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Federal Court of Australia |
TRADE PRACTICES - misleading and deceptive conduct - whether applicant induced to enter into a lease of premises in shopping centre by misrepresentations - whether misleading statements made - whether reasonable grounds for statements - reliance - failure to make full and frank disclosure - whether circumstances existed giving rise to a duty to disclose information.
Leda Holdings Pty Limited v Oraka Pty Limited (Full Court, 9 December 1997, unreported), applied
BRANSON J
SYDNEY 20 FEBRUARY 1998
|
IN THE FEDERAL COURT OF AUSTRALIA | |
| NEW SOUTH WALES DISTRICT REGISTRY | NG 802 of 1996 |
|
BETWEEN: | EATTEN'S PTY LIMITED
ACN: 008 596 316 Applicant |
|
AND: | J L W (NSW) PTY LIMITED
ACN: 002 851 925 First Respondent
THE COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED ACN: 004 021 809 Second Respondent
PERMANENT TRUSTEE AUSTRALIA LIMITED ACN: 008 412 913 Third Respondent |
JUDGE(S):
BRANSON J DATE OF ORDER: 20 february 1998 WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
1. The application be dismissed.
2. Judgment be entered for the third respondent on its cross-claim.
3. The third respondent is to file and serve short minutes of order which reflect the reasons of the Court with respect to its cross-claim.
4. The parties have liberty to apply.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
|
IN THE FEDERAL COURT OF AUSTRALIA | |
| NEW SOUTH WALES DISTRICT REGISTRY | NG 802 of 1996 |
|
BETWEEN: | EATTEN'S PTY LIMITED
ACN: 008 596 316 Applicant |
|
AND: | J L W (NSW) PTY LIMITED
ACN: 002 851 925 First Respondent
THE COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED ACN: 004 021 809 Second Respondent
PERMANENT TRUSTEE AUSTRALIA LIMITED: ACN: 008 412 913 Third Respondent |
|
JUDGE(S): | BRANSON J |
| DATE: | 20 february 1998 |
| PLACE: | SYDNEY |
The applicant claims relief against the first and second respondents pursuant to ss 52(1) and 82(1) of the Trade Practices Act 1974 (Cth) ("the TPA"). Sections 52(1) and 82(1) of the TPA are in the following terms: "52(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."
"82(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention."
Section 52 of the TPA is a provision of Part V of that Act.
The applicant did not press any claim for relief against the third respondent. The third respondent has cross-claimed against the applicant for moneys, including rent, unpaid under the sub-lease.
Mr Senti holds a Bachelor of Commerce degree from the University of New South Wales. He has had extensive business experience, including as General Manager/Executive Officer/Secretary to the Union Board of Directors of the Australian National University Union ("the ANU Union"). One of the major projects that Mr Senti undertook whilst at the Australian National University was the redevelopment of the Union refectory. As part of that redevelopment Mr Senti made a recommendation, which the Board of Directors of the Union accepted, that a "weigh-n-pay" self-service sandwich system be introduced. This system proved popular and profitable at the ANU Union.
Mr Senti left the ANU Union in 1993 with the intention of establishing a commercial "weigh-n-pay" system which could be franchised. He entered into negotiations concerning the establishment of such a system at a number of sites in the Australian Capital Territory, and also in Goulburn, New South Wales, but none of these negotiations led to the establishment of the system.
Mr Senti then gave consideration to establishing a commercial "weigh-n-pay" system in Parramatta, New South Wales. He contacted a Mr Hunziker, who was then employed by the first respondent at Parramatta. Mr Senti ultimately decided that the Parramatta area was unsuitable for the business that he proposed to establish. He asked Mr Hunziker to keep him in mind should Mr Hunziker become aware of any sites that might be suitable for the business that Mr Senti proposed to establish. It was from Mr Hunziker that Mr Senti learnt of the Chatswood Central building ("Chatswood Central").
The first respondent ("JLW") is a company which carries on business as a real estate agent. It was appointed by the second respondent ("CML") to act as its agent for the purpose of finding tenants for shop premises within Chatswood Central.
