Re Maniero Pty Ltd v El Barador Holdings Pty Ltd Qld [1982] FCA 129 (16 July 1982)

FEDERAL COURT OF AUSTRALIA

Re: MANIERO PTY. LTD.
And: EL BARADOR HOLDINGS PTY. LTD.
Qld No. G26 of 1981
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Fitzgerald J.

CATCHWORDS

TRADE PRACTICES - Misleading and deceptive conduct - representations made in course of negotiations for agreement for lease.

Trade Practices Act 1974, s.52

HEARING

BRISBANE
16:7:1982

ORDER

The application is dismissed with costs.

DECISION

The applicant, Maniero Pty Ltd., claims against the respondent, El Barador Holdings Pty Ltd., for damages for breach of s.52 of the Trade Practices Act 1974. A claim for damages for breach of s.53 of the Act was not pursued. The substance of the applicant's claim is that, as a result of certain statements made by one Peter Hansen, the Manager of the respondent, the applicant entered into an agreement to lease from the respondent suites 5 and 6 in a building which the respondent owned situated at 150 Bundall Road, Bundall, Surfers Paradise, paid rental, and outlaid other sums. In the end, the amount of the applicant's loss was not seriously in dispute.

Particulars of the conduct said to be misleading or deceptive or likely to mislead or deceive, as finally amended, are as follows:

(i) On or about the nineteenth day of March 1981 at 150 Bundall Road, Bundall, Surfers Paradise in the State of Queensland, the said PETER HANSON stated to NOEL REX ROBE, a director of the Plaintiff, that certain persons whose names appeared on a list shown by Peter Hanson to Noel Rex Robe wanted to take leases of parts of Suites 5 and 6, subject to certain partitioning being effected and a receptionist being arranged; and at the time that that statement was made, those persons or some of them were not wanting to take leases of parts of the said suites;

(ii) On or about the nineteenth day of March 1981 at 150 Bundall Road, Bundall, Surfers Paradise the said PETER HANSON:

(a) handed to the said Noel Rex Robe a sketch plan of Suites 5 and 6 showing the proposed partitioned offices in the names of tenants which he stated he had arranged for those premises; and those persons had not been arranged as tenants for those premises;

(b) stated that the persons and companies whose names were written on the plan, namely Neal Blackely, Allan Corke, Jojoba, Wilkinson Timber, Chris Conroy and Graham Phillips, were ready to occupy the offices as sub-tenants to the plaintiff as soon as the partitioning had been completed, and those said persons or some of them were not ready to occupy the offices at that time or at all;

(iii) On or about the twenty-fourth day of March 1981, at 13 Koombahla Drive, West Burleigh, the said PETER HANSEN stated that the persons he said he had contacted to take sub-leases, namely the persons and companies whose names were written on the plan, were ready to occupy the offices, and the said persons or some of them were not ready to occupy the offices at that time or at all.

The applicant and the respondent are respectively associated with the families of Noel Rex Robe and Barry Beasley. Mr Robe effectively controls the applicant, and Mr Beasley the respondent. Prior to March 1981, there had been some discussions between them concerning a possible purchase by Mr Robe of the building at 150 Bundall Road, but the discussions proved fruitless and were terminated. Commencing in that month, Mr Robe had discussions with Mr Hansen, this time concerning a possible leasing of part of the building, described as Suites 5 and 6. It would be an exercise in futility to attempt to reconcile the various versions offered or to set down extracts from the evidence. I make the following findings.

When Mr Robe called on Mr Hansen at his invitation in mid-March 1981, Mr Hansen outlined a proposal for Mr Robe to lease suites 5 and 6 from the respondent, erect internal partitions dividing them into a number of smaller areas, one of which would serve as a reception area for the rooms created, provide the services of a manageress or receptionist, and let the rooms. Although the forecast return was attractive, the respondent did not wish to undertake the project itself, for reasons which were explained to Mr Robe and repeated in evidence.

Mr Hansen showed Mr Robe a list of names which were recorded on pages 28 and 29 of Exhibit 1, a book kept by Mr Hansen. There were many more names on the list than possible rooms in suites 5 and 6. I am not satisfied that there was anything said which justified a conclusion that each of those named had indicated a willingness to lease a part of suites 5 and 6, or that Mr Robe formed that conclusion. Those named were said by Mr Hansen to be prospective tenants, who were looking for areas such as would result from the proposed partitioning and who had inquired after space in the building at 150 Bundall Road. Mr Robe failed to persuade me that he was led to believe otherwise. Particular (i) was not made out.

The feasibility of the project was discussed at the meeting between Mr Robe and Mr Hansen. I have no doubt but that Mr Hansen was anxious to persuade Mr Robe to embark upon the venture, and that in this he sought to serve his own interests as well as those of the respondent. He produced and discussed with Mr Robe Exhibit 2, a plan showing the layout of suites 5 and 6 after the proposed partitioning had been erected. Mr Robe was, at his request, given a photostat copy of the document.

