| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : 155 ADELAIDE TERRACE PTY LTD -v- ZHANG [2011] WADC 111 CORAM : REGISTRAR KINGSLEY HEARD : 30 MAY 2011 DELIVERED : 20 JULY 2011 FILE NO/S : CIV 455 of 2011 BETWEEN : 155 ADELAIDE TERRACE PTY LTD (ACN 120 748 218) Plaintiff
AND
SHENG QUAN ZHANG
WEN CHAO WANG
ZI LIN
XIAO LEI ZHANG
Defendants
Catchwords: Practice - Order 14 Rules of the Supreme Court 1971 - Claim of misleading and deceptive conduct by plaintiff Legislation: Nil
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Result: Application allowed but judgment not entered
Defendants allowed to pursue counterclaim Representation: Counsel:
Plaintiff : Mr Pettitt
Defendants : Mr Nash
Solicitors:
Plaintiff : J K Panegyres
Defendants : GG Legal
Case(s) referred to in judgment(s):
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83
Jones v Stone [1894] AC 122
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109
Taco Co of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177
Webster v Lampard (1993) 177 CLR 598
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155 Adelaide Tce v Zhang 1 The plaintiff has brought an application for leave to issue an application pursuant to O 14 Rules of the Supreme Court 1971. The plaintiff seeks judgment in the sum of $386,584.31 and interest.
General principles applicable 2 It is common ground between counsel for the parties that the following general principles are to apply: • In an application for summary judgment the criteria to be applied by the court is that after the matter has been explained there must be a real uncertainty, without full argument or further investigation of the facts, as to the plaintiff's right to judgment (Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332). • Even though extensive argument may be necessary to demonstrate there is no question to be tried, that fact does not disentitle an applicant to relief. • Summary judgment is intended only to apply to cases where there can be no reasonable doubt a plaintiff is entitled to judgment, and the power to order summary judgment should be exercised with great care, and not be exercised unless it is clear there is no real question to be tried (Jones v Stone [1894] AC 122; Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87). • The defendant's affidavit in opposition must condescend upon particulars by giving definitive facts, pointing to the basis upon which the defendant alleges its right to defend arises, or that there is some triable issue at law (Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109). • Where there are disputed facts, and in the absence of cross-examination, the application is to be determined on the basis that the defendant's version of the facts, assuming that it is not inherently incredible, would ultimately be accepted at the trial of the action (Webster v Lampard (1993) 177 CLR 598). (Page 4)
The plaintiff's claim 3 By a contract for sale of strata titled property dated 5 December 2007, the defendants agreed to purchase lot 13 being a commercial unit in Rise Apartments, for a purchase price of $1,500,000 (the commercial unit). The offer to purchase was not subject to finance, and the deposit of $150,000 was payable within 28 days of acceptance. The balance of the purchase price was to be paid at settlement. 4 The plaintiff, pursuant to the contract, was required to make various alterations, and settlement was to take place seven days after the date of the duplicate certificate of title for the commercial unit had issued from Landgate. 5 As the property is a commercial lot, and the consideration is not expressed to be inclusive of GST, the defendants had to pay an additional amount calculated by multiplying the purchase price by the prevailing GST rate (cl 4.5 of the contract). 6 The defendants paid the deposit of $150,000 and in April 2010, the plaintiff through its solicitors, advised the defendant's settlement agent that the duplicate certificate of title for the commercial unit had issued from Landgate and settlement was to take place on 21 April 2010. 7 In breach of the contract, the defendants did not settle and on 21 May 2010 the plaintiff, by its solicitors, served on the defendant a notice of default requiring the defendants to remedy the default by paying the balance of the purchase price being $1,350,000. A further default notice in the same terms was sent on 23 June 2010. On 5 August 2010, the plaintiff served on the defendant a notice of termination by reason of the failure of the defendants to remedy the notice of default. 8 The plaintiff resold the commercial unit at a lesser price and the plaintiff claims the loss together with additional marketing and reselling expenses. 9 In an affidavit sworn 24 March 2011 Francesco Piertro Di Latte (Di Latte) deposes that he believes the defendants are liable to the plaintiff in the sum of $386,584.31 and that the defendant had no defence to the plaintiff's claim. Di Latte's affidavit verifies the substance of the statement of claim. (Page 5)
The defendant's defence and counterclaim 10 The defendant's filed a defence and counterclaim on 14 March 2011. The substance of the defence is that in April 2010 when the plaintiff notified the defendant's settlement agent that the duplicate certificate of title had issued, the construction of the commercial unit was not complete and it was not in a condition for the defendants' use and occupation. Further, at that time, the plaintiff was not ready and willing and able to settle in accordance with the terms of the contract and the defendants were not obliged under the terms of the contract to settle at that time. Thus the plaintiff's notice was not valid. 11 The counterclaim pleads that the defendants were told by the plaintiff's agent shortly before the offer was signed that the proposed purchase price in the offer document was inclusive of GST (the representation). The defendants plead they relied on the representation in making the offer and would not have entered into the contract to purchase the commercial unit for the purchase price plus GST. The defendants plead that if, on the proper construction of the contract, the purchase price was not inclusive of GST then the representation was misleading or deceptive or likely to mislead and deceive and the defendants counterclaim damage. 12 The defendants oppose the plaintiff's summary judgment application and have filed the affidavit of Sheng Quan Zhang (Zhang) sworn 28 April 2011. Zhang deposes that contrary to the requirements of the contract the property was in a defective condition and was not fitted with: • double doors between the café dining area and kitchen; • gas connection to the kitchen; • water supply to the kitchen; • draining to the kitchen; • a grease trap; or • exhaust ducting. 13 These items comprise the special conditions 6 and 7 contained in the contract document. 14 Di Latte and Zhang in their affidavits detail the correspondence in relation to the double doors and other defects that are referred to in a (Page 6)
consultant's report by DSP Construction Consultants dated 22 June 2010. The defects have been categorised by the plaintiff as minor but some are suggested to be structural (see page 275 Di Latte's affidavit).
