Fitline Pty Limited; Gregory James Taylor and Bronwyn Christina Taylor v Spurfork Pty Limited and Jerome Leonard Fernandez [1993] FCA 279 (9 June 1993)

FEDERAL COURT OF AUSTRALIA

FITLINE PTY LIMITED; GREGORY JAMES TAYLOR and BRONWYN CHRISTINA TAYLOR v.
SPURFORK PTY LIMITED and JEROME LEONARD FERNANDEZ
No. G501 of 1991
FED No. 379
Number of pages - 11
Trade Practices - Damages - Costs

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Einfeld J(1)

CATCHWORDS

Trade Practices - Licence of business premises - false representation as to profit - misleading and deceptive conduct - reliance - fraud

Damages - whether wages claimed by but not paid to applicant's shareholders are recoverable - whether stamp duty paid/payable recoverable

Costs - Claim never likely to exceed $40,000 - whether enforceability of licence was ever in issue - damages only substantive order sought - respondents' attempt to have the matter transferred to the District Court resisted by applicants - costs recoverable by applicants limited approximately to amount which would have been obtained in the District Court less an amount as a deterrent to future misuse of this Court

Trade Practices Act (1977) (Cth) ss 52, 75B(1)(c), 82, 87

Income Tax Assessment Act (1936) (Cth) ss 221C(1A), 221EAA(1), 221G(4A), 221P(1)

Federal Court of Australia Act (1976) (Cth) s 51A

District Court Act (1973) (NSW) s 86A(2)

Stamp Duties Act (1920) (NSW) ss 40A(1), 41(1), 41(7)(a)

Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634

Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1

Gould v Vaggelas (1985) HCA 85; (1984) 56 ALR 31

Sutton v Thompson (1987) 73 ALR 233

Brown v Jam Factory [1981] FCA 35; (1981) 53 FLR 340

Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Limited (1981) ATPR 40-226

Derry v Peek [1889] UKHL 1; (1889) 14 App Cas 337

HEARING

SYDNEY, 9-10 November 1992
9:6:1993

Counsel and solicitor for the applicants: Mr V.R.W. Gray instructed

by Werry Altobelli

Counsel and solicitor for the respondents: Mr C J Bevan instructed
by Anthony Malouf and Company

ORDER

1. Order that the respondents pay to the first applicant the sum of
$32,000.
2. Cross claim dismissed.
3. Respondents to pay one half of the applicants' costs on a
party-party basis.
4. Respondents to pay the costs of Mr Pitts of and incidental to the
motion granted on 9 November 1992.

Note: Settlement and entry of orders are dealt with in accordance with Order 36 of the Federal Court Rules.

DECISION

Introduction
EINFELD J The first applicant, Fitline Pty Limited (Fitline), seeks the setting aside of a deed consisting of a 5 months licence of a business known as the Kings Cross Deli (the business) and an option to purchase the business (the deed), entered into with the first respondent, Spurfork Pty Limited (Spurfork) on 19 July 1991. The second and third applicants, Gerald and Bronwyn Taylor, as husband and wife directors and shareholders of Fitline, guaranteed the obligations of Fitline under the deed. Jerome Leonard Fernandez, the second respondent, is a director and shareholder of Spurfork. Unless otherwise specified, I shall henceforth only refer to the parties by their corporate names.

2. Fitline alleges that it was induced to enter into the deed by a false representation made by Spurfork as to the profit of the business. As a consequence Fitline terminated the licence and purported to repudiate the deed after 8 weeks. Spurfork agrees that the representation made as to profit was false, but alleges that there was no reliance by Fitline on the representation, and that accordingly Fitline wrongfully repudiated the deed. Spurfork cross claims for outstanding licence and occupation fees and other matters.

The facts
3. The basic facts of the case are not disputed. On 20 September 1990 Robert Norman Ganley, a business broker of Bounty Brokers Pty Limited, was retained by the owner of the business, Solon Baltinos, to find a purchaser for it. A number of queries or expressions of interest in the business were received by Mr Ganley following its advertisement for sale. Inquiries were made, on behalf of Spurfork, by a Dr Ranjit Thind and the second respondent. In addition a number of telephone conversations and meetings took place between the Taylors and Mr Ganley regarding the possible purchase of the business by Fitline. These negotiations culminated in a meeting between Mr Taylor and Mr Baltinos and the subsequent provision of a draft contract to Fitline. In the end the negotiations were unsuccessful and on 16 November 1990 Spurfork entered into a contract to purchase the business from Mr Baltinos for a sale price of $305,000. This sale was completed on 4 February 1991.

4. On 11 April 1991 Spurfork placed the business for sale with Mr Ganley's firm for $350,000 and a few days later Mr Ganley contacted Mr Taylor to inform him that the business was again on the market. In the course of their conversations Mr Ganley told Mr Taylor that the weekly takings of the business were $21,000. At Mr Taylor's request, a copy of the listing form in relation to the business was faxed to him on 11 April 1991.

5. Thereafter Mr Taylor had a number of discussions with Mr Ganley concerning the possible purchase of the business by Fitline and on 20 May 1991 Mr Ganley received from Fitline a typewritten letter of offer to purchase the business setting out its proposed terms and conditions. In mid June 1991 at least one conversation took place between Mr Taylor and Mr Ganley regarding the takings of the business and on 21 June 1991, at Mr Taylor's request, Mr Ganley sent him by facsimile an updated listing statement signed by the second respondent on behalf of Spurfork on 20 June 1991 (the updated listing form). This form represented that the weekly takings were $17,000 with purchases and outgoings of $5,400 and a consequent profit of $11,600. Although Spurfork warranted that the particulars contained in the form were true and correct, it now concedes that the representation as to profit was false. In fact Fitline alleges that the true profit of the business as at 21 June 1991 was approximately $6,700 per week although Spurfork submits, I think correctly, that no evidence of the true profit of the business as at 21 June 1991 was either led by Fitline in chief or extracted in cross examination from Mr Fernandez. In view of the concession of falsity and the nature of the case, this dispute does not need to be specifically resolved.

6. By the deed of 19 July 1991 Fitline contracted to pay an upfront "one-off" licence fee or premium of $20,000, which was immediately paid, and a weekly licence fee of $2,000. On 20 July Fitline took over the management of the business as licensee and on 24 July paid a second $20,000 for stock after completion of a stock take. On 12 September Fitline ceased to operate the business and handed possession back to Spurfork which did not dispute the termination of the licence.

7. Fitline's request for an order setting aside the licence, together with its application for damages and costs, are based on a number of grounds including fraud and misleading or deceptive conduct contrary to the Trade Practices Act 1977 (Cth) (the Act). Spurfork's cross claim for moneys owing for unpaid weekly licence and occupation fees and for other items is grounded in a proposed declaration that Fitline wrongfully repudiated the deed and that the deed has been validly terminated by Spurfork.

Liability
a) Trade Practices Act
8. In the light of Spurfork's concession that its representation as to profit in the updated listing form was misleading or deceptive, the only question for the determination of liability in this case raised by Spurfork is whether Fitline was induced by this misrepresentation to enter into the deed.

9. The guiding principles on the question of reliance were summarised by a Full Court of this Court (Foster, Woodward and Wilcox JJ) in Sutton v Thompson (1987) 73 ALR 233 where their Honours said at 240:

However, in a case such as the present, where the allegedly
misleading conduct consists in representations directed
specifically towards a particular person or group of people,
with a view to making a single specific sale, it is more
helpful to recall the principles of law restated by Wilson J
in Gould v Vaggelas (1985) HCA 85; (1984) 56 ALR 31 at 46. Although these
related to the common law action of deceit, they are, in our
view, equally applicable to breaches of s 52 of the Act.
The principles are:
(i) notwithstanding that a representation is both false
and fraudulent, if the representee does not rely on
it he has no case;
(ii) if a material representation is made which is
calculated to induce the representee to enter into
a contract and that person in fact enters the
contract there arises a fair inference of fact that
he was induced to do so by the representation;
(iii) the inference may be rebutted, for example, by
showing that the representee, before he entered
into the contract, either was possessed of actual
knowledge of the true facts and knew them to be
true or, alternatively, made it plain that whether
he knew or not he did not rely on the
representation; and
(iv) the representation need not be the sole inducement.
It is sufficient so long as it plays some part,
even if only a minor part, in contributing to the
making of the contract.
In this formulation, the possibility that a foolish person
might be misled by some representation which no normal
person would take seriously, is covered by the exclusion of
representations which are not "calculated to induce" entry
into the contract. The test is objective, but must take
into account the respective positions of the parties,
including such matters as their knowledge of each other
through previous dealings and their respective familiarity
with the subject-matter of the contract.

10. Pointing to the lengthy course of negotiations through Mr Ganley in relation to the licence of the business, Spurfork in essence submitted that Fitline had sufficient familiarity with the business as to establish that it placed no reliance at all on the updated listing form, not even as one of a number of factors relied on. In evidentiary terms it identified in particular:

(i) the evidence of the second respondent that at a meeting in June
1991 at a Kings Cross coffee shop between himself, Dr Thind and
Mr and Mrs Taylor, Mr Taylor stated that he did not wish a trial
period as he had "seen the business before and I have been
watching you since you bought it. I have often sat here and
watched the business from across the road". Mr Taylor did not
recall this statement;
(ii) the receipt by Mr Taylor of the earlier listing statement,
stating takings of $21,000, outgoings of $6,000 and profit of
$15,000 (although how this evidence helps Spurfork is not clear);
(iii) the evidence that Mr Taylor told representatives of Spurfork at
the time he was considering the business:
I will be able to turn the takings around because my wife
is very experienced and between the two of us we should
be able to make the business work.
This seems to have been a reference to lifting the takings back
to what was apparently a higher level at an earlier time;
(iv) the fact that over a period of about 10 months from September
1990 to July 1991, Fitline had been provided with a number of
documents about the business and its profitability, and had been
told, on a number of occasions, the history of the business
whilst in the hands of Mr Baltinos and of Spurfork.

11. In support of its reliance on the updated listing form in deciding to licence the business, Fitline identified in particular Mr Taylor's evidence of his request for further information in June 1991:

Seeing that the takings are now down to $17,000 can we
have an updated listing form because the bottom line of
this whole deal is the net profit?

12. The evidence of Mr Ganley was that the updated listing form was prepared and sent by facsimile to Fitline as a result of this request. Fitline submitted as self evident that the only reason why up to date figures for the business were requested before it entered into the deed was to enable it to be satisfied that it should enter into the deed.

13. Spurfork further relied on the decision of Justice Northrop in Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Limited (1981) ATPR 40-226 where his Honour held at 43,059:

I am satisfied that Mr Robertson (the lessor's agent)
stated that his estimation of the outgoings would be
between 10%-15% of the rent ... To the extent that the
statements were confusing, they could constitute conduct
which was misleading or deceptive under s. 52 ... I am
not satisfied that Mr Figgins acted on or relied on that
conduct ... From his experience with the other shops
operated by the applicant Mr Figgins knew or ought to
have known that the charges in the nature of
apportionable outgoings when added to the normal
outgoings exceeded by far 15% of the rent paid for those
shops ... If the applicant had been relying or acting
upon the conduct of Mr Robertson, in this respect, the
simple solution would have been to insert a proviso that
the total amount of outgoings and apportionable outgoings
would not exceed 15% of the rent payable. This was not done.

14. Spurfork thus submitted that had Fitline wished to rely on the profit referred to in the updated listing form as a basis for proceeding with the transaction, there was nothing to prevent it from insisting upon the inclusion in the deed of a warranty in those terms.

15. This case is distinguishable from Mister Figgins, among other reasons because it was found there that the applicant as a significantly experienced business operator knew or ought to have known the extent of the amounts involved. In the present case there was no evidence that Fitline had experience of this kind or actual knowledge of the true profit of the business, nor that such knowledge should be imputed to it. In my opinion, Spurfork's submissions in this respect are misconceived. It is hardly likely that Fitline would have considered the need for a warranty given Spurfork's signed acknowledgment that the particulars supplied in the updated listing form were true and correct. From Fitline's standpoint in the present circumstances, the warranty would not have provided any better protection than the form.

16. As arises from Sutton v Thompson, a representation by or on behalf of a vendor/licensor as to the profitability of a business raises a strong inference of influence on any prospective purchaser/licensee of the business in deciding whether or not to take it over. In my opinion the evidence pointed to by Spurfork was not sufficient to demonstrate that Fitline had sufficient familiarity with the business as to have relied entirely on what it knew and to have placed no reliance on the updated listing form.

17. I find that the misrepresentation as to profit was a significant factor in Fitline's decision to enter into the deed. It therefore contravened section 52 of the Act. By signing the form on behalf of Spurfork, the second respondent was himself knowingly engaged in this contravention of the Act within the meaning of section 75B(1)(c).

b) Fraud
18. Fitline also alleges that this misrepresentation constitutes fraud within the meaning of Derry v Peek [1889] UKHL 1; (1889) 14 App Cas 337. The Court has wide discretion in section 87 of the Act as to the appropriate form of relief in the present case, and no extra relief can be gained here from a finding of fraud. Accordingly it is not necessary to consider this question.

Relief
19. The claim in this case for monetary relief under sections 82 and 87 of the Act is intended to put Fitline back into the position it would have been in had there been no contravention of the Act. In addition to an order setting aside the deed, Fitline sought damages as follows:

i) refund of the licence fee paid: $20,000
ii) legal expenses paid: $1,662
iii) cost of two stock valuations: $500
iv) wages for Mr and Mrs Taylor )
)not quantified in
v) stamp duty )statement of claim
vi) interest under section 51A of the Federal Court Act

a) The deed
20. By its conduct in retaking possession of the business on 12 September 1991, Spurfork elected to accept Fitline's repudiation of the deed: Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634. This acceptance of the repudiation was also pleaded in the cross claim. Consequently, there is no dispute that the licence was terminated on 12 September 1991. No order setting aside the deed is therefore necessary to resolve this dispute. I refuse the order sought.

b) Damages
Amounts already paid
21. Essentially Fitline's first three claims for damages consist of the cost of acquiring the right to license the business for eight weeks, namely the licence fee paid and the legal and stock taking fees paid. In themselves these three heads of damage are not and cannot be disputed.

Wages
22. Fitline claimed that in order to achieve a profit at all let alone the profit misrepresented by Spurfork, Mr and Mrs Taylor as employees of Fitline had to operate the business for twenty hours a day on three days a week and for twenty four hours a day on four days a week, and to spend further time attending to the books of the business. Fitline said that if the profit had not been misrepresented, it would not have entered the deed and the Taylors would have been employed elsewhere. It thus claims a reasonable sum of wages for the work done by the Taylors.

