Asia Digital Investments Pty Ltd v Mara Dextra Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST

S ECI 2023 00737

BETWEEN:

ASIA DIGITAL INVESTMENTS PTY LTD (ACN 639 740 088) AS TRUSTEE FOR ASIA DIGITAL INVESTMENTS TRUST	Plaintiff
v
MARA DEXTRA PTY LTD (ACN 005 286 662)	Defendant

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JUDGE:	Ierodiaconou AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	29 June 2023
DATE OF JUDGMENT:	21 September 2023
CASE MAY BE CITED AS:	Asia Digital Investments Pty Ltd v Mara Dextra Pty Ltd
MEDIUM NEUTRAL CITATION:	[2023] VSC 565

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REAL PROPERTY — Off-the-plan contracts — Surface level works — Sections 9AB and 9AE of the Sale of Land Act 1962 (Vic) — Details of any works affecting the natural surface of the land — Whether disclosure of surface level works complied with s 9AB — Whether valid rescission of contracts under s 9AE(1) — Whether disclosure made to the purchaser — Whether disclosure was made as soon as practicable — Whether disclosure made with the requisite details — When details of surface level works can be known — Agent of purchaser — Scope of agency — D’Souza v Wedgewood Road Hallam No 1 Pty Ltd [2010] FCA 765 — Hera Project Pty Ltd v Bisognin (No 5) [2017] VSC 383 — Purported disclosure did not meet obligation — Valid rescission of contracts — Return of deposits with interest in accordance with special condition of contracts.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G Costello KC with Mr H Williamson	Gadens Lawyers
For the Defendant	Mr J McKay	Aptum Legal Pty Ltd

TABLE OF CONTENTS

Evidence............................................................................................................................................... 3

Background......................................................................................................................................... 4

Communications after the contracts of sale were entered...................................................... 5
Surface level works....................................................................................................................... 8
Purchaser realises the impact of the surface works................................................................. 8

Communications between the parties’ solicitors from 22 December 2022........................... 10

Relief sought by the purchaser...................................................................................................... 11

Overview of Submissions.............................................................................................................. 12

Mr Wilson’s evidence...................................................................................................................... 14

Construction of s 9AB..................................................................................................................... 15

Was disclosure made to the purchaser?.................................................................................. 16
Submissions........................................................................................................................ 16
Consideration..................................................................................................................... 17

Was disclosure made as soon as practicable?......................................................................... 22
Submissions........................................................................................................................ 22
Consideration..................................................................................................................... 25

Was the disclosure made with the requisite details?............................................................. 31
Submissions........................................................................................................................ 31
Consideration..................................................................................................................... 32

Conclusion......................................................................................................................................... 36

HER HONOUR:

This proceeding concerns a dispute about the sale of land in Portsea under off-the-plan contracts. In contention is whether the vendor failed to comply with its disclosure obligation under ss 9AB(2) to (4) of the Sale of Land Act 1962 (Vic) (the ‘Act’). The plaintiff purchaser, Asia Digital Investments Pty Ltd, says that the vendor defendant, Mara Dextra Pty Ltd, did not properly disclose ‘details of any works affecting the natural surface of the land’. The purchaser purported to rescind the contracts of sale and seeks the return of its deposits plus interest.

The defendant vendor says that it complied with its obligation to make disclosure under s 9AB of the Act by sending emails to the purchaser’s builders, copying in the purchaser’s project manager and architect (the ‘purported disclosure’).

Section 9AB of the Act provides:

Disclosure of works
(1)The vendor must disclose in an off-the-plan contract details of any works affecting the natural surface level of the land in the lot to which the contract relates or any land abutting the lot which is in the same subdivision as the lot which to the vendor's knowledge—
(a)have been carried out on that land after the certification of the plan of subdivision and before the date of the contract; or
(b)are at the date of the contract being carried out or proposed to be carried out on that land.

(2)The vendor under an off-the-plan contract must disclose to the purchaser details of any works affecting the natural surface level of the land in the lot to which the contract relates or of any land abutting the lot which is in the same subdivision as the lot which have not been disclosed in the off-the-plan contract and which to the vendor's knowledge—
(a)have been carried out on that land after the date of the contract and before the registration of the plan of subdivision; or
(b)after the date of the contract and before the registration of the plan of subdivision have been commenced to be carried out or are proposed to be carried out on the land.

(3)The vendor must make a disclosure under subsection (2) in writing as soon as practicable after the details required to be disclosed come to the knowledge of the vendor.

(4) If—
(a)any works referred to in subsection (1) or (2) have been, are being or are to be carried out at the direction of a municipality or public authority; and
(b) the vendor has been required to submit plans of the works or proposed works to the municipality or public authority—
the vendor must—
(c)in the case of a disclosure under subsection (1), include a copy of the plans in the off‑the-plan contract; and
(d)in the case of a disclosure under subsection (2), provide the purchaser with a copy of the plans at the time of that disclosure.

(5) If the vendor under an off-the-plan contract knowingly or recklessly—
(a)supplies false information to the purchaser under this section; or
(b)fails to supply all the information required to be supplied to the purchaser under this section—

the vendor shall be guilty of an offence and liable to a penalty of not more than 50 penalty units.

Special condition 17(4)(c) of the contracts of sale acknowledges this statutory obligation. It provides that if any works affecting the natural surface level of the lot are proposed after the day of sale, the vendor will provide disclosure in accordance with s 9AB(2) of the Act.

The purchaser says that it was entitled to rescind the contracts because the vendor failed to comply with its disclosure obligation under ss 9AB(2), 9AB(3) and 9AB(4). The vendor relies on s 9AE(1) of the Act. It follows that:

If the vendor under an off-the-plan contract fails to comply with section 9AA(1) or (2) or 9AB the purchaser may rescind the off-the-plan contract at any time before the registration of the plan of subdivision.

Furthermore, the purchaser says that given its right to rescind the contracts, it is entitled to recover its deposits under s 9AF of the Act and interest accrued on the deposits in accordance with special condition 8.4 of the contracts. Special condition 8.4 authorises the vendor solicitor to hold the deposit in an interest bearing trust account with a bank. Further, if the contract is voided through no fault of the purchaser, then interest that has accrued on the deposit will accrue for the benefit of and be paid to the purchaser.

Ultimately, the real issue in dispute is whether the vendor’s purported disclosures met its disclosure obligation under s 9AB of the Act. In particular, whether the disclosure was made:

(a) to the purchaser;

(b) as soon as practicable; and

(c) with the requisite details.

