinct before showing her to a display room containing a table-top model of the project. Pender denies that any such tour occurred, her recollection being that after meeting her in the lobby Clyde-Smith escorted her directly to the room in the hotel containing the scale model. I do not think anything turns on this difference in their testimonies. When they met in the foyer there was, according to Clyde-Smith, further mention of the Skases. He did not raise this during his evidence in chief until prompted: " Now, when you met her in the hotel, was there any discussion about the Skases?---Yes, there was. What was that?---We started off looking around the hotel and just engaging in polite conversation. She asked at the time were the Skases down on the Gold Coast in the hotel, and I said no, they were in Brisbane, that they did come down sometimes on weekends, but I didn't know whether - didn't think they were there at the moment. And she said, 'Oh, that's - that's fine; I'd like to meet them. " Counsel for the respondent put the following to Pender during cross-examination: " All right. And you said to him at this time, 'Are Pixie and Christopher here?"?---No. And he said, 'No, they're in Brisbane as far as I know, and I will let them know that you've come up.'?---No. And you said, 'Yes, I would like you to pass on my regards to Pixie.'?---No. You had met Mrs Skase, had not you?---I knew her. Well, you had met her, had not you?---Yes. " In the room where the model was kept, Pender was shown a promotional video narrated by Mr Tabart that was part of a marketing kit prepared for BKF by Mirage. Mr Tabart's narration include the following: " The first floor of Marina Mirage will boast fittings and appointments of the same high standard as the Sheraton Mirage Hotel. The attractions on this floor will include a sophisticated fashion court with world acclaimed labels and an international art gallery. These installations will set the scene for shops on this level; designer fashion boutiques and specialist antique and art galleries. ... A steady flow of customers is assured. Firstly a stream of shoppers with high disposable incomes is guaranteed from Sheraton Mirage. A walk way provides direct access from the hotel lobby to the first floor of Marina Mirage. Marina Mirage is also in the direct path of Seaworld which attracts a hugh population seven days a week. Seaworld is Australia's largest family entertainment park drawing over 900,000 visitors in 1986. The board walk between Seaworld drive and the Southport broadwater with its many marinas forms a focal point for Gold Coast maritime activities with tour boats and charter operations running to regular schedules. We have the position we have the quality we have the people. " After viewing the video, they had a further conversation of which, in her evidence in chief, Pender said: " While we were in his office, after he had shown me the video, we looked at the table-top model, and he explained traffic flows and expected visitor rates - all that type of thing: how they would approach either over the pedestrian bridge or from the water; how the Fisherman's Wharf area next door was always - you couldn't get a park there at weekends, and weekend trading was huge, and with the new car parking that would be provided by Marina Mirage and the new attraction, it would be even bigger. And then he talked about finding suitable tenants of the--- Right. Now what did he say specifically about that?---That he had visited all the best shopping centres in the country, and that strangely enough most of the people that he had found who were suitable had come from either Toorak Road or Double Bay. I didn't have a shop as such, and I was interested in how he knew about me, and he told me again that Pixie Skase had recommended me. Now did he tell you anything about their method of selection of people?---Yes. Part of it had been his own research of going around shopping centres looking for suitable people. He said when he had done that he had found no costume jewellers of suitable quality, and that they really were demanding top quality. Did he tell you why you had been selected over anybody else?---He said there was nobody else who was suitable who met their requirements or their standards. Now it is pleaded by the respondent that you were told that he had - that Mr Clyde-Smith had approached other retailers of fashion jewellery in Toorak Road and Double Bay and they had all failed to express interest in taking a shop in the centre. Did Mr Clyde-Smith ever say that to you?---No. No, there was no indication of that. " Clyde-Smith's version differed: " All right. What happened after the video had concluded?---There was a model in the room and also some floor plans of the shopping centre which we had there on display, and again I had a sort of standard procedure to follow there explaining the shopping centre, where everything was located, the different precincts that we had for different types of retailing, and how the - the room was facing across the road from the hotel to the shopping centre; you could clearly see it; and we pointed out - I pointed out things like the pedestrian bridge that linked the hotel foyer to the shopping centre, and generally explained the shopping centre itself and the construction sort of aspects of it. Did you discuss anything with her about the policy that was being adopted with respect to tenants?---Yes. I indicated briefly at that stage, because we were going to view the shopping centre physically, the sort of tenants that we were targeting, the type - that they were to be relatively upmarket types of tenants in the main, particularly on the lobby level, and that they were individual in the most part for the type of product that they sold; in other words, they were brand names; and that they were very upmarket, and that each tenant was supposed to perform a part of being a nucleus of attraction to the shopping centre, and that's - that's what made the key to the shopping centre, made people come there. I also explained very briefly that the tenancy - the details as to - you know, we had a standard five year lease, that no tenant was given any exclusive rights in the shopping centre, and that the rentals were somewhat negotiable, depending on - on the circumstances. When you spoke about the exclusive rights, did you speak about that in absolute terms?---Most definitely. In the sense that, did you admit of any exceptions to that, or not?---There was one exception to it. No, no, did you tell Mrs Pender of any exception to it?---I did so, yes. And what did you say to her?---I didn't mention them by name --- No?---because we were not able to disclose who they were at that stage--- No, but just tell me what you told her in this period?---I told her that there was one case of exclusivity that was granted but - that had - everything had to go before Skase in that - to get any sort of approval like that, and the case was a very particular one. And to whom was that given?---That was given to Raymond Castle Shoes. All right. Now, was anything else said in this discussion, as you recall?---I don't - I don't recall anything further at this stage. " Importantly, Clyde-Smith's states that he expressly told Pender she would not have "exclusive rights". I return to this point below. After that discussion they left the office and Clyde-Smith showed Pender around the shopping complex itself which was then still under construction, and discussed the type of tenants that would be in the centre. Pender was adamant that he made no mention of Toscana being wanted for the centre. They then entered the fashion court and stood by shop 153A/157 - the shop that was the subject of their negotiations. Pender's recollection was that: " Did you then have a conversation with him in the fashion court?---We did. He took me - he showed me the shop which he said was the one that he had talked about on the phone but it was actually the mirror image to that shop, but he said the names had been - the numbers had been altered and we stood in front of the shop which he then said was to be mine, the one that was designated for the one costume jeweller they were to have, and moving in a clock-wise direction explained to me who the other tenants within the fashion court were to be. " Again, Clyde-Smith's version differed: " Now, did you have a discussion with Mrs Pender about her possibly taking up any specific shop in the complex?---Yes, I did. What was the number of that?---That was 153A. And where did you have that discussion?---At the Fashion Court itself in front of the shop. And what was the discussion you had?