Drew & Drew v Nicholson [1990] QSCFC 86

totafoth IN THE SUPREME COURT OF QUEENSLAND FULL COURT WRIT NO. 2784 OF 1988 BETWEEN: AND: JOHN DAVID DREW and PAMELA DORN DREW (Plaintiffs) Appellants THOMAS ALAN NICHOLSON (Defendant) Respondent THE CHIEF JUSTICE DERRINGTON J de JERSEY Reasons for judgment delivered by de Jersey J on the 21st November, 1990. The Chief Justice and Derrington J agreeing with the reasons and orders made. "APPEAL DISMISSED WITH COSTS." [1990] QSCFC 86 -- 1 of 11 -- .IN THE SUPREME COURT OF QUEENSLAND No. 2784 of 1988 Before the Full Court The Chief Justice Mr. Justice Derrington Mr. Justice de Jersey BETWEEN: AND: JOHN DAVID DREW and PAMELA DORN DREW (Plaintiffs) Appellants THOMAS ALAN NICHOLSON (Defendant) Respondent JUDGMENT - de JERSEY J. Delivered the 21st day of November, 1990 CATCHWORDS : Factual finding of fraudulent inducement of contract - whether finding of inducement sustainable - measure of damages Counsel: I.D.F. Callinan Q.C. with him P.J. Favell for appellants J .A . Logan for respondent Solicitors: Tierney and Co town agents for Overton Edser for appellants 0' Mara Patterson and Perrier town agents for David Lewis and Co for respondent Hearing date: 16th October, 1990 -- 2 of 11 -- IN THE SUPREME COURT OF QUEENSLAND BETWEEN : No. 2784 of 1988 AND: JOHN DAVID DREW and PAMELA DORN DREW (Plaintiffs) Appellants THOMAS ALAN NICHOLSON (Defendant) Respondent JUDGMENT - de JERSEY J. Delivered the 21st day of November, ,1990 This appeal arises from the sale by the appellants to the respondent of the appellants' property known as "The Grange". The property comprises 59 ha. of land together with improvements situated 27 km north-east of Kingaroy. The contract was dated 30th September, 1987, and provided for a purchase price of $225,000. The contract was settled on 23rd November, 1987. Payment of part of the price, $60,000, was deferred however, and payment secured by a bill of mortgage. The respondent, who was in possession of the property after settlement, did not make the payments required by the mortgage. The appellants therefore served a notice of exercise of power of sale dated 3rd May, 1988. The respondent failed to give up possession of the property in response to that notice, and the appellants sued for delivery of possession. The respondent defended on the basis that he had been induced to enter into the contract by the appellants' fraudulent misrepresentation, to the effect that the property "was licensed by appropriate authorities to irrigate over an area -- 3 of 11 -- 2 of 100 acres". The respondent counterclaimed for damages in the amount of $75,000, being the difference between the value of the land as at the date of contract, and the contract price, and he sought to set off that amount against moneys owing under the mortgage. The learned trial Judge found in favour of the respondent. The learned Judge found that the respondent was induced to enter into the contract by two representations. The first representation was contained in an advertisement for the property in Queensland Country Life on 3rd September, 1987. The male appellant arranged for the insertion of that advertisement, which, describing the property, included the words: "Irrigation licence 100 ac. cultivation.". Up to the time of that advertisement, the appellants had been unsuccessfully trying to sell the property for-some five months. The Judge found that when inserting the advertisement, the male appellant deliberately omitted a comma between the word "licence" and "100", and did so in order to convey the false impression that a licence to irrigate an area of 100 acres went with the property. There was in fact a licence to irrigate only up to a maximum of 15 ha., depending on the flow of water in Barker Creek. The learned Judge identified a "serious credibility issue" between the respondent and the male appellant. Having stated the standard of proof as explained in Reifek v. McElrov (1965) 112 C.L.R. 517, he said that he found the evidence of the male appellant unsatisfactory. He set out comprehensively his reasons for that assessment, which was not challenged on appeal and could not successfully have been challenged. -- 4 of 11 -- 3 The second representation was made orally by the male appellant to the respondent, in the course of an inspection of the property, preceding the contract, and it was to the effect that the property would without any problems grow 100 acres of lucerne. The two representations were potentially related, in that the capacity of the property to produce 100 acres of lucerne could depend on there being irrigation for that area. As the male appellant knew, these considerations were important to the respondent.. The Judge found that the representations were false, as the male appellant knew, and he awarded damages for fraud. As I have indicated, the appellants did not challenge the learned Judge's