Discussion 15 The defence of the defendants focuses on cl 7.4 of the contract. Clause 7.4 provides that if at the time of registration of the strata plan not all the works required to complete the apartment have been completed, then the builder will ensure that so much of the work that remains incomplete will be completed, and the purchaser completes the agreement and not make any claim for reduction so long as the apartment is substantially complete and fit for use or occupation. Zhang in his affidavit deposes that when the June 2010 default notice was sent, certain defects were still outstanding at that time. Zhang, in his affidavit, does not depose that the premises were not substantially complete. There is no evidence that, at the time the June 2010 default notice was issued, the commercial unit was not substantially complete and fit for use or occupation. There is evidence that some work remained incomplete and some evidence that the builder would attend to completion, but there was no evidence that the premises were not substantially complete and fit for use or occupation. In an email from Zhang to Di Latte dated 4 August 2010, Zhang appears to confirm that most defects have been rectified and some defects are there but that the builder can rectify them within the maintenance period. 16 On the construction of cl 7.4, settlement may be delayed where the commercial unit is not substantially complete and fit for use or occupation. However the requirement to settle is not defeated – unless of course the commercial unit is never substantially complete and fit for use or occupation. 17 On the facts therefore I am not persuaded that the defendant has an arguable defence to the plaintiff's claim.
The defendant's claim 18 It is the defendants' case that the purchase price for the premises was $1,500,000 and that the price for the premises was inclusive of GST. Zhang, on behalf of the defendants, deposes that the conversation between he and the plaintiff's agent occurred in or about late November 2007. 19 The contract for sale of the premises was made on 5 December 2007 and at that time Zhang deposes the plaintiff's sale agent told him again (Page 7)
that the offered purchase price was inclusive of GST. Zhang deposes that he did not have his attention drawn to the operation of cl 5 of the conditions which state that GST is payable on top of the stated purchase price where the lot is a commercial unit. 20 Zhang goes on to depose that the plaintiff's default notice, at page 247 of Di Latte's affidavit, is consistent with his understanding as that notice only sought the balance of monies owing after payment of the deposit of $150,000. Further, Zhang deposes the plaintiff's settlement statement dated 13 July 2010 did not seek as an extra component the GST. 21 Zhang deposes that in deciding whether to purchase the property he relied on the agent's representation that the purchase price of $1,500,000 was inclusive of GST. He deposes he would not have entered into the contract to purchase the property had it not been for the agent's representations. 22 Section 52 Trade Practices Act 1974 provides that a corporation shall not in trade or commerce engage in conduct which is misleading or deceptive or is likely to mislead or deceive. As stated by Lockart J in Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 that '… ultimately in each case it is necessary to examine the conduct, whether representational in character or not, and ask the question whether the impugned conduct of its nature constitutes misleading or deceptive conduct'. Taco Co of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177 is authority for the proposition that whether particular conduct is misleading or deceptive is a question of fact to be determined in the context of the evidence as to the alleged conduct and to the relevant surrounding facts and circumstances. 23 In relation to remedies for a breach of s 52 of the Trade Practices Act one looks to s 82 of the Trade Practices Act and s 87. By virtue of s 82 a person who suffers loss or damage may recover the amount of loss or damage against the person involved in the contravention of s 52. However, under s 87(2) a court is empowered in appropriate cases to declare the whole or part of a contract void ab initio. Whilst there may be considerable impediments to a finding that the conduct on the part of the plaintiff entitles the defendants to rescind the contract, if the defendants evidence is accepted that they were unaware of the contractual price was exclusive of GST and it was only upon service of the writ that that fact became known to them then recision under s 87 is at least arguably open. (Page 8)
24 For these reasons I am of the opinion that whilst the defendants do not have a defence to the plaintiff's claim, I should not enter judgment pursuant to O 14. However, I propose to stay the proceedings as between the plaintiff and defendant and permit the defendants to pursue their counterclaim against the plaintiff. 25 To this end, I will hear counsel on the form of orders and as to costs.
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