Bartlett v Weatherill

By summons filed on 29 July 2016 the plaintiff, Clinton Bartlett, appeals from the judgment in the sum of $25,000 ordered by Curran LCM in the Local Court on 8 June 2016 in favour of Dr Colin Weatherill, the defendant. By cross-summons filed on behalf of Dr Weatherill on 13 September 2016, Dr Weatherill challenges the amount of the judgment and contends that it ought to have been ordered in the sum of $52,000.

As Dr Weatherill was the plaintiff in the Local Court and is the defendant in this Court; and Mr Bartlett was the defendant in the Local Court and is the plaintiff in this Court, I propose to refer to the parties by name to avoid confusion.

The appeal and cross-appeal turn solely on the question of damages. There is no challenge to the finding that Mr Bartlett engaged in misleading or deceptive conduct or conduct that was likely to mislead or deceive in breach of s 18 of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)). Accordingly, the narrative of facts, which is largely taken from the Magistrate’s reasons, can be summarised briefly.

Dr Weatherill lives in Mount Gambier, South Australia. He practices as an obstetrician and gynaecologist. He obtained his pilot’s licence and a single engine Cessna 172 aircraft which he used both for professional and personal purposes. In about October 2012 he decided to upgrade his aircraft and purchase a faster version. He decided on a Cessna 400 aircraft. There were few Cessna 400’s in Australia but many in the United States. As it happened, one of the few Cessna 400’s in Australia was owned by a man who lived in Aldinga, just south of Adelaide. Dr Weatherill made enquiries of the owner who told him that it would not be for sale for less than $500,000.

Dr Weatherill’s research had led him to believe that he could purchase a Cessna 400 for significantly less than $500,000 in the United States. At that time the Australian and US dollars were at relative parity. He contacted Mr Bartlett, who was a Licensed Aircraft Maintenance Engineer, to ask him to estimate the cost of bringing a Cessna 400 to Australia from the US. Mr Bartlett provided an estimate (which was not quotation) of $52,395, excluding GST. In reliance on the estimate, Dr Weatherill decided to purchase the Cessna 400 from the US for US$370,000 and bring it to Australia.

Ultimately Dr Weatherill spent a total of about $490,000 on purchasing the Cessna 400 (for $370,000) and bringing it to Australia ($120,000). This figure was much more than he expected to have to spend, based on Mr Bartlett’s estimate. The Cessna 400 was registered in Australia and obtained its Certificate of Airworthiness. Dr Weatherill described it in an email to Mr Bartlett dated 17 May 2013 as “a very good aircraft for years to come”.

By statement of claim filed in the Local Court on 17 November 2014, and amended by the filing of an amended statement of claim on 17 April 2015, Dr Weatherill alleged that Mr Bartlett had engaged in misleading or deceptive conduct or conduct that was likely to mislead or deceive in breach of s 18 of the Australian Consumer Law by, relevantly, representing that the estimate of transport costs was $52,395 (excluding GST). Dr Weatherill claimed damages pursuant to s 236 of the Australian Consumer Law. As referred to above, the Magistrate found that the estimate was misleading or deceptive or likely to mislead or deceive and that a “reasonable” estimate would have been $86,000. There was no challenge in this Court to these findings.

In the Local Court, Dr Weatherill argued (based on the particulars of loss in the amended statement of claim) that he was entitled to the difference between what he actually spent on getting the aircraft to Australia and associated costs ($130,703.02) and the sum of the estimate ($52,395, excluding GST) and agreed extras, which gave rise to a claim for $58,857.77, together with interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW). Mr Bartlett argued that, even if he had engaged in misleading or deceptive conduct, Dr Weatherill had suffered no loss as he had paid $490,000 for an aircraft that was worth at least $500,000.

The Magistrate did not accept either of these submissions as to the way in which damages ought be assessed. The way in which his Honour assessed damages appears from the following extract from the reasons for judgment:

Mr Bartlett appealed on the following grounds:

Mr Gration, who appeared on behalf of Mr Bartlett, confirmed that grounds 4 and 5 were alternatives to grounds 1-3. Accordingly, he accepted that if he was successful on grounds 1-3, the remaining grounds would not arise.