Evidence

The purchaser holds real estate investments and develops property. It is a landlord of residential and retail property.[1]
[1]Affidavit of Lee-Anne Wilson sworn 16 June 2023, [6] (‘first Lee-Anne affidavit’).

The vendor is a property developer, responsible for subdividing and selling blocks of land in Portsea.[2] The subject land consists of two lots under proposed subdivision (Lot 111 and Lot 112).
[2]Affidavit of Warwick Wilson affirmed 13 June 2023, [6] (‘Warwick affidavit’).

The purchaser relies on the following affidavits:

(a) the affidavit of its solicitor, Andew Paul Kennedy, sworn 24 February 2023 (‘Kennedy affidavit’);

(b) the affidavits of Lee-Anne Wilson sworn 16 June 2023 (‘first Lee-Anne affidavit’) and 11 July 2023 (‘second Lee-Anne Affidavit’).

Ms Wilson deposes that she is the Head of Portfolio at Ondas Management Pty Ltd (‘Ondas’). Ondas is a related entity of the purchaser; the companies have the same directors. It managed the lots for the purchaser.

The vendor relies on the following affidavits:

(a) the affidavit of Warwick McLeod Wilson affirmed 13 June 2023, filed by the vendor (‘Warwick affidavit’), noting that the parties agreed prior to the hearing that paragraph 15 of the Warwick affidavit is struck out under the hearsay rule; and

(b) the affidavit of its solicitor, Nikolas Joseph Kalcic, affirmed 9 July 2023 (‘Kalcic affidavit’).

Mr Wilson (no relation to Ms Wilson) deposes that his role is to act as a facilitator for the vendor to organise the relevant consultants and agents to carry out the subdivision and sale of the lots.[3]
[3]Ibid.

The evidence before the Court is by affidavit. There was no oral evidence.

Background

The subject property is located at 183 Hotham Road and Wildcoast Road, in Portsea, Victoria. The land has been owned by Mr Wilson’s family for 60 years.[4]
[4]Ibid.

On 27 June 2021, the vendor and purchaser entered into contracts of sale for two lots of the land, being Lot 111 and Lot 112 (the ‘lots’).

Lot 111 was purchased for $4,400,000.[5] The deposit comprised 10% of the price payable, being $440,000.
[5]Exhibit “APK-1” to the affidavit of Andrew Paul Kennedy sworn 23 February 2023, 4 (‘Kennedy affidavit’).

Lot 112 was purchased for $4,850,000.[6] The deposit comprised 10% of the price payable, being $485,000.
[6]Ibid 130.

The contracts of sale were signed by Robin Khuda, director of the purchaser and Caron Wilson-Hawley, for and on behalf of the vendor. Under the Particulars of Sale in the contracts, Mr Khuda provided contact details, including a postal address in Sydney and an email address containing his name. The Particulars of Sale also contained the contact details of the purchaser’s legal practitioner.[7]
[7]Ibid 4, 130.

Settlement was stipulated by the contracts as being ‘due 14 days after receiving written notification of registration of the Proposed Plan of Subdivision’.[8]
[8]Ibid 5, 131.

Communications after the contracts of sale were entered

The purchaser’s related entity, Ondas, engaged Civia Pty Ltd (Civia) to develop the lots. S. Smith Builders Pty Ltd (‘Smith Builders’) were retained to coordinate design activities. Smith Builders retained Wolveridge Architects (‘Wolveridge’) to complete design works for the purchaser.[9]
[9]First Lee-Anne affidavit, [7]–[9].

Hamish Opray is a real estate agent for the vendor.[10]
[10]Warwick affidavit, [7].

On 10 November 2021, Ms Smith of Smith Builders emailed Mr Opray, noting that a feasibility study was being prepared for the purchaser concerning the lots and seeking details related to road engineering.[11]
[11]Ibid [12].

On 12 November 2021, Mr Opray emailed Ms Smith, copying in Steven Smith (of Smith Builders), Mino Howard (of Civia) and Jerry Wolveridge (of Wolveridge). Mr Opray attached a number of documents to the email (the ’12 November 2021 email’).[12] Mr Opray wrote the following in the email body:
[12]Exhibit “WMW-1” to the Warwick affidavit, 8–17.

Hi Vicki
Please see information below and attached from the Tintagel vendors per your request.
Many thanks,
Hamish
-
Hamish,
Please find attached relevant road and services engineering plans in the following order:
Overall Layout Plan
·        Pavement Longitudinal Section
·        Road Cross Sections x 2
·        Sewer Layout Plans x 2
·        Watermain Layout Plans x 2
I hope these are of assistance.[13]

[13]Ibid 8.

Included in these attachments were select sheets from Not for Construction road and service engineering plans, topographically detailed and A3 sized, and dated 23 August 2021 (the ’23 August 2021 Not for Construction Plans’).[14] The sheets were numbered and so it was evident only some of the plans had been provided. The sheets were numbered as follows: Sheet 2 of 16, Sheet 3 of 16, Sheet 4 of 16, Sheet 5 of 16, Sheet 2 of 4, Sheet 3 of 4, Sheet 2 of 3, Sheet 3 of 3.[15] The 23 August 2021 Not for Construction Plans, in the vendor’s submission, substantially reflected the surface level works ultimately undertaken on the lots, despite the plans not being provided in their entirety.
[14]Ibid 10–17.
[15]Ibid.

On 14 January 2022, Ms Smith emailed the vendor’s real estate agent, Mr Opray, copying in Mr Howard of Civia, and Mr Smith. Mr Howard is referred to as the Project Manager for the ‘property owner’ in this correspondence.[16]
[16]Warwick affidavit, [16].

On 11 July 2022, Mr Howard emailed Mr Opray regarding tree locations on the boundaries of the lots and swimming pool permits.[17]
[17]Ibid.

On 17 August 2022, Mr Howard emailed Mr Opray attaching the 23 August 2021 Not for Construction Plans (described above), requesting the latest civil drawings for the subdivision and noting that he had just left a voicemail with Mr Opray.[18]
[18]Ibid.

On 31 August 2022, Mr Opray emailed Ms Smith and Mr Howard (the ’31 August 2022 email’) enclosing a copy in PDF and CAD[19] format of the drawings of the Council approved engineering plans dated 24 December 2021 (the ’24 December 2021 Council Approved Plans’).[20] The documents included a letter of approval from the Council and A3 design sheets. Evidently, they were initially dated 3 September 2021 but later updated to 20 December 2021. The design sheets state ‘update per council audit’. The entirety of the A3 design sheets (16 sheets) comprising the relevant plans are enclosed to the letter. This is evident from the pagination at the bottom right and bottom middle of the sheets.[21]
[19]Also referred to as DWG format documents.
[20]Warwick affidavit, [14]; Exhibit “WMW-1” to the Warwick affidavit, 18–38.
[21]Exhibit “WMW-1” to the Warwick affidavit, 22–38.