CML was, until November 1995, the head lessor of Chatswood Central. On 23 November 1995, CML sold to the third respondent the head leases to Chatswood Central. The applicant entered into a sub-lease dated 7 December 1995 as sub-lessee in respect of shop P6. The sub-lease names the third respondent as the sub-lessor.
After hearing from Mr Hunziker about Chatswood Central, Mr Senti contacted David Paul Mylne ("Mr Mylne"), a Senior Leasing Executive with JLW. Mr Mylne provided to Mr Senti by facsimile transmission certain information about Chatswood Central. Such information revealed that solicitors had been instructed with respect to McDonald's entering into a lease of the shop P7: ie. the shop beside shop P6, the latter being the shop available for lease by the applicant. Shops P6 and P7 were on the Plaza Level of Chatswood Central. Above the Plaza level of Chatswood Central was a level known as the Concourse Level.
Mr Senti held the opinion that it would be in the applicant's interest to go into business alongside McDonald's. His opinion in this regard was based on his belief that - (a) McDonald's thoroughly researched all sites on which it conducted business, so that a site at which McDonald's conducted business would be a desirable fast food site;
(b) McDonald's would attract an enormous amount of trade to Chatswood Central; and
(c) the applicant's business would be complementary to the McDonald's business in that the applicant would be able to sell cappuccino coffee to McDonald's customers as McDonald's only sold brewed and not espresso coffee.
Mr Mylne was aware from his conversations with Mr Senti that Mr Senti wished the applicant to lease a shop alongside the McDonald's outlet on the Plaza Level of Chatswood Central. However, Mr Mylne gave evidence, which I accept, that Mr Senti did not advise him that Mr Senti considered that the applicant's business would be complementary to that of McDonald's which would sell brewed but not espresso coffee. I also accept that Mr Mylne did not discuss with Mr Senti, other than possibly in a very general way, the retail price of cappuccino coffee or the likely profit to be made on each sale of cappuccino coffee.
I find that Mr Senti did ask Mr Mylne in August 1995 whether any of the other shops on the Plaza Level of Chatswood Central would be selling cappuccino coffee, and that Mr Mylne replied to the effect that "apart from the coffee shop, there is possibly the Italian seafood shop". As at August 1995, the tenancy arrangements for the Plaza Level of Chatswood Central had not been finalised. Mr Senti agreed in evidence that he did not understand Mr Mylne's response to his question to mean that only the two shops mentioned by him would ever sell cappuccino coffee in proximity to shop P6. Indeed, Mr Senti acknowledged that Mr Mylne was not in a position to control the tenant mix of the Plaza Level of Chatswood Central, or to control the nature of the business of such tenants.
Under the cover of a letter dated 17 August 1995, Mr Mylne provided to Mr Senti a copy of JLW's standard letter of intention to lease. This letter of intention to lease described the "permitted use" for shop P6 as follows: "Self serve sandwich facility, incorporating hot and cold fillings, hot and cold beverages and a range of breads and fruits."
It also included an acknowledgment that no representation had been made in connection with the premises or the lease.
Mr Senti requested an amendment to the description of the "permitted use" for the shop P6. The sub-lessor gave agreement for the "permitted use" clause to be amended to read as follows: "Self-serve sandwich facility incorporating hot/cold fillings/food, hot/cold beverages including capuccino, fruit, fruit salads, variety of breaks [sic], gateaux/cakes etc. Catering for lunchtime/boardroom and take home dinner market".
By letter dated 1 September 1995, JLW advised Mr Senti that the lessor's approval had been obtained to lease the shop P6 to the applicant. A disclosure statement was provided under cover of the letter of 1 September 1995. In the disclosure statement, under the heading "RETAIL SHOPPING CENTRE DETAILS", appears the following: "TENANT MIX: As described in the attached tenancy mix plan, but subject to finalisation. Usages may change in location and nature at the lessor's discretion."
In the same document, under the heading "DETAILS AS TO AGREEMENT OR REPRESENTATIONS", appears the following: "No exclusivity of usage is granted. Tenancy mix may vary."
