Interpreting Loss or Damage Under the Trade Practices Act

Article by David Harland, Ainslee Cox and Nicole McKinnon

Key Point

The High Court expressly stated that it is wrong to approach the operation of the "loss and damage" provisions of Pt VI of the Act by beginning with an attempt to draw an analogy with any particular claim under the general law.

In Murphy v Overton Investments Pty Limited [2004] HCA 3 (5 February 2004) the High Court of Australia overturned the Federal Court's decision in respect of how "loss or damage" should be interpreted under Pt VI of the Trade Practices Act 1974 (Cth) ("the Act").

Background

Mr and Mrs Murphy were considering moving into a retirement home. The respondent, the developer and then owner of the Heritage Retirement Village in Padstow Heights, Sydney, furnished the Murphys with an information brochure about the village which explained that the respondent was selling leasehold interests in units at the village and that there would be an associated "on-going management and maintenance program". The information brochure stated that "[p]resent budget figures would indicate" that, for a unit of the kind that the appellants were considering leasing, a pensioner would incur a weekly cost of $55.71. This estimated levy was calculated on a certain set of outgoings, which failed to account for all possible outgoings, which could be included in the weekly maintenance fee. This resulted in an estimated weekly cost that was significantly lower than the respondent was entitled to charge under the lease. Approximately 4 years later, the respondent unequivocally communicated to the Murphys that it would now be taking into account all expenditure in the calculation of the maintenance fee and the Murphys would, therefore, be required to pay a much higher weekly rate. By the time of the High Court appeal, it was not disputed that it was misleading for the respondent to provide an estimate to the appellants without disclosing that it did not adequately provide for all items of expenditure actually being incurred in the operation of the village. It was accepted, therefore, that the respondent had engaged in conduct in contravention of Pt V of the Act.

Summary of the proceedings in respect of the Pt VI loss or damage claim

The trial judge concluded that the appellants had not proved that they had suffered any loss or damage. The Full Court dismissed an appeal in respect of the trial judge's refusal to award damages. The appellants appealed to the High Court contending that the assessment of damages should be remitted to the trial judge. That contention was accepted by the High Court and the relevant applications were remitted to the trial judge for consideration.

Loss or Damage under the Act

Section 52 of the Act is a general prohibition against misleading and deceptive conduct. However, it is section 82 of the Act which enables damages to be recovered for loss or damage caused by the conduct of another person that is in contravention of various parts of the Act, including section 52. In addition, section 87 of the Act gives the Court a wide discretion to make a variety of orders and remedies, including orders to prevent...