Case: Demagogue Pty Ltd v Ramensky [1992] 39 FCR 31
Outcome: referred to
The applicant relied upon the judgment of the Full Court in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 ('Demagogue') to support the proposition that 'loss or damage' did not have to be loss or damage for which monetary damages could be awarded. That may well be correct but Demagogue may be distinguished on the basis that it concerned misleading or deceptive conduct in contravention of the Trade Practices Act 1974 (Cth) ('the Trade Practices Act '), in the form of non-disclosure by a vendor of unusual features relating to access to land located at Noosa Heads in the State of Queensland, which the purchasers, who sought relief under s 87(1) and/or (1A) of the Trade Practices Act , acquired by entering into a contract which they would never have entered into had they been aware of the true position with regard to access to the site. The trial judge had clearly found a causal link between the misleading and deceptive conduct and the purchasers' entry into the contract (see per Black CJ at 33 and per Gummow J at 42). 112 Each of Black CJ, Gummow J and Cooper J found that the expression 'loss or damage' where used in s 87 of the Trade Practices Act , and which corresponded in many respects with s 412(2) of the Act in the present case, could include being saddled with an agreement which had been induced by misleading or deceptive conduct. At 33 Black CJ said: '... I consider it to be clear that the loss or damage contemplated by s 87(1A) is not limited to loss or damage in the s 82 [monetary damages] sense but was intended to include the detriment suffered by being bound to a contract unconscionably induced. ... In my view, the loss or damage for the purposes of both ss 87(1) and 87(1A) will include the detriment suffered by being bound to a contract induced by misleading or deceptive conduct in contravention of s 52. Proof of loss or damage of the sort that would be an "amount of ... loss or damage" for the purpose of s 82 is not a prerequisite for the grant of relief under either subsection.' 113 Gummow J, in his leading judgment, said at 42-43: 'The phrase "loss or damage" appears in s 82 and in various subsections of s 87, particularly subss (1) and (1A). In my view, on this appeal nothing turns upon the circumstance that in a given case subs (1) may be attracted only by reason of the making of an application under s 82 to recover the amount of the loss or damage suffered by conduct in contravention in (sic) a provision of Pt IV or V. Section 82 is concerned with the recovery of "the amount of the loss or damage" suffered by conduct in contravention of the Act. Section 87(1) requires that the court consider that its order will compensate "in whole or in part" for the loss or damage or will prevent or reduce the loss or damage. Section 87(1A) requires that the orders concerned will compensate in whole or in part for the loss or damage suffered "or likely to be suffered", or will "prevent or reduce the loss or damage suffered, or likely to be suffered ...". Thus, whilst s 82 is concerned with the recovery of an amount representing the loss or damage, s 87 is concerned with compensation, whether in whole or in part, for loss or damage and with the reduction of loss or damage, and with the prevention of loss or damage which is likely to be suffered. In the phrase "likely to be suffered", the word "likely" speaks of a "real chance or possibility": Western Australia v Wardley Australia Ltd (1991) 30 FCR 245 at 261. One significant distinction between ss 82 and 87 is the quia timet operation of s 87. On the appeal to the High Court in Wardley Australia Ltd v Western Australia [1992] HCA 55 ; (1992) 175 CLR 514 at 527 [Mason CJ, Dawson, Gaudron and McHugh JJ said] : "The Act draws a clear distinction in Pt VI between loss or damage which may be recovered under s 82 and the likelihood of loss or damage which may be prevented, or, if not prevented, reduced by one of the remedies under s 87." Deane J said (at 850) that the statute in s 87 expressly distinguishes between the actual suffering of loss or damage and the likelihood (or contingency) that loss or damage will be suffered in the future. This emphasises that the phrase "the loss or damage", at least in s 87, may be concerned with more than pecuniary recovery as understood in the law of damages in tort; tort law postulates the commission, already accomplished, of a wrong: Leeds Industrial Co-operative Society Ltd v Slack [1924] AC 851 at 859, 868-869. Further, unlike the position at general law with the administration of the equitable remedy of rescission of contracts, orders under s 87 may be made not only against parties to the contract but also against third parties, being persons involved (within the meaning of s 75B) in the contravention as a result of which the plaintiff entered into the contract: Lezam Pty Ltd v Seabridge Australia Pty Ltd ... at 304; Munchies Management Pty Ltd v Belperio ... at 714. The respondents complain that they entered into a contract as the result of reliance upon conduct which contravened s 52. Why should they not be described as having suffered loss or damage, within the meaning of s 87, by that very reliance and entry into legal relations from which they otherwise would have abstained? If that contract be declared void ab initio as provided for in s 87(2)(a), will that not reduce this loss or damage?' 114 Cooper J also proceeded in Demagogue to expound upon the meaning of the phrase 'loss or damage'. At 44, Gummow J expressed his agreement with what Cooper J said in that regard. Cooper J's observations were recorded at 46-48 as follows: 'Section 87 provides both the source of the court's power to provide a remedy and the remedy itself. It is therefore important to distinguish clearly between the need to establish the factual circumstances necessary to enliven the power of the court to grant relief and the circumstances which are relevant to the nature of the relief which it is appropriate to grant. The circumstance in s 87(1) which empowers the court to grant relief is a finding that a party "has suffered or is likely to suffer loss or damage by the conduct of another person". That is a question of fact. The words "loss or damage" where they appear in s 87(1) are to be construed by the application of the ordinary canons of statutory construction. This requires giving the words their ordinary meaning in the context in which they appear. The ordinary meaning of loss is "detriment or disadvantage resulting from deprivation or change of conditions" ( Shorter Oxford English Dictionary (3rd ed (Revised), 1990) at 1241). "Damage" is defined as "1. Loss or detriment caused by hurt or injury affecting