In the 31 August 2022 email body, Mr Opray wrote:^[22]

Hi Mino & Vicki,
I’ve also received today the attached files (PDF and DWG format) and below correspondence from our vendors’ engineers FYI.
Hopefully this is what you need.
Many thanks,
Hamish

[22]Ibid 18–19.

The bottom of the email contained the following disclaimer:[23]

Disclaimer
The plans attached have been drawn for purposes separate and unrelated to house, block and landscape design. It is highly recommended you do your own surveys and research to attain the information you require. Please note the sharing civil and engineering plans has in the past resulted in adverse outcomes when relied upon for purposes other than their explicit purpose. Additionally these plans are subject to change at any time including during the construction period. No liability will be assumed for any adverse impacts occurring as a result of relying on these plans. Finally, it is unusual to receive requests for such plans and we would appreciate if you could please undertake your own research in the future.

[23]Ibid.

On 14 September 2022, Mr Howard emailed Mr Opray proposing to pivot the building envelopes on the lot with respect to surrounding vegetation and advice from a bushfire consultant.[24]
[24]Warwick affidavit, [17]; Exhibit ”WMW-1” to the Warwick affidavit, 53.

On 5 October 2022, Mr Howard emailed Mr Opray stating that he was about to lodge town planning application for the lots and seeking consent from the vendor to do so.[25]
[25]Warwick affidavit, [17]; Exhibit ”WMW-1” to the Warwick affidavit, 54.

On 1 November 2022, Mr Howard emailed Mr Opray seeking the vendor’s signature on the planning permit applications for the lots.[26] Mr Howard enclosed some consent letters for the vendor’s execution.[27]
[26]Warwick affidavit, [17]; Exhibit ”WMW-1” to the Warwick affidavit, 55.
[27]Warwick Affidavit, [17]; Exhibit ”WMW-1” to the Warwick affidavit, 56–7.

On 18 November 2022, Mr Opray emailed Mr Howard enclosing typed letters signed on behalf of the vendor, by its director Ms Wilson-Hawley, consenting to the applications for planning permits for the lots.[28]
[28]Warwick affidavit, [18]; Exhibit ”WMW-1” to the Warwick affidavit, 58–60.

Surface level works

On 1 October 2022, the surface level works, substantially in accordance with the 24 December 2021 Council Approved Plans, were commenced.[29] The works were completed on 24 December 2022.^[30]
[29]Exhibit “APK-1” to the Kennedy affidavit, 253–68 (letters between the parties’ solicitors pre-issue show agreeance).
[30]Ibid 257–8.

Purchaser realises the impact of the surface works

On 5 October 2022, Ms Wilson of Onda received an email from Mr Howard of Civia. In this correspondence, Mr Howard forwarded an email from Katie Peros of Wolveridge dated 16 September 2022, attaching screenshots of a 3D model of the land.[31] The 3D model was created by Wolveridge with the benefit of the CAD format drawings enclosed with the 31 August 2022 email. The 3D images depicted the impact of the proposed new road and showed the extent of the earth fill to be placed on the land as part of the road works. Mr Howard wrote that the proposed fill would likely increase Lot 111 by 1.5m and Lot 112 by 2.5m.[32] Ms Wilson says this was the first notice the purchaser had of the impact of the surface level works.[33]
[31]Exhibit “LAW-1” to the first Lee-Anne affidavit, 23.
[32]First Lee-Anne affidavit, [10]–[12].
[33]Ibid [10]–[13].

Mr Howard wrote:^[34]

I meant to speak to you about this email.
The attached image shows the extent of the new road (Wildcoast Rd) at Portsea. This information was provided to us by Hamish, the agent.
You can see the yellow portions are new fill areas to support the road and impact our site(s). I feel this is a decent imposition and will impact the extent of landscaping design and likely there will be covenant on the land.

[34]Ibid [13].

On 6 October 2022, Ms Wilson received an email from Mr Howard expressing further concerns regarding the impact of the surface level works.[35] He wrote:

This needs more investigation to understand what was disclosed. If this is drawing is accurate, this is clearly affecting our lots.

[35]Ibid.

On 11 October 2022, Ms Wilson received a further email from Mr Howard stating that he had spoken to Wolveridge, and that they had advised that one of the lots would need to be raised by up to one metre to avoid a ‘sunken house feeling’.[36] Between 5 and 13 October 2022, Ms Wilson recalls, as best as she can, that she and Mr Howard spoke about the surface level works on at least one occasion.[37]
[36]Ibid [16].
[37]Ibid [17].

On 9 November 2022, Mr Howard emailed Ms Wilson, forwarding another email from Ms Smith of the same date, attaching a DropBox link with photos. The photos showed the extent of the surface level works that were underway.[38] Mr Khuda, director of the purchaser, was copied into this email.
[38]Ibid [18].

The purchasers’ consultants had progressed development plans for the lots. Ms Wilson deposes that the likely impact, of the surface level works is as follows:^[39]
[39]First Lee-Anne affidavit, [5]–[6].

(a) due to the unexpected height of the fill that has been placed on the land, to keep any dwelling at its planned height relative to the road, the dwelling would need to be raised by up to one metre;

(b) the alternative is for the dwelling to be sunken relative to the road, which would tend to make it less desirable to prospective purchasers and give it less street appeal;

(c) due to the height limit on development on the land, if any swelling on Lot 111 needs to be raised so that it is not sunken, it might not be possible for the dwelling to have two storeys, as planned; and

(d) the fill on both lots is likely to substantially impede the purchaser’s ability to landscape the land.

Communications between the parties’ solicitors from 22 December 2022

On 22 December 2022, solicitors for the purchaser wrote to the solicitors for the vendor, stating that the purchaser had a proper basis to rescind the contracts under s 9AE of the Act for failure to comply with the requirements of ss 9AB(1)–(4) of the Act. The purchaser gave notice that the purchaser intended to terminate each of the contracts in accordance with s 9AE of the Act unless the vendor provided a legitimate justification in writing for its failure to comply with the requirements of s 9AB by 6 January 2023.[40]
[40]Exhibit “APK-1” to the Kennedy affidavit, 253–6.

