New South Wales Supreme Court CITATION : Castle Constructions P/L v Fekala P/L & Ors [2001] NSWSC 659 revised - 3/08/2001 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 3812/01 HEARING DATE(S) : 01/08/01 JUDGMENT DATE : 1 August 2001 PARTIES : Castle Constructions Pty Limited (ACN 001 602 188) (Plaintiff) Fekala Pty Limited (ACN 001 321 946) & others (Defendants) JUDGMENT OF : Santow J COUNSEL : P P O'Loughlin (Plaintiff) M W Young (Defendants) SOLICITORS : Day Dockrill (Plaintiff) CATCHWORDS : EQUITY — Procedure — Misleading and deceptive conduct under Trade Practices Act — Injunctive relief denied where its grant depends on final relief based on disappointed expectations where such relief not available. LEGISLATION CITED : Trade Practices Act s82; s87 CASES CITED : Gates v City Mutual Life Assurance Ltd (1986) 160 CLR 1 affirming the earlier decision in the Federal Court (1983) 68 FLR 101 DECISION : Plaintiff's Notice of Motion so far as paragraph 3 is dismissed. Plaintiff to pay Defendants' costs. REVISED — 3 August, 2001 IN THE SUPREME COURT OF NEW SOUTH WALES IN EQUITY SANTOW J No. 3812/01 Castle Constructions Pty Limited (ACN 001 602 188) Plaintiff Fekala Pty Limited (ACN 001 321 946) & others Defendants JUDGMENT — ex tempore 1 August 2001 1 This is an urgent application for interlocutory relief by way of an injunction restraining the carrying out of an auction of certain plant and equipment associated with a hospital. That hospital was purchased by the Plaintiff at an auction. 2 The Plaintiff proffers an undertaking as to damages. It relies upon four representations which are identified in the chronology below and which for present purposes I may treat as made out to the level required for interlocutory relief. CHRONOLOGY DATE EVENT 2 June 2001 Lahoud sees advertisement and notes that property advertised on the basis, "occupy or convert" Representation 1 4 June 2001 Lahoud receives copy draft contract. It contains on the first page the statement relating to the property, "The land the improvements, all fixtures and the inclusions but not the exclusions." He checked and observed that there were no exclusions in the exclusions box also on the first page. Representation 2 21 June 2001 Matthews of Ray White tells Lahoud that the property was fully equipped as a private hospital, that it had a valuation of in excess of $5 million and that it had equipment worth in excess of $1 million. Representation 3 Lahoud receives brochure. 28 June 2001 Auction, date of contract. Auctioneer says that there are two valuations, the lowest is five and a half million which included over a million dollars worth of equipment. Representation 4 29 June 2001 Kylie Wilson of Hall Chadwick speaks to Lahoud who then believes he may not have bought the equipment. 30 July 2001 Meeting on site. Discussion of whether or not equipment is fixtures. List to be sent. List of equipment sent at 4.19 1 August 2001 Auction. 3 The Plaintiff contends that the contract he has entered into should be construed as including plant and equipment. This is by reason of the reference to "the inclusions" on the face of the contract, the domestic nature of the items in the column identifying inclusions, none of which are ticked, and the absence of any item under "exclusions". The Plaintiff relies on the description of the "property" being "the land, the improvements, all fixtures and the inclusions but not the exclusions". 4 The Plaintiff then contends that because on inspection it was clear that there was plant and equipment associated with the property, itself a hospital no longer functioning as such but capable of doing so, it was entitled to construe the reference to "property" as necessarily including what he observed. He relies for reinforcement upon the representations earlier identified. 5 The Plaintiff separately contends that by reason of the representations, it would be entitled to damages pursuant to s87 of the Trade Practices Act at a final hearing but also to a variation to the contract if such were needed to make good the representations including the relevant plant and equipment in the property. On the Plaintiff's case, either it has already purchased the plant and equipment by the contract, properly construed, or should obtain relief (for misleading and deceptive conduct by representation) having that effect. 6 The Defendants response is that on no view of the contract could its plain words embrace plant and equipment. There is no ambiguity and no basis even at the prima facie level or as a serious question to be tried to treat the contract as capable of having the meaning contended for by the Plaintiff. I consider that submission correct. 7 That leaves the Trade Practices Act claim, or any analogous claim based on an extension of the Summons to include by way of final relief innocent misrepresentation. The fundamental obstacle which the Defendant identifies is that High Court authority has made it crystal clear that damages are not available either under s82 or s87 to compensate for disappointed expectations (Gates v City Mutual Life Assurance Ltd (1986) 160 CLR 1 affirming the earlier decision in the Federal Court (1983) 68 FLR 101 at 104 where the following was concluded: "Section 87 like section 82 is concerned with loss or damage 'by' the offending conduct and it is sufficient for present purposes to observe that, in this case, the question is not how much better off Mr Gates would have been if the statements had been true but how much worse off he is by reason of having taken the steps which he did in reliance on the statements." 8 It must follow that though s87 would permit an order varying the contract to include the relevant plant and equipment, to do so would be the equivalent of providing a remedy for disappointed expectation rather than for the loss suffered. That loss suffered is computed by reference to any shortfall in the valuation of the hospital without the plant and equipment compared to what the Plaintiff paid. Given that be the measure of damage in any final hearing, I do not consider that the Plaintiff succeeds in establishing that there is a serious issue to be tried. That is, the Plaintiff would be entitled to a remedy which would in one form or another put the Plaintiff in the position it would have been if the contract had included the relevant plant and equipment. 9 Finally, I note that rectification is not sought in the Summons for final relief. Moreover, compensation for innocent misrepresentation gives no basis for disappointed expectations either. 10 It follows that the interim relief sought should not be granted as it presupposes the kind of final relief that could not be available. The Plaintiff's remedy lies in damages for loss, based on how much worse off he was by reason of the representations being false (if such be proven). Accordingly, preventing the inclusion to preserve the subject matter of the plant and equipment by interim injunction should not be allowed. In so concluding I need not consider the discretionary aspect of other third party rights in the form of competing claimants for the property. CONCLUSION 11 The Plaintiff's application for interlocutory relief fails. COSTS AND ORDERS 1. The Plaintiff's Notice of Motion so far as paragraph 3 is concerned is dismissed. 2. The Plaintiff to pay the Defendant's Costs. 3. Leave has earlier been granted to the Plaintiff to file in Court, Summons and Notice of Motion in the form initialled by me and to place with the papers returnable before the Registrar on 9 August 2001 at 9.30 am. ********** Last Modified: 08/06/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.