estate, condition or circumstances (Arch) 2. Injury, harm". ( Shorter Oxford English Dictionary at 485). There are two matters within the context of s 87(1) which colour the meaning of the phrase in the section. The first is that the loss or damage has been or is likely to be caused by conduct in contravention of the Act. The second is that any order made is to compensate for the loss or damage. However, the compensation is not limited to the payment of a money sum or damages as an examination of s 87(2) discloses. Nor is there anything in s 87(2) which would limit the loss or damage suffered or likely to be suffered to pecuniary loss or damage. In particular, s 87(2)(a) (declaring a contract or collateral agreement to be void) and s 87(2)(ba) (refusing to enforce any or all provisions of a contract) take as their point of focus the denial of the benefit of a contract to a person whose proscribed conduct has caused loss or damage to the other party. Such an order has the consequential effect of releasing the innocent party from the obligations imposed by the contract. In the context of providing compensation it is the obligations imposed by such a contract which is the loss or damage which the order seeks to redress. In my opinion "loss or damage" in s 87(1) means no more than the disadvantage which is suffered by a person as the result of the act or default of another ( Halsbury's Laws of England (4th ed), Vol 12, par 1102) in the circumstances provided for in the section. The phrase "loss or damage" in s 87(1) does not involve any concept of quantum or assessment of damages: see Barneys Blu-Crete Pty Ltd v Australian Workers' Union (1979) 43 FLR 463 at 473 where Northrop J expressed a similar view as to the use of the same phrase in s 45D(1)(a) of the Act. This is to be contrasted with the context of the phrase in s 82 where it is "the amount of the loss or damage" which is recoverable by action. For the purpose of s 82 it is the quantum or assessment of the loss or damage suffered in monetary terms which must be demonstrated. The rules as to the assessment of damages or the measure of damages in an action for deceit are relevant to the question of loss or damage under s 82. However those rules are not relevant to the meaning of the phrase in s 87(1). The distinction between "loss or damage" and "the amount of the loss or damage" is reflected in the terms of section 4K of the Act. The section provides: "In this Act (a) a reference to loss or damage, other than a reference to the amount of any loss or damage, includes a reference to injury; and (b) a reference to the amount of any loss or damage includes a reference to damages in respect of an injury." There are practical reasons why this should be so. The prima facie rule that the measure of damage in deceit is the difference between the value of the property and the price paid is inappropriate where the contract is not completed: Myers v Transpacific Pastoral Co Pty Ltd [1986] ATPR 47,421 at 47,424. Where the contract remains unrescinded the costs associated with the conveyance of the property are costs arising out of the contract and of performing the obligations imposed thereby. Until the contract is rescinded such costs and expenses do not take on the character of costs and expenses thrown away and as such recoverable loss and damage under the general law. The court is not restricted in granting a remedy under s 87 by the limitations under the general law of a party's right to rescind for breach of contract or misrepresentation ( Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 at 102, 109). Likewise the limitations under the general law as to the assessment of damages and the measure of damage ought not be imported into a definition of "loss or damage" in s 87 to limit the category of actionable loss or damage. To adopt a definition of "loss or damage" for the purpose of s 87(1) which includes the disadvantage of incurring contractual obligations that would not have been incurred but for the conduct complained of does not mean that the granting of a proper discretionary remedy necessarily leads to the setting aside of such a contract or to a refusal to enforce it according to its terms. That result will always depend upon the particular circumstances which exist when the occasion calls for an exercise of the powers under s 87 of the Act. ...' 115 The problem for the applicant and Ms Stringer in particular, in the present case, is that there is simply no evidence of any loss or damage for which monetary damages could be awarded, if otherwise appropriate and available, in her favour or in favour of any of Karellas' other employees. Nor is there any evidence that the approval, making and/or coming into operation of the 2007 Agreement resulted from the contravention by Karellas of s 341(1) of the Act. 116 Section 412(2) of the Act confines the Court's power to declare a workplace agreement void to those cases where the relevant loss or damage to be remedied, prevented or reduced is loss or damage 'resulting from' the relevant contravention. In order to establish a causal link between the contravention of s 341(1) of the Act and Karellas employees becoming saddled with the 2007 Agreement in this case, evidence would be required from employees of Karellas who voted to approve the agreement indicating that had it not been for one or other of the misrepresentations contained in the four page document or the three page document put around by Karellas, they would not have voted as they did. 117 In the absence of any evidence on the issue, the Court may not make an order declaring the 2007 Agreement void. It is unnecessary, in the circumstances, to address the proper exercise of the Court's discretion to grant relief under s 409(a) of the Act were it otherwise able to do so. 118 In the foregoing circumstances, there should be a declaration that the employee collective agreement styled 'Karellas Investments Pty Ltd Employee Collective Agreement 2007' was not approved in accordance with s 340(2) of the Act. Otherwise, the Amended Application filed in Court on 23 May 2007 should be dismissed. 119 Given the terms of s 824 of the Act, there should be no order as to costs. Appendix A Appendix B I certify that the preceding one hundred and nineteen (119) numbered paragraphs together with Appendices 'A' and 'B' are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. Associate: Dated: 12 September 2007 Counsel for the Applicant: A G Rogers appearing by direct client access Counsel for the Respondent: P J Newall and M J Easton Solicitor for the Respondent: Greenstein Shakenovsky Date of Hearing: 27 July, 30 31 August 2007 Date of Judgment: 12 September 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/1425.html