Jurisdiction - Australia
Australia – Oral Representations Found To Be Just A Mirage.

16 September, 2013

Sunland Waterfront (BVI) Ltd & Anor v Prudentia Investments Pty Ltd & Ors [2013] VSCA 237




  • In Sunland Waterfront (BVI) Ltd & Anor v Prudentia Investments Pty Ltd & Ors, the Victorian Court of Appeal dismissed claims for misleading or deceptive conduct and deceit arising out of oral representations allegedly made in the course of discussions relating to the purchase of a plot of land for development in Dubai. Sunland contended that in reliance on the representations it paid a substantial sum to a company associated with Prudentia, which it understood facilitated the acquisition of the land.


  • The Court found that Prudentia never represented that it had a legally enforceable right to acquire the plot, but merely (as was fact) that it was in a preferential negotiating position with the owner. Sunland knew or ought to have known that Prudentia had no legally enforceable right and if there were any ambiguity its failure to make enquiries was telling and meant that there was no clear representation and no reliance.


  • The decision emphasises that at least in relation to transactions between commercially sophisticated parties:

    • it is not easy to prove that representations were made based on oral communications, particularly where the allegation is that that statements individually or in combination bore a meaning different from or additional to their literal meaning. The precision of witnesses’ recollections is critical.

    • where alleged representations are ambiguous or uncertain, a failure to seek clarification may defeat any misleading or deceptive conduct claim.


  • Parties which have not protected their own interests by noting key representations and making inquiries to clarify any ambiguity will find it difficult to avoid the consequences by making claims of misleading or deceptive conduct.


Sunland was a property developer operating in Australia and Dubai through a number of companies. In 2007, the owner of a plot of land in Dubai, Dubai Water Front LLC (DWF) introduced Brown, one of Sunland’s principals, to Prudentia Investments Pty Ltd (Prudentia) which was interested in developing Plot D17. Sunland and Prudentia attempted to negotiate a joint venture to develop the plot but the structure ultimately adopted was that Sunland would purchase and develop the plot but pay what was referred to as a “consultancy fee” to a company associated with Prudentia. The fee was worth AED44 million. Sunland acquired the plot and paid the fee. Sunland alleged that it was induced to enter the agreement and pay the fee by representations that Prudentia had a right or, possibly, a privileged position, in relation to the plot.

In 2009, the Dubai authorities began investigating the transaction on the basis that the “consultancy fee” was unlawful and subsequently commenced criminal proceedings against Reed, the managing director of Prudentia, and Joyce, an officer of DWF. Brown gave interviews and evidence in that investigation which were found to be in some tension with his evidence in the Australian case. Sunland commenced proceedings in Victoria against Prudentia, DWF, Reed and Joyce seeking damages for misleading or deceptive conduct and deceit. At trial, Croft J dismissed Sunland’s claims. Sunland appealed to the Court of Appeal, which upheld the trial judge’s decision. The case raised a number of issues, including as to the law in relation to anti-suit injunctions. This update focuses on the misleading or deceptive conduct claims.

The representations

The Court of Appeal upheld the trial judge’s finding that, based on the oral evidence, the written correspondence and the limited file notes made by both parties, it could not be said that Prudentia had held itself out as having a legally enforceable right to acquire the land. Brown’s evidence was either equivocal as to Prudentia’s position or so uncertain as to precisely what was said as to be incapable of founding the alleged representations. Brown’s “reasonable guesses” as to what arrangements might underlie the alleged statements were not sufficient to found representations. The Court therefore found there was no representation that Sunland was legally required to deal with Prudentia in relation to the purchase of the plot.

Similarly, whilst in any event it went beyond the pleaded case, the Court rejected the argument that Prudentia represented that Sunland was in fact excluded from dealing with DWF without Prudentia. The Court found that Prudentia held itself out as the party with a superior negotiating position that could assist Sunland in purchasing the plot. That representation was found to be true.


Even if Prudentia made the alleged misrepresentations, the Court found that Sunland did not rely on them in its decision to pay the fee and purchase the land. As an experienced property developer, Brown’s failure to make enquiries to
clarify Prudentia’s position in relation to the plot undermined his evidence that he relied on the alleged representations. The Court found that the prospect of a favourable commercial return from the purchase, combined with Sunland’s belief that Prudentia had a superior negotiating position, was enough to motivate Sunland to pay the fee as “go away” money or for facilitating the transaction.

Loss and damage

The Court of Appeal in any event rejected Sunland’s claim that it had suffered loss and damage because it had failed to establish its net financial position from purchasing the plot at what appeared to be an advantageous price.

Intra-territorial operation of the legislation

The Court of Appeal upheld the trial judge’s decision that the Trade Practices Act 1974 (Cth) (as it then was) did not apply to Sunland’s claims because the impugned transactions occurred in Dubai, with no connection to Australia. The transaction also did not involve bodies corporate incorporated or carrying on business within Australia, as the parties to agreement under which the AED44 million was paid were incorporated in the British Virgin Islands and Singapore respectively, even if related entities involved in the negotiations were Australian or connected to Australia.


The decision demonstrates that, in the context of transactions between sophisticated commercial parties, clear and precise evidence is needed to prove oral representations and reliance upon them. The Court will not lightly infer a meaning different from the literal meaning of the precise words used and assumptions made in the absence of sensible enquiries may well not suffice to found representations or reliance upon them.
Accordingly, parties should keep careful records of the precise words used when significant representations are made in the course of negotiations and seek clarification in a meeting where there is ambiguity.


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