New South Wales Supreme Court CITATION : Young & Anor v The Owners - Strata Plan No. 3529 & Ors [2002] NSWSC 1077 CURRENT JURISDICTION: EQUITY DIVISION FILE NUMBER(S) : SC 2454/99 HEARING DATE(S) : 26/09/02, 27/09/02 and 06/11/02 JUDGMENT DATE : 18 November 2002 Bruce Donald Young - First Plaintiff PARTIES : Nateli Solenko - Second Plaintiff The Owners - Strata Plan No. 3529 - First Defendant JUDGMENT OF : Acting Master Berecry at 1 COUNSEL : Mr M B Evans - Plaintiffs Mr M.D. Young - First Defendant John McEncroe & Company - Plaintiffs David Le Page - First Defendant SOLICITORS : CATCHWORDS : Misleading and deceptive conduct - Fair Trading Act - valuations - failure to inspect - weight of evidence - damages - scope of damages - not construed narrowly - requires causal link between contravening act and loss - reasonableness of plaintiffs' conduct - onus on plaintiffs to prove damages. LEGISLATION CITED : Fair Trading Act Trade Practices Act 1974 (Cth) Gates v Mutual Life Assurance Society (1986) 160 CLR 1 Kizbeau Pty Limited v W G & B Pty Limited (1995) 184 CLR 281 CASES CITED : Marks v GIO Holdings Limited (1998) 196 CLR 496 Walker v Henville (2001) 75 ALJR 1410 Enzed Holdings Limited v Wynthea Pty Limited (1984) 57 ALR 167 DECISION : I certify that the damages the plaintiffs are entitled to recover pursuant to s 68 of the Fair Trading Act from the defendants in an amount of $7,614.50.; I make no order in respect of costs. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ACTING MASTER BERECRY MONDAY, 18 NOVEMBER 2002 2454/1999 - BRUCE DONALD YOUNG & ANOR v THE OWNERS - STRATA PLAN NO 3529 & ORS JUDGMENT Background 1 MASTER: In February/March 1998 the plaintiffs instructed agents to sell 37A Wolseley Road (Lot 2) and one-third as tenants in common of Lot 27/SP 3529 with a 99 year lease of Lot A of 27/SP 3529. Subsequently the property was withdrawn from the market and additional work was done to improve the value and attractiveness of Lot 2. On or about March 1999 instructions were given to an agent to offer Lot 2 for sale by way of auction. The property was advertised with reference to the use of the swimming pool at 45 Wolseley Road. The auction was to take place at 6.30pm on 28 April 1999. 2 In April 1999 the plaintiffs were registered proprietors 37 Wolseley Road, Point Piper and also of Lot 27 of Strata Plan 3529. The latter confers the right to two car parking spaces at 45 Wolseley Road, Point Piper, an adjoining property, but not to any residential rights. By virtue of their ownership of Lot 27 the plaintiffs also have an interest in the common property of Strata Plan 3529 which presently confers upon the plaintiffs the right to the use of the swimming pool at 45 Wolseley Road, Point Piper. The present proceedings follow the plaintiffs' strata titling of 37 Wolseley Road into three lots. The defendants sought to amend the by-laws of Strata Plan 3529. If passed, the by-law would deny the plaintiffs and purchasers of the new strata title lots, any entitlements to use the common property, other than the right to parking spaces and thus use of the swimming pool. 3 The first defendant first foreshadowed the passing of an exclusive by-law by letter from its solicitors dated 28 April 1999. The letter was delivered just two hours before the advertised time for auction of one of the new lots (Lot 2) of 37 Wolseley Road, and according to the plaintiffs led to the cancellation of the auction. The effect of the foreshadowed by-law would be to limit the use of that swimming pool and common property exclusively to those who owned or occupied residential lots in Strata Plan 3529 at 45 Wolseley Road. That would exclude the plaintiffs who merely have the parking lot entitlement and no other residential entitlement. 4 The plaintiffs commenced proceedings on 24 May 1999 seeking, inter alia, a declaration that the owners and occupiers of Lot 27 in Strata Plan No 3529 are entitled to use the swimming pool which comprises part of the common property of Strata Plan No 3529. On 27 July 2001 the plaintiffs filed a further amended statement of claim which included, inter alia, injunctive relief restraining the defendant from passing the by-law. The matter came on for hearing before Santow J on 26 and 27 July 2001. On 11 December 2001 his Honour delivered his judgment. In resolving the dispute between the parties his Honour answered five questions relating to the proposed by-law. 5 His Honour came to the conclusion that for there to be a valid by-law the consent of the owner who will be deprived as well the owners who will benefit by the proposed by-law becomes an essential requirement for such by-law to take effect. 