PUBLIC IMAGE PTY LTD v HENRI HOLDINGS (CIRCULAR QUAY) PTY LTD [1993] NSWCA 217

PUBLIC IMAGE PTY LTD v HENRI HOLDINGS (CIRCULAR QUAY) PTY LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MEAGHER, HANDLEY and POWELL JJA 22 October 1993, 25 November 1993

[1993] NSWCA 217

FACTS:

The appellants purchased from the respondents a business in Jindabyne consisting of a restaurant, craft shop, maze, animal farm and rental property. The sale was found to have been procured by fraudulent misrepresentations as to annual turnover and profits. His Honour in the court below awarded damages, to be determined by inquiry, to compensate for the difference between the price for which the business was purchased and its true value. Damages were not awarded for consequential losses which the appellants alleged they suffered in running the business. The appellants claimed an inquiry was unnecessary because the purchase price correctly reflected the damages caused by the representations, and sought additional consequential damages. The respondents claimed that, as the appellants had not proved the damages which were an element of their cause of action, the action should be dismissed.

HELD:

(1) The plaintiffs could have led evidence as to the true value of the business, but did not. This did not disentitle them to a remedy, given the finding of fraud, but did leave an inquiry as the only possible means of quantifying their loss.

(2) The purchase price of the business was not the appropriate measure of the damages resulting from the fraudulent sale. The evidence clearly showed the value of the business was not nil.

(3) Consequential damages need not be awarded in a case where some blame for the poor performance of the business lay with the appellants, and the facts point to the appellants having affirmed the contract.

(4) Common law rescission is not available to the appellants, because they elected to sue instead for damages. Further, no error has been demonstrated in his Honour's exercise of discretion not to decree rescission under the Trade Practices Act, 1974.