---Whilst we were in the Fashion Court, I went around and pointed to each of the shops that were in that location, and indicated, where I could, the tenants that had indicated to us that they were going to go ahead with the tenancy, and I think in one case - possibly two cases - that they were fitting out. I think that Cornelius and Misses Bonney were actually in the process of fitting out at the time. Then - so that sort of gave her a bit of a feel for the types of tenants that were going to go in there. The Fashion Court, I went through a process of telling her how the Fashion Court was going to be decorated. It had had a fairly ornate sort of floor with a fountain in the centre, an antique sort of fountain, and the entrances to the Fashion Court were carpeted - or were to be carpeted. The - we discussed the shop itself as to its approximate size, because we didn't know what its exact size at the time. I think I was talking around 28 metres, because the survey hadn't been done. It was originally one big shop and we had cut off that area. " After seeing the fashion court they went and had lunch in a coffee lounge at the hotel. The discussion over lunch, according to Pender, involved the following: " All right. Now, you then go on in your statement to deal with the - your impressions after that visit, and you then say that you went back to the hotel and had lunch. Did another conversation occur there?---Yes, it did. It was fairly general. I was still very hesitant about retailing at all. We discussed - or rather I said that if I did go in, I would only be able to go in if I had a shorter lease. He said they were very keen to have me because, again, there was nobody else that - that they wanted who met their standards and that he felt that the lease might be able to be made more flexible. We discussed Cornelius and the hosiery shop again, because I was intrigued by them. ... Now is that the entire conversation that you had over lunch?---There was the bit about the lease in which he said they would possibly consider something else, and again how he had searched and how it was quite extraordinary that there weren't costume jewellers of the standard they'd hoped to find. " The respondents' version was that they talked mainly about the Skases over lunch. This was put to Pender during cross-examination: " Okay. And you did not talk about the tenancy during the lunch, did you?---Yes, we did. See, I suggest that you talked mainly about the Skases?---No. And you remarked to him how well they were doing?---No. Well, they were perceived as doing very well at this stage, were they not?---But I don't believe we talked about them very much. And it was during this luncheon conversation that you told him your husband was a barrister, did you not?---I possibly did. But you said that you were acting independently of your husband and you had your own solicitor?---I don't remember that. I would have told him I was acting independently, possibly; I may not have volunteered that. You see, I suggest that he said that because he also said to you that if you go ahead and you need to get a lease, then obviously your barrister husband can help you with that. Did he say something to that effect?---I don't recall that. You just have no recollection of that?---No. All right. And I suggest that at this stage he gave you Duthie's phone number and he left?---No, he did not give me Duthie's phone number at that day. And your parting comment to him was to give your regards to Pixie?---No, that was not so. " Representations - Conclusion The evidence of Pender is, in relevant respects, in stark conflict with the evidence of Clyde-Smith. It was put to Pender that Clyde-Smith did not make the statements as alleged in paragraphs 17(b) an 17(c) of the statement of claim; she was adamant that he did. Clyde-Smith was adamant he did not make them. I prefer the evidence of Pender. Although he may not have intended to, I find that Clyde-Smith did make the representations as alleged in paragraphs 17(b) and 17(c) of the statement of claim and that those representations were sufficient to make the implied representation alleged in paragraph 18 of the statement of claim. In my opinion Pender's recollection of events is more accurate than Clyde-Smith's. Clyde-Smith had, on his own evidence, prior to 30 March 1988, dealt with at least 500 potential tenants for the complex by way of mail, telephone and personal interviews. More particularly, between the time he started with BKF in October 1987 and when he left for Cairns, Clyde-Smith estimated that he had conducted approximately 100 of the on-site presentations like that given to Pender. Also, aspects of Clyde-Smith's version of events do not impress me as likely. There was a degree of urgency about the search for tenants at the time Pender was approached. I think it unlikely a sales 'pitch' to a much needed tenant would have included volunteered statements to the effect that "no-one has exclusivity"; "I am trying to secure another costume jeweller - Toscana"; "we have tried many other costume jewellers in Double Bay and Toorak but none of them were interested". In my opinion, Pender's version of events is consistent with the letters of complaint she wrote, contemporaneously to the events in question, to various representatives of the respondents that spoke of an "understanding" she and Clyde-Smith had had with respect to her store being unique within the centre. Those letters tell significantly in my preference of her version of the events. Also, some of Clyde-Smith's recollections and explanations are unreliable. Some are contradicted in his own evidence. Clyde-Smith in his evidence-in-chief drew a distinction between tenancies that were 'in place' and tenancies that were 'targeted'. When asked if he used the word "targeted" when he was speaking to Mrs Pender, he said he was absolutely confident that he did and, when asked why, said: " It was a common term for me to use. I was very conscious in my experience in leasing shopping centres and in dealing in real estate generally that unless something was absolutely documented, you never indicated that something was definitely going to happen. In other words, if you said that a tenant was definitely going into a shopping centre, and you didn't have it documented, well, it was on your own head. One just didn't take those sort of risks. " He then produced a document from his briefcase which was said to indicate the distinction he was seeking to make. The document produced from his briefcase was a leasing status report that formed part of the minutes of a meeting on 31 March 1988 between Tabart, Avery, Dick, Clyde-Smith and Dagg. The document uses the word "committed" nearly as frequently as it uses the word "targeted". It did not list Adrienne and the Misses Bonney as "committed". He agreed that he had indicated that some of the tenants were "definitely going to go ahead". Something of his difficulties in reliably recollecting what in fact he said to Mrs Pender on the occasion of her visit appears from the following passage of evidence. " On 8 April, at the Fashion Court, you indicated the shops that were going to go ahead, and, in particular, you indicated Cornelius Furs and Misses Bonney?---That's correct. Well, they indicated to me that they were definitely going ahead. Yes. Did I hear you correctly to say that you indicated to Mrs Pender that there were a number of shops that were going to go ahead; they included Cornelius Furs and Misses Bonney, who were in the process of fitting out?---I--- Is that what you said before?