On 20 January 2023, solicitors for the vendor wrote to solicitors for the purchaser, refuting that the vendor had contravened its obligation under ss 9AB(2) and 9AB(3) of the Act, and refuting that the purchaser had an entitlement to rescind the contracts under s 9AE of the Act. The solicitors for the vendor stated that to avoid doubt, the vendor would provide a ‘formal disclosure and notification of the Surface Level Works shortly’, stating also that the surface level works were completed on 24 December 2022.[41]
[41]Ibid 257–8.

On 30 January 2023, the solicitors for the purchaser wrote to solicitors for the vendor, enclosing a Notice of Rescission of Contract of Sale for both lots, citing non-compliance with ss 9AB(1)–(4) of the Act.[42]
[42]Ibid 259–62.

On 14 February 2023, solicitors for the purchaser wrote to solicitors for the vendor, requesting return of the deposits paid and interest.[43]
[43]Ibid 263–4.

On 17 February 2023, the solicitors for the vendor wrote to the purchaser, disputing the validity of the Notices of Rescission. By additional letters of the same date, they ‘formally’ disclosed the works that the vendor had undertaken on the land (the ’17 February 2023 letters’).[44] Enclosed with these letters were the 24 December 2021 Council Approved Plans.
[44]Ibid 268–305.

On 27 February 2023, the purchaser filed an originating motion in this Court.

Relief sought by the purchaser

The purchaser seeks the following relief:

(a) a declaration that the vendor failed to comply with ss 9AB(2), 9AB(3) and/or 9AB(4) of the Act;

(b) a declaration that by notices dated 30 January 2023 the purchaser validly rescinded the contracts under s 9AE(1) of the Act;

(c) a declaration that the purchaser is entitled to the immediate return of the deposits under the contracts under either s 9AE(1)(b) or, alternatively, s 9AF(2); and

(d) an order that the vendor returns the deposits to the purchaser, together with interest in accordance with special condition 8.4 of the contracts.

Overview of Submissions

The parties agree that the surface level works warranted disclosure to the purchaser under s 9AB of the Act. The purchaser places further reliance upon special condition 17 of the contracts. Special condition 17.4(c) states:

If such works [affecting the natural surface level of the Lot or any land abutting the Lot which is in the Plan of Subdivision] are proposed after the Day of Sale, the Vendor will provide disclosure in accordance with section 9AB(2) of the Act as soon as practicable after the details required for disclosure come to the knowledge to the Vendor.[45]

[45]Ibid 15, 141.

The vendor regards the obligation to be statutory rather than contractual.

As to the timing of disclosure, the purchaser accepts that disclosure was not required at the time of signing the contracts. The contracts were entered into on 27 June 2021 and the initial surface level works plans were not substantially created until 23 August 2021 according to the vendor. Accordingly, the purchaser accepts that the surface level works were not known to the vendor at the time the contracts of sale were executed. Therefore plans and disclosure were not required to be included with the contracts of sale per s 9AB(1).

The vendor submits that it complied with its obligation by notifying the purchaser’s agents of the purchaser of the surface level works, by way of the purported disclosure, being:

(a) the 12 November 2021 email attaching the 23 August 2021 Not for Construction Plans; and

(b) the 31 August 2022 email attaching the 24 December 2021 Council Approved Plans.

The vendor submits that if the Court takes the view that one off disclosure is required, then the 12 November 2021 email and its attachments fulfilled the disclosure obligation. Alternatively, if the Court takes the view that continuous disclosure is required under s 9AB, then the 12 November 2021 and 31 August 2022 emails and attachments together fulfilled the disclosure obligation. The vendor submits that exquisite detail was provided to the purchaser’s ostensible agents, by way of the 23 August 2021 Not for Construction Plans and 24 December 2021 Council Approved Plans. The vendor says this was as soon as practicable and before commencement of the surface level works on 1 October 2022. The vendor submits it was reasonable to rely upon the purported authority of the purchaser’s professional consultants (Smith Builders and Wolveridge) as appropriate recipients of the disclosure.

On the other hand, the purchaser submits that the vendor did not comply with its obligation until the 17 February 2023 letters. The purchaser says these letters post-date completion of the surface level works and post-date rescission of the contracts of sale. The purchaser characterises the vendor’s purported disclosure (on 12 November 2021 and 31 August 2022) as incomplete and unlawful. The purchaser says it should not have to treat documents sent to its agents as a treasure map, and that clear prose should accompany a mandatory disclosure. Further, that disclosure should be directed to the purchaser’s nominated contact details under the contracts of sale.

The purchaser maintains that s 9AB is a strict liability provision and that it is unnecessary to show that surface level works adversely affect the land or the purchaser’s rights. It says that the works needs not be material to obligate the disclosure.

The vendor did not provide any submissions to the contrary, nor any evidence that the surface level works did not affect the land materially or at all. Here the vendor says it acted in good faith and provided details to the purchaser’s agents in advance of the surface level works. The 14 February 2023 letters ought be regarded as disclosure of the works once completed, as soon as practicable with regard to the summer holiday period. The vendor rejects the suggestion that this ‘formal disclosure’ (post-dating the surface works and service of the rescission notices) should be construed as admission there was inadequate disclosure. Rather, the vendor says the 14 February 2023 letters further signify their good faith attempts to keep the purchaser informed. As described above, the real issue in dispute is whether the vendor’s purported disclosures to the purchaser’s builder, project manager and architect met its disclosure obligation under s 9AB of the Act. This requires consideration of whether:

(a) the purported disclosures were made to the ‘purchaser’ under s 9AB(2);

(b) the purported disclosures were made as soon as practicable after the details required to be disclosed come to the knowledge of the vendor pursuant to s 9AB(3); and

(c) the purported disclosures were made with the ‘details’ required by ss 9AB(2) and (4).

The parties made detailed and helpful submissions on each of these issues both orally and in writing. Before turning to these issues, I will address an evidentiary dispute.

Mr Wilson’s evidence

The purchaser submits that an adverse inference pursuant to the rule in Jones v Dunkel[46] (‘Jones v Dunkel’) ought be drawn due to the unavailability of Mr Wilson and Mr Kalcic for cross-examination at trial.
[46](1959) 101 CLR 298 (‘Jones v Dunkel’).

On 7 July 2023, solicitors for the purchaser gave a late notice of intention to cross-examine Mr Wilson at the hearing of 12 July 2023. In the Kalcic affidavit, Mr Kalcic deposes to Mr Wilson’s prolonged ill mental health, which prevented Mr Wilson from being available to give evidence.[47] Mr Kalcic proposed he give evidence instead. Solicitors for the purchaser agreed not to cross-examine Mr Wilson. In lieu, on 11 July 2023, they gave notice that they intended to cross-examine Mr Kalcic. Late on 11 July 2023, solicitors for the vendor informed the solicitors for the purchaser that Mr Kalcic was unavailable for cross-examination as he was instructing at another trial on 12 July 2023.
[47]Kalcic Affidavit, [9].