6 On 19 February 2002 amended orders where made by his Honour including the following: "2. Declare that the letter dated 28 April 1999 written by the solicitor for the First Defendant and sent to Mr Pillinger impliedly falsely represented that the First Defendant was entitled to make a by-law extinguishing the Plaintiffs' right to use the swimming pool and other common property without obtaining the Plaintiffs' written consent in circumstances where refusal of that consent might be the subject of challenge pursuant to s 158 of the Strata Schemes Management Act, and that the First Defendant by sending such letter has breached s 42 of the Fair Trading Act, being misleading and deceptive conduct in trade or commerce, and caused the aborting of the auction on 28 April 1999 . 5. Order that the Master inquire into and certify what damages, if any, were suffered by the Plaintiffs by reason by reason of the breach of s 42 Fair Trading Act referred to in declaration 2 above." 7 The first plaintiff's evidence is that the property had attracted interested purchasers because, amongst other reasons, it had access to an in-ground swimming pool. Once the letter was received the first plaintiff gave instructions to the agent to withdraw the property from sale. The property was put up for auction again on 25 May 1999. On that occasion there was not a single bid from a prospective purchaser. The unit was sold in August, 1999 for $2.35 million. 8 The first plaintiff's evidence is that in his opinion the unit was valued at $3.5 million. He gave evidence of his experience as a property developer and is of the opinion that he knows the value of the market. There is evidence that on the Contract for Sale he put the figure of $3.5 million as the price at which the property was to be offered. On the same document there is an amount which expresses the agent's opinion as to the current reasonable selling price. That opinion is $2.5 million plus (t 13.10-40). 9 Although Mr Young asserted in his affidavit that there were interested buyers in the property, no evidence was put on by either the agent or an intending purchaser in respect of the auction which was to take place on 28 April 1999. In cross-examination Mr Young's evidence was that the reserve price had not been set prior to the auction. He stated that the custom was that such written directions are given either on the eve of the auction or at the auction. His evidence is that both before and after the aborted auction his opinion was that the property was worth $3,500,000.00. However, his evidence was silent on whether or not that figure would have been the reserve price. 10 Mr Young was also cross-examined on the contents of a letter he wrote to Macquarie Bank on 7 June 1999. At page 16 of the transcript he was cross-examined in relation to the letter. "Q. Can I just take you to the very foot of the first page, '…is our selling campaign. We have of course had several set backs, in particular, the violent hail storm of 14 April was a real disaster.' You would agree with me now that it clearly was on the 14th April, correct. You have actually referred to that date as the date of the violent hail storm, and you refer then in the second line of the second page to only four sheets of glass and a great deal of landscaping at Point Piper and that is a sentence that commences with the words, 'Our direct damage was limited…' Do you see that? A. Yes. Q. So it did suffer broken glass, did it not, as well as damage to a great deal of landscaping? A. Yes. Q. And then you go on the say, 'Indirectly the damage was much greater, particular affecting to those potential purchasers who had and were depending on the sale of their houses in order to buy our lovely unit.' A. Yes. Q. 'The storm really did cause enquiries from such people to disappear, but we see that these effects are steadily diminishing.' A. Yes." 11 It would appear that the Macquarie Bank who was the mortgagee of the property and the plaintiffs were trying to forestall any steps by Macquarie Bank to call in loan monies under the mortgage. The plaintiff's evidence was to the effect that the letter was merely a rouse to convince Macquarie Bank that the hailstorm damage was a cause for the delay in the sale of the property. He was cross-examined on this aspect: "Q. The real punishing aspect of the storm to us was to the falling off demand following it caused us two to three months delay in getting a sale. Those were your opinions at that time you wrote that letter on the 7th June? A. No, that was my excuse to the bank. Q. You are saying that was an untrue representation of your views, are you, Mr Young? A. Yes. Q. It was a lie? A. If you like. Q. It was a lie, was it, because you thought lying to the bank would attain you some commercial advantage? A. Indeed. Q. And you see nothing wrong with that, Mr Young? A. The alternative was to have the bank take possession of the property, wasn't it. Q. I didn't ask you the alternative. I asked you if you saw anything wrong in lying to the bank to obtain commercial advantage to yourself? A. No, because it was partially true, very partially I have to admit. Q. Well, was it partially true that it affected enquiries from people interested in buying the house? A. I am sure it did. Q. Because they in many cases were relying on selling their own storm damaged premises as you go on to explain? A. True enough." 