The jurisdiction of this Court to review decisions of the Local Court in the circumstances of this case is limited to an appeal on a question of law (s 39 of the Local Court Act 2007 (NSW)) or an appeal by leave on a mixed question of law and fact (s 40 of the Local Court Act 2007 (NSW)). I am satisfied that each of the grounds raised by Mr Bartlett raises a question of law.

Dr Weatherill’s cross-appealed on the following grounds (as extracted from the cross-summons and renumbered):

Other orders were sought and grounds framed which related to the question of costs. Mr Darvall confirmed that these orders and grounds had been superseded as the Magistrate had determined the costs questions and made costs orders. Accordingly, they do not need to be considered further, except in so far as the costs of the Local Court proceedings are affected by the orders which I make.

Although, as framed, the grounds that are pressed do not raise questions of law and at best raise questions of mixed law and fact, Mr Darvall, who appeared for Dr Weatherill, confirmed in his written submissions that each of the grounds ought be read as a “no evidence” ground. In other words, Dr Weatherill submitted that there was no evidence for any of the findings by Curran LCM listed in his cross-appeal grounds. The allegation that there is no evidence for a particular factual finding raises a question of law: Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 at [91] per Hayne, Heydon, Crennan and Kiefel JJ. Accordingly, on this basis, Dr Weatherill is entitled to appeal as of right in respect of the reformulated grounds.

It is convenient to address the first two grounds of the cross-appeal at the outset since the Magistrate’s finding that the Cessna 400 was worth more than $500,000 was fundamental to Mr Gration’s submission on the appeal that Dr Weatherill had suffered no loss. The written submissions, as referred to above, confined the first two grounds to the allegation that there was no evidence for the findings that the aircraft he purchased was worth more than $500,000; or that it was more valuable than it was when it was purchased in 2012.

A finding of fact for which there is some evidence does not reveal an error of law: Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156. Mr Gration responded to the first two grounds by identifying the evidence to support the two findings sought to be impugned by Dr Weatherill.

The evidence relied on by Mr Gration was, in substance, evidence about the worth of the Cessna 400 owned by the man who lived in Aldinga. Mr Gration relied on Dr Weatherill’s admissions that he had been told that he could pick up a Cessna 400 in Australia for around $500,000 and that the Aldinga plane was “not for sale for anything under half a million”. Dr Weatherill’s evidence was that he hoped to be able to obtain such an aircraft for a cheaper price by importing one from the US.

Mr Darvall submitted that this evidence was insufficient to prove the value of the aircraft which Dr Weatherill owned. He argued that not all aircraft were equal and that an examination would be required of the comparable hours flown and maintenance performed on each to ascertain their respective values.

The difficulty with Mr Darvall’s submissions is that they fail to take account of the nature of this Court’s jurisdiction, which is not to conduct a rehearing of the evidence before the Magistrate. As long as there is some evidence, of whatever probative value, that the aircraft he purchased was worth about $500,000, there is no error of law on the basis that there is “no evidence” to support it.

I am satisfied that the evidence referred to by Mr Gration is such that the first ground of the cross-appeal is not made out.

The material relied on by Mr Gration to support this finding was the movement in the rate of exchange from the time of purchase (when the US and Australian dollars were at relative parity) to the time of the judgment (when the US dollar had increased in value as against the Australian dollar). He submitted that courts were entitled to take judicial notice of movements in exchange rates and that this was what the Magistrate had done in making this finding. He also relied on the evidence (based on admissions made by Dr Weatherill) that the US was a significantly larger market for Cessna 400 aircraft than was Australia where there were only three at the time Dr Weatherill was considering purchasing one. Mr Gration referred to the passage from the Magistrate’s reasons for judgment (extracted more extensively above) where his Honour referred to the aircraft Dr Weatherill purchased being worth more “largely due to the exigencies of exchange rate variation”.

In my view, this material and evidence is sufficient to defeat the “no evidence” allegation made in the second ground.