The purchaser queried why they were not advised earlier of Mr Wilson’s mental ill health, given this meant that the vendor’s key witness was never going to be available to give evidence. The purchaser sought an explanation for this delay and was not given one. The purchaser submits this is problematic in circumstances where the vendor’s communication and compliance with the law is a subject of the dispute.

The purchaser seeks than an adverse inference be drawn that Mr Wilson has not had the capacity to do what he needed to do to comply with the law. I find this to be irrelevant. I decline to make findings on irrelevant issues.

The vendor submits that a Jones v Dunkel inference concerning Mr Wilson and Mr Kalcic’s unavailability would do little to assist with the three agreed key issues of the case in any event. I accept that submission. Key facts are agreed. This is a dispute about the interpretation and application of law.

Construction of s 9AB

The three key issues identified above are ultimately questions of statutory construction. I adopt the following principles:[48]

The principles of statutory construction are well established.[49] The starting point is the text of the statutory provision, considered in light of its context and purpose.[50] Context includes the legislative context, because the meaning of a provision must be determined by reference to the entire Act.[51] It is permissible to have regard to extrinsic materials in resolving the meaning of the text, particularly in cases of ambiguity.[52] However, legislative history and extrinsic materials cannot displace the meaning of the statutory text.[53] A court can, in determining which competing interpretation of a statute ought be adopted, have regard to the consequences of each interpretation.[54]

[48]James (a pseudonym) v The King [2023] VSCA 34, [28] (Emerton P, Kyrou and Kaye JJA).

[49]AB v Independent Broad-Based Anti-Corruption Commission [2022] VSCA 283, [123] (Emerton P, Beach and Kyrou JJA); Vicinity Funds RE Ltd v Commissioner of State Revenue [2022] VSCA 176, [69]–[70] (Kyrou, Sifris and Walker JJA).

[50]SAS Trustee Corporation v Miles (2018) 265 CLR 137, 149 [20] (Kiefel CJ, Bell and Nettle JJ), 157 [41] (Gageler J), 162–3 [64] (Edelman J). See also Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27, 46–7 [47] (Hayne, Heydon, Crennan and Kiefel JJ).

[51]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 381 [69] (McHugh, Gummow, Kirby and Hayne JJ) (‘Project Blue Sky’).

[52]Interpretation of Legislation Act 1984 (Vic) s 35(b).

[53]Commissioner of Taxation (Cth) v Consolidated Media Holdings Ltd (2012) 250 CLR 503, 519 [39] (French CJ, Hayne, Crennan, Bell and Gageler JJ).

[54]R vYoung (1999) 46 NSWLR 681, 687–8 [15] (Spigelman CJ). See also Project Blue Sky (n 51) 384 [78] (McHugh, Gummow, Kirby and Hayne JJ); CTM v The Queen (2008) 236 CLR 440, 509 [237] (Heydon J).

There are few authorities concerning s 9AB(2) of the Act.[55] However, in Hera Project Pty Ltd v Bisognin (‘Hera Project’), Riordan J made relevant statements of principle when considering s 9AD(3) of the Act:[56]

In my opinion, it is not appropriate to give s 9AD(3) of the Sale of Land Act 1962 a restrictive interpretation substantially for the reasons submitted on behalf of the purchaser.
In particular, I consider that reading the subsection in its legislative context supports the contention that the provisions were introduced for the benefit of purchasers particularly in circumstances when a proposed sale of land is delayed while awaiting registration of a plan of subdivision. I accept the purchaser’s submission that such an intention is readily inferred from ss 9AA, 9AAA, 9AB, 9AC, 9Ae, 9AF and 9AG, which were also introduced into the Principal Act by the Sale of Land (Allotments) Bill 1985.
If necessary, the legislative purpose inferred from the provisions of the Principal Act, and the Sale of Land (Allotments) Bill 1985 in particular, is supported by the second reading speech in which the Minister for Agricultural and Rural Affairs stated that the amendments were the result of a report on the Subdivision of Land Taskforce, which made recommendations ‘primarily designed to simplify the subdivision procedure and thereby reduce the end cost to the purchaser’.

[55]See Hera Project Pty Ltd v Bisognin (No 5) [2017] VSC 383 (Riordan J) (‘Hera Project’); D’Souza v Wedgewood Road Hallam No 1 Pty Ltd [2010] FCA 765 (Gordon J); Everest Project Developments Pty Ltd v Mendoza [2008] VSC 366 (Hargrave J); Clifford v Solid Investments Australia Pty Ltd [2009] VSC 223 (Bongiorno J).

[56]Hera Project (n 55) [40]–[42].

Both parties accept s 9AB has a consumer protection purpose.

Was disclosure made to the purchaser?
Submissions

The purchaser contends that disclosure under s 9AB(2) must be made to the purchaser as opposed to the purchaser’s consultants.

The purchaser submits that the contract does not permit the vendor to give notices via the purchaser’s consultants. Further the purchaser submits that special condition 33.1 of the contracts clarifies that disclosure under s 9AB must be addressed to the purchaser’s contact details provided in the contracts, being the email address pertaining to Mr Khuda and a PO box in Sydney, or the purchaser’s legal practitioner.

Special condition 33.1 with respect to service of notices under the contracts, states:

33.1Any notice, approval, consent or other communication under this Contract:
(a) must be in writing; and
(b) must be delivered and left at the address of the addressee, or sent by prepaid post or by facsimile or by email to the address of the addressee specified in this Contract or if the addressee has notified another address to that new address.[57]

[57]Exhibit “APK-1” to the Kennedy affidavit, 25, 151.

The vendor contends that service personally on the purchaser is not required under s 9AB of the Act. Instead, it is sufficient at law, and on the proper construction of the Act, that a properly authorised agent can receive that disclosure on behalf of the purchaser. The vendor submits that special condition 33.1 pertains to notice ‘under this contract’ and does not inform the statutory obligation.

The vendor says that if a statute allows or requires something to be done by a particular person, the rules of agency are effectively incorporated into the statute. The vendor says this means it is permissible for that thing to be done by the agent, unless the statute makes clear that an agent cannot do that thing.[58]
[58]Citing Bega v Lauvan Pty Ltd [2019] NSWCA 36, [42]–[43] (Leeming JA); Jackson & Co v Napper (1886) 35 Ch D 162 (Stirling J) (‘Jackson’).