12 The defendants rely in part on this evidence to show that the two major contributing factors which would have mitigated against the sale of the property on 28 April 1999 were, firstly, the plaintiffs' value on the property of $3,500,000.00 and the inference that he wouldn't have moved very much from that because if a situation arose where he entered into negotiations with the highest bidder at the auction and, secondly, that because of the wide spread hailstone damage to properties in the Eastern Suburbs in April 1999, the number of interested parties had steadily diminished. Valuation by Charles Verheyden 13 It was put to the first plaintiff that he had some influence over how Mr Verheyden carried out valuations; namely that Mr Verheyden might accept the first plaintiff's opinion as to the value of any property that he has Mr Verheyden value. The first plaintiff's response to that was that that was not the case and that Mr Verheyden may agree with him on other matters such as zoning, but he was independent when it came to formulating the valuation of a piece of property. There was a suggestion that an arrangement between the two that Mr Verheyden charged the plaintiff at less than the going rate. Reference is made in a number of invoices to a concessional rate (t 22.12). The inference sought to be drawn from this evidence is that Mr Verheyden had a special arrangement with the first plaintiff and was not completely independent. 14 Mr Verheyden is a valuer who has been used by the plaintiffs for many years. Mr Verheyden's evidence is that he is not a friend of the first plaintiff and that their relationship is and always has been over the last 14 years that of client and valuer. Mr Verheyden was shown invoices prepared on his behalf in respect of valuation work performed for the first plaintiff and asked for his comment about the fee concession. His evidence was that where a valuation is done for the purpose of the client obtaining mortgage finance he does not require payment until the client is successful with his loan application. If the client is unsuccessful he does not expect to be paid for his valuation. His evidence was that this was a common practice adopted by him. However, he was shown a number of other invoices in which the reference to no payment unless the loan approval was obtained does not appear. Mr Verheyden conceded that those matters seemed to be exceptions to the general rule. His evidence in this area in my view is unsatisfactory. He conceded that the purpose for doing his current valuation was not pursuant to any written request but an oral request and he was informed that the report was for the purposes of court proceedings. He was informed by the first plaintiff that the court proceedings concerned the use of the pool at 45 Wolseley Road. (T40.28 to T41.17). 15 Mr Verheyden conceded in cross-examination that he did not make any notes (T41.41 to T41.55) and the reason for this was that he never inspected the property. (T42.10 to T42.18). He merely relied on earlier inspections he had undertaken. There is some evidence that one inspection was in 1997. There was also evidence from Mr Verheyden that he did not inspect any of the properties which are mentioned in his report. (T42.20 to T42.26). It became obvious that the list of properties that were used as comparables were misleading for that purpose. There was evidence that the aspects of some of the properties were totally different to that of the plaintiffs' property. There was evidence of other properties in Wolseley Road having better aspects and also having swimming pools. 