---I thought that they may have been fitting out at that stage. I can't recall precisely whether they were, but I did indicate that they were going ahead. " "No-one has exclusive rights" Counsel for BKF, Mr Cooper, placed significant emphasis, in closing, upon Clyde-Smith's testimony that he expressly told Pender on 8 April 1988 that she would not have exclusivity. Clyde-Smith was not cross-examined on this aspect of his evidence. Mr Cooper submits that as this aspect of his evidence is not inherently improbable, it should be accepted. He cites Precision Plastics Pty Ltd v Demir (1975) 132 CLR 362 at 370-1 in support of that submission. There Gibbs J, as he then was, said: " The respondent was asked in her examination-in-chief: 'How long did you intend to continue working?' and replied: 'I like to work very much. Until the age of fifty-five years old. Of course, until the last day until I died I like to work as far as work is concerned.' If it had been intended to suggest that she was not speaking the truth she should have been cross-examined on this matter so that she might have had an opportunity of explanation (cf. Browne v Dunn (1893) 6 R. 67, at pp. 76-77), but she was not in fact cross-examined on her answer. The respondent's evidence that she intended to work until she reached the age of fifty-five was not inherently incredible. She had in fact been engaged in employment for most of the time during which she had been in Australia before the accident, and had only given up employment when it was necessary to care for her child. In these circumstances, in my opinion, the jury, acting reasonably, were bound to accept her evidence, uncontradicted and unchallenged in cross-examination, that she had the present intention of working until she reached the age of fifty-five. " In that case, in the words of Gibbs J, the evidence was "uncontradicted and unchallenged in cross-examination". Here, although it is factually correct to say that the statement in question was "unchallenged in cross-examination", in the actual conduct of the trial there could be no doubt as to the contentious nature of this claim. In my opinion, it would be preferring form over substance to describe Clyde-Smith's statement as "uncontradicted". In the circumstances of this case, the observations of Gibbs J in Demir have no application. The evidence of Clyde-Smith that he told Pender no-one would have exclusivity (except one shoe store) is inconsistent with other evidence, including Pender's evidence- in-chief earlier set out. Clyde-Smith said in his statement, in the passage earlier set out, that Pender was referred to by Christopher as "the one we should go after for that role". I am satisfied that it was represented to Pender that if a lease of the proposed shop was taken, that would be the only costume jewellery retailer in the centre I am quite satisfied on Pender's evidence in the witness box and the later correspondence that that representation played an important part in the decision to enter into possession of the shop. Misleading and Deceptive The statement of claim alleges: " 20. Each of the matters impliedly so represented: (a) was false in fact; (b) so far as each constituted a representation with respect to a future matter was made without reasonable grounds; (c) so far as each constituted a representation with respect to the belief or intention of Clyde-Smith and/or the Respondents was false in that neither Clyde-Smith nor the Respondents held that belief or intention. 21. In fact: ... (e) there were other retailers of fashion/costume jewellery in Australia who met the standards which were applied in selecting tenants; (f) there was more than one space for a retailer of fashion/costume jewellery; (g) the Respondents wanted a suitable tenant for the shop, not necessarily the Applicant; ... (j) in November 1988, the shop referred to in sub-paragraph (i) above was sub-sub-leased to a company trading as 'Deneuve', a retailer of, inter alia, fashion/costume jewellery; (l) the Applicant was not the only retailer of fashion/costume jewellery in the Centre; ... 22. In the premises, each of the Respondents in trade or commerce engaged in conduct which was misleading or deceptive or likely to mislead or deceive contrary to Section 52(1) of the Act; " The defence claims: " 14. Further or alternatively any of the alleged representations held to have been made by Clyde-Smith were: (a) at the time they were made, true; and/or (b) to the extent that they contained statements of opinion, statements of opinion truly held; and/or (c) to the extent that they contained representations with respect to any future matter, made on reasonable grounds, namely: (i) the Centre was so positioned and marketed and constructed as likely to attract clientele prepared to spend money; (ii) the expected tenants in the Centre were likely to be well-known quality tenants who would attract clientele prepared to spend money; (iii)the first and/or third and/or fourth respondent supplied the second respondent with brochures, video tapes and other material setting out the concept of the Centre and the second respondent as agent was relaying this information. ... " The defence did not admit the allegations in, inter alia, paragraphs 21 (e), (f) (g) (j) and (l). The implied representation that the applicant would be, and would remain, the only retailer of costume jewellery in the centre was a representation with respect to future matters that was made without reasonable grounds in accordance with s 51A of the Act. Clyde-Smith denied that he made this representation. Consistently with that denial, the factual position was that no reasonable basis existed for his making it. He was very anxious to find tenants. What he might have regarded as mere salesman's hyperbole was very real to Pender, and with its understandable appeal to her vanity, played an important role in the decision to lease the shop. This is so especially having regard to the fact that BKF did not have sole agency status for the project and would have been unable to predict accurately the tenants that would or would not have been acquired by Max Christmas, BKF's competitor. I must now turn to consider the causal connection or nexus between the applicant and BKF. Damage Suffered "by" s 52 Conduct The word "by" in s 82 of the Act introduces the notion of causation: Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514 at 525 per Mason CJ: " The statutory cause of action arises when the plaintiff suffers loss or damage 'by' contravening conduct of another person. 'By' is a curious word to use. One might have expected 'by means of', 'by reason of', 'in consequence of' or 'as a result of'. But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s 82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v Stramare (E. & M.H.) Pty Ltd & Anor (1991) 171 C.L.R. 506, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so. " As the many cases brought by commercial competitors under the Act show, it is not necessary that to show the person who suffered damage relied on the misleading conduct. The present pleaded case is one of reliance by the applicant company which was not formally represented at the negotiations. Is the Applicant Entitled to Rely ? The Court is here concerned with whether s 82 of the Act provides the applicant with a cause of action when the representations were not communicated directly to it by the party who acted in breach of s 52 of the Act. The question of whether the applicant did actually rely on the misrepresentations is dealt with separately below. The statement of claim, in paragraphs 23 and 24, essentially claims that the applicant was induced to take certain steps by reason of which it suffered loss and damage, in reliance upon certain representations that were made to Pender personally. It seems to me likely that the question of whether the representations were made to Pender personally, or in her capacity as a director of the applicant, or in some other capacity, were never thought about by Pender or Clyde-Smith at the time of the making of them. The existence of the applicant was not revealed to Clyde-Smith until after the alleged conduct in breach of s 52 of the Act occurred. If misrepresentations are made by A to B personally can a third party, C, bring an action against A in respect of damage suffered as a result of relying on those misrepresentations ? It is established that entitlement to recover loss or damage under s 82 of the Act is not confined to a person who actually relied on the misleading conduct of the respondent, and can extend to a person who suffered loss as a result of reliance by others: Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526; (1992) 109 ALR 638. In that case the applicant and respondent were rival pharmaceutical companies. In earlier proceedings the respondent was held to have contravened s 52 of the Act in its advertising. That conduct allegedly caused damage to the applicant because consumers who relied on the advertising were drawn away from the applicant's product. There was no suggestion of reliance by the applicant itself on the misleading conduct. It was contended for the respondents that reliance was a necessary ingredient of all actions for damages under s 82 of the Act for breach of Pt IV or V of the Act. Lockhart J rejected that view finding that it was open for the applicant to recover any losses caused by the public's reliance on the respondent's misleading conduct. In Emanuele v The Chamber of Commerce & Industry (1994) ATPR (Digest) ¶46-121, where it was held that a third party who relied on a misleading contractual provision can bring a claim despite lacking contractual privity