The tenancy mix plan attached to the disclosure statement indicates the types of tenancies proposed for the different shops but not the names of proposed lessees.
By letter dated 15 September 1995, addressed to the solicitors for Colonial Property Management (NSW) Pty Ltd ("Colonial Property"), the applicant's solicitors sought certain changes to the standard sub-lease agreement proposed in respect of the shop P6. By this letter, the applicant's solicitors sought, amongst other things, advice about whether Colonial Property would agree to the following: "Provision in the Agreement to Sublease and Sublease that if McDonald's do not take a sublease of Shop P7 in the Centre or if it terminates its sublease during the term of our client's sublease then our client may also terminate its sublease. The representation from your client's agent that a McDonald's store would be situated in Shop P7 has been a major inducement for our client to enter into a sublease. Our client has also confirmed this requirement in writing to your client's agent."
The response received to the above request was "Agreed during the first 5 years of the term." It may be assumed that Colonial Property was at this time managing the Chatswood Central building on behalf of CML.
By letter dated 1 December 1995, Mr Senti, on behalf of the applicant, wrote to Mr Robin Grant of Colonial Property, expressing concern that a business similar to that which the applicant proposed to conduct from shop P6 may be going to operate from the adjacent shop, P5. He subsequently wrote to Mr Andrew McClure, Senior Property Manager with Colonial Property, on the same topic. Colonial Property agreed that, although other shops on the Plaza Level of Chatswood Central would have the right to sell sandwiches, such right would be subject to the proviso that such sales not exceed 25% of that shop's sales.
On 7 December 1995, the applicant executed the memorandum of sub-lease for the shop P6. The memorandum of sub-lease includes the following special conditions:
"3.1 ...
3.2 During the Term the Lessor will not permit any other tenant of any other part of the Plaza Level of the Building to engage in the sale of sandwiches where those sales exceed 25% of the revenue of that tenant's business conducted from those premises.
3.3 During the first 5 years of the initial Term, if McDonald's do not commence trading, or cease to trade, from Shop P7 on the Plaza level of the Building, then the Lessee may, on 1 Month's written notice to the Lessor terminate this Lease and the provisions of Part 21 will apply.
...".
By letter dated 21 December 1995, the solicitors for Colonial Property advised the solicitors for the applicant of the sale of the head leases of Chatswood Central to the third respondent as trustee of the Colonial Commercial Property Trust. Approval was sought for the Agreement for Lease and the sub-lease to be amended to show the correct name of the sub-lessor. Such approval was apparently obtained.
Meanwhile, on 16 December 1995, Mr Senti had visited Chatswood Central and observed a McCafe bar in shop P7. He made no contemporaneous complaint about the fact that McDonald's would be selling cappuccinos from its McCafe bar on the Plaza Level of Chatswood Central. Mr Senti acknowledged in his evidence that, in late 1995, he had known for "a couple of years" that the McDonald's McCafe bars had been selling cappuccino coffees for $1.00 a cup as a strategy to get into the cappuccino coffee market. He also acknowledged that a major aspect of the applicant's proposed business was to be the "weigh-n-pay" self-service sandwich system. The selling of cappuccino, and other espresso coffee was to be a subsidiary, albeit important, aspect of its proposed business.
On approximately 18 January 1996, Mr Senti became aware that a McDonald's outlet was to operate from the Concourse Level of Chatswood Central: ie. that there was to be a McDonald's outlet on each of the Plaza Level and the Concourse Level. Mr Senti made no contemporaneous complaint about the second McDonald's outlet at Chatswood Central.
The applicant commenced the operation of its business at shop P6 in early March 1996.
Mr Senti gave evidence that towards the end of March 1996, he indicated to Mr McClure that he proposed to make a formal complaint about not having been told about the second McDonald's and the fact that the McDonald's outlet on the Plaza Level was to sell cappuccino coffee at $1.00 per cup. Mr McClure could not recall such a conversation but did not deny that it occurred. I find that such a conversation probably did occur.
