oa 'HL 4, Groen, Got, Print, Melb. Co —_—_- fo IN THE HIGH COURT OF AUSTRALIA. Ararat . . of REASONS FOR JUDGMENT. BEIM & ORS. Ve COLLINS & ANOR. ORDER Appeal dismissed with costs. JUDGM: r BEIM & ORS Vv. COLLINS & ANOR ve CO. iS_& ANO: This is an appeal from an order of the Full Court of the Supreme Court of Queensland refusing an application for a new trial in an action of deceit. The jury found a verdict for the plaintiffs for £3125 damages. The defendants sought to have this verdict set aside on grounds which include the ground that having regard to the evidence the assessment of damages was unreasonable. It is upon this ground that the appellants support their appeal to this Court. The respondents, who are husband and wife, entered into a contract dated 13th February 1951 to purchase from the defendants for the price of £1000 a half interest in a laundry business, described as a laundrette, theretofore conducted by the defendants. The misrepresentation which the plaintiffs set up was that the profits of the business were between £60 and £80 a week, The defendants denied making these representations but admitted that the profits were less in fact than £60 a week and that the defendants were aware that the profits were less than £60 a week. The jury must be taken to have accepted fully the plaintiffs' allegation that the representation was made and, of course, its falsity and knowledge of its falsity inevitably followed. In fact these latter issues were not put to the jury. The assets of the business included the residue of a term of a lease, some plant and chattels, including a motor vehicle and the business or goodwill. The agreement of purchase required that the purchase money of £4000 should be paid by an instalment of £1000 payable at once, a further instalment of £1000 to be paid on 15th March 1951, that is a month after the date of the contract, and the balance of £2000 by monthly - 2s instalments of £60, the first of which was to be paid on lst April 1951. In fact the plaintiffs paid down the first instalment of £1000, a second instalment of £1000 and three instalments of £6, amounting in all to £2180. One provision of the agreement was that the plaintiff Iris Collins should have the sole management and control of the conduct of the business and devote her whole time and attention to its management and in consideration thereof she should be entitled to a salary of £8 a week, The defendants, who are the vendors, consisted of three persons, Beim, Hemming and Patterson. Apparently of the half share in the business retained by the vendors Beim and Hemming were entitled to forty six fiftieths and Patterson to four fiftieths. It appears to have been conceded by both parties at the trial that the contract could not be rescinded and that the claim for damages mst be upon the basis that the sale of the half share of the business stood, so that the plaintiffs were at least notionally bound to pay the balance of purchase money, subject, of course, to their claim for damages. Accordingly, the defendants counterclaimed for the balance of purchase money, £1820. At one stage in the trial the parties came to an arrangement that the counter-claim should be ignored and that, if the jury found misrepresentation and came to the subject of damages, the damages should be assessed on the basis that the amount paid (£2180) by the plaintiffs was the full amount for which they would be liable. But Philp J., before whom the trial took place, formed the opinion that this was a course which would lead to difficulty and, at some stage in the address of the defendants' 'counsel to the jury, informed him that he would direct the jury that the liability of the plaintiffs to pay the balance of purchase money, £1820, remained and that they were to assess the damages-on that footing. There was, of course, no issue to put to the jury on the counter-claim and judgment was entered upon the counter-claim for £1820 and upon the claim for the amount of damages found by the jury, namely £3125. -3- The measure of damages in an action of deceit consists in the loss and expenditure incurred by the plaintiff in consequence of the inducement on which the plaintiff relied, diminished by the corresponding advantage in money or money's worth obtained by him on the other side. When a plaintiff has been induced to make a purchase of property from a defendant and to part with his money to the defendant in payment of the purchase price, then if the transaction stands, as this mst do, and is not disaffirmed or rescinded, what the plaintiff is entitled to recover is the difference between the real value of the property purchased and the sum which the plaintiff was induced to pay or contracted to pay, assuming that the liability of payment is enforceable, as it was in this case: see Toteff v. Antonas, 1952 87 C.L.R.e G7: Potts ve Miller, 1940 6+ C.L.R. 282: Holmes Ne Jones, 1907 4 C.L.R. 1692, at p. 1703. There is no difficulty in the present case about the sum which the plaintiffs paid or were obliged to pay, £4000. The whole difficulty in the case lies in valuing the property and advantages obtained by the plaintiffs, namely one half share in the partnership business and good will, chattels and balance of lease. The plaintiffs in support of their case relied upon the expert evidence of Mr. Cyril Windrum, and it is only too evident that the jury accepted his evidence and reflected his estimate exactly in their assessment of damages. His view was that the business, considered as a going concern, would not obtain a purchaser as at the date of the actual contract, namely 13th February 1951. Its good will was of no value and it was necessary to value the interest obtained on the footing that the chattels were separately saleable and that the balance of the lease had a value. He gave his evidence in