68 OPR Pty Ltd (as trustee for the 68 OPR Property Trust) v Emmerson
[2019] WASC 308
•27 AUGUST 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: 68 OPR PTY LTD (AS TRUSTEE FOR THE 68 OPR PROPERTY TRUST) -v- EMMERSON [2019] WASC 308
CORAM: MASTER SANDERSON
HEARD: 29 JULY 2019
DELIVERED : 27 AUGUST 2019
FILE NO/S: CIV 1412 of 2019
BETWEEN: 68 OPR PTY LTD (AS TRUSTEE FOR THE 68 OPR PROPERTY TRUST)
Plaintiff
AND
TREVOR JON EMMERSON
First Defendant
AIM PTY LTD
Second Defendant
Catchwords:
Summary judgment - Plaintiff's claim defendant suffered no loss and counterclaim cannot be maintained - Turns on own facts
Legislation:
Australian Consumer Law
Competition and Consumer Act 2010 (Cth)
Rules of the Supreme Court 1971 (WA)
Result:
Judgment for plaintiff
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr L Hager |
| First Defendant | : | Mr T O Coyle |
| Second Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Hager Grubb & Partners Lawyers |
| First Defendant | : | Edwards Mac Scovell Legal |
| Second Defendant | : | No appearance |
Case(s) referred to in decision(s):
Nil
MASTER SANDERSON:
This is the plaintiff's application for summary judgment brought against the first defendant. The writ was filed on 8 March 2019 and a memorandum of appearance was lodged on 19 March 2019. On 9 April 2019 Registrar Whitbread made an order by consent extending the time for filing of a summary judgment application to 30 April 2019. The plaintiff issued its summons for judgment on that day. The application was supported by an affidavit of Timothy Willing filed 30 April 2019 and an affidavit of Louise Neil filed 11 July 2019. In opposition to the application, the first defendant filed two affidavits, the first on 1 July 2019 and the second on 19 July 2019.
At the hearing of the matter counsel for the first defendant conceded ‑ and properly conceded ‑ that the technical requirements of O 14 of the Rules of the Supreme Court 1971 (WA) (the Rules) had been satisfied. That is to say the plaintiff, through Mr Willing, had confirmed the contents of the statement of claim and sworn to a belief there was no defence to the claim. For its part, the plaintiff conceded for the purposes of this application, the version of facts put by the first defendant was to be accepted. With these concessions it is possible to set out the relevant facts by reference to the submissions of the plaintiff. (The one change I have made to what follows is to transpose what were pars 6 and 7 of the submissions. The only reason for doing so was to ensure the narrative followed a logical sequence).
Plaintiff's outline of submissions filed 24 July 2019
This case concerned the first defendant's proposed purchase of an apartment from the plaintiff. The position of the plaintiff can then be put by quoting pars 6 through to 23 of counsel's outline of submissions:
The Contract concerned a property known as Apartment 4, Terrace House, 110 Terrace Road, Guildford, Western Australia) (Property).
Subject to some variations, the '2011 general conditions - joint form of general conditions for the sale of land' (General Conditions) form part of the Contract dated 13 January 2017.
Under the Contract, the purchase price for the Property was $298,000, and a deposit of $29,800 (Deposit) was payable within 21 days of the date of the Contract, to be held by the second defendant (the settlement agent) as deposit holder. The settlement date under the Contract was to be 21 days after Landgate issues a duplicate certificate of title for the Property.
Mr Emmerson paid the Deposit to the settlement agent.
Landgate issued the duplicate certificate of title for the Property on 30 August 2018 so that the settlement date under the Contract was 20 September 2018.
Mr Emmerson did not effect settlement on 20 September 2018, and on 21 September 2018, OPR served Mr Emmerson with a default notice.
On 26 September 2018, Mr Emmerson issued a notice of termination which constituted a repudiation of the Contract.
Mr Emmerson refused, neglected or failed to pay to OPR the balance of the purchase price within 10 business days of service of the default notice.
On 11 October 2018, OPR served a notice of termination of Contract on Mr Emmerson, relying upon Mr Emmerson's failure to comply with the default notice; and further and alternatively Mr Emmerson's repudiation of the Contract.
OPR claims against Mr Emmerson the forfeiture of the Deposit and costs.
Relevant terms of Contract
The relevant terms of the Contract are found in the General Conditions and are set out below:
'…24.1 Buyer Default
If the Buyer:
(a)is:
(1)in default under the Contract; and
(2)has failed to comply with a Default Notice; or
(b)repudiates the Contract,
the Seller has each right in clause 24.2, in addition to any other right or remedy of the Seller.