rejection of the evidence of the male appellant. It was open for the Judge to find that the representations were made, that they were false, and that the male appellant appreciated their falsity. A principal contention for the appellants on appeal was that the respondent had failed to establish that the misrepresentations induced him to purchase the property. The learned Judge correctly observed - that . ..for ... a misrepresentation to be operative, it need not be the sole inducing cause of the subsequent contract ( Gould v. Vaggelas (1985) 157 C.L.R. 215, 236 and Barton v. Armstrong (1976) A.C. 104, 118). As those cases show, it suffices that it plays * some part in contributing to the formation of the contract, that the contract -rest in some degree on the foundation of the representation. There is ample evidence to support the Judge's finding that both misrepresentations induced the respondent to enter into the contract. One really need not go beyond the -- 5 of 11 -- 4 evidence of the respondent, acknowledging the Judge's view that the respondent was "candid, frank and honest". Before us, however, the appellants relied on some eight matters as dispelling the respondent's claim that these representations induced the respondent to enter into the contract. Mr. Callinan Q.C., who appeared for the appellants, conceded that these matters did not individually preclude the view that the respondent was induced by the misrepresentations to enter into the contract, but he submitted that collectively they had that effect. I do not accept that submission. The particular circumstances upon which the appellants relied are, whether taken alone or together, no more than factual circumstances which might bear upon the question whether there was inducement, and certainly did not necessarily exclude the conclusion to which the learned Judge came, conscious of the relevant standard of proof. I will now briefly mention these eight matters and make some short comment in response to them, while emphasising that they could in the end bear only upon the factual finding of inducement for which there was ample foundation in the evidence. The appellants acknowledged the great difficulty they faced in seeking to overturn that finding. The first of these matters was that the licence is not mentioned in the contract. I suppose however that if a party were bent on deception, he would not particularly want it to be included; and the respondent already had the representation in written form anyway, in the advertisement, which he might have felt sufficient protection. Secondly, the appellants answered "not to the vendor's knowledge" to a requisition whether the land -- 6 of 11 -- 5 was "licensed by any authority for the use of any purpose". The limited 15 ha. irrigation licence should probably have been disclosed here, but significantly, there was no evidence that this answer was brought to the respondent's personal attention at any time prior to settlement. Third, there is the circumstance that before entering into the contract, the respondent discussed whether growing lucerne on the property would be practicable, with one Ian Crossthwaite, an agronomist within the Department of Primary Industries. That of course does not mean that the respondent was not relying on the male appellant's representation. Indeed, the respondent told Mr. Crossthwaite that the property had a 100 acre irrigation licence, and it was on that basis that the agronomist expressed the view that the growing of lucerne would be practicable. Fourth, there is the respondent's wife's account of conversations between the male appellant and the respondent while she was present, which on her account did not extend to an oral representation that there was an irrigation licence for 100 acres, of which the respondent gave evidence. The Judge found that the respondent was mistaken about that. There is no special significance for present purposes in the respondent's wife's failure to give evidence of such a representation, especially where the question of whether or not it was made was not put directly to her. In addition, she was a nurse, not a farmer, and not experienced in matters of irrigation, and therefore less likely to retain such a matter in her memory. Fifth, the first complaint of misrepresentation was not made until about 28th March, 1988', following demand by the appellants under the mortgage. There was -- 7 of 11 -- 6 however no clear evidence of when the respondent first became aware of the falsity of the representations. Sixth, the appellants point to the first written complaint of fraud being delayed until 29th April, 1988, which was some five months after settlement. Other matters apart, this point lacks any overwhelming significance for the same reason as mentioned with respect to the preceding point. Seventh, the respondent made inspections prior to purchasing, and eighth, the respondent