Gould v Vaggelas (1985) 157 CLR 215

Contract – Fraud – Deceit – Inducement to Purchase Property

Facts: Gould purchased a tourist resort from Vaggelas after relying on Vaggelas’ representation that the business was booming in profits. Vaggelas also produced false figures of the financial returns of the venture to the Gould.

After two years of purchase, Gould’s venture was unsuccessful and pursued to sue Vaggelas for damages of deceit, negligence and a breach of contract, on the grounds that the representation of the resorts profits were fraudulently misrepresented.

Issue: Were Vaggelas’ representation of fact or of opinion?

Held: The holding before the Supreme Court of Queensland held that the representation is both false and fraudulent, if the representee relies upon the representation. If the representee does not rely on the representation by the representor, then he or she has no case. On appeal to the High Court, by way of cross-appeal from the Full Court of the Supreme Court of Queensland, the High Court held that the representation about the resorts profits were fraud, even if the representation contains an element of fact or opinion. Further, since the representation is material enough to induce Gould to enter into a contract, it is sufficient enough to prove that fraud exists in contributing to the formation to purchase the resort from Vaggelas.

All in all, Vaggelas was ordered to pay Gould an amount of $1,427,500.00 in damages.