respect of each of the chief chattels separately and placed upon them a total value of £1651. He valued the residue of the term of the lease at £100, giving a total value of the entire interest in the chattels and lease of £1751. Half this value would amount to £875 and a eat a cal it is evident that the jury have accepted this estimate and deducted the amount from the £4000, thus arriving at their damages of £3125, The defendants appellants contend that the jury did not act reasonably in accepting Mr. Windrum's evidence without qualification and that in.some instances, at all events, Mr. Windrum had no sufficient support for the figures which he assigned to the chattels. It is undeniable that Mr. Windrum expressed an opinion about each and all of the items to be valued, including the good will of the business and did so without objection. Literally, therefore, the jury had before them opinion evidence which, if accepted as both honest and accurate, entirely justified the verdict. It is equally true, however, that opinion evidence can never have the same weight as direct evidence of an objective fact, evidence which mist depend entirely upon the credibility of the witness. The counsel for the defendants appellants takes advantage of this difference in the character of the evidence to examine the basis of Mr. Windrum's opinion and to suggest that in some respects it was so lacking in foundation that the jury could not reasonably have acted upon it. In the case of every verdict attacked on the ground that it is against the evidence the ultimate test mst be whether on the whole of the materials before the jury the verdict might reasonably have been arrived at. A finding of damages is no exception. In point of legal theory, therefore, it is open to the defendants to contend that, in spite of Mr. Windrum's expression of opinion as a witness, on the whole of the circum- stances a finding based upon his evidence was unreasonable. But while this is theoretically so, it needs no argument to show that it can seldom be easy to sustain the burden of establishing such a content ion. In the present case the contention for the appellants takes the assets piece-meal. It is perhaps convenient to deal first with the value of the business considered apart from the chattels or as a going concern. It appears that the three defendants commenced the business at the beginning of the year 1950 eis -5e at the site where it was carried on at the time of the purchase, The premises had previously been the site of a cafe proprietor's business. The defendants Beim and Hemming obtained a lease of the premises from the proprietors of the premises, Sanders Chemicals Ltd., for three years from 17th July 1950 and, according to the defendants, there was a prospect of the term being extended. They paid the sum of £1050 in order to obtain a preliminary weekly tenancy of the premises, For the first six months of the business, namely from Ist January to 30th June 1950, the accounts show a loss of £2047:16:10, but included in this loss was the writing off of the £1000 so paid and the writing off of £804:10:9 for depreciation which appeared jmmediately to have accrued. This meant that the operating loss was £243:6:1. For the next six months, from 1st July 1950 to 31st December 1950, the net loss was £573 323. It will be recalled that it was six weeks after the close of this accounting period that the purchase was actually made. It was upon this basis that Mr. Windrum expressed the view that the business could not be sold as a going concern except at the value of the chattels it contained and of the residue of the term of the lease. It appeared, however, that for the ensuing six months, namely 1st January 1951 to 30th June 1951, the business made a net profit of £237;18:2. For the six months following that, namely from 1st July 1951 to 31st December 1951, the net profit was £240:12;0, The business was in fact closed on 3rd April 1952 and for the three months from lst January 1952 to 31st March 1952 there was a net loss of £535:6:2. The closing of the business and the net loss in the final three months were attributed to the fact that the landlord had resumed portion of the premises essential to the business. It is unnecessary to go into this incident in detail. It is sufficient to say that the landlord's action was wrongful but seems to have been acquiesced in by the plaintiffs, although not by the defendants, and that in the end the defendants brought -6- an action of trespass against the landlord for his wrongful act and were awarded by Hanger J. £759:2:0 damages, an amount calcu- lated on the basis that they were entitled to a_46 th share of the lease and business. The relevanwof this fact to the assessment of damages is not altogether easy to understand but no objection was taken to its admissibility. The fact that the business showed a net profit during the twelve months from 1st January 1951 to 31st December 1951, amounting as it did to £478 , is accounted for in the evidence of the plaintiffs by the energy and long hours of hard work expended upon it by the plaintiff Iris Collins. The defendants! evidence attempted to make some substantial quali- fications upon this story of hard work and energy but the jury must be taken to have accepted the plaintiffs' case. It was upon the foregoing facts and his general knowledge of the valuation of businesses that Mr. Windrum gave his evidence negativing any disposable value.apart from the separate value of the chattels as at 13th February 1951. The jury may have been right or wrong in accepting and acting upon his testimony in this respect, but we find ourselves unable to say that a verdict based on his distinct statement cannot be supported because it is unreasonable. We think it was within the province of the jury, weighing.all the circumstances, to