The vendor says that, alternatively, if special condition 33.1 applies, then 33.1(b) demonstrates that new addressees, including email addresses, can be nominated. The vendor submits that by the email communications of Smith Builders with the vendor’s agent Mr Opray, the purchaser notified another address for service of information relating to development of the land.

Consideration

Section 9AB requires that the disclosure be made ‘to the purchaser’. ‘Purchaser’ is given an inclusive definition in s 2 of the Act:

purchaser includes any person from time to time deriving an interest under a contract of sale from the original purchaser under the contract;

I adopt the following principles on agency. In Jackson & Co v Napper, Stirling J stated:

I take it that, subject to certain well-known exceptions, every person who is sui juris has a right to appoint an agent for any purpose whatever, and that he can do so when he is exercising a statutory right no less than when he is exercising any other right … And I understand the law to be that, in order to make out that a right conferred by statute is to be exercised personally, and not by an agent, you must find something in the Act, either by way of express enactment or necessary implication, which limits the common law right of any person who is sui juris to appoint an agent to act on his behalf. Of course, the Legislature may do so, but, prima facie, when there is nothing said about it a person has the same right of appointing an agent for the purpose of exercising a statutory right as for any other purpose.[59]

[59]Jackson (n 58) 172–3.

The principles of agency are not ousted from s 9AB such that disclosures under the section could only ever be made to the purchaser personally. On the proper construction of s 9AB, disclosure must be made to the purchaser or any person nominated by them to receive communications on their behalf as the purchaser of the land. Such authority should be conferred expressly, for instance in the contract of sale.

It would not be compliant with s 9AB for disclosures to be made to any agent of the purchaser. The disclosure must be to an agent who has authority to act in their position as purchaser, or to receive notices and disclosure on the purchaser’s behalf, or to specifically receive disclosures under s 9AB.

This construction aligns with the purpose of s 9AB as it protects the purchaser by ensuring that they are notified of any surface level works which may affect the lot which they are purchasing.

The construction above is reinforced by reference to the definition of ‘purchaser’ in s 30(1) of the Act. That definition does not apply to s 9AB. As discussed above, the definition of purchaser in s 2 applies. In contrast to s 2, s 30(1) expressly refers to agents and nominees. Section 30(1) provides:

purchaser includes any person acting as agent for the purchaser or a nominee of the purchaser;

If the reference to purchaser in s 2 was intended to include any agent of the purchaser there would be little need for the additional definition of purchaser in s 30(1) of the Act.

The contracts of sale identify the purchaser as ‘Asia Digital Investments Pty Ltd ATF Asia Investment Trusts’. Under the Particulars of Sale, the contact details of the purchaser and their legal practitioner or conveyancer are provided.

If the purchaser effectively nominated a different address or contact under special condition 33.1, I would consider disclosure to this address or contact sufficient to satisfy the disclosure requirements under s 9AB given this is effectively authorising the manner in which communications are to be given to the purchaser. This is reinforced by the fact that s 9AB is effectively reproduced in special condition 17 of the contracts of sale.

Evidently, the purported disclosures were not made to the purchaser directly, nor to the solicitors acting for them.

The vendor submits that the purported disclosures were made to Vicki Smith and Steve Smith of Smith Builders, Mr Howard of Civia and Mr Wolveridge, and that this was sufficient to comply with their disclosure obligation under s 9AB.

Ms Wilson deposed in her affidavit that:[60]

The assets held by Asia Digital and managed by Ondas relevantly include the two adjacent plots of land that are the subject of this dispute (together, the ‘Land’).
Because Ondas is a portfolio manager rather than a property developer in its own right, it engaged Civia Pty Ltd (‘Civia’) to develop the Land. Civia is a development and property management company. It is not a related entity of Ondas or Asia Digital.
S Smith Builders Pty Ltd (‘Smith Builders’) were retained to co-ordinate design activities. Wolveridge Architects (‘Wolveridge’) were retained by Smith Builders to complete design works for the project.

[60]First Lee-Anne affidavit, [7]–[9].

I reject the vendor’s submission that the communications by Mr and Ms Smith, Mr Howard and Mr Wolveridge to the purchaser’s agent Mr Opray constituted notice to the vendor of a new address for service of notices under the contract or Act. There was no express notification. There is no evidence that any of them had the actual authority of the purchaser to act as and receive communications as or for the purchaser of the land nor for the specific purposes of s 9AB. It may be that they were the purchaser’s agents in some respects, however:[61]

it is never sufficient as a matter of law to simply say that X is agent – one must look further and inquire: ‘X is agent to do what?’.[62] The terms of the agency, as agreed between principal and agent, dictate the scope of the agent’s authority.[63]

[61]G E Dal Pont, The Law of Agency (LexisNexis, 4^th ed, 2020) 148 [7.1].

[62]Netage Pty Ltd v Cantley (1865) 6 IPR 200, 212–13 (Young J).

[63]Upjohn v Illingworth (1928) 29 SR (NSW) 4, 7 (Street CJ).

Furthermore, authority to receive disclosures which the Act requires to be made to the purchaser could not be implied by their positions as the purchaser’s builders, project manager or architect. While it may be that they had the purchaser’s authority to communicate with the vendor to obtain plans and other documents to assist them in their work, there is no evidence that they had authority to receive them for any other purpose, let alone as the purchaser for the purpose of disclosures under s 9AB.

The purchaser did not nominate an alternative contact under special condition 33.1. In the circumstances, I reject the vendor’s submission that an inference can be drawn from it that the purchaser did in fact give authority to act on its behalf to Mr and Ms Smith, Mr Howard and Mr Wolveridge.

The vendor contends that Vicki and Steve Smith had ostensible authority. It is submitted that this type of authority arises because Smith Builders were given the authority to investigate the road works, and thus the purchaser encouraged provision of information to Smith Builders respecting those works.

Ostensible authority arises from the principal holding the agent out as having authority. In G E Dal Pont’s Law of Agency, it is stated:

As it is the principal who is estopped from denying an ostensible authority, it is the principal’s representation or ‘holding out’, not any representation or ‘holding out’ by the agent, that gives rise to such authority. To this end, it has been said that ‘[n]o representation by the agent as to the extent of his authority can amount to a “holding out” be the principal’. Once it is established that the agent has acted without actual authority, the court focuses on the conduct of the principal in determining whether he or she should be estopped. No assertion of authority by the agent will suffice in and of itself; else an agent ‘could simply give himself authority’. An agent cannot, by doing no more than asserting an authority which exceeds the limits stipulated by the principal and notified to the contracting party, create an apparent or ostensible authority wider than that. What the agent asserts may constitute a warranty of authority, which avails against the agent, not the principal. Hence, it is not enough for a third party to show reliance on the agent’s representation of the authority from the principal; what must be shown is reliance on the representation of the principal that the agent had the necessary authority.[64]

[64]Dal Pont (n 61) 473 [20.32] (citations omitted).