The single sheet of paper comprising Exhibit 2 shows suites 5 and 6 divided into 7 areas, a reception area and 6 rooms. It also contains extensive notes of calculations. The six rooms are not drawn at random, but contain particulars, including dimensions. Each room drawn also bears one of the names on the list, Exhibit 1. The calculations descend to specific details of anticipated outgoings and incomings, related to the layout as drawn. Paragraph (ii) of the particulars records Mr Robe's case as to what he was told concerning Exhibit 2.

Although Exhibit 2 is, in effect, a feasibility exercise specifically related to the layout drawn, I am not satisfied that Mr Robe was told that the persons and companies named on Exhibit 2 were each ready to occupy the respective rooms as soon as the partitioning was completed and/or the manageress/receptionist installed, or that arrangements for them to do so had been made. Mr Robe was made aware that those named on Exhibit 2 had confirmed that they were still interested in obtaining space in the building, and that the layout drawn on Exhibit 2 was designed to meet their requirements, which were also used as the basis for the calculation of the profitability of the exercise. However, Mr Robe did not convince me that Exhibit 2 was more than a hypothetical exercise. Mr Robe agreed to pay Mr Hansen in respect of each tenancy which he finalised a commission equal to one week's rental payable by the tenant.

A day or two after that meeting, arrangements were made by telephone for Mr Hansen to attend on Mr Robe with an agreement for lease for the applicant to execute. Mr Hansen did so on 24 March 1981. Arrangements were made, perhaps at the initial meeting, but in any event prior to 24 March, that Mr Hansen would attend to the partitioning.

Mr Hansen said that he provided Mr Robe with a further document, Exhibit 14, prior to 24 March. Mr Robe said that Mr Hansen brought Exhibit 14 with him on 24 March. In any event, Mr Robe agreed that he had Exhibit 14 prior to signing the agreement for lease, Exhibit 3. Exhibit 14 refers to only one of the six names on Exhibit 2, and is otherwise blank as to the proposed occupants of the rooms. It shows a different layout from Exhibit 2. Mr Robe said that he did not read Exhibit 14 carefully, but "glanced over it". Mrs Robe also saw it before signing the agreement for lease on behalf of the applicant, but "did not read it through particularly closely".

However, according to both Mr Robe and his wife, Mrs Hansen assured them, before they signed the agreement for lease on behalf of the applicant, that the persons named on the plan, Exhibit 2, were ready to occupy the rooms as soon as the rooms were ready. The assurance was given, according to Mr Robe, in association with a rejection by Mr Hansen of a request by Mr Robe for a special condition in the agreement for lease, imposing upon the respondent a responsibility for finding tenants for the rooms. Elsewhere in his evidence, Mr Robe said that he felt some doubt on 24 March about what he had been told about the proposed tenants by Mr Hansen, although he accepted Mr Hansen's statement. Mr Robe knew full well that the respondent was not prepared to guarantee to the applicant that the proposed tenants would take tenancies of the rooms, and he also knew that no person or company had bound itself by contract to do so. Although, in one place at least, he claimed in his evidence to have been led to believe that the terms and conditions of the tenancies would be the same as those of the applicant's lease from the respondent (obviously apart from rental and other payments), the general tenor of his evidence suggested that such details were either not thought of, or merely made the subject of assumption rather than discussion. However, there is no necessary inconsistency between this approach and his allegation that Mr Hansen told him that the persons and companies named were ready to occupy the rooms. No direct evidence was given to show that that was a misstatement, if made; I was left by both sides to infer whether that was the case.

I do not accept the evidence of Mr and Mrs Robe as to the assurance they claim was given on 24 March by Mr Hansen. Mr Hansen's denial that he gave the assurance is consistent with Exhibit 14, both in the omission of 5 of the 6 names on Exhibit 2, and in the rearrangement of the layout to suit the requirements of the sixth, Mr Corke, who did proceed, and also with events after 24 March, at least apart from furhter alleged statements attributed to Mr Hansen by Mr Robe. There is no need for me to detail these matters, since the effect of the findings I have made is that the applicant's claim must fail.

My rejection of the evidence of Mr and Mrs Robe does not imply that I concluded that either was deliberately untruthful. Each may well have been genuinely persuaded that what he or she said in answer to the questions asked was true. However, in my opinion, it was not accurate in the critical respects. Mrs Robe was substantially concerned only with what Mr Hansen allegedly said on the occasion the applicant signed the agreement for lease on 24 March 1981. Mr Robe's evidence was crucial to the applicant's case overall. His testimony exhibited confusion and inconsistency, internally and with demonstrable facts, to an extent which, in my opinion, made it quite unreliable.

It may well be that Mr Hansen instilled in Mr Robe a greater optimism concerning the prospects of letting the rooms than the information Mr Hansen possessed warranted. However, the case pleaded for the applicant, and Mr Robe's evidence, were directed to specific misrepresentations by Mr Hansen which were not made out. Only those statements were put forward as the inducement which led to the applicant's loss. It would not, in any event, be possible to assess the truthfulness of any more general statements which Mr Hansen may have made concerning the interest which had been shown by those named in Exhibits 1 and 2 without evidence of what each had communicated to Mr Hansen.

The applicant's claim fails. The order of the Court is that the application be dismissed with costs.