24.2 Seller right on default or repudiation
If clause 24.1 applies, the Seller may:
(a)affirm the Contract and sue the Buyer for damages for default;
(b)affirm the Contract and sue the Buyer for:
(1)specific performance of the Contract; and
(2)damages for default in addition to or instead of specific performance;
(c)subject to clause 23.1, retake possession of the Property;
(d)subject to clause 23.1 terminate the Contract by Notice to the Buyer, but only if the Default Notice given under clause 23.1 includes a statement that if the default is not remedied within the time specified in the Default Notice the Contract may be terminated; or
(e)where the Buyer repudiates the Contract, terminate the Contract by Notice to the Buyer. …'
Balcony Railing Height
The Contract was signed on 13 January 2017 and then on 13 March 2017 there was an addendum signed which required OPR to do minor modifications to the Property for an additional fee of $4,400 including 'change balcony railing height to waist height'.
On 28 June 2018, the balcony railing height was head height.
On 20 September 2018 being the settlement date under the Contract, the balcony railing height was waist height.
By written notice issued 26 September 2018, Mr Emmerson repudiated the Contract on the basis of his incorrect 'understanding' that the balcony railing was head height when he contended it should be waist height.
Mr Emmerson asserts he has a claim for damages under section 236 of the Australian Consumer Law which provides:
'…236 Actions for damages
(1)If:
(a)a person (the claimant ) suffers loss or damage because of the conduct of another person; and
(b)the conduct contravened a provision of Chapter 2 or 3;
the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention. …'
OPR has caused Mr Emmerson no loss or damage:
22.1Mr Emmerson by written notice issued 26 September 2018 repudiated the Contract, which OPR accepted by its notice of termination of 11 October 2018;
22.2upon OPR's acceptance of Mr Emmerson's repudiation of the Contract, OPR was discharged from any further obligation to perform or to be ready and willing to perform the Contract so Mr Emmerson cannot bring a claim for:
22.2.1damages if there remained any issue with the railing; or
22.2.2specific performance or damages in lieu of specific performance of the Contract,
because OPR's acceptance of Mr Emmerson repudiation relieved OPR of its obligations to perform the Contract.
Mr Emmerson's decision to repudiate the Contract rather issue than a 14 day default notice was his own decision, and as Master Bredmeyer said in Komtyas Pty Ltd v Buckingham [2001] WASA 193 at [19], even if the repudiating party [Mr Emmerson] asserts that they could have performed the contract they are 'stuck' with General Condition 24 which allows the other party [OPR] to accept the repudiation and forfeit the deposit.
First defendant's submissions filed 26 July 2019
There was no dispute between the parties that it was for the first defendant to establish there was a serious question to be tried. By par 4 of his submissions, counsel for the first defendant put the position as follows:
The first defendant raises the following triable issues:
4.1.the plaintiff engaged in conduct that was misleading or deceptive in contravention of section 18 of the Australian Consumer Law (ACL), alternatively that amounted to unconscionable conduct under section 21 of the ACL;
4.2.the first defendant suffered and is likely to suffer loss and damage because of the misleading or deceptive conduct and/or the unconscionable conduct;
4.3.in consequence, the first defendant is entitled to compensation under section 236 of the ACL and/or orders under section 243 of the ACL requiring the plaintiff to facilitate the return of the deposit to the first defendant.
Counsel provided details of these submissions in pars 7 through to 21 of his submissions. Those submissions read as follows:
The first defendant says he was misled by the following express and implied representations.
First, that the plaintiff would be able to complete the construction of the apartment with a low, transparent railing between the balcony and Light Well 2 (Railing Representations). See the first defendant's affidavit sworn 1 July 2019 (First Affidavit), paragraphs 7.4 ‑ 7.6, 11.2 ‑ 11.3, 17.3, 22.3 and 24.
Secondly, that the plaintiff's agents Mr Harwood and Ms Neal believed on reasonable grounds that there were no regulatory or other impediments to apartment 4 being constructed and finished in a manner consistent with the Railing Representations (First Basis Representation). This implied representation arises from the making of the Railing Representation (and see paragraph 8 of the First Affidavit), given that statements about the future will often convey that the speaker had a particular state of mind for which there was a proper basis: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 85; Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 at 239.
The first defendant relied on these representations by signing the contract on 24 December 2016 (First Affidavit, paragraph 11); by refraining from putting forward design options that could have been implemented if the low railing could not be installed (First Affidavit, paragraph 19); and by signing the Addendum to the contract on 13 March 2017 (First Affidavit, paragraph 23).