with the defendant, O'Loughlin J, at p 53,575-6 made the following remarks about entitlement to sue under s 82 and reliance by parties not privy to the representation: " The parties who are entitled to institute proceedings that are based on non-compliance with s 52 of the TPA are not limited to those to whom misrepresentations are made. In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) ATPR ¶40-307 at 43,783; (1982) 149 CLR 191 at 199 Gibbs CJ explained that: 'Section 52 does not expressly state what persons or class of persons should be considered as the possible victims for the purpose of deciding whether conduct is misleading or deceptive or likely to mislead or deceive. It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct. ' Janssen Cilag Pty Ltd v Pfizer Pty Ltd (1992) 109 ALR 638 is an example of the practical application of that statement...Nor is the right to seek remedies under Part VI of the TPA 'limited to parties in contractual relations with the party which contravened s 52': Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) ATPR ¶41-269 at 41,647; (1993) 114 ALR 355 at 390 per Lockhart and Gummow JJ....Gummow J summed up the situation in Poignan v NZI Securities Australia Limited & Ors (1992) ATPR ¶41-181 at 40,469; (1992) 109 ALR 213 at 223 when he said: 'The consequences of conduct by the one actor which contravenes a relevant provision of the Trade Practices Act may be such that a plurality of persons each has standing to obtain relief in respect of the interests of that individual. ' ...When the Chamber engaged in the conduct that constituted the breach of s 52 of the TPA the Chamber knew, or ought to have known, that its conduct would be relied on, not only by Mr Emanuele, but also by others who had a close relationship with him. It is not necessary to define those who would come within that relationship: it is sufficient to find, as I do, that both Industry House and Pirie Partners were within it. As to Industry House, it was not necessary for the Chamber to know the identity of the party who might be nominated by Mr Emanuele as the purchaser of the building; it was not even necessary for the Chamber to know that Mr Emanuele would actually exercise his right of nomination. There was a reasonable probability that he would exercise that right and that was sufficient. The statement by the Chamber that there was no asbestos in the building was a matter of material importance; the Chamber knew that and it knew, or ought to have known that any purchaser - whether it was Mr Emanuele or a party nominated by him - would have been materially influenced by the statement....It was within the reasonable expectation of the Chamber, as the maker of a statement of material importance, that not only its contracting party, but anyone else whom that contracting party might nominate in the exercise of its ordinary right, would rely upon and would be influenced by such a statement. ... " Lockhart J in Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) FCR 526 said, at 529: " Section 82 creates a remedy in damages for the benefit of persons who have suffered loss or damage 'by conduct of another person' in contravention, inter alia, of s 52. Such persons are entitled to recover 'the amount of that loss or damage', and it may be recovered from the person who contravened the relevant provision of the Act... Section 82 is the vehicle for the recovery of loss or damage for multifarious forms of contravention of the provisions of Pts IV and V of the Act. It is important that rules laid down by the courts to govern entitlement to damages under s 82 are not unduly rigid, since the ambit of activities that may cause contraventions of the diverse provisions of Pts IV and V is large and the circumstances in which damage therefrom may arise will vary considerably from case to case. " In my opinion it is open for the applicant to rely on statements not directed specifically to it, provided that the applicant was, or ought to have been, within the contemplation of Clyde-Smith as someone who may act in reliance upon his statements to Pender. For this to be so it is not necessary that Clyde-Smith knew of the applicant's existence. It is enough to find, as I do, that he ought reasonably to have contemplated the statements, made by him to Pender, might subsequently be relied upon by a corporate vehicle of which Pender was a directing mind. Although the applicant did not adopt its current name until 10 October 1988 (about 6 months after the representations were made), an ASC Historical Extract reveals it has been in existence since 1974, with Pender and her husband as directors. As a matter of commercial reality, and particularly having regard to Clyde-Smith's experience as a Real Estate agent, he ought to have contemplated the possibility of Pender adopting a corporate body to take up the lease and to operate the business at Mirage. This is corroborated by the fact that the nomination by Pender of a corporate tenant other than herself provoked no reaction from BKF and their solicitors, and in fact was anticipated by BKF as a possibility in the correspondence following Pender's inspection. This is not a case where a representation made by X to Y was communicated by Y to a wholly independent third party, Z, (who can be regarded as a complete stranger to Y), and then relied on by Z. I am not deciding questions of causation, foreseeability or liability in those circumstances. In the present case Y is a director of Z. As earlier indicated, Clyde-Smith's mind, in all likelihood, never turned to the question of whether the representations were made to 'Pender the person' rather than 'Pender the company director'. It was a matter of indifference to him. Where a total stranger to representations learns of them from one of the parties to the representations and suffers loss, one possible view is that the loss is caused not by the s 52 conduct, but by the communication of the representations. Having concluded that it is open for the applicant to base its claim for damages on reliance by it upon misrepresentations made to Pender during the negotiations, I am satisfied that the applicant did rely on the statements as made to Pender. The issue of reliance is pleaded: " 23. Induced by and in reliance upon the aforesaid representations, the Applicant: (a) entered into possession of Shop 157 on or about 6 July 1988; (b) expended moneys in fitting out the shop for the purpose of conducting the business of retailer of fashion/costume jewellery; (c) acquired additional stock with which to undertake retail operations for the shop; (d) commenced trading from the shop on or about 16 July 1988; (e) diversified its business operations into retailing jewellery from the shop. " The defence pleaded: " 17. As to paragraph 23 of the amended Statement of Claim, the second respondent: (a) denies the allegation of reliance; (b) contends that the applicant relied on: (i) Pender's own assessment of the proposed Centre; (ii) the fact that Pixi Skase wanted Pender in the proposed Centre; (iii)Pender's then husband who was a barrister-at-law and his advice and assessment of the proposed Centre; (iv) advices from Penders' solicitors Messrs Chambers McNab Tully & Wilson; (c) admits that the applicant entered into possession of Shop 157 on or about 6th July 1988; (d) otherwise does not admit the allegations contained therein. 