The determination of the first four grounds of appeal and the balance of the cross-appeal requires consideration of the principles for the assessment of damages under s 236 of the Australian Consumer Law for breach of s 18. It has been accepted that the statutory provisions ought not be confined to common law concepts of causation and loss. Nonetheless, several principles have been held to be applicable by analogy. Moreover, a consideration of the authorities decided by reference to the Australian Consumer Law and its predecessor, the Trade Practices Act 1974 (Cth), reveals that the principles in cases such as the present are well-established. Mr Gration referred me to several cases relating to similar principles and charted the jurisprudence under s 236 and its statutory predecessor, s 82 of the Trade Practices Act. However, it is sufficient for the purposes of these reasons to refer to the authoritative summary in Marks v GIO Australia Holdings Limited (1998) 196 CLR 494; [1998] HCA 69 in the following passage:

It can be seen from the Magistrate’s reasons set out above that his Honour failed to apply what was said in Marks v GIO. What his Honour did was to start with what Dr Weatherill had actually paid, $490,000, and deduct what he was willing to pay, $438,000. The figure of $438,000 was calculated by adding the purchase price of $370,000 and the figure of $68,000, which comprised Mr Bartlett’s actual estimate plus a margin of 20% (to take account of the circumstance that it was an estimate). This calculation produced a figure of $52,000. However, the Magistrate was plainly conscious of the circumstance that Dr Weatherill had acquired an aircraft which was worth more than he had paid for it. Whether it was worth significantly more than he had paid for it because of the strengthening of the US dollar against the Australian dollar (after he had paid for the aircraft at a time of relative parity between the currencies) was irrelevant since, irrespective of these changes, it was worth at least $500,000, which was more than he paid for it. To take account of the advantage which Dr Weatherill had obtained as a result of the transaction, the Magistrate effectively halved the calculated amount and rounded it down to $25,000.

There are two principal errors in the Magistrate’s approach, which I note for completeness was ultimately supported by neither party. First, it ignored the principle that the wronged party needs to establish actual loss before an award of damages can be made. Secondly, it contaminated the assessment of damages by including “expectation” loss and by using what Mr Weatherill was prepared to pay as an integer in the calculation. This second matter was inconsistent with what the plurality of the High Court said in Marks v GIO at [49] (extracted above): “What is important is what that party could have done, not what it might have hoped for or expected.”

Mr Darvall’s submissions on appeal were, in the main, based on his contention in the cross-appeal that the aircraft he purchased had not been shown to be worth $500,000, which I have rejected for the reasons set out above. Mr Darvall submitted that Dr Weatherill’s loss ought be assessed by reference to the Magistrate’s undiscounted figure of $52,000 (being the difference between what Dr Weatherill had to pay and what he can be taken to have expected to pay (Mr Bartlett’s estimate plus 20%)). He relied on Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 in support of the proposition that Dr Weatherill was entitled to reimbursement of his additional expenses. He also relied on what Gaudron J said in the following passage in Marks v GIO at [20]:

Mr Darvall also cited, at length, passages from Rares J’s judgment in Consort Express Lines Ltd v J-Mac Pty Ltd (No. 2) [2006] FCA 833.

I do not regard these decisions as supporting the approach for which Mr Darvall contended or qualifying the principles articulated in Marks v GIO.

In Henville v Walker, the appellant purchased and developed property by constructing units on the basis of misleading representations made by the respondent real estate agents. They suffered a net loss on the sale of the units amounting to $205,000. However, they also suffered other losses on the project which included interest on borrowings, and marketing expenses which, together with the loss on the sale of the units resulted in a total figure of $319,846.51. The High Court, by majority, held that the appellants were entitled to the higher figure since they would not have undertaken the development but for the misleading conduct. The higher award restored them to the position in which they would have been but for the misleading conduct and was equivalent to their actual loss on the project. Of present relevance, McHugh J said in Henville v Walker at [132]:

The result in Henville v Walker is consistent with the principles set out in Marks v GIO. The appellants had suffered actual losses as a result of entering into transactions which formed part of the project which was undertaken as a result of their reliance on the respondents’ misleading and deceptive conduct and were held to be entitled to damages equivalent to their total actual losses, as established by the evidence.

To the extent to which it could be argued that what Gaudron J said in Marks v GIO at [20] supports Dr Weatherill’s contentions, this possibility is dispelled in the present case by the ensuing paragraphs of her Honour’s judgment which follow [20]. Her Honour continued:

To borrow the language of Gaudron J in this passage, Dr Weatherill did not assert, much less prove, that another Cessna 400 aircraft was available at a price less than $500,000; or, indeed, that there was another course of action available to him that would have produced a better outcome. Had he not bought an aircraft at all, he would still have had the cash ($490,000) but would not have had the aircraft, worth $500,000. He did not prove that, had he purchased another aircraft, assuming another was available, it would have been available for a price less than $490,000. Dr Weatherill has not proved any scenario which would have put him in a better position than the one he was actually in, albeit in reliance on the misleading estimate.