was an experienced farmer with business experience. Those two features obviously carry.very little overall significance to this sort of inquiry. These eight matters, taken alone or together, could not even arguably have precluded the factual finding of inducement made by the learned Judge. The next point taken for the appellants concerned the learned Judge's findings that the advertisement, containing the passage "Irrigation licence 100 ac. cultivation.", was "well capable of leading a reader" to believe that a 100 acre irrigation licence went with the land, that the respondent reasonably believed that to be so, and that in arranging for the advertisement in that form, the male appellant "intended a reader ... to act upon that representation". Mr. Callinan submitted that those conclusions were not open, in view of the "standard and clarity of proof required in fraud cases". Each of the Judge's findings was reasonably open. That he made those findings did not involve any neglect of the approach to proof described in cases like Reifek . I note that the words in question do appear between two full stops, denoting a description of a particular feature, and that a description by reference to -- 8 of 11 -- 7 area is appropriate to such licences which are granted in relation to particular areas. There was ample basis for the Judge's conclusions. The Judge was not saying that the view taken of the advertisement by the respondent, and which the male appellant hoped would be taken, was necessarily its proper construction. He was saying that it was a view reasonably open, and I respectfully agree with him. Mr. Callinan's remaining submissions concerned the assessment of damages for the fraud, and the valuation evidence. The learned Judge correctly stated the measure of damages as the difference between the value of the property at the time of purchase and the contract price ( Gould , p. 220). The respondent relied on the evidence of one Cupitt, a registered valuer who valued the property as at the time of the contract at $150,000. The Judge accepted his evidence, and calculated the damages at $75,000, being the difference between that amount of $150,000 and the contract price of $225,000. The appellants' valuer, Mr. Otto, valued the property at the time of contract at $230,000. Mr. Callinan advanced some fairly muted criticism of the Judge's preference for Mr. Cupitt's valuation. I have read the passages to which he referred, and I am not persuaded that the Judge erred in any way. The Judge set .out in his reasons for judgment perfectly satisfactory and convincing reasons for preferring the evidence of Mr. Cupitt which we would not possibly reject on appeal. There was particular reference to the learned Judge's criticism of Mr. Otto for valuing the property "at what he saw as its highest and best use - an executive style farming -- 9 of 11 -- 8 property". The Judge immediately went on in his reasons to say that "this was not the purpose for which the defendant (respondent) purchased the property". Mr. Callinan submitted that the respondent's purpose was not relevant to the assessment of damages. Mr. Cupitt in fact valued the property on the basis that its highest and best use was as a "commercial enterprise property", such as the respondent intended for it. The Judge was saying here that he preferred Mr. Cupitt's approach on this point, which happened to accord with the respondent's own intentions with respect to the use of the property. The final point taken on behalf of the appellants was that in assessing damages at $75,000, the learned Judge "over-compensated" the respondent, as it was put. The submission ran as follows. Of that $75,000, $63,000 was assessed by reference to the value of fixed improvements. The absence of a full irrigation licence at most reduced the value of the land by $12,000. Awarding that $12,000 would have sufficiently compensated the respondent for his loss. To award the $75,000 went beyond compensating the respondent for "the loss resulting directly from the fraud" ( Gould, p. 222). The submission overlooks the learned Judge's finding that the fraudulent misrepresentation induced the respondent to enter into the contract to purchase the land which included the improvements. The land was purchased as a single, income producing unit, not in separate parts, one comprising the land and the other the buildings. Once one identifies the property purchased as being that entity, and once one concludes that the fraud induced the overall purchase, assessment of the loss is -- 10 of 11 -- 9 simply a matter of comparing the contract price and the true value of the total property purchased. It is that loss which flows directly from the fraudulent inducement ( Gould, p. 255). The Judge correctly assessed the loss consequent upon the deceit. In my opinion, the appeal should be dismissed with costs to be taxed. -- 11 of 11 --