16 Mr Verheyden prepared a report in which he estimated that the value of the property as at 3 August 1999 was $3,650,000.00. He also expressed the opinion that without use of the pool at No. 45, the property at auction would have a value of approximately $2,850,000.00. Therefore, the difference of the plaintiffs' valuer's report with the use of a pool is $1,315,000.00; i.e. the difference between the valuer's opinion of $3,650,000.00 less the August sale price of $2,335,000.00. Mr Verheyden's evidence was unsatisfactory. There are significant flaws in the report. The Residex Data Services schedule of comparable properties has a glaring mistake in it which was not picked up by Mr Verheyden. One property is listed as having sold for $17,000,000.00. It was quite clear that the property's sale price was $1,700,000.00: Exhibit "11". There was at least one other property which was not a comparable property and when shown plans and photographs Mr Verheyden agreed that it was not a comparable property but nevertheless that was included. Mr Verheyden gave no reasoning for the values that he ascribed to the property. At best he puts the valuation on the basis that the property has the value he ascribed to it because of the perceived lifestyle associated with the property, there is no object criteria used by him in determining the value of that property. 17 It was conceded by Mr Verheyden that the property had steep access; there was an inclinator as well as steps, that the property was not as well positioned as a property known as 2/27 Wolseley Road. He conceded that not having provision for vehicles on site would be a factor which would diminish the value of the property. His evidence was that he did not need to do a physical inspection of a property that he has the experience and he relies on the size of the sales and the location of the property. He was found wanting in both these respects. Valuation by Gregory Oliver 18 On instructions from the defendants' solicitor, Mr Oliver prepared a Valuation Report on 4 September 2000. The report is a detailed report of the property. He sought access to the subject property for the purpose of inspecting it but was refused access. He then carried out a view of the property together with those properties mentioned in his report. In assessing the valuation of 37A Wolseley Road, Point Piper, Mr Oliver approached the report on two bases. Firstly, an assessment on the assumption that the Le Page letter was never sent. Secondly, on the assumption that the letter was sent and was known by parties who were likely to bid at the auction. On page 7 of his report he sets out valuation considerations that he took into account when arriving at the value of the property. On pages 7-9 under the heading 'Assessment of Value' he refers to and makes some comment on properties which he regarded as comparable properties to 37A Wolseley Road. In Mr Oliver's view the Le Page letter had minimal effect on the value of the property. His view was that a swimming pool is somewhat subjective, some purchasers will place little or no value on such a facility whereas others will regard it as an added attraction. He conceded in cross-examination that some purchasers may lose interest in the property if it didn't have a pool. 19 Of the nine properties Mr Oliver used as comparable properties with 37A Wolseley Road, five of those properties are located in Point Piper and four are located in Wolseley Road. The main features of the subject property and some of the comparables are set out hereunder:- 37A Wolseley Road, Point Piper - 407 sq metres, combined lounge-dining room, kitchen, internal laundry, 4 bedrooms, 3 bathrooms, study, marble tiled terraces on the north and western sides and a large paved courtyard, 2 car parking spaces, one provided within the building and the other on the adjoining land at No. 45 Wolseley Road; access to a swimming pool at No. 45 Wolseley Road. Pool under construction at No. 37 Wolseley Road. 4/45 Wolseley Road, Point Piper – Selling at a price of $1,950,000.00, sale date March 1999; whole floor apartment in adjoining building; 3 bedrooms, 2 bathrooms, very elevated position with unrestricted and far superior view, single car space in basement, area 201.3 sq metres, in-ground swimming pool located on property. 1/56 Wolseley Road, Point Piper – Price $2,810,000.00, sale date March 1999. Two-level apartment in waterfront complex of three opposite the subject property. Far superior views to subject property; double garage, extensive terraces, total area 406 sq. metres, similar aspect to the subject property. Pool located in property. 2/27 Wolseley Road, Point Piper - Price $2,270,000.00, sale date 16 November 1998, whole floor apartment in block near subject property; area 403 sq. metres; double garage, good views, large terrace, similar aspect to subject property, pool located on property, drive-in off-street parking. 2/42A Wolseley Road, Point Piper – Price $2,500,000.00, sale date 22 June 1999, whole floor unit in block of two; waterfront location; area 217.5 sq. metres; magnificent views; inferior building, no pool. 20 Mr Oliver's report gave four valuations. Firstly, the value of the property with access to the pool at No. 45. As at 28 April 1999 his opinion was that the value of the property was $2,300,000.00. On 8 August 1999 the value was $2,360,000.00, without a pool his opinion was as at 28 April 1999 the property's value was $2,275,000.00 and as at 8 August 1999 it was $2,335,000.00. The potential loss, according to Mr Oliver's valuation, is with access to the pool at No. 45 the difference in his valuation is $25,000.00. Without access to the pool there is no difference in the valuation of the property. 