23. Spurfork on the other hand contended that such a claim misconceives the nature of a tortious loss by a company. If the profit represented had been true, it was Fitline who would have benefited. Although the Taylors as its shareholders would have been entitled to and would presumably have a share of the profit with the other shareholders, they would in that event not also have been paid wages or the profit would have been reduced by the amount of the wages paid to them. Spurfork thus submitted that this claim for wages is really the loss of an expectation of profit rather than a loss of earnings. One other problem with the claim is the absence of evidence that Fitline did in fact pay wages to the Taylors -- and if it is merely liable to do so, there is no evidence of the liability or of a realisable obligation in that respect. The Taylors themselves were only induced to enter the guarantee, not the deed, and this case is not an action on or relating to the guarantee. Moreover, the suggestion in the applicants' submissions that the Taylors were wrongfully induced by the misrepresentation to cause Fitline to enter into the licence agreement and that that represented all or part of the foundation for the loss of wages claim was not pleaded and should therefore be ignored.

24. In the abstract there is some merit to Spurfork's argument in that if the representation had been true, the earnings of the Taylors as some of Fitline's shareholders would ordinarily have been a share in the profit and not wages. However, it has been said time and again that the basis for awarding damages as a result of misleading conduct is by comparing the position the applicants would have been in if there was no transaction at all, with the position that the applicants were in as a result of reliance on the offending conduct: see, for example, Brown v Jam Factory [1981] FCA 35; (1981) 53 FLR 340.

25. In particular, if reliance on the misrepresentation deprived Fitline of the opportunity of entering into a different contract -- in this case the possible purchase of another business from which the Taylors would have derived income -- or denied the Taylors the possibility of entering into employment contracts of some other kind in which they would have been paid wages or made a profit and from which Fitline would have derived a financial benefit -- then this amount is recoverable as part of the loss suffered in consequence of Fitline having altered its position under the inducement of the representation: Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1. In my opinion, justice requires in the present case that Fitline be compensated on one of these bases either for its employment of the Taylors in the amount of wages to which they were entitled and it should have paid them in lieu of the profit misrepresented, or for the wages its employment of the Taylors caused them to lose. The amount will be the same in either case.

26. I accept the evidence given by the Taylors as to the hours they worked in the business in the period from 20 July to 11 September 1991. Furthermore, I have carefully examined the evidence for Fitline given by Alexander Pitts and his associate Peter La Forest as to the wages to which the Taylors would have been entitled under the Shop Employees' (State) Award (the Award) in force during the relevant period, had they worked in an establishment akin to the King Cross Deli. Their evidence was that Mr Taylor would have earned $20,153.10 and Mrs Taylor $8,756.65. These are presumably gross figures from which tax would have had to be deducted before the amounts allegedly foregone by the Taylors could be identified. If paid, wages would also have had an effect on the profit made by Fitline. The evidence to support the awarding of some such amounts as a loss to Fitline is quite slight -- even the likelihood that Fitline might have entered into another business deal and made a profit or that the Taylors would have worked elsewhere for wages is left to inference. Nonetheless, in my opinion, the wages claim, however framed, should be granted, but there should be a deduction for tax and other contingencies left open by the inadequacy of the evidence. I find that the loss sustained in respect of Mr Taylor's wages was $14,000 and Mrs Taylor's wages $5,000.

27. Fitline also claims entitlement to moneys owing to the Taylors in lieu of one week's notice of termination of employment as legally required by the Award or two weeks suggested in submissions. These proceedings were commenced on 4 September 1991, eight days before Fitline ceased operating the business on 12 September 1991. In my opinion this gave Fitline an adequate opportunity to give notice of termination to its employees. Moreover, it should be inferred that the Taylors knew from prior to 4 September that their employment would be terminated.

Stamp duty
28. As the Stamp Duties Act 1920 (NSW) imposes on a lessee/licensee the obligation to pay any relevant stamp duty, and the deed itself makes no provision for an indemnity of this liability by Spurfork, Fitline claims the duty payable pursuant to its solicitor's undertaking to stamp the deed made in open Court on 11 November 1992.

29. The deed is one instrument but it evidences two transactions, namely, a licence of property in New South Wales and an option to purchase property in New South Wales. As such the instrument was at all material times liable to be stamped twice. The first impressed duty stamp for which the deed was liable was for $7,940 for the option to purchase pursuant to sections 40A(1) and 41(1) of the Stamp Duties Act. The second impressed stamp for which the deed was liable was for $1,630 for the licence of the business pursuant to section 76 of the Stamp Duties Act. Apparently the lump sum fee of $20,000 was also dutiable as a premium on the licence (the additional payment of the same sum for stock was not dutiable), as was each additional licence fee of $2,000 per week. These amounts of stamp duty were not paid by Fitline and penalties of 100% of each duty may be levied. In fact it seems that no weekly licence fees were ever paid by Fitline to Spurfork.

30. As there is no evidence that duty will be paid on these amounts, there is no basis for including them in the damages awarded. To the extent that penalties become payable by Fitline, it is clear that they are not causally connected to the misrepresentation made on 21 June 1991 by the second respondent in the name of Spurfork, but are rather the result of Fitline's omission to pay the required duties on or soon after 19 July 1991 when the deed was executed.

31. Furthermore, the primary duties of $7,940 and $1,630 were refundable to Fitline had it applied within twelve months of its repudiation of the deed and the transactions in it on 12 September 1991 when it vacated the business: s. 41(7)(a) of the Stamp Duties Act. Thus Fitline's loss of this refund was also a direct result of its own conduct, this time by failing to apply. In my opinion Spurfork's liability to Fitline under this head of damages is limited to the amount of $25 as the only amount which was not refundable under the Stamp Duties Act.

Credit for Profit
32. The final issue to be determined in calculating the amount of damages payable to Fitline is the credit that should be given to Spurfork for the profit actually earned by Fitline in the eight week period in which it operated the business. The evidence established that the takings of the business during this time were $53,942.64. To determine its earnings or profit in the business, Fitline deducted its expenses including $13,088.20 for wages paid to employees of the business other than the Taylors, as taken from the cash book kept by Mrs Taylor. By this means, Fitline calculated a profit figure of $15,547.89. Thus had the weekly licence fees been paid, no profit would have been earned. Spurfork did not argue with this method of calculation or challenge the other expenses deducted, but asserted that the correct wages figure to be used in the calculation is $5,547.69, the amount contained in Fitline's tax stamp records.

33. Sections 221C(1A), 221EAA(1), 221G(4A) and 221P(1) of the Income Tax Assessment Act 1936 (Cth) require the accuracy of these tax stamp records. The absence of evidence to explain the discrepancy presumably arises because cash amounts were paid to the employees from which tax was not deducted. Although I recognise that this is a widespread practice in this industry, I do not think that I am permitted or ought to do anything to encourage unlawfulness. On the other hand, the exercise on which I am now embarked is the finding of facts, not the imposition of law or morality. Again the evidence is minimal but Mr Taylor said in evidence, and I accept, that Fitline followed Spurfork's practice in this respect, and most of Spurfork's employees were members of the Fernandez family who seem to have received some of their wages as cash in hand from which tax was not deducted. Spurfork should therefore not be permitted to profit from Fitline's identical practices in this respect. I accept that the moneys paid to the employees concerned was of the order of $13,000 as noted in the cash book. Doing the best I can from the limited material made available, the credit that should be allowed for the profit made is $15,000. Neither party suggested the existence of any element of double counting in this method of assessment having regard to the wages claim granted. I have therefore not further adjusted this figure on this account.

Summary
34. Total damages payable to the applicants are thus calculated as follows:

Licence fee paid 20,000.00
Legal fees paid 1,662.00
Stock taking fee paid 500.00
Wages for Mr Taylor 14,000.00
Wages for Mrs Taylor 5,000.00
Stamp duty allowance 25.00
41,187.00
Less Fitline's profit (15,000.00)
Loss to Fitline from
conduct of business 26,187.00

Interest
35. In addition Fitline claims interest pursuant to section 51A of the Federal Court of Australia Act 1976 (Cth). This section gives the Court discretion to allow for interest up to judgment at a rate determined to be appropriate. I have generally used the rates of interest provided for in Schedule J to the New South Wales Supreme Court Rules as a guide to the appropriate figure. The period concerned is from 12 September 1991 to 9 June 1993. I allow $5,800.00 for interest.