Further representations were made at the inspection on 28 June 2018, when the first defendant was told by the plaintiff's agents Ms Neal and Mr Harwood that the privacy screen that had been installed between the balcony and Light Well 2 had to remain because of building code requirements (Privacy Screen Representation, First Affidavit, paragraphs 27 and 28). This entailed an implied representation that Ms Neal and Mr Harwood believed the Privacy Screen Representation to be true on reasonable grounds (Second Basis Representation).
In reliance on these representations, the first defendant sought to terminate the contract and refused to settle (First Affidavit, paragraph 29). In so acting the first defendant lost the opportunity to settle and to benefit from the acquisition of an apartment that was worth at least the amount of the purchase price if not more and exposed himself to a claim for forfeiture of the deposit and, potentially, the difference between the contract price and any lower price realised by the plaintiff on a resale.
Damages can be awarded under section 236 where the contravention of section 18 leads to a failure to act as well as the taking of positive steps: Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 348. Compensation may be awarded where the plaintiff would have avoided loss but for the breach, for example by lawfully ceasing performance of a contract: Unit 11 Pty Ltd v Sharpe Partners Pty Ltd [2006] FCAFC 43 at [34]; Thompson v STX Pan Ocean Ltd [2012] FCAFC 15 at [21] ‑ [23].
The ultimate position in relation to the railing is not clear. It appears from Ms Neal's affidavit sworn 11 July 2019 that the privacy screen was replaced by a low, transparent railing by 21 August 2018. There is no evidence however that this was compliant with the building code.
Assuming that the low railing was compliant with the building code and assuming that the first defendant's evidence of his dealings with the plaintiff and its agents can be established, then the position would be as follows:
15.1.The Railings Representations would not have been false.
15.2.The Basis Representation may have been false, noting that there is no evidence from which it could be inferred that Ms Neal and Mr Harwood had reasonable grounds for making the Railing Representations.
15.3.The Privacy Screen Representation would have been false.
15.4.The Privacy Screen Basis Representation would most likely have been false.
A further important consequence would be that the plaintiff engaged in misleading or deceptive conduct by failing to inform the first defendant that the low railing had been installed and that it was compliant with the building code. In the circumstances the first defendant had a reasonable expectation that he would be informed about the replacement of the privacy screen with the low railing: Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited [2010] HCA 31 per French CJ and Kiefel J at [17] - [21].
Another way of putting it is that the plaintiff engaged in misleading or deceptive conduct by its failure to correct a representation (i.e. the Privacy Screen Representation) that was true when made, but became false in light of subsequent events: Winterton Constructions Pty Ltd v Hambros Aust Ltd (1992) 39 FCR 97 at 114.
The question of whether this conduct should be regarded as misleading or deceptive should be considered in light of the relevant course of conduct between the first defendant and the plaintiff's agents, including that the plaintiff was in a position to know or find out about whether the low railing could be installed: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 319; 257 ALR 610 at 620-1 per French CJ, and 639 per Gummow, Hayne, Heydon and Kiefel JJ in approving the following statements by McHugh J in Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 at 625; 212 ALR 357 at 383-4:
The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of [s 18] has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the [person's] conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of [s 18] relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the [person] in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document.
This is not a situation where the plaintiff, as a party to commercial negotiations, was not required to volunteer information which will assist the decision making of another party of equal bargaining power and competence: Miller & Associates Insurance Broking Pty ltd v BMW Australia Finance Ltd, supra at [22].
The plaintiff appears to have recognised the need to inform the first defendant that the privacy screen had been replaced by the low railing: see the affidavit of Ms Neal at paragraph 7. It is clear, however, that neither Mr Willing nor Ms Neal made any reasonable attempt to inform the first defendant that the low railing had been installed: see the first defendant's affidavit sworn 19 July 2019 (Second Affidavit).
Unconscionable conduct
The plaintiff's conduct in not informing the first defendant about the replacement of the privacy screen with the low railing arguably amounted to unconscionable conduct under section 21 of the ACL.
The Australian Consumer Law
Of particular relevance then are s 18, s 21, s 237 and s 243 of the Australian Consumer Law (ACL). Those sections are in the following terms:
18.Misleading or deceptive conduct
(1)A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2)Nothing in Part 3-1 (which is about unfair practices) limits by implication subsection (1).
21.Unconscionable conduct in connection with goods or services
(1)A person must not, in trade or commerce, in connection with:
(a)the supply or possible supply of goods or services to a person; or
(b)the acquisition or possible acquisition of goods or services from a person;
engage in conduct that is, in all the circumstances, unconscionable.
(2)This section does not apply to conduct that is engaged in only because the person engaging in the conduct:
(a)institutes legal proceedings in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition; or
(b)refers to arbitration a dispute or claim in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition.