21 In stark contrast to the approach taken by the plaintiff's valuer, the defendants' valuer has given careful consideration to selecting properties of like nature to the plaintiffs' property. It seems to me that the material that has been provided in Mr Oliver's report is superior to that provided by Mr Verheyden. Conclusion of Valuation Evidence 22 Mr Oliver's valuation is to be preferred over that of Mr Verheyden. In my view, the valuation given by the plaintiffs' valuer cannot be given any weight because of the valuer's failure to inspect the property and to view other comparable properties, he has merely relied on figures obtained from another source for the valuation of other properties without discriminating between those properties and the property in question. Whereas, Mr Oliver's valuation sets out a methodology as well as statements concerning the way in which he undertook the task of obtaining a valuation for the property. Plaintiffs' Intention Prior to Auction to Construct an In-Ground Pool. 23 Exhibit "19" is a copy of the Contract for Sale which was prepared for the purposes of giving instructions to L J Hooker, Double Bay in March 1999 to offer for sale by way of auction No 37A Wolseley Road, Point Piper. Paragraph 29 of the Special Conditions contains the following:- "29. The purchaser will make no objection to the construction of the proposed swimming pool for Lot 1/SP 56842 (37B Wolseley Road) in accordance with the plan annexed hereto or as it may be by or at the request of the Woollahra Council, PROVIDED ALWAYS no expense in respect thereof shall accrue to the purchaser nor to the owners' corporation of SP 56842." 24 Following the aborted auction the plaintiffs embarked on a further marketing campaign with a view to selling the property at auction on 25 May 1999. Exhibit "18" contains, inter alia, copies of advertisements placed in the Wentworth Courier on 5th, 12th and 19th May, 1999. Each advertisement describes the property as having or having access to a swimming pool. It would appear that having regard to the wording of the advertisements that neither the plaintiffs nor their agent informed potential purchasers that there were some difficulties in respect of access to the swimming pool at No. 45 Wolseley Road. Therefore, the inference that can be drawn, is that potential purchasers were not discouraged from bidding for the property because of problems with the pool. In any event, it would appear that the pool was not a major consideration for any intending purchasers because the contract delivered to L J Hooker foreshadowed that an in-ground pool was going to be built at No. 37 Wolseley Road, Point Piper. Therefore, one way or another the intending purchaser would acquire a property which had either access to a pool or had a pool located within the boundaries of the property. Similarly, when the property was advertised in August 1999, namely on 11th and 18th August in the Wentworth Courier it was described as having, or having access to, a pool. Subsequently, the property was sold with the special condition 29 in the March contract now becoming special condition 28 of the contract that was exchanged in August. There was also an acknowledgement signed by the purchaser concerning the dispute in relation to accessing the pool at No. 45 Wolseley Road. 25 However, there was no evidence that there had been any negotiations between the vendors and the purchaser concerning any discount that should apply to the sale price of the property because of the problems associated with access to the pool at No. 45 Wolseley Road. Damages 26 Santow J has made findings that the defendants' letter to the plaintiff's auctioneer was false and misleading pursuant to s 42 of the Fair Trading Act ("the Act"). Therefore the plaintiff may be entitled to recover damages pursuant to s 68 of the Act. The relevant part of s 68 is as follows:- "68(1) A person who suffers loss or damage by conduct of another person that is in contravention of a provision on Part 3, 4, 5 (s 43 excepted), or 5A or 5B may recover the amount of loss or damage by action against the other person or against any person involved in the contravention." Section 4(5) of the Act defines the damages:- "In this Act: (a) a reference to loss or damage, other than a reference to the amount of any loss or damage, includes a reference to injury; and (b) a reference to the amount of any loss or damage includes a reference to damages in respect of any injuries." 