Case: Briess v Woolley [1954] AC 333
Outcome: cited
is important to assess whether a misrepresentation was an operative cause of the decision of a person to enter into a contract. Ordinarily, a person who has made a false representation is under a duty to correct it before the representee acts to his or her detriment in reliance upon it. This is so in cases of fraudulent misrepresentation as Lord Reid explained in Briess v Woolley [1954] AC 333 at 349. Equally, in cases of unintentional contraventions of s 52 of the Act, a representee who relies on an uncorrected misleading representation (even where the representor does not know of the facts which make the representation incorrect) is entitled to relief under Pt VI of the Act: Campomar 202 CLR at 85 [103]. Whether something is a cause of something else is ultimately a question of fact although it can involve considering and applying difficult value judgments. This representation was false too. Mustara, itself, had no qualifications in the conduct or operation of hotels or resorts and was wholly reliant on its connection with Pacific International Hotels. Mustara was a corporate shell and had never traded. It had no financial substance independent of Pacific International Hotels' limited support in cl 20.9 and what it might earn in the future from operating the resort. Moreover, Mustara was not a subsidiary of Pacific International when each of the applicants entered into the lease and, with the exception of Ms Tan-Bounkeua, when they entered into their contracts to purchase. Austcorp failed in its duty to correct this representation to Ms Tan-Bounkeua after it had become falsified on 23 December 1999 when Mustara was taken over by Mr Wong's group: cf: Briess [1954] AC at 349. Representation (d): the entity that would lease the apartments in the resort was a leading manager of resort and apartment As I have found Mustara was not a leading manager of resorts and apartments. And, after 23 December 1999 it was not a subsidiary of Pacific International Hotels. Therefore, the representation was false by the time each of Ms Tan-Bounkeua and Mr Owers acted on it by completing their contracts. Mr Wong's group were financers, not resort or hotel operators. And cl 20.9 significantly limited the financial responsibility of Pacific International Hotels in respect of Mustara. Thus, there was a real separation between the two so that Mustara could not be said to be the same entity as Pacific International Hotels. Had they known the true position created by cl 20.9, neither Mr Owers nor Ms Tan-Bounkeua would have regarded the two companies, in a lay sense, as the same entity. As I have found, they would not have been troubled, and would have regarded Mustara and Pacific International Hotels as one entity, if there were no limitation of the latter's responsibility for Mustara's financial commitment to them as found in cl 20.9 of the lease. Of course, as a matter of law the two companies were different legal persons. Ms Tan-Bounkeua was not told of the change of Mustara's relationship to Pacific International Hotels following her entery into the contract, when the representation had been substantively accurate. In fact, at the time Mr Owers entered into his contract and at the time he and Ms Tan-Bounkeua completed, Mustara was not a subsidiary of Pacific International Hotels. Thus, this representation was also false. Representation (e): the purchase of an apartment in the resort would be an outstanding investment with no hidden risks