Fraudulent Misrepresentation In Australia

This essay will go through imperative elements for implementing fraudulent misrepresentation and to provide innocent party to recover civil damages, gain an injunction or other remedies from the other party. Business law is very broad concept of law which covers all the legal issues that include many commercial and domestic cases which make up most of the civil cases and there are only few criminal cases where there has been serious breach of law. With the help of reference to relevant case law, this essay will argue that Bob Wheelie suffered loss due to fraudulent misrepresentation of historical figures of business by Mr Spoke as Bob anticipated that the business was in good financial position whereas the business was struggling and he ended

up paying more than the business was worth. This essay will provide sufficient evidences to prove there has been fraudulent representation under section 18 and section 29 under Australian Consumer Law.

In Alati v Kruger 94 CLR (1995) The High court of Australia gave its judgement that the fraudulent misrepresentation that caused one party economic loss will give the innocent party to take action against the other party for fraudulent misrepresentation, apart from contractual relationship.

In the given scenario one party (Bob Wheelie) suffered economic loss due to fraudulent misrepresentation of important business figures before buying business from other party( Mr Spoke). Fraud is sense of deceit which may be defined as a false representation of fact made by representor which is Mr Spoke .The case of Alati v Kruger (1995) 94 CLR provided the bottom line of fraudulent misrepresentation but there are more cases which gave more clarification on fraudulent misrepresentation which are listed

below.
This essay will now go through all the elements which must be established in order to authenticate that this is the case of fraudulent misrepresentation. This scenario is similar to John McGrath Motors (Canberra) Pty .Ltd. v Applebee (1964) 110 CLR where it was held the inflating or deflating the business figures knowingly which cause economic loss to the other party. In this case Mr Spoke knowingly inflated the business figures by 55% which caused Bob to suffer economic loss. This case also constitutes unconscionable conduct as Mr Spoke has more knowledge than Bob so it was like a piece of cake for Mr Spoke to inflate business figures. Mr Spoke may have done this intentionally so that he could earn extra money for his retirement and travel which authenticate the element that it has been intentional.
The other two main elements of fraudulent representation is that is must be untrue and the other person making the representation must know it is false.

As in Krakowski v Eurolynx Properties Ltd (1995) 183 CLR. IRAC analysis is the best option to justify whether these elements are right or wrong the issue here is that, are the figures false and Mr Spoke knew that he is inflating the figures? The rule is that person doing the presentation should have done misrepresentation knowingly and the figures should be false. Application is that figures were inflated by 55% which have been checked by his fellow enthusiast who studied accounting with him at University and Mr Spoke knew that those figures are untrue as he is literate, was not intoxicated and didn’t suffered mental health problems such as dementia so he knowingly did that for his travel plans after retirement. So there are enough reasons to prove that that these two elements also apply in this

case.

To justify that there has been fraudulent misrepresentation the other element in which the other party should suffer loss as in McGrath Motors (Canberra) Pty .Ltd. v Applebee (1964) 110 CLR so in this case Bob bought this business on basis of historical figures which Mr Spoke presented to him. Mr Spoke intentionally inflated figures by 55% i.e. fraudulent misrepresentation so Bob ended up paying more money for the business than it was worth. Bob suffered loss because he anticipated that the business was in a good financial position whereas it costed him more in order to make it work, So Bob fulfils the last elements of fraudulent misrepresentation that one party must have suffered the loss
Bob can sue Mr Spoke under Section 18 of Australian consumer law which prohibits misleading or deceptive conduct. The best way to prove that Mr Spoke has breached section 18 is through IRAC analysis which is issue, rule, application and conclusion. The main element of section 18 is that there must be misleading or deceptive conduct which is likely to mislead or deceive which is determined by an objective test of reasonable person (reference book page 626) .The issue in this scenario is that, Did Mr Spoke mislead or deceive Bob by an objective? The rule is that one party must have mislead or deceive other party intentionally. The application of this case is Bob bought business on basis of historical figures which were inflated by Mr Spoke. The figures were designed in order to induce Bob to buy the business and Mr Spoke could have extra money which he can use in travelling overseas when he retires. So we can conclude that Mr Spoke fulfils all the elements which lead to breach of section 18 under Australian Consumer Law and Bob can bring a civil action. Section 18 covers broad range of misrepresentations which can be narrow down to section 29 which is for false misrepresentation as in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR this is very similar to our scenario A breach of section 29 can lead to fines up to $220000 for individuals under s 151 and person suffering damage (Bob) can recover civil damages, gain an injunction or other remedies
This essay has provided the foundation required for the factors which are essential to argue a case of fraudulent misrepresentation and application of legal facts as in given scenario, with reference to relevant case law. In this case Bob held expertise in bikes whereas lacked in going through historical financial facts whereas Mr Spoke intentionally presented the financial figures which were inflated by 55% which made Bob pay more money than the bike store was net worth. This provides sufficient evident that Bob could pursue damages charges against Mr Spoke for fraudulent misrepresentation of facts under section 18 and section 29 and seek penalties to recover civil damages, gain an injunction or other remedies from Mr Spoke.