By letter dated 29 April 1996, addressed to the attention of Mr McClure, Mr Senti, on behalf of himself and Mrs Senti, complained that he had not been advised that a McDonald's outlet for the Concourse Level of Chatswood Central was proposed, and that he had not been advised that McDonald's would sell cappuccino through a McCafe bar at $1.00 per cup. The letter states:
"... we based our projected sales on the fact that:
1. We would be selling cappuccino coffee in competition with other cappuccino coffee sellers who would be price/quality competitive.
2. Other cappuccino coffee suppliers were not expected to have any great purchasing or advertising advantages over our outlet.
3. We would be able to capture part of the cappuccino coffee sales by virtue of our quality coffee and location and as McDonald's would be selling their standard coffee not the $1.00 cappuccino coffee that they are currently selling."
The letter of 29 April 1996 includes the paragraph: "Eatten's entered into an agreement with your company on the basis of some major representations made by your agents, J.L.W. which are central to the achievement of our projected sales both in the short and longer term."
By letter dated 18 June 1996, Mr and Mrs Senti, as directors of the applicant, expressed concern to Mr McClure about his response to the letter of 29 April 1996. Their letter concludes as follows: "We therefore formally request that:
1. Our current lease be terminated and that all expenditure relating to the setting up of our outlet ... be reimbursed to us or alternatively;
2. Our current lease terms and lease rental payments be renegotiated.
The lack of disclosure by your managing agents and ultimately your company is being viewed very seriously by us and we would expect your company to treat this matter accordingly and with the urgency that it obviously warrants.
... ".
The applicant closed the business which it was operating from shop P6, Chatswood Central on or about 23 August 1996. It vacated the premises on approximately that day.
Mr Senti's evidence is that, if at any time during the negotiations for the sub-lease for the shop P6, he had been made aware that there were to be two McDonald's outlets in Chatswood Central, the applicant would not have entered into the sub-lease on any terms. He further gave evidence that if he had been informed at any time during the negotiations for the sub-lease that the McDonald's outlet on the Plaza Level of Chatswood Central was to incorporate a McCafe business, at which cappuccino coffee was to be sold at $1.00 per cup, he would not have caused the applicant to continue the negotiations and the applicant would not have entered into the sub-lease.
The applicant has pleaded its case against the first and second respondents as a case of misleading and deceptive conduct constituted both by positive misrepresentations and by a failure to make full and frank disclosure.
By its amended statement of claim, as particularised, the applicant alleges that in August 1995, in the course of the negotiations between Mr Senti and Mr Mylne, the following positive representations were made orally by Mr Mylne to Mr Senti:
"(a) That there would be only one McDonalds in the Complex;
(b) That the only McDonalds in the complex would be on the Plaza level;
(c) The only other businesses that would be selling cappuccinos on the Plaza level of the Complex were a coffee shop and possibly an Italian/seafood shop."
The applicant further pleads that: "[T]hroughout the negotiations, Mr Senti stressed to Mr Mylne that:
(a) The Applicant desired to be next to the only McDonalds Restaurant in the Complex so as to benefit from the trade generated by that Restaurant;
(b) The Applicant would provide services which were complimentary [sic] to those provided by McDonalds;
(c) The Applicant would be able to sell quality coffee, including cappuccinos, to patrons of McDonalds."
In reliance on the above pleading, the applicant alleges that "[i]n the circumstances there was an obligation on the First and Second Respondents to make a full and frank disclosure to the Applicant of all relevant material information in their possession relating to the activities of McDonalds." It is pleaded that such obligation was breached in the following way:
"(a) The First and Second Respondents did not advise the Applicants that McDonalds would be operating two outlets within the Chatswood Central Complex, one on the Plaza level and one on the Concourse level.
(b) The First and Second Respondents did not advise the Applicant that as part of the McDonalds outlet on the Plaza level next to the Applicant's premises, McDonalds would be operating a "McCafe Bar" which would sell cappuccino coffee.
...