17A.In further answer to paragraphs 17 and 23 of the amended Statement of Claim the second respondent says that if the second respondent did make the alleged representations which are not admitted by it, the representations pleaded in paragraph 17 were puffery and it was unreasonable in all the circumstances for the applicant to rely upon them. " I do not accept the respondent's portrayal of Pender as being enchanted by the prospect of being associated with the Skases, with the consequence that I should find that the representations to her played no part in the decision that the applicant enter into a sub-sub lease of the shop. Nor do I think that the advice provided by Pender's solicitors or husband went beyond legal advice given once the decision to go ahead with the outlet had been made. Pender's own assessment of the centre would have played a central part in the applicant's decision (made through Pender). But, in my opinion, the representations made by Clyde-Smith were an important inducement to Pender. I am satisfied that Pender did rely on the representations made by Clyde-Smith. It was submitted by counsel for the Applicant that "no one suggests any other reason for the Applicant entering into the venture other than satisfaction of its controlling mind with what was said to Mrs Pender by Clyde-Smith". Of this submission counsel for BKF, Mr Cooper, said that there is no evidence that Pender was the "controlling mind" or that she could, simpliciter, compel the Applicant to act as she wished; Mr Cooper argued that without the Articles of the Applicant being in evidence this is impermissible speculation. The evidence establishes that Pender was the controlling mind of the Applicant. In a passage in her statement (which also illustrates the lack of distinction between herself and the company, in her eyes) she said: " My husband, Patrick Pender, did not play any part in the decision which I made to open the shop in Marina Mirage. He did not see the Centre before the shop opened and was not involved in any of my discussions with Mr Clyde-Smith. He paid (sic) very little part in my business as I tried to keep it separate from him. The only time that I brought him into it was when things had gone wrong and he came up with me to see Grant Hunt in December 1988. " Further, Pender's husband, a barrister-at-law and the other director of the applicant, in a letter he wrote on 8 December 1988, refers to the applicant's shop as "Susy's shop" and repeatedly treats the applicant's business as Pender's. Pender was the only contact of the applicant involved in the negotiations for the lease. The applicant accepted the offer to lease by a letter written by Pender, dated 18 May 1988. It can be inferred that the applicant's decision to accept the offer was made by Pender. I am satisfied that Pender was acting as the controlling officer of the company when making the decision to take up a lease in the applicant's name. These representations were made to Pender personally but relied on by Pender in her capacity as an agent of the applicant. The applicant, through Pender, relied on the statements by Clyde-Smith. The "entire agreement" clause in the lease document (which was never executed) does not negative reliance by Pender (and therefore by the applicant) in this case. Although her expertise concerning costume jewellery was not in question, Mrs Pender gave the impression of someone who relied to a significant degree on advisers and understood little about legal questions. In her statement she said: " Subsequently a formal lease was sent to my solicitors Chambers McNab Tully & Wilson. I never attempted to read the lease which was a large document. I did not give any instructions to Chambers McNab to include in the lease the statements that had been made to me by Mr Clyde-Smith because I relied completely upon them. The lease was in any event never executed. I did not ask them to provide me with any advice about the business or its prospects. " During cross-examination the following passage appears: " ...you agreed with me earlier that you read the provision of the lease, draft lease, clause 1.12, which said: ' The covenants, agreements, and provisions contained in this agreement and in the lease comprise the whole agreement between the parties; it is expressly agreed no further or other covenants, agreements or provisions shall be deemed to be implied in this agreement or to arise between the parties by way of collateral or undertaking given or made by any party to any other party or any person on their behalf on or prior to the date of this agreement. The existence of any implied or collateral or other agreement is hereby expressly negatived. ' You read that, did not you?---I am a lay person. That is why I had a solicitor. You read that, did not you?---Yes, I read it. You read the solicitor's handwritten notes underneath saying: ' NB: Any pre-contractual material should be checked and if relevant referred to here. ' ... Did you tell her you did not understand the significance of the entire agreement clause that I read to you a moment ago?---No, I didn't say that to her. Did you tell her about the statements that Mr Clyde-Smith had made to you which induced you to go into the venture?---I don't recall. You are not prepared to say on oath one way or the other; is that right? You just do not - no recollection?---I - I have no recollection. I see. But you have no doubt in your mind, have you, that it was of the utmost importance to you that all those things that Mr Clyde-Smith said to you were true; correct?---Yes. " I do not accept that Pender's failure to ensure that the statements made by Clyde-Smith were incorporated in the to-be-executed lease leads to the conclusion that she did not rely on them. I am satisfied that she did. Assessment of Damages Assessment of damages in this case involves difficult questions, both of principle and of calculation. The limits of s 82 of the Act are yet to be fully explored. Problems of the measure of damage are not completely resolved. I proceed on the basis that in assessing damages under s 82 of the Act for breach of s 52 of the Act, the rules for assessing damages in tort, and not the rules for assessing damages in contract, are the appropriate guide in most cases: Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 69 ALJR 787. In Wardley Australia Limited v The State of Western Australia (supra), the majority of the High Court said at 526: " ...it would not be right to conclude that the measure of damages recoverable under the sub-section [s 82(1)] necessarily coincides with the measure of damages applicable in an action for deceit or in an action for negligent misrepresentation. The measure of damages recoverable under s. 82(1) can only be fully ascertained after a thorough analysis of those provisions in Pts IV and V of the Act for contravention of which the statutory cause of action may be maintained. But the common law measure of damages will in many cases be an appropriate guide, though it will always be necessary to look to the provisions of the Act with a view to ascertaining the existence of any relevant legislative intention. In a case such as the present, it may safely be assumed that the plaintiff is entitled to recover 'a sum representing the prejudice or disadvantage [the plaintiff] has suffered in consequence of his altering his position under the inducement' Toteff v Antonas (1952) 87 C.L.R. 647, at p. 650; see also Potts v Miller (1940) 64 C.L.R. 282, at p. 297; Gould & Anor v Vaggelas & Ors (1985) 157 C.L.R. 215, at p. 220; Gates v City Mutual Life Assurance Society Ltd. (1986) 160 C.L.R. 1, at p. 12 (where the measure of damages was applied in an action for damages the contraventions of ss. 52 and 53(g) of the Trade Practices Act 1974 (Cth)) of the misleading conduct or 'the actual damage directly flowing from' Clark v Urquhart [1930] A.C. 28, at p. 68; State of South Australia v Johnson (1982) 42 A.L.R. 161 at p. 170 that conduct, to take up and adapt well-known statements of the measure of damage applicable in an action of deceit. Whether the condition of foreseeability, applicable to claims for consequential damages in cases of negligent misrepresentation inducing the purchase of property State of South Australia v Johnson (1982) 42 A.L.R. 161, at p. 170, would apply to a claim for consequential damages under s. 82(1) is a question that may be put to one side for present purposes." Where the case, like the present, is not one of the purchase of a business, the statement of Gibbs CJ in Gould v Vaggelas (1985) 157 CLR 215 at 223 is applicable: " Where the victim of the deceit is not the purchaser under a contract of sale, it is obvious that the usual measure of damages, which involves a comparison between price paid and value received, cannot be applied. " And see also Netaf Pty Ltd v Bikane Pty Ltd (1990) 92 ALR 490, particularly at 494 in the judgment of Sheppard and Pincus JJ, and the unreported judgment of Heerey J in Jaldiver Pty Ltd v Nelumbo Pty Ltd(2 December 1992, Melbourne), at p 89 et seq. I have concluded that the "exclusivity" representation was made; that the applicant was entitled to rely on it and did rely on it; that the representation was misleading in that, in fact, it was never the intention or belief of BKF that the applicant have the promised exclusivity. The applicant went into possession, and suffered losses. Having regard to those considerations that Pender says led her to a similar attitude, the Toscana presence as falsifying the representation can, as a matter of practical significance, be put to one side. It is the case that "but for" the representations, the applicant would not have gone into possession (and thus would not have suffered any loss of any sort). Counsel for the applicant submits that all the applicant's losses are recoverable on this basis. In