Here, there is no evidence of any communication from the purchaser that cloaks Smith Builders with authority to act on its behalf. The vendor relies upon the email sent by Ms Smith to Mr Opray on 10 November 2021, in which it was stated:

We are preparing a feasibility study for the owners of the above property and need any details you have with regard to road engineering. That is, are there cuts and retaining in this area as this will affect our entry point to the site. Anything you could obtain would be greatly appreciated.[65]

[65]Exhibit “WMW-1” to the Warwick affidavit, 7.

This falls far short of ostensible authority to receive disclosures under the Act. On the evidence before the Court, the purchaser did not themselves ‘hold out’ that Smith Builders had any authority to receive plans in any capacity let alone as ‘purchasers’ for the purpose of s 9AB.

Accordingly, the sending of plans to Vicki Smith and Steve Smith of Smith Builders, Mr Howard and Mr Wolveridge cannot amount to disclosure to the purchaser for the purposes of s 9AB. The purported disclosures therefore did not satisfy the defendant’s disclosure obligation under s 9AB.

On this ground, the purchaser has established a valid ground for rescission.

As a matter of completeness, I will address the other grounds.

Was disclosure made as soon as practicable?
Submissions

The purchaser submits that the disclosure obligation in s 9AB(2) is time sensitive and the disclosure must be made in writing ‘as soon as practicable’ after the details come to the knowledge of the vendor. The purchaser contends that s 9AB(2) effectively imposes a continuous or staged disclosure obligation whereby the details of surface level works must be made when relevant works are proposed, have been commenced and have been carried out.

Accepting that there may be changes in proposed works, the purchaser contends that it is not necessary that every iteration of such change needs to be disclosed. However, the purchaser says that disclosure must be made where there are material changes to the works affecting the relevant lot or any land abutting it, such that what was previously disclosed is no longer what is proposed.

The purchaser submits that if the prospect that the works may change means they do not need to be disclosed, there would be no obligation to disclose works until the absolute final version of the works is confirmed, which could conceivably not be until after works have commenced.

The purchaser submits that the vendor failed to disclose the details of the proposed surface of level works as soon as practicable pursuant to s 9AB(2)(b) of the Act. The purchaser submits that details of the proposed works were known at least as early as 23 August 2021, when the 23 August 2021 Not for Construction Plans were created.

The 12 November 2021 email enclosed the 23 August 2021 Not for Construction Plans. However in the purchaser’s submission, the plans failed to draw attention to the fills pertaining to the surface level works and the fills themselves were not labelled. The covering email did not draw any attention to the fills either. The purchaser says that the mere sending of the plans could not fulfil the disclosure obligation. Further explanation of the significance of the plans was required.

With respect to proposed plans, the purchaser submits that there was material difference between the 23 August 2021 Not for Construction Plans and the 24 December 2021 Council Approved Plans, so as to require explicit updated disclosure. The purchaser regards the vendor’s concerns about continuous disclosure of iterative changes as irrelevant in this case, where explicit and timely disclosure of plans already in existence would have sufficed. Further emails as material updates came to hand to the effect of ‘for your information’ does not impose a substantive time or financial burden on vendors.

Further, the purchaser submits that vendor failed to disclose details of the works that had been carried out on the land after their completion pursuant to s 9AB(2)(a). The works were completed, on the vendor’s own assertion, on 24 December 2022. The vendor did not notify the purchaser of the surface level works that had been carried out on the land until 17 February 2023.

On the other hand, the vendor submits that the statutory language reveals that it is the ‘details’ of the works which must be disclosed, and not merely the fact that works are proposed or the general nature of the works. Thus, the vendor submits that disclosure is only required when the vendor has a precise knowledge of the details so that accurate disclosure can be effected.

The vendor submits that a vendor cannot have knowledge of the detail of work until two prerequisites are satisfied:

(a) first, the plans have to exist that record or embody the scope and nature of the work in detail, and even once plans are created the vendor cannot have knowledge of the detail of the work until satisfied that the plans will not change and such satisfaction may not be attained until a much later time; and

(b) second, if a municipal authority is involved in the process and it is clear from the dealings with the authority that there is a real (as distinct from a remote) chance that plans may change, then the vendor cannot have ‘knowledge’ of the detail of the work until the plans are approved.

The vendor says the plans disclosed with the 12 November 2021 email were still under consideration and had not been approved by Council.

The vendor contends that Council’s letter approving the plans suggests the scope of work may change.[66] The vendor refers to Council’s reference to obtaining further permits, requiring inspection before works commence and warning that if problems were encountered, they would need to be resolved to the satisfaction of Council. The vendor says that there was a real prospect that the details of the works would change again. Further, the 31 August 2022 email included a significant disclaimer paragraph (described above) citing that the plans were subject to change. The vendor says they did not have knowledge, to the requisite degree, of the proposed works. There was no certainty that the surface level works would be executed in accordance with those plans.
[66]Exhibit “WMW-1” to the Warwick affidavit, 20–1.

The vendor submits that the two different sub-paragraphs in s 9AB(2) deal with two distinct situations, one where works are completed or are underway, and the other where works are proposed to be carried out. That is, there are alternative times. This weighs against interpretation of an obligation of continuous disclosure. The vendor says that such an obligation would be overly onerous on vendors and such a construction could cause real issues in terms of compliance. This is particularly concerning when s 9AB contains a criminal sanction.

The vendor contends that the beneficial interpretation of s 9AB must be moderated by s 9AB(4) because it contains a criminal sanction and therefore the principles of construction for penal statutes apply. The vendor contends that this was not a matter considered by Riordan J in Hera Project. The vendor submits that given the significant consequences of breaching the disclosure obligation, including the potential for criminal liability, a vendor should not be regarded as having the knowledge of the extent of the plans or the scope of the surface works until it is quite clear that the works will not change.