Verdict
36. Because of the inadequate state of the evidence and the oddity of some of the submissions, there has been a need for some approximations and rounding off in order to do justice to both parties. I therefore order that the respondents pay $32,000 to Fitline. The cross claim is dismissed.

Costs
37. Fitline claims costs. As can be seen from the quantification of damages, the claim clearly did not, and was never likely to, exceed $40,000. In a motion in December 1991, Spurfork sought the transfer of these proceedings to the District Court. The motion was opposed by Fitline and deferred. I raised the matter again at the commencement of the hearing but Fitline again resisted the transfer, saying that if Spurfork admitted liability and contested only the quantum of damages, the proceedings could have been transferred. Fitline argued that as long as the validity and enforceability of the deed were in issue, the case could not be heard in the District Court, both because that Court does not have power to grant section 87 relief: see s. 86A (2) of the Act and Part 3 of the District Court Act 1973 (NSW), and because the quantum of damages that may have been payable included what Fitline said was the value of the deed of $270,000, taking the figure beyond the jurisdiction of that Court. Although I could not see the strength of that argument, I decided to continue the hearing in this Court. I still cannot understand the argument in the light of the facts proved.

38. Spurfork now contends that it should not be penalised in relation to costs on a number of grounds. Firstly it submitted that the failure by Fitline to provide proper wages records until after the commencement of the hearing precluded it from calculating the exact loss suffered by Fitline. The simple answer to this contention is that no party should agree to the fixing of a matter for hearing if pre-trial procedures are incomplete. If something new arises after hearing dates are allocated, the Court should be notified of the position in advance of the hearing.

39. Spurfork submitted secondly that it acted reasonably in moving to transfer the proceedings to the District Court in December 1991. I agree that this is so, subject only to the position concerning Fitline's claim for relief from the deed. In this connection, Spurfork contended that an order setting aside the deed has never been substantial or even necessary relief in the action because it accepted Fitline's repudiation of the deed when it made an election to retake possession of the business: see also paragraph 8 of the cross claim. The only point that needs to be made on this submission is that Fitline failed on the issue as was evident from the outset.

40. This case should never have been litigated in the Federal Court. The only valid relief sought by Fitline was for damages at common law for deceit or under section 82 of the Trade Practices Act. The Taylors should not have been applicants as no relief was sought on or against the guarantee and they lost nothing by being induced to enter the guarantee. The only substantive orders sought by Spurfork were for damages for Fitline's failure to complete the licence. Such a case should have been conducted in the District Court or the Family Court, as Parliament has made clear should be done in such matters. Perhaps the Local Court could have heard this matter.

41. To reflect the waste of this Court's time on the case and its disapproval of the practice of including a pointless request for relief under section 87 as a ruse to keep a minor case in a Court which the Parliament has said should hear only major or exclusive jurisdiction cases, I was at first minded to make no order as to costs. On reflection I think that having obtained damages, Fitline should have some order for costs but that these should be limited approximately to an amount which would have been obtained in the District Court less an amount as a deterrent to future misuse of this Court's very scarce resources in this way. I order the respondents to pay one half of the applicants' costs on a party-party basis.

42. There is one additional matter to be resolved. Mr Pitts, the expert witness for the applicants, filed a notice of motion to set aside a subpoena served on him by the respondents. In essence the subpoena called for the records of five of Mr Pitts' clients on the basis of which Mr Pitts had given his expert opinion. For reasons given at the time, I granted the motion to set aside the subpoena on 9 November 1992. I order that the respondents pay the costs of Mr Pitts of and incidental to that motion.