the circumstances of this case I do not think this is so. Mason CJ referred in March v E.and M.H. Stramare Pty Ltd (1990-1991) 171 CLR 506 at 515 to the remarks of Dixon CJ, Fullagher and Kitto JJ in Fitzgerald v Penn (1954) 91 CLR 268 at 278 that "[i]n truth the conception in question is not susceptible of reduction to a satisfactory formula". Mason CJ said, at 515: " That said, the 'but for' test, applied as a negative criterion of causation, has an important role to play in the resolution of the question. " The Chief Justice referred to difficulties to which the "but for" test gives rise in cases of concurrent independent "causes", or in cases of conjoint contributing "causes". His Honour said, at 516: " The 'but for' test gives rise to a well-known difficulty in cases where there are two or more acts or events which would each be sufficient to bring about the plaintiff's injury. The application of the test 'gives the result, contrary to common sense, that neither is a cause': Winfield and Jolowicz on Tort, 13th ed. (1989), p. 134. In truth, the application of the test proves to be either inadequate or troublesome in various situations in which there are multiple acts or events leading to the plaintiff's injury: see, e.g., Chapman v Hearse; Baker v Willoughby [1970] A.C. 467; McGhee v National Coal Board; M'kew... The cases demonstrate the lesson of experience, namely, that the test, applied as an exclusive criterion of causation, yields unacceptable results and that the results which it yields must be tempered by the making of value judgments and the infusion of policy considerations. That in itself is something of an irony because the proponents of the 'but for' test have seen it as a criterion which would exclude the making of value judgments and evaluative considerations from causation analysis: see Weinrib, 'A Step Forward in Factual Causation', Modern Law Review, vol. 38 (1975) 518, at p. 530. " In this case, the applicant had "de facto" exclusivity until the arrival of "Deneuve" in the shop opposite. Even though this situation was not what Clyde-Smith believed was going to be the position (he being indifferent on the question), during that period the applicant, though losing money, was no worse off than if the representation was truthfully entertained. During that period, there has been no 'prejudice or disadvantage' flowing from reliance on the representation. In my opinion, the trading losses from opening until this event are not caused "by" the making of the representations. Those losses, viewed in a practical manner, do not flow from the making of the misrepresentations: they are properly to be seen as flowing from the nature and location of the centre, and its inherent commercial shortcomings. I think it likely that, absent the arrival of Deneuve, the applicant would have continued in occupation. Less confidently, I think the business would have become profitable in the quite short term. On my understanding of the authorities, if Deneuve had commenced operation at the same time as the applicant, and the applicant's business had not been profitable from the start, and continued in that way, the fact that the inherent trading difficulties of the centre and the competition from Deneuve each contributed to the losses, would not mean that the applicant would fail in its claim for damages, or would in some way have its damages reduced. I accept the force of the argument that if multiple factors produce a certain result, there is an element of inequity in assigning to one factor only the responsibility for the whole of the damage. If the damage would have happened in any event, and been of the same extent, it would not be right to say that the damage had been caused "by" a factor that did not contribute to the loss. These questions lurk in those situations, not uncommon, where operator inexperience or inefficiency is alleged to be the cause of loss, or a cause of the loss. In the situation where misrepresentations have induced a party to enter into a transaction of bargain and sale that was always going to be unprofitable, (and which would have been unprofitable even if the representations had been true), the representee is entitled to recover its loss, for the measure of damages is the difference between what was paid and what was the value of what was acquired, together with reasonable consequential losses: Gould v Vagellas (supra), at 221-2 per Gibbs CJ. The position of a "green field" project, like the present, present greater difficulties than those which involve a "going concern". In the particular circumstances of this case, it is necessary to adopt a rather broad brush and robust approach to the difficulties of causation. The object is to compensate the applicant for the loss or damage suffered by the second respondent's conduct, no more or no less. In my view, that will be done if I allow the trading losses after the arrival of Deneuve until the close of trading, but not the trading losses from the opening until the arrival of Deneuve; I think the set up costs, including associated costs, are properly claimable, and I will allow only half of the stocks losses, because in my opinion the applicant has failed to mitigate its damages in a significant way. There was an attempt on the first day of the trial to amend the defence to include as paragraph 18B the following: " 18B.In further answer to paragraph 24 of the Amended Statement of Claim the second respondent says that if the applicant suffered the loss and damages alleged (which is denied) the same was caused solely by the action of the applicant in January 1989 of wrongfully repudiating the agreement for lease into which it had entered in respect of the subject premises after only six months of the lease term had expired, and by abandoning the business conducted upon the subject premises when that business was in fact viable and had grossed in excess of $74,400.00 in sales between August and December 1988. " I indicated to counsel for the respondent that, considering the lateness of the application for leave to amend, I would only grant it on terms that the respondent pay the costs of the adjournment that would be required to allow the other side to prepare its case in response to the amendment. The application for leave to amend was not pursued. Instead, it was submitted by counsel for BKF that any loss suffered by the applicant was caused by Pender's decision to quit the premises rather than by any conduct of BKF. I am satisfied that the decision to quit was not an unreasonable reaction in the circumstances and is attributable to the conduct of BKF. It is not a supervening event that severs the chain of causation. The arrival of the competitor in the first place was, as recognised by Clyde-Smith, "unfair" to Pender. When she complained, an unsuccessful attempt was made by the management to restrict the products Deneuve sold in competition to Pender. It was not until this failure to contain Deneuve was manifest that the decision to quit was made. The decision to quit was not rash. Pender was aware of Shaw's impending arrival from early October 1988 and the decision to quit, despite numerous earlier threats to do so, was not made until 5 December 1988, at which time Grant Hunt was able to persuade her to stay on until the end of January 1989, rather than quit pre-Christmas. Had Deneuve not opened, as earlier indicated I think it probable that Pender would have stayed in the centre. If Pender 'wanted out' independently of Deneuve and was just using the competitor as a convenient excuse, she would not, in my view, have accepted so easily the arrival of Toscana, nor would she have attempted to resolve the matter with the centre management. I turn now to consider the difficulties in calculation. The applicant ran 2 operating accounts. First, the Susan Pender Jewellery Pty Limited Mirage account No. 03 855-7680 ('Account 1') which operated from 17 August 1988 to 5 April 1989; and secondly, the Susan Pender Jewellery Pty Ltd account No. 03 855-7699 ('Account 2'). The first 59 pages of the statement for Account 2 could not be found and are not before the court. A report prepared for the applicant by Price Waterhouse ('the PW report') was formulated in 1991 when the other alleged misrepresentations, such as those with respect of traffic flow and number of visitors, were still being pursued. Accordingly, the PW report considers every loss flowing from the Mirage business to be recoverable. The PW report makes no distinction between the applicant and Pender. The report, headed "Susan Pender Jewellery - Marina Mirage, Gold Coast" is expressed to be directed