Consort Express Lines Ltd v J-Mac Pty Ltd (No. 2) involved a claim by the applicant, a wholly owned subsidiary of which, Rho Beta 7 Ltd, had purchased a container vessel based on a survey conducted by the respondent, which was established to be misleading and negligent. The evidence established that the amount paid for the vessel, $5m, was in excess of its value, $3.5m. Relevantly, the applicant claimed damages in contract, in the tort of negligent misstatement and for misleading or deceptive conduct. Its claim included amounts for the costs incurred in repairing and restoring the vessel, as well as the cost of hiring substitute vessels during the periods when the vessel could not be used. Damages were assessed by reference to the cost of repairs and hiring. As it was held that the applicant was entitled to damages for breach of contract, negligent misstatement and under s 82 of the Trade Practices Act, it was not necessary to distinguish the awards on the basis of the different causes of action. On no view could it be said that Consort Express Lines Ltd had not proved actual loss.

Mr Darvall further submitted that Dr Weatherill did not bear the onus of proving loss. Rather, he contended that Mr Bartlett, as the wrongdoer, bore the onus of establishing that there had been no loss. I do not discern support for these propositions in the authorities. However, in any event, the Magistrate made findings (which are set out above) from which it followed that it had been established (notwithstanding that the onus did not fall on Mr Bartlett) that Dr Weatherill had suffered no loss.

Applying the correct principles to the present case, in order to obtain an award of damages pursuant to s 236 of the Australian Consumer Law, Dr Weatherill was obliged to prove that he had suffered actual loss as a result of his purchase of the Cessna 400 aircraft in reliance on Mr Bartlett’s estimate. Before he relied on the estimate, Dr Weatherill did not own a Cessna 400 aircraft. As a result of his reliance on the estimate, he owned a Cessna 400 aircraft worth $500,000 and he had spent $490,000. Therefore he was $10,000 better off. His situation is not unlike that of the hypothetical injured party referred to in [50] of Marks v GIO, who bought goods for $50,000 believing them to be worth $100,000 when they were only worth $50,000, although Dr Weatherill, unlike the hypothetical purchaser, was better off by $10,000.

Although Dr Weatherill spent more than he had either hoped or expected in its acquisition, the value of the aircraft exceeded the total sum he had paid for it. Accordingly, he suffered no actual loss. As Mr Bartlett has succeeded on grounds 1-3, there is no need to consider grounds 4 and 5 of the summons, since the latter grounds are alternative grounds.

Mr Gration accepted that it was appropriate for this Court to make final orders to dispose of the Local Court proceedings rather than to remit the matter to the Local Court to be determined according to law. Mr Darvall submitted that it ought be remitted but did not contend that, if I allowed the appeal and dismissed the cross-appeal, there would be any residual question which the Local Court would need to determine.

This Court has power under s 41 of the Local Court Act to vary the terms of a judgment or order and set aside the judgment or order. Although there are constraints on this power which arise from the nature of the supervisory jurisdiction conferred by s 39 of the Local Court Act, I do not consider there to be any reason why I ought not set aside the Magistrate’s order for judgment in favour of Dr Weatherill and substitute an order that there be judgment in the Local Court in favour of Mr Bartlett. There are substantial reasons of utility, cost and time, for this Court to determine the matter finally: Owners Strata Plan 4003 v Mustafa [2012] NSWSC 780 at [12]-[17] per Beech-Jones J.

Orders for costs consequential on the result in the Local Court were made by the Magistrate. They will need to be revisited in light of this decision. Both Mr Gration and Mr Darvall accepted that the appropriate course was to make directions for written submissions following delivery of these reasons in order to provide the parties with an opportunity to address me on costs. I propose to determine the question on the papers unless either party considers an oral hearing to be necessary. Were it not for the making of offers germane to the outcome, costs would, in the ordinary course follow the event. In other words, but for relevant offers, Dr Weatherill would have to pay Mr Bartlett’s costs of the Local Court proceedings and of the proceedings in this Court on the ordinary basis. However, I will defer making any costs orders pending the receipt of submissions, or agreed orders, in accordance with the directions set out below.

For the reasons set out above, I make the following orders: