Ackers v Austcorp International Ltd [2009] FCA 432

FEDERAL COURT OF AUSTRALIA

Ackers v Austcorp International Ltd [2009] FCA 432

TRADE AND COMMERCE –– CAUSATION –– s 52 Trade Practices Act 1974 (Cth) –– misleading or deceptive conduct –– misleading conduct in relation to purchase of investment property –– unequivocal representations by promoter of real property investment contained in glossy promotional brochure and leaflet –– promoter not the vendor of land –– fine print of contract for sale of land conflicted materially with representations made in promotional material –– contract contained entire agreement clause and clause acknowledging no reliance by applicant on any representations –– whether contractual clauses corrected, or relieved promoter from liability for, misleading representations –– whether promoter can rely on terms of contract to which it not party – whether promoter can rely on possibility or likelihood that a representee's solicitor will explain contract so as to correct fully the misleading representations –– where promotional material calculated to interest prospective investors to enter contract to purchase by omitting material matter contained in fine print in contract –– whether misleading conduct caused applicant to enter the contract TRADE AND COMMERCE –– CORPORATIONS –– corporate groups –– where holding company and subsidiary involved in the same conduct or transaction –– where only group's logo used in promotional material to identify promoter –– where holding company officers employed by it but also act as agents of subsidiary –– where holding company publicly states that it is the project promoter, writes correspondence on its letterhead, issues promotional and advertising material in its name as promoter, and instructs third parties to act in relation to pursuing venture –– where group affairs conducted on basis that holding company often paid invoices addressed to it, and not its subsidiary, in relation to the venture and recorded such payments in internal group accounting as loans to subsidiary by holding company –– importance of corporate identity in determining liability TRADE AND COMMERCE –– CAUSATION –– s 52 Trade Practices Act 1974 –– significance of legal advice –– whether applicant acted unreasonably in relying on promotional material for sale of apartments "off the plan" promising a guaranteed return –– vendor using standard form contract –– applicant deciding not to obtain legal advice on contractual documents but to rely on promotional material and fact of large number of earlier presales and vetting of contract by other purchaser's solicitors –– whether legal advice could have prevented representations being misleading –– where evidence that some lawyers had and others had not found or advised other purchasers or investors of important difference between promotional material and the actual rights under the contract –– whether misleading representation a cause of loss TRADE AND COMMERCE –– s 51A Trade Practices Act 1974 –– whether corporation had reasonable grounds for making representation with respect to future matter –– whether corporation can rely on information provided to it by another promoter without actively analysing it –– importance of carrying out due diligence TRADE AND COMMERCE –– s 84(2)(b) Trade Practices Act 1974 –– conduct by directors, servants or agents –– whether conduct performed in the course of corporation's business affairs or activities TRADE AND COMMERCE –– s 82(1) Trade Practices Act 1974 –– damages –– quantum –– where loss claimed is overpayment for purchase of investment property caused by misleading representations –– principles of valuation –– where market value inflated because of misleading representations –– comparable sale or capitalisation of income valuation approaches TRADE AND COMMERCE –– s 82(1) Trade Practices Act 1974 –– damages –– quantum –– whether tax benefit obtained by applicant as a result of reliance on misleading conduct should be taken into account in determining quantum of damages TRADE AND COMMERCE –– s 82(2) Trade Practices Act 1974 –– limitation period –– contingent loss –– when cause of action accrues –– when loss occasioned in the context of a contractual contingency –– contract providing right of recession for both parties if event not occur by a particular time –– contract entered into by applicant more than 6 years before proceedings –– applicant brings proceedings within 6 years of occurrence of contractual contingency Held: Judgment for the thirty first and forty second applicants (1) Representations to applicants and other potential purchasers/investors made in promotional material misleading –– small print of the contract did not correct or displace earlier misleading representations –– promoter's contemplation that applicants would obtain legal advice not sufficient to prevent the misleading effect of the representations –– corporation not excused from adhering to the norm of conduct in s 52 because of an expectation that a representee will obtain legal advice that will correct misleading representations –– applicants relied on representations –– representations a cause of loss or damage suffered (2) Fifth respondent liable for making misleading representations notwithstanding that it had no direct contractual involvement with the applicants –– fifth respondent promoted as part of its business, as holding company, and held itself out publicly as being directly involved in the development –– responsible for misleading promotional material –– the fact that its subsidiary was also contractually involved in the development did not shield fifth respondent from liability (3) Fifth respondent had no reasonable grounds upon which to make representations as to future matters including a guaranteed net 7% return for 10 years in a resort development –– uncritical acceptance of limited information given to it by a co-promoter and failure to carry out appropriate due diligence attracted the operation of s 51A which deemed representations to have been misleading (4) Applicants' claims were not barred by s 82(2) –– applicants only suffered loss from the time that they could no longer rescind contract to purchase land –– contract provided that either party could rescind if the strata plan was not registered by a certain date –– no loss was suffered until the contractual contingency was satisfied WORDS AND PHRASES –– "misleading or deceptive" "reasonable grounds" "on behalf of" "guaranteed return" Trade Practices Act 1974 (Cth), 51A, 52, 82, 84 Abigail v Lapin (1934) 51 CLR 58 followed Allianz Australia Insurance Limited v GSF Australian Pty Limited (2005) 221 CLR 568 applied Australian Breeders Co-Operative Society Ltd v Jones (1997) 150 ALR 488 cited Banco de Portugal v Waterlow & Sons Limited [1932] AC 452 discussed Barton v Croner Trading Pty Ltd (1984) 3 FCR 95 applied Benlist Pty Ltd v Olivetti Australia Pty Limited [1990] ATPR¶41-043 discussed Blatch v Archer (1774) 1 Cowp 63 discussed/applied Braverus Maritime Inc v Port Kembla Coal Terminal Ltd (2005) 148 FCR 68 cited Briess v Woolley [1954] AC 333 cited Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 applied/discussed Campomar Sociedad Limitada v Nike International Limited (2000) 202 CLR 45 applied Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 referred to Carminco Gold & Resources Ltd v Findlay & Co Stockbrokers (Underwriters) Pty Ltd (2007) 243 ALR 472 applied Cassidy v Saatchi & Saatchi Australia Pty Ltd (2004) 134 FCR 585 followed Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 cited Cooke v Wilson(1856) 1 CB (NS) 153 applied Cummings v Lewis (1993) 41 FCR 559 followed Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) 38 FCR 471 cited Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 applied/followed Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 discussed Gardam v George Wills & Co (1988) 82 ALR 415 cited General Newspapers Pty Limited v Telstra Corporation (1993) 45 FCR 164 discussed Global Sportsman Pty Limited v Mirror Newspapers Limited (1984) 2 FCR 82 cited Gluckstein v Barnes [1900] AC 240 discussed Gould v Vaggelas (1984) 157 CLR 215 applied/discussed H O Brandt & Co v H N Morris & Co [1917] 2 KB 784 cited Hamilton v Whitehead (1988) 166 CLR 121 cited/distinguished Henderson v Amadio Pty Limited (No 1) (1995) 62 FCR 1 cited Henville v Walker(2001) 206 CLR 459 cited House v The King (1936) 55 CLR 499 cited HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 applied Jones v Dunkel (1959) 101 CLR 298 cited Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 discussed/followed Lewis v Daily Telegraph Limited [1964] AC 234 referred to Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111 cited McGrath v Australian Naturalcare Products Pty Limited (2008) 165 FCR 230 cited Milner v Delita Pty Limited (1985) 9 FCR 299 followed/applied Minister for Youth and Community Services v Health and Research Employees' Association of Australia, NSW Branch (1987) 10 NSWLR 543 cited Mirror Newspapers Limited v Harrison (1982) 149 CLR 293 cited Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 cited National Exchange Pty Ltd v Australian Securities and Investments Commission (2004) 61 IPR 420 cited NMFM Property Pty Ltd v Citibank Ltd (2000) 107 FCR 270 followed/applied NSW Mutual Real Estate Fund Ltd v Brookhouse (1978) 38 FLR 257 cited/distinguished Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 followed Pavich v Borba Nominees Pty Ltd [1988] ANZ Conv R 556 cited Poulet Frais Pty Ltd v The Silver Fox Company Pty Ltd (2005) 220 ALR 211 distinguished RAIA Insurance Brokers Limited v FAI General Insurance Co Limited (1993) 41 FCR 164 cited Ricochet Pty Ltd v Equity Trustees Executors and Agency Company Ltd (1992) 41 FCR 229 cited S. Pearson & Son, Ltd v Dublin Corp [1907] AC 351 cited/applied Scarcella v Lettice (2000) 51 NSWLR 302 followed/applied Simpson Ltd v Hubbards Pty Limited (1982) 44 ALR 695 followed/applied Sutton v AJ Thompson Pty Ltd (1987) 73 ALR 233 cited Sydney Harbour Casino Properties Pty Ltd v Coluzzi [2002] NSWCA 74 followed/applied Sykes v Reserve Bank of Australia (1998) 88 FCR 511 followed/applied Toll (FGCT) Pty Ltd v Alphapharm (2004) 219 CLR 165 applied Travel Compensation Fund v Tambree (2006) 224 CLR 627 cited Trig v Blanche (1993) 118 ALR 543 cited Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259 applied/followed Walplan Pty Ltd v Wallace (1985) 8 FCR 27 cited Wardley Australia v Western Australia (1992) 175 CLR 514 followed Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd (2005) 224 ALR 134 followed Watson v Foxman (1995) 49 NSWLR 315 followed Webb v Bloch (1928) 41 CLR 331 followed Yorke v Lucas (1985) 158 CLR 661 applied GRANT ANTHONY ACKERS v AUSTCORP INTERNATIONAL LTD