to "the loss suffered by Mrs Pender in the above matter". Three minor amendments to the PW report were tendered during the trial. The report prepared by Mr Calabro for the respondent ('the Calabro report') is compressed and there is one mathematical error concerning advertising in "Vogue" magazine and some artwork, in its client's favour. I found it of much greater assistance in that it was focussed on the issue before the Court, i.e. the loss caused to the applicant by the arrival of a competitor whose presence was a necessary component of the misleading conduct. The losses were categorised in the PW report as: loss from trading; furniture and fittings; stock loss; interest, bank charges and loan fees; management fee and other costs. The Calabro report was prepared subsequently and in answer to the PW report and adopts similar categories. The Calabro report, in an attempt to calculate the loss after the arrival of Deneuve, derives "expected" trading figures by combining the pre-Deneuve weekly sales figure for the relevant periods and pre-Deneuve gross margin, and taking off the actual gross profit for that period. The PW report simply assesses the actual losses for that period regardless of their cause. The basis of the Calabro calculations involves a number of questionable assumptions, including that it is fair to apply results and margins from a non-pre-Christmas period to the immediate pre-Christmas period. I prefer to allow the actual losses in this period, namely $6,218.00. Despite the fact that Pender was a retailing novice, I do not think it was incompetence on her part that was responsible for the applicant's trading losses. The first 19 weeks of trading from the week ending 16 July to the week ending 20 November 1988, the business did not show a profit, the weekly loss averaging a little under $200.00 a week on total sales averaging about $3,600.00. The arrival of Deneuve had a drastic effect on sales, declining to under $2000.00 a week. In the seven week period of the "sale", weekly sales exceeded $4,400.00, but the gross profit percentage in this period was 31.6%, compared with the pre-Deneuve figure of 51.8%. The decision to vacate the premises caused the money expended on fitting out and furnishing the store to be lost. The decision to leave the premises, in my opinion, was triggered by the actuality that falsified in fact the "exclusivity" representation, and was not unreasonable in the circumstances. While the business had hitherto been trading at a small loss, the decision to vacate was prompted by the arrival of Deneuve. The effect of that arrival is in the sales figures. In the circumstances, I will allow the fitting out costs as part of the s 82 loss and damage. A further circumstance which supports the conclusion that fitting out costs should be recoverable is the youth of the lease at the time the misleading conduct crystallised with the arrival of Deneuve. The applicant had only been in possession for 17 weeks of the 5 years contemplated and a formal lease document had not been executed. There had been no opportunity for the costs of fitting out to be fully written off. The position may have been different had there had been more time between fitting out and the competitor's arrival. A total of $33,350.00 was spent establishing the Mirage shop. While closing his case, counsel for the applicant, Mr Savage, handed up a schedule of the expenditures under this head of damage. The schedule did not specify which accounts the cheques were drawn out of and I asked, at that time, for those details. An updated schedule was annexed to the written submissions submitted by Mr Savage after the trial was complete. The respondents agree with the figures but dispute causation in some respects and claim that the expenses were incurred by Pender, not the Applicant. The amount of $33,350 can be broken down as follows: Shop Fittings $17,284 Architects Fees $2,102 Furniture $13,964 Total $33,350 Apparently, certain furniture and fittings were purchased before the business began to be conducted in the name of the applicant and thereafter certain purchases were paid for by cheques drawn on the Susan Pender Mirage account. Shopfittings: The $17,284.00 paid to A & S Shopfitters is in three parts. First, an amount of $10,919.00 was paid by 2 cheques drawn from an account titled "S.M. Pender Mirage Account". While this amount was not paid from an account of the applicant, I am satisfied that it is a liability of the applicant to Pender in respect of the applicant's business and is properly allowable as part of the applicant's damages. The second category of payment to A & S Shopfitters was $5000.00 deposit. There is no payments journal reference, no cheque butt or a bank statement that indicates from where the funds were drawn. I am prepared to infer this sum was paid, and paid on account of shopfitting at the centre, although the source of the funds cannot be identified. The applicant, if not the payer, is liable to the payer in this amount, and this amount is properly to be included in the applicant's damages. The third category of payment to A & S was $1,365.00 by cheque drawn from the account of the applicant in December 1988. As to the architect's fees, $2,052.00 was paid from the account of the applicant. The additional $50.00 was paid to the architect on 10 June 1988. While the cheque butt is in evidence, it is not possible to conclude whether Pender or the applicant was the primary source of the funds. A hand written record of "Mirage expenses paid from Jewellery account, June, July, Aug" includes the $50.00 paid to the architect. Regardless of the primary source, the $50.00 was paid either by the applicant or on the applicant's behalf, and is properly to be included in the applicant's damages. In respect of both shop fittings and architect's fees, Mr Calabro accepts these figures but reduces the amounts by amortising them over a period of one year, and taking the amortised amount for the period after Deneuve commenced trading. I will allow those amounts without reduction, for the reasons above. Furniture: The amount claimed of $13,964 is made up of seven payments to various suppliers. For one payment of $143.00 there is no payments journal reference, no cheque butt and no bank statement. For three of the remaining payments there are cheque butts in evidence and a record of payment in Document 172. The remaining three payments were by cheques drawn from Pender's Mirage account and not an account of the applicant. I accept that these amounts were expended on acquiring furniture for the Mirage shop, and that the amounts were paid either by or on behalf of the applicant. The furniture was valued in 1991 in the Price Waterhouse report at $7,760.00, and a set of shelves was sold for $50.00. $676.00 more than the valuation was received for a Georgian bookcase and secretaire. The net loss proved is $5,478.00. Interest and Bank Charges Interest on bank charges in excess of $100,000.00 is claimed by the applicant. I will allow nothing to the applicant in respect of interest, bank charges and loan fee costs, but will allow interest on the total amount of loss and damage that the applicant has suffered. The evidence on this aspect is wholly unsatisfactory, and the applicant has not made out its case on this category of its claim. Pender took out a $60,000.00 term loan in her name. In November 1989, a new term loan facility was put in place to replace this loan and an overdraft facility on Pender's own account. Until June 1990, interest on those borrowings was charged to an account of the applicant. After that date, interest was charged to another of Pender's accounts. There is no evidence to show how the borrowed funds were applied, and in particular, no evidence to differentiate borrowings for the Melbourne business, the Mirage shop or indeed personal borrowings. Mr Calabro's report shows sales in the year ended 30 June 1989 for the Mirage shop at about $100,000.00 and in Melbourne of about $250,000.00, although expenses seemed to be higher pro rata for the Mirage shop. In the course of submissions, I asked Mr Savage: " ...Why should the applicant be entitled to seven years' interest on borrowing costs when, in fact, the total fit-out costs were modest; furniture was modest, and yet we are paying interest on $100,000.00. " Mr Savage said that "they were the actual costs incurred". I then asked: " ...were they the actual costs incurred? There were borrowings, but they were not borrowings for this business, or at least I have some difficulty in seeing that they were borrowings for this business. " Mr Savage replied: " Well, unfortunately apart from the admissions made of the accountant's report, there was nothing suggested to Mrs Pender. So there really is no evidence. " Stock Losses As with the fitting out costs, stock losses on vacating the premises are, prima facie, part of the loss or damage suffered by the misleading conduct. The introduction of the competitor prompted the closing of store and therefore caused the stock wastage. However, in the present case I am not prepared to find that the entirety of the stock losses claimed - $42,957.33 - were caused by the respondent's conduct. I am satisfied that Pender contributed in a significant way to the losses suffered in respect the excess stock. First, reasonable steps to mitigate this head of damage were not taken; and secondly, the amount of stock that the applicant had on hand at the date of the vacating the premises was excessive, and a significant part of any loss suffered is attributable to this factor. The applicant cannot recover damages for losses which it reasonably could have avoided by taking reasonable steps to mitigate their loss: Finucane v New South Wales Egg Corporation (1988) 80 ALR 486 at 519. The onus is on the respondent to show that reasonable steps were not taken. If the respondent fails to show that the applicant ought reasonably to have taken certain mitigating steps, then the normal measure will apply. At the end of January 1989, when the store closed, it was left with stock that had a retail value of between $90,000 and $100,000 (the 2 reports give different retail values but both lie within that range). It was agreed in both reports that a notional mark up of 50% would be accurate and therefore stock with a retail value of $90,000 - $100,000 would have a wholesale value of $45,000 - $50,000. According to a valuation performed by Mr John Bourke, Jewellery Valuer, on 31 July 1991 that stock had a realisable value of $9,948.90, if sold individually, and a realisable value of 50% less ( $ 4,974.45) if sold as one lot. The initial amount of stock losses claimed by the applicant, in the PW report was the difference between the wholesale value of the stock ($45-50,000) and the realisable value if the stock was sold as one lot. An amendment to the PW Report, dated 30 June 1995, that takes into account items sold by Pender through her Melbourne shop, earning $3,424.95, and an updated valuation of the excess stock, performed by Mr Bourke in June 1995, arrives at the final figure of $42,957.33. Mr Bourke concluded that the realisable value of the stock in June 1995 was 70% of what it had been in 1991, i.e. $3,482.12 (70% of $4,974.45). The susceptibility of costume jewellery values to fluctuate with fashion was put forward by counsel for the applicant as an explanation for the dramatic loss in value of the jewellery between January 1989 and July 1991. In determining whether the applicant took reasonable steps to mitigate its damage, the ephemeral nature of jewellery fashions is an important consideration. The fact that stock, if not sold quickly, would go out of fashion, increases the urgency needed by the applicant to take reasonable steps to mitigate its loss. Reasonableness requires a more urgent attempt to unload the merchandise here than in the ordinary case where the value of the goods in question is essentially static. Pender would have been well aware, on quitting the premises, that the stock's value was temporary. Pender conducted, between 16 December 1988 and the end of January 1989, a closing down sale at the Mirage premises. However, after the closure, a considerable amount of stock still remained and she had transported to her Melbourne outlet where she attempted to sell it. According to Pender's statement the "opportunity for sale of discounted retail stock [from her Melbourne store was] limited". Pender had a display table with baskets of items on sale which included old Mirage stock. The Melbourne store was not a retail outlet and had no shop front or passing trade; the limited retail from there was largely to customers who knew her by word of mouth or reputation. I accept that the sale of the stock was advertised in 'The Age' in Melbourne on 22 February 1989. Pender also suggested during her cross-examination that samples of the stock were sent to her interstate agents who sell jewellery on her behalf to retailers. It was the stock remaining after these attempts to sell that was valued by Mr Bourke in 1991. What steps Pender in fact took to realise the Mirage stock other than that described above does not emerge. Pender's responses in cross-examination were vague. It seems there was no direct approach by Pender to Toscana, Pender saying she did not approach Toscana because she had a Queensland agent. "My agent might well have approached them", she said. Counsel for the respondent brought attention to the fact that nor was there any attempt by Pender to sell her stock, on closing the Mirage outlet, to her rival in the centre, Deneuve. In explanation, Pender said that she didn't think it was the sort of stock Deneuve dealt in. This response, in suggesting that Deneuve was not in direct competition with Pender, is contrary the applicant's case and cannot be accepted. I am positively satisfied Pender did not take reasonable steps to mitigate her losses in respect of the left-over Mirage stock. Considering the fact that such stock would lose value quickly over time, merely delivering it to Melbourne and trying to sell it individually out of a shop not designed for retail sale does not in all the circumstances constitute reasonable steps to mitigate loss. There is no evidence that the samples delivered to the agents resulted in any sales, and if so what sales, or that Pender stressed to the agents the urgency of the sale. The details of the attempts by the agents to unload the merchandise are sketchy and unconvincing. Accepting that the second respondent has to establish a failure to mitigate, the evidence as to what was done and what was not done satisfies me that there was a significant failure to mitigate the applicant's loss. Mr Calabro, in his report prepared on behalf of BKF, calculated that, as average weekly sales were about $3,800.00 retail and because the retail value of the excess stock on hand at the end of January was between $90-$100,000.00, there must have been about 24-25 weeks worth of stock on hand as at 31 January 1989. That is approximately 6 months worth of stock. I accept that is too much stock to have on hand in a retail operation. Mr Calabro suggested that reasonable stock level holdings should be between 3-4 months' worth. This view is supported by the evidence which illustrates the dramatic effect that fashions can have on the value of costume jewellery. In the light of both these factors, I would assess as a fair figure to allow for the loss attributable to stock disposal the sum of $22,000.00. Management Fee to Pender The applicant claims as an item of its loss, management fees in the sum of $13,783.56. It was submitted by Mr Cooper for the respondents, "there is no basis for any management fee for [Pender] because there was never any agreement by the company to pay her this. The claim is the product solely of the accountant's fertile litigation mind...". The Price Waterhouse report concedes that "no management fees were charged by Melbourne to the Mirage operation". The applicant did not in fact suffer this loss, and the second respondent, in my opinion, should not be saddled retrospectively with a theoretical outgoing. I disallow this item. Other Costs Other costs totalling $3,726.00 are set out in the PW report. Only the final telephone account item is disputed by Mr Calabro's report; I think this item is properly included. I will allow the other costs in the sum of $3,726.00. Conclusion: The components of the allowed items of loss or damage total $56,808.00, which I round off to $56,800.00. This figure I regard as a fair measure of the loss and damage suffered by the applicant by reason of the conduct of the second respondent in breach of s 52 of the Act. On this amount, I will allow interest at 12% from 1 February 1989 to judgment, which I round down to $51,000.00. I give judgment for the applicant against the second respondent for $107,800.00. I reserve the question of costs. I certify that this and the preceding seventy-nine (79) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender. Associate Date: 5 August 1996 Counsel for the applicant: Mr D A Savage instructed by : Freehill Hollingdale & Page Counsel for the second respondent: Mr D R Cooper instructed by : Creswicks Date of Hearing : 3, 4 and 5 July 1995