Case: McRae v Commonwealth Disposals Commission [1950] HCA 12 ; (1951) 84 CLR 377
Outcome: cited
The following submissions were advanced by Idoshore as to the implications of that contribution which it made to Dr Fox warrant precise reproduction, as follows: (i) 'Idoshore was induced to permit this transaction [to be implemented] on the clear condition and representation that Foundation would take forward the move to a larger location, the CBA building, which in turn would entitle Idoshore to a second Earn-Up with the profits of the economies of scale. Dr Fox was, on the evidence, a critical part of that overall plan for larger premises'; (ii) '[a]gain, no evidence has been called to challenge either Mr O'Shanassy's account of the circumstances, or to demonstrate that Foundation had the present intention represented when the inducement was made, or that it had a reasonable basis for the representations'; based on the Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298 principle of evidence, 'and (for the TPA claim) on s 51A of the Trade Practices Act 1974 (Cth), the failure to adduce evidence necessary to explain or demonstrate the truthfulness of the representation is fatal'; the representation having 'induced the payment, relief under sec 87 to order the restoration of the funds to Idoshore is an obvious remedy'; (iii) '[f]urther, by reason that the payment was made pursuant to the undertaking to expand the business, which did not happen, the consideration for the payment wholly failed'; (iv) '[t]he argument that there was simply a breach of contract by not moving, damages for which cannot be demonstrated, because there is no evidence as to what the income would have been in the new premises, invites the McRae v Commonwealth [ Disposals Commission [1950] HCA 12 ; (1951) 84 CLR 377] response that Idoshore having been deprived of the opportunity to show what the effect of a move would have been, because there was not a move, is entitled to recover the monies it paid on the warranty that there would be a move; in McRae the disappointed salvagers were entitled to recover the costs of the salvage expedition undertaken that discovered there was no tanker to salvage because the absence of a tanker prevented them showing what the profits might have been from that expenditure'; (v) '[a]ccordingly, either in restitution for the sum paid on a pre-contractual misrepresentation, or because the consideration and purpose of the payment wholly failed; or because the conduct [of Foundation] was misleading and deceptive in circumstances undertaken within s 51A , the $210,000 removed from the warranty retention money must be returned to Idoshore's account and benefit together with interest'; (vi) '[t]he simplest way of dealing with this in a case such as this is to treat the $210,000 warranty retention money as being intact in the hands of Foundation; in circumstances where the Court concludes (as is submitted) that Foundation has no right to retain any of that money for "warranty" breaches or for any other reason, it should be treated as a remaining part of the original purchase price not yet paid to Idoshore'. As I have foreshadowed, that sum of $210,000 comprised the sums of $125,000 and $85,000 referred to in [2] above, and the same did not as such lose their clause 10.5 character as the part of the 'Purchase Price' payable by Foundation to Idoshore for the 'Purchase' of the 'Business'. There is force in Idoshore's submission that the consideration for and purpose of the payment of the $210,000 failed, and that the totality of those warranty retention moneys should be returned to Idoshore beneficially. There is no evidence before the Court that challenges at least the substance of Mr O'Shanassy's account of the circumstances regarding the drawing down of the Warranty Security Deposit to pay 'one half of the sum demanded by Dr Fox'.