arrive at the conclusion that his valuation of the business could be relied upon. Again, in assigning a value of £100 to the residue of the term of the lease, we think the jury were entitled to accept his testimony and to act upon it, and that their finding in this respect is not open to challenge as unreasonable. Turning to the chattels that are in question, the first to be considered is a Commer panel car. This had been bought by the defendants in 1950 new for £750. The expert called by the defendants valued it at £600 as at 13th February 1951. Mr. Windrum valued it at £550. It was in fact retained until March 1952 when it was sold at £650. Very plausibly the defendants maintained -7- that if it was sold twelve months after the date as at which it was valued at £100 more than the valuation, the valuation mst have been wrong. But plausibility is one thing and the reasonable- ness of the conclusion is another. The value placed upon the car by the defendants' expert could be taken into account. Mr. Windrum supported his valuation by some argument. He adhered to it, notwithstanding the selling price of £650. The chances of the market were, of course, pointed out and the changes in demand. On the whole, we think that the jury's finding in respect of the car cannot be set aside on the ground that it was not supported by evidence. Greater difficulty arises over the value placed upon a water softener. It had been bought for £139. It was said not to be an up to date softener and to be one of a kind for which there was no known demand secondhand. It was valued by Mr. Windrum at £15 only. His cross-examination showed that he had very little basis for this valuation beyond the fact that he thought it was extremely difficult to sell, that it was secondhand and was not likely to be sought after. The evidence rather suggests that it was an item of property the disposal value of which was extremely difficult to fix, and the question when and at what price it was to be sold depended on chance. Clearly enough, Windrum's valuation! must have been largely conjectural but in all the circumstances we ' do not think that the jury were not at liberty to act upon it. Another item in somewhat similar situation was a hyrdo dryer which the witness valued at £90. It had been bought at the beginning of 1950 for £301:8:4. The defendants! expert in the case of all these items of plant contented himself with taking the purchase price and depreciating that price by ten per cent. because the items were not new. It is not remarkable that the jury should have rejected this theory of value, and in the absence of any other measure it is easy to understand why they accepted Mr. Windrum's. We do not think that the finding as to -8- the hydro dryer can be set aside by the Court on the ground that it was not supported by some evidence. Before the Full Court it was found that a small sum of £40 paid by the partnership as a deposit in connection with electrical supply and repaid had been left out of account. The Full Court therefore deducted half this sum from the amount of the verdict. No objection has been made to this course. But it was suggested that we might adopt a similar course in relation to the items with which we have just dealt. Taking the view we have expressed :/tie jury were entitled to attach the value to which Mr. Windrum deposed, this question does not arise. Nor do we think any question arises in relation to the conflict between the plaintiffs and defendants on the one side and the landlord on the other over his unlawful resumption of portion of the premises. It may be true that the plaintifts had by their acquiescence precluded themselves from suing the landlord for trespass, having so conducted themselves as to afford him a plea of leave and licence, It may or may not be true that other- i wise they could have recovered damages from the landlord computed upon the same basis as those recovered by two of the defendants, We do not, however, think that these were circumstances which \ compelled the jury to reduce the damages on the ground that the plaintiffs might have reimbursed themselves for part of the loss. i Indeed, they are not facts which have any logical bearing on the value of the business and assets as at 13th February 1951. Finally, a complaint was made on behalf of the | defendants concerning the course the Judge took in declining to | direct the jury on the basis to which the parties appeared to have been agreeable and in putting the case on the basis that the plaintiffs were liable for the full £4000 purchase money. There can be no doubt that the basis upon which the learned Judge did fi present the case to the jury was correct but the complaint is that the learned counsel had explained the case on an opposite basis in the opening of his address and was compelled to explain to the -9- jury the new basis upon which the learned Judge proposed to direct them and that this was calculated to confuse the jury and in some measure accounted for their decision, We do not think that a new trial could be granted on this ground. Incidents at the trial may explain a verdict and may be taken into account when a question arises whether it can be supported on the evidence, but as an independent ground incidents of this description can seldom suffice to invalidate a verdict. Counsel had ample opportunity to explain the matter to the jury and no doubt he did so. The jury's verdict bears no trace of confusion. It is a perfectly logical application of the evidence of Mr. Windrum, the only question being whether the jury were justified in placing such implicit faith in his conclusion. We think that they cannot be said to have acted unreasonably in doing so, and that it was entirely a matter for them to judge and was within their province. The appeal should therefore be dismissed.