27 In order to make out a cause of action based on s 68 the plaintiff needs to establish three things: First, that loss or damage has been suffered; secondly, that the conduct contravenes one of the relevant provisions (s 42); and thirdly, that the loss or damage was caused by the defendants' conduct. Sections 42 and 68 of the Act correspond to ss 52 and 82 of the Trade Practices Act 1974 (Cth). Therefore, the authorities that have considered those provisions of the Trade Practices Act are relevant to matters to be considered in respect of s 68 of the Act. 28 The normal measure of damages in cases of misleading or deceptive conduct is that used in tort. See Gates v Mutual Life Assurance Society (1986) 160 CLR 1 and Kizbeau Pty Limited v W G & B Pty Limited (1995) 184 CLR 281. 29 In determining the question of damages it has been held that the Court is not limited to the measure of damages in tort or in contract or any statutory provision. In Marks v GIO Holdings Limited (1998) 196 CLR 496 it was said that the ultimate enquiry in a case involving a claim for damages under s 82(1) of the Trade Practices Act in respect of misleading or deceptive conduct is what loss or damage has been caused by the contravening conduct. The Court affirmed that help could be had from the common law in determining what damages may be allowed under s 82 and that the amount of damage will often coincide with damages recoverable in an action at common law for deceit. 30 In Walker v Henville (2001) 75 ALJR 1410, the Court said that when determining damages the objects of the Act need to be taken into account. The objects indicate that a Court should strive to apply s 82 in a way that promotes competition in fair trading and protects consumers. The width of the potential application of s 82 and the objects of the Act tell against a narrow, inflexible construction of the section. At paragraph 140 the Court said:- "Nothing in the common law, in ss 52 or 82 or in the policy of the Act supports a conclusion that a claim of damages under s 82 should be reduced because the loss or damage could have been avoided by the exercise of reasonable care on the plaintiff's part. There is no ground for reading into s 82 doctrines of contributory negligence an apportionment of damages. No doubt, if part of the loss for damage would not have occurred but for the unreasonable conduct of the claimant, it would be appropriate in assessing damages under s 82 to apply notions of reasonableness in assessing how much of the loss was caused by the contravention of the Act. But that proposition is concerned with the items that go to the computation of the loss." 31 At paragraph 166 Hayne J said:- "…..if notions of remoteness of damage is of reasonableness are to find reflection in s 82(1) it seems probable that they may do so only through consideration of the causation question which the subsection poses." 32 The questions of remoteness of damage in tort can be seen in terms of causation. Likewise, asking what is "reasonable" in assessing how much of the loss was caused by the contravention may invite attention to the nature and extent of the causal connection between the loss and the contravening conduct. 33 Thus first the plaintiffs must establish causation. It is not a defence to rely on the doctrine of contributory negligence to apportion damages. However, the reasonableness of the conduct of the plaintiffs may be taken into account when determining damages. 34 The plaintiffs have submitted that the damages sustained by them as a result of the abortion of the auction involves consideration of general principles of damages and that the loss is not limited to merely the costs of conducting the auction. It is submitted on behalf of the plaintiffs that the damages cover the following matters. The costs of the aborted auction, interest paid on moneys lent to the plaintiffs and secured by mortgage in respect of the property, loss sustained as evidenced by the difference between the reserve price and the amount that the plaintiffs eventually got for the unit, diminution in the plaintiffs' quality of life and loss of opportunity. 35 It was submitted by the plaintiffs that damages may not be the subject of precise mathematical calculation. The plaintiffs relied on Enzed Holdings Limited v Wynthea Pty Limited (1984) 57 ALR 167. The proposition put by the plaintiffs was that the fact that the letter was sent to the auctioneer and was found to be misleading and deceptive was sufficient to ground a successful claim in damages by the plaintiff. However, in Enzed Holdings Limited v Wynthea (supra) the Court said that "it is not enough for the plaintiff merely to show wrongful conduct by the defendant." Therefore, the plaintiff must establish that there is a causal link between the deceptive and misleading conduct and the damages sustained by them. 36 It was submitted on behalf of the defendants that the extent of damages suffered by the plaintiffs did not go beyond the aborted auction of 28 April 1999. Therefore, damages are confined to some of the actual costs incurred by the plaintiffs on that day. 37 It seems to me, having regard to Henville v Walker (supra) that damages under the Fair Trading Act are wider than that submitted by the defendant. In my view, prima facie, the plaintiff is entitled, firstly, to recover damages for actual costs incurred and thrown away by the aborted auction; secondly, interest and charges relating to any loan secured by way of mortgage or charge on the property existing between the auction and the ultimate sale; thirdly, the difference between what the property was likely to sell at auction and what it actually sold for in August. 38 Walker v Henville (supra) affirm the flexibility of the method of calculating damages; i.e. the Courts are not bound to award reliance or expectation damages, and the plaintiff, therefore, has a deal of flexibility in formulating its claim. However, notwithstanding the view of the minority in Henville v Walker that the plaintiff was not required to prove which component of his or her loss or damage was referable to the contravening conduct, the majority did not decide this point. Therefore, it would seem that the onus remains with the plaintiff to establish the components of damage that was referable to the contravening conduct. 39 Santow J found that the letter was deceptive and misleading. Cancellation of Auction 40 The letter written by Mr Le Page was received by Mr Pillinger two hours prior to the auction taking place. There was a discussion between Mr Pillinger and Mr Young concerning the contents of the letter and it was agreed that the auction should not proceed. In my view, the letter was a matter of material consideration by the plaintiff in determining whether or not to proceed with the auction on 28 April. But for the letter, the auction would have proceeded and therefore the plaintiff has sustained damages in respect of the cancellation of the auction on 28 April 1999. 41 Exhibit "20" is a document entitled 'Vendor's Statement of Account' issued by L.J. Hooker, Double Bay. The statement covers costs incurred in respect of the auction on 28 April 1999 and costs incurred in respect of the auction held on 25 May 1999. The total amount paid by the plaintiffs in respect of auction costs was $13,075.00. It was submitted on behalf of the plaintiffs that all those costs are recoverable as they were incurred because of the conduct of the defendants. It is submitted that but for the letter there would not have needed to be a second auction in May 1999. Therefore, those additional costs have been incurred. 42 In my view, the plaintiffs are not entitled to recover all the costs in respect of the auction. The measure of damages is determined by putting the plaintiffs' in a position that they could have been but for the deceptive and misleading terms of the letter. The costs associated with the May auction are not costs that are directly referable to the letter of 28 April 1999. The evidence is that there was no bid at the May auction. Therefore, the costs incurred in respect of the May auction are costs that the plaintiffs would have been liable for in any event. However, the plaintiffs are entitled to recover costs that were thrown away because of the cancelled auction on 28 April. There are some costs incurred in respect of the April auction which are costs which would have been incurred in respect of the May auction. Therefore, no allowance will be made in respect of those items. Those items are as follows:- Photographs by Neil Feneion. The ADS Copy Writing. The ADS floor plans. The ADS booklet. The plaintiffs should also be entitled to recover the costs of the visual effects signboard extension. Therefore, I include that in the amount under this item. 43 The following costs are costs which the plaintiffs should be recompensed by the defendants:- ADS layout and design $ 216.00 Wentworth Courier FP x 3 weeks $6,000.00 Visual effects signboard $ 350.00 SMH ads x 3 weeks $ 628.50 L J Hooker auctioneer $ 300.00 Visual effects, signboard extension $ 120.00 Total $7,614.50 Loss of Opportunity 44 The next question to determine is what loss was suffered by the plaintiffs that was caused by the relevant contravention. In relation to the failure to proceed with the auction, in my view, it does not follow that the plaintiffs would have sold the property had the auction not been aborted. 