Assessing ‘loss or damage’ under the TPA
THE recent decision of the High Court in Murphy v Overton Investments P/L is an important decision in relation to the assessment of loss or damage under sections 82 and 87 of the Trade Practices Act, which foreshadows a significant increase in liability for persons whose pre-contractual representations are found to be misleading.
The proceedings arose out of a lease of a unit in a retirement village by Mr and Mrs Murphy.
The lease contained an estimate of outgoings payable by the tenant.
The estimate included all categories of outgoings then being charged to tenants in the village.
Subsequently the operator of the village sought to recover outgoings that were being incurred at the time of the initial estimate but were not then being charged to the tenants.
There was no dispute that the outgoings were properly recoverable under the terms of the lease and that, accordingly, the previous estimate of outgoings was misleading.
Mr and Mrs Murphy failed to convince the trial judge and the Full Federal Court on appeal that they had suffered any loss.
While they said they would have entered a different retirement village had they known the true position, they did not produce any evidence that the outgoings in other retirement villages were less than they were being asked to pay.
Nor did they claim the value of their lease had declined by reason of them being asked to pay the increased outgoings or that their lease was worth any less than they had paid for it.
Based on previous decisions, these factors would normally preclude tenants from any entitlement to an award of damages from a landlord.
That is, the tenants were in no worse position than they would have been in had the representations not been made.
On appeal, however, the High Court found in favour of Mr and Mrs Murphy.
The court concluded that the Murphy’s were entitled to relief for entering into an obligation that was more onerous than the representations had led them to believe.
The matter was remitted to the Federal Court for an assessment of damages to be calculated as the difference between the outgoings contained in the estimate and the outgoings actually levied.
Historically, where misleading or deceptive conduct has induced a party to enter into a contract, courts have awarded a sum that will put the party in the position they would have been had the representations not been made.
In this case, the effect of the award of damages was put to the Murphys in the position they would have been in had the representations as to the amount of the outgoings been true.
Adam Kent, solicitor
9288 6911
Darren Pratt, senior associate
9288 6702