(c) The First and Second Respondents did not advise the Applicant that as part of the McDonalds outlet on the Plaza level next to the Applicant's premises, McDonalds would be operating a "McCafe Bar" which would sell cappuccino coffee for $1.00 per cup ...".
As to the allegations of positive misrepresentations made by Mr Mylne, I am satisfied that at no time did Mr Mylne tell Mr Senti either that there would only be one McDonald's at Chatswood Central or that the only McDonald's at Chatswood Central would be on the Plaza level. Indeed, Mr Senti did not by his evidence suggest that Mr Mylne had ever spoken about the number of McDonald's outlets that would operate from Chatswood Central, and it was not suggested to Mr Mylne by counsel for the applicant that he had. Mr Mylne gave evidence that although he did not recall advising Mr Senti of the proposed McDonald's outlet on the Concourse level, he believed that, in accordance with his usual practice, he would have said to Mr Senti that:
"[t]he landlord is negotiating with McDonalds in relation to two sites, one on the Plaza level and one on the Concourse level."
Although such a statement would have been ambiguous as to the number of sites at which McDonald's proposed to operate an outlet, I am satisfied that Mr Mylne did not make such a statement to Mr Senti. However, I do not consider that he deliberately withheld information from Mr Senti concerning McDonald's. I am satisfied that Mr Mylne had no reason to think that a second McDonald's outlet would be of any particular significance to Mr Senti. Mr Senti, I find, himself gave no consideration to the possibility of a second McDonald's outlet in Chatswood Central. Indeed, his evidence was that he did not seek to ascertain whether McDonald's was planning to open an outlet or outlets nearby to Chatswood Central. Mr Senti's concern was with the "food hall" planned for the Plaza level of Chatswood Central, and with securing a tenancy for the applicant on that level adjacent to McDonald's.
As to the alleged positive representations that the only businesses other than that operated by the respondent that would be selling cappuccino coffee on the Plaza level were a coffee shop and possibly an Italian seafood shop, as is indicated above, I am satisfied that in response to a question from Mr Senti on or about 11 August 1995 as to whether any of the other shops on the Plaza level would be selling cappuccino coffee, Mr Mylne replied to the effect "apart from the coffee shop, there is possibly the Italian seafood shop." Mr Mylne gave evidence, which I accept, that at the time of this exchange between him and Mr Senti, he did not know that cappuccino coffee would be sold by McDonald's.
Mr Senti gave evidence that he did not understand Mr Mylne's response to his question to mean that only the two shops mentioned by him would ever sell cappuccino coffee on the Plaza level. At the time of Mr Mylne's response, as Mr Senti knew, tenancy arrangements for the Plaza level were still being negotiated and Mr Mylne was not in a position to control the nature of the businesses of proposed tenants. Moreover, quite shortly after the time of the above exchange concerning who might sell cappuccino coffee, Mr Senti received the disclosure statement which indicates, as to the tenant mix plan provided with the statement, that "[u]sages may change in location and nature at the lessor's discretion".
It may be noted further that Mr Senti negotiated a special condition in the applicant's sub-lease intended to protect the applicant's business from competition so far as the selling of sandwiches was concerned, but he made no attempt to negotiate a clause of the same kind concerning the sale of cappuccino coffee.
Mr Mylne's response to Mr Senti's question concerning the other businesses that would be selling cappuccino coffee is, in my view, to be understood, at its strongest, as a representation as to a future matter. Chatswood Central was not to open as a retail shopping centre until January 1996. It is not clear when Mr Mylne, or any person on behalf of the first respondent, learned of McDonald's' intention to operate a McCafe bar on the Plaza level of Chatswood Central. I am satisfied, however, that it was after the exchange between Mr Mylne and Mr Senti concerning the businesses that would be selling cappuccino coffee. On the evidence before me, I am satisfied that the first indication that the second respondent received that McDonald's intended to operate a McCafe bar on the Plaza level of Chatswood Central came from McDonald's signage proposal. Copies of the relevant McDonald's signage proposal are in evidence. The page of the proposal which shows McCafe signage is dated "5-10-95". Mr McClure's evidence, which I accept, was that he did not become aware that McDonald's proposed to sell cappuccino coffee from shop P7 until late October 1995. I am satisfied that there were reasonable grounds for the statement made by Mr Mylne on or about 11 August 1995 as to the businesses on the Plaza level of Chatswood Central that would be selling cappuccino coffee.
In any event, for the applicant's claim with respect to the representation to succeed, it is necessary for it to show that it suffered loss or damage "by" such representation (s 82 of the TPA).
In Leda Holdings Pty Limited v Oraka Pty Limited, (Full Federal Court, 9 December 1997, unreported), Emmett J and I, in a joint judgment, said: "Section 82 of the Trade Practices Act provides for the recovery of loss or damage suffered "by conduct of another person" done in contravention of section 52. In Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd [1987] FCA 332; (1987) 78 ALR 193 at 241, Gummow J pointed out that:
"... s 52 is not designed for the benefit of persons who fail, in the circumstances of the case, to take reasonable care of their own interests. ... it would be wrong to select particular words or acts which, although misleading in isolation, do not have that character when viewed in context ... ."
By so pointing out, his Honour was, in our view, saying little different from that which fell from the High Court in March v E & M H Stramare Pty Limited [1991] HCA 12; (1991) 171 CLR 506. In that case, Mason CJ, with whom in this regard Toohey and Gaudron JJ agreed, at 515 observed that:
"The common law tradition is that what was the cause of a particular occurrence is a question of fact which `must be determined by applying common sense to the facts of each particular case'...".
In order to found a claim based on contravention of section 52, the conduct of the Landlord, consisting of Mr Keast's statement seen in the context of the earlier discussions between Mr Johnson and Ms Vale must be "the sort of statement that was likely to have an inducing effect on the minds of business people such as Mr Johnson". [citations omitted]
I am not satisfied in the circumstances of this case that the applicant suffered loss by Mr Mylne's statement as to the businesses that would be selling cappuccino coffee on the Plaza level. Mr Senti's evidence does not cause me to conclude that he placed reliance on Mr Mylne's statement in deciding to cause the applicant to execute the sub-lease. Support for this conclusion is found in Mr Senti's failure promptly to complain when he learned that a McCafe bar was proposed for the Plaza level of Chatswood Central, and in the applicant's proceeding thereafter to complete the necessary arrangements to open its business, and to open and operate it. Support for the conclusion is also found in the fact that Mr Senti's early complaints to the second respondent did not include any reference to Mr Mylne's statement concerning the competing businesses that would be selling cappuccino coffee (see, in particular, the terms of Mr Senti's letter to Mr McClure of 29 April 1996). Nor do I consider
that Mr Mylne's statement, made as it was very early in the negotiations for the lease by the applicant of the shop P6, is to be seen as the sort of statement likely to induce a business person such as Mr Senti to cause a company which he controlled to enter into a sub-lease of business premises. Mr Senti showed by his conduct in other regards that he knew how to obtain protection for the applicant against competition, should he require such protection.
The applicant's case, so far as it is based on alleged positive misrepresentations made by the first and second respondents, must fail.
I turn to consider the applicant's case so far as it is based on alleged failures by the first and second respondents to make to it full and frank disclosure concerning the proposed operations of McDonald's.
I am satisfied that Mr Senti did not stress to Mr Mylne that the applicant "desired to be next to the only McDonalds Restaurant in the Complex so as to benefit from the trade generated by that Restaurant". Indeed, Mr Senti did not suggest by his evidence that he did. As is mentioned above, I am satisfied that Mr Senti did not direct his attention to the likely tenant mix on the Concourse level of Chatswood Central. His concern was with the Plaza level on which food outlets were to be concentrated to create a "food hall". It seems clear that, up until the occasion in January 1996 when Mr Senti observed the second McDonald's outlet, Mr Senti had given no consideration at all to the possibility that McDonald's might open more than one outlet at Chatswood Central. This conclusion is supported by the assertion in the letter dated 15 September 1995 from the applicant's solicitors to the solicitors for Colonial Property that "[t]he representation from your client's agent that a McDonald's store would be situated in Shop P7 has been a major inducement for our client to enter a sublease." [emphasis added]
I am satisfied that Mr Senti did let Mr Mylne know that it was his belief that the applicant would benefit from McDonald's' capacity to attract trade. However, as is mentioned above, I am not satisfied that Mr Senti advised Mr Mylne of his belief that the applicant would provide services that were complementary to those provided by McDonald's, or that it was his belief that the applicant would be able to sell quality coffee, including cappuccino coffee, to patrons of McDonald's. I do not doubt that Mr Senti believed that the applicant's services, including its cappuccino service, would be complementary to those of McDonald's. It is not necessary for me to determine whether his belief was well founded. However, Mr Senti's evidence has caused me to form the view that, in late 1995, Mr Senti was securely confident of the strength of his strategy of ensuring that the applicant opened its business beside a McDonald's outlet. I see no reason to conclude that Mr Senti felt the need to disclose to Mr Mylne the detailed justification of the strategy. I accept the evidence of Mr Mylne that he did not do so. I am further satisfied that Mr Senti said nothing to Mr Mylne from which Mr Mylne might reasonably be expected to conclude that the strategy would be undermined if McDonald's opened, in addition to its outlet in P7, an outlet on the Concourse level of Chatswood Central.
In Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 466, the Full Court of this Court made it clear that s 52 of the TPA "gives rise to no duty to provide information". At 467, the Full Court pointed out that: "Where the contravention of s 52 alleged involves a failure to make a full and fair disclosure of information, the applicant carries the onus of establishing how or in what manner that which was said involved error or how that which was left unsaid had the potential to mislead or deceive."
In the circumstances that Mr Senti had clearly articulated a desire for the applicant to sub-lease premises beside a McDonald's outlet, but had expressed no concern about a second McDonald's outlet in Chatswood Central, or said anything from which it could reasonably be deduced that a McDonald's outlet on the Concourse level of Chatswood Central would cause him concern, the applicant has failed to satisfy the onus of establishing how that which it alleges was unsaid had the potential to mislead or deceive within the meaning of s 52 of the TPA. In my view, the applicant has failed to identify circumstances "such as to give rise to the reasonable expectation that if some fact [ie. the fact of the second McDonald's outlet] exists it would be disclosed" (per French J in Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 46-054 at 53,195. See also Demagogue Pty Ltd v Ramesky [1992] FCA 557; (1993) 39 FCR 31 per Black CJ at 32). Put another way, in my view, nothing in the circumstances of this case imposed upon either the first or the second respondent an obligation to subject Mr Senti's strategy for the selection of a site for the applicant's business to a more rigorous analysis than that to which Mr Senti had subjected it for the purpose of identifying potential weaknesses in it and warning Mr Senti of them.
The application will be dismissed.
I do not understand the applicant to have challenged the amounts claimed by the third respondent pursuant to its cross-claim. The applicant's defence to the cross-claim was based on its contention that the lease was void ab initio by reason of the conduct of the first and second respondents which it sought to characterise as misleading or deceptive. Alternatively, the applicant contended that it should be indemnified by the first and second respondents in respect of the cross-claim of the third respondent. In the event that the application is to be dismissed, there will be judgment for the third respondent on its cross-claim. The third respondent is to bring in appropriate short minutes of order in this regard.
|
I certify that this and the preceding fifteen (15) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice
Branson. |
Associate:
Dated:
|
Counsel for the Applicant: | J E Robson |
| Solicitor for the Applicant: | I S P Law |
| Counsel for the First Respondent: | D J Hammerschlag |
| Solicitor for the First Respondent: | Cowley Hearne |
| Counsel for the Second Respondent | N F Francey |
| Solicitor for the Second Respondent | Minter Ellison |
| Counsel for the Third Respondent | A Leopold |
| Solicitor for the Third Respondent | Henry Davis York |
| Dates of Hearing: | 8-10 December 1997 |
| Date of Judgment: | 20 February 1998 |
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