45 In my view, the plaintiffs have not established that any loss sustained by them in respect of the sale of the property was caused by the letter of 28 April 1999. The plaintiffs' evidence was that the property was worth $3,500,000.00 and the agent had recommended $2,500,000.00 plus. No evidence was given by either the agent or any potential purchaser concerning the purchaser's views as to the value of the property and to what amount he or she would be prepared to bid. There is, therefore, no evidence that the property would have sold at the auction. In any event, having regard to the difference in the value of the property ascribed by Mr Young and the agent, it is improbable that a reserve price set by Mr Young would have been met at the auction or a sale price would have been successfully negotiated by the highest bidder. 46 In my view, whilst the auction was aborted because of the letter, it cannot be said that, but for the letter, the property would have sold on 28 April. Therefore, no damages flow from the failure to sell the property at the April auction. 47 The plaintiffs proceeded with a second auction in late May 1999. Exhibit "18 " shows that for the May auction and for the subsequent sale in August the plaintiffs continued to describe the property as one with a swimming pool. Therefore, in the absence of any evidence given on behalf of the plaintiffs', it would appear that the plaintiffs did not inform any potential purchasers of the Le Page letter of 28 April 1999. Therefore, that would not be a factor which would have been considered by any potential purchasers at the May auction. It would also follow that that was not a consideration by the purchaser in August 1999. In any event, it was clear that by August the plaintiffs had intended to construct a swimming pool on No. 37. It is a term of the contract that part of the common property would be used for the construction of a swimming pool. The purchaser was aware of the problems of access to the pool at No. 45. She signed a letter stating that she was aware of the problems that the plaintiffs were having with regard to access to the swimming pool. 48 I do not think the plaintiffs have established a causal link for the following reasons. Firstly, there is no evidence put on by the plaintiffs which demonstrated that there was a likely purchaser who would have bid at the auction. Secondly, the inference to be drawn from the plaintiffs' evidence concerning the valuation of the property is that in all probability, they would have put a reserve of somewhere near $3,500,000.00. It is highly unlikely that it would have sold and it is unlikely because of the gap between properties that had sold in proximity to the date of the auction and having regard to the characteristics of those properties and the plaintiffs' property, it is difficult to imagine a bidder bidding beyond about $2,500,000.00. In my view, it is therefore difficult to see how the prospective purchaser and the vendors would be able to negotiate a figure satisfactory to the vendors having regard to the potential difference in the last bid and the possible reserve price. Thirdly, there is evidence from the plaintiffs that the market became sluggish after the hailstorm damage in April 1999. Lastly, the plaintiffs had, by special condition 29 in the Contract for Sale, inserted a condition which advised potential purchasers that a swimming pool was to be constructed at No. 37 Wolseley Road. Miscellaneous Damages 49 In respect of the other costs that the plaintiffs are seeking by way of damages, namely, the holding charges and interest payments, it follows that so far as the interest payments are concerned, that no award for damages should be made. The plaintiffs' also seek payment in respect of furniture hired to display the unit to its best advantage during the pre-sale period in April 1999. However, the plaintiffs failed to put on any evidence in this regard. Therefore, in the absence of any evidence, I decline to make an award for any loss the plaintiffs may have suffered in respect of the hiring charges. No proper basis was made out for damages as a result of the plaintiffs' loss of quality of life. 50 The plaintiffs also claim holding charges but there is no evidence concerning what they regard as holding charges and how much money was expended by them in respect of those charges. 51 Therefore, I certify that the damages the plaintiffs are entitled to recover pursuant to s 68 of the Fair Trading Act from the defendants in an amount of $7,614.50. I make no order in respect of costs. ***************************** Last Modified: 11/22/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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