(3)For the purpose of determining whether a person has contravened subsection (1):
(a)the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and
(b)the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.
(4)It is the intention of the Parliament that:
(a)this section is not limited by the unwritten law relating to unconscionable conduct; and
(b)this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and
(c)in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of:
(i)the terms of the contract; and
(ii)the manner in which and the extent to which the contract is carried out;
and is not limited to consideration of the circumstances relating to formation of the contract.
237Compensation orders etc on application by an injured person or the regulator
(1)A court may:
(a)on application of a person (the injured person) who has suffered, or is likely to suffer, loss or damage because of the conduct of another person that:
(i)was engaged in a contravention of a provision of Chapter 2, 3 or 4; or
(ii)constitutes applying or relying on, or purporting to apply or rely on, a term of a contract that has been declared under section 250 to be an unfair term; or
(b)on the application of the regulator made on behalf of one or more such injured person;
made such order or orders as the court thinks appropriate against the person who engaged in the conduct, or a person involved in that conduct.
Note 1:For applications for an order or orders under this subsection, see section 242.
Note 2:The orders that the court may make include all or any of the orders set out in section 243.
(2)The order must be an order that the court considers will:
(a)compensate the injured person, or any such injured persons, in whole or in part for the loss or damage; or
(b)prevent or reduce the loss or damage suffered, or likely to be suffered, by the injured person or any such injured person.
(3)An application under subsection (1) may be made at any time within 6 years after the date on which:
(a)if subsection (1)(a)(i) applies ‑ the cause of action that relates to the conduct referred to in that subsection accrued; or
(b)if subsection (1)(a)(ii) applies ‑ the declaration referred to in that subsection is made.
243.Kinds of orders that may be made
Without limiting section 237(1), 238(1) or 239(1), the orders that a court may make under any of those sections against a person (the respondent) include all or any of the following:
(a)an order declaring the whole or any part of a contract made between the respondent and a person (the injured person) who suffered, or is likely to suffer, the loss or damage referred to in that section, or of a collateral arrangement relating to such a contract:
(i)to be void; and
(ii)if the court thinks fit ‑ to have been void ab initio or void at all times on and after such date as is specified in the order (which may be a date that is before the date on which the order is made);
(b)an order:
(i)varying such a contract or arrangement in such manner as is specified in the order; and
(ii)if the court thinks fit ‑ declaring the contract or arrangement to have had effect as so varied on and after such date as is specified in the order (which may be a date that is before the date on which the order is made);
(c)an order refusing to enforce any or all of the provisions of such a contract or arrangement;
(d)an order directing the respondent to refund money or return property to the injured person;
(e)except if the order is to be made under section 239(1) ‑ an order directing the respondent to pay the injured person the amount of the loss or damage;
(f)an order directing the respondent, at his or her own expense, to repair, or provide parts for, goods that had been supplied by the respondent to the injured person;
(g)an order directing the respondent, at his or her own expense, to supply specified services to the injured person;
(h)an order, in relation to an instrument creating or transferring an interest in land, directing the respondent to execute an instrument that:
(i)varies, or has the effect of varying, the first mentioned instrument; or
(ii)terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first mentioned instrument.
Counsel for the plaintiff made the point that a party seeking a remedy for either misleading and deceptive conduct or unconscionable conduct must establish that damage has been suffered. Counsel quoted from Miller's Australian Competition and Consumer Law Annotated ‑ 33rd ed (2011) (at page 1879):
A cause of action established by ACL s 236 has two elements ‑ contravention of a provision of the ACL and suffering of loss or damage as a result of such contravention. Accordingly, a cause of action accrues, not when a breach occurs, but when loss or damage is suffered as a result of such breach …
The entitlement to damages under ACL s 236 does not arise at the stage where there is a potentiality of loss: the statutory cause of action arises only when the loss or damage occurs.
Counsel's point was that at no time did the first defendant suffer loss or damage. The only potential loss or damage that the first defendant could have suffered was if the contract had been completed and the first defendant was left with an apartment which was of a value less than the apartment with the rail at the agreed height. Because the first defendant had repudiated the contract and that repudiation was accepted by the plaintiff no damage ever accrued. Without damage there is no cause of action under the ACL and the prospect of some adjustment to the contractual terms does not arise.
Conclusion
In my view the plaintiff's argument is well founded. The first defendant did not suffer any loss or damage and therefore does not have a right of action under the ACL. Without that counterclaim there is no answer to the plaintiff's claim. I propose to make orders in terms of the plaintiff's chamber summons filed 30 April 2019 for summary judgment against the first defendant with damages to be assessed. I will hear the parties as to the precise form of orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson29 AUGUST 2019
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