The vendor submits that interpretation of s 9AB must take into account the lack of remedy available to the purchaser if the vendor does comply with their disclosure obligation. That is, should the vendor have made their disclosure earlier, the purchaser would not have any right to rescind the contracts if what they learned disappointed them. This can be contrasted with ss 9AC, 32K(2) and (4) of the Act. Section 9AC entitles a purchaser to rescind a contract within 14 days of being notified of an amendment to the plan of subdivision which will materially affect the lot to which the contract relates. Section 32K(2) entitles a purchaser, in circumstances where a vendor provided a false s 32 statement or failed to provide a s 32 statement prior to signing a contract, to rescind a contract based on the information supplied once a compliant s 32 statement is received. Section 32K(4) stipulates that notwithstanding s 32K(2), the purchaser may not rescind a contract if the court is satisfied that the vendor has acted honestly and ought fairly to be excused for the contravention, and, the purchaser is in as good as a position if all the relevant provisions of the Division have been complied with. The vendor considers it notable that no such defences are available to the vendor under s 9AB.

In this way, the vendor submits that interpretation of timing ought to reflect this contrast by having careful regard for balancing the interests of ease of subdivision as well as protection of the purchaser. Although the vendor might be deemed to have been a little late in making their disclosure, this is immaterial under the provision, given the negligible difference in rights to the purchaser should compliance have been met. The vendor suggests that s 9AB provisions do not exist to inform the purchaser of the scope of works so that they can assess their position and potentially terminate the contracts, because that right to terminate is missing. This ought be taken into account in construing s 9AB.

Consideration

Section 9AB(3) provides that a disclosure under s 9AB(2) must be made in writing ‘as soon as practicable after the details required to be disclosed come to the knowledge of the vendor’. Accordingly, s 9AB(3) places a positive obligation on the vendor to make disclosure in s 9AB(2). This may be contrasted with an obligation at the request of the purchaser.

Section 9AB(2) also makes clear that disclosure must be made where, after the date of the contract and before the registration of the plan of subdivision, surface level works affecting the lot to which the contract relates or any land abutting the lot within the same subdivision:

(a) have been carried out on the land;

(b) have been commenced; or

(c) are proposed to be carried out on the land.

The time when a vendor obtains knowledge of the details of relevant works that are ‘proposed’ to be carried out on the land will, of course, depend on the circumstances of a particular case.

However, I reject the contention that a vendor cannot have knowledge of the details of proposed surface level works until satisfied that the plans will not change. Where plans are prepared and decided upon, works would be ‘proposed’ notwithstanding that they may change before the time they are commenced. Accordingly, a vendor would be required to make disclosure of the details of the relevant works as soon as reasonably practicable after those details have been sufficiently decided upon.

While s 9AB(4) deals with works that have been, are being, or are to be carried out, at the direction of a municipality or public authority, it does not limit the disclosure obligation under s 9AB(2). Instead, it imposes an additional obligation on the vendor to disclose any plans of the works or proposed works they have been required to submit to the municipality or public authority at the time it makes disclosure under s 9AB(2).

There is no suggestion in s 9AB(2)(c) that council approval is a pre-requisite for works to be disclosed. The text contains no such restriction. This may be compared with the express language in s 9AB(4)(b). It requires the vendor to provide the purchaser with a copy of the plans in circumstances where the vendor has been required to submit plans of the works or proposed works to the municipality or public authority.

I reject the vendor’s submissions that the Council’s letter approving the 24 December 2021 Council Approved Plans meant that details of the works were not sufficiently knowable to the vendor. The fact is Council did approve the plans. It did so with the usual warnings about the need for continued steps to maintain compliance. This was a green light letter, not a barrier to undertaking the surface works. It would be contrary to the beneficial reading of this provision to treat such a letter as a barrier to vendors making disclosures under this provision.

I also reject the submissions that Mr Opray’s disclaimer in his 31 August 2022 email (cited above) showed that the vendor did not have knowledge of the details of the works. The email annexed detailed planning documents from which the purchaser was ultimately able to develop its 3D images. The 24 December 2021 Council Approved Plans contained sufficient detail as to the likely works, and indeed were details of the proposed works. This is sufficient knowability of the details of the surface level works. Disclosure was required per s 9AB.

The disclosure requirement is not ‘one-off’. The text of s 9AB does not limit disclosure in that way. If disclosure of proposed works is made and subsequently there are changes to the proposed works — whether due to an approval process or otherwise — then the vendor would then need to provide disclosure of the details of the updated proposed works. The ongoing nature of the disclosure obligation is consistent with the consumer protection purpose of the legislation. There was no evidence to support the vendor’s contention that such disclosure would place an onerous costs burden on the vendor or lead to delay of works. Indeed, it would be difficult to see how that could be the case when disclosure could occur by a letter or email communication.

It may be in some circumstances the vendor does not become aware of works until they have been commenced or in fact completed, in which case there may be no opportunity for the purchaser to make representations regarding the proposed works. The text of s 9AB envisages this. It requires the vendor to disclose the details of these works as soon as practicable after they obtain knowledge of the details of those works. The ‘details required to be disclosed come to the knowledge of the vendor’ and what will amount to ‘as soon as reasonably practicable’ after that knowledge is obtained will depend on the circumstances of the particular case.

Rescission of the sale of contract is the remedy provided pursuant to s 9AE(1) for the failure to disclose. This provides substantial relief to the purchaser, and significant cost to the vendor. On the other hand, there is no remedy available if the purchaser is simply unhappy with the proposed surface level works. I gather that the vendor views the rescission remedy harsh in the circumstances and suggests the requirement to disclose should not be interpreted onerously. With respect, this misses the mark. The text has primacy and a restrictive interpretation is not apt. Justice Riordan made clear in Hera Project that ‘the literal meaning of the text is consistent with the legislative purpose and must therefore be accepted as the legal meaning’.[67]
[67]Hera Project (n 56) [44].

Like s 9AB, s 9AD(2) contains a criminal offence and Riordan J made clear that he read s 9AD(3) in its context which includes these provisions. The text has primacy regardless of whether or not there is a criminal offence.

Similarly, I reject the vendor’s submission that s 9AB should be read restrictively because a purchaser has no remedy if unhappy with the proposed surface works. Such a construction is counter to the text and the purpose of consumer protection by transparency of disclosure.

Works affecting the natural surface level of the land in the lots to which the contracts of sale related, and land abutting the lots in the same subdivision, were proposed to be carried out from at least 24 December 2021 when the plans submitted to Council were approved by Council. As described above, these works were in fact commenced on 1 October 2022 and completed on 24 December 2022.

I reject the vendor’s submission that there was disclosure of the requisite detail by its purposed disclosure on 12 November 2021 and 31 August 2022. The cover emails did not refer to disclosure under the Act, nor disclosure of the surface level works generally. They did not adequately bring to the attention of the purchaser that works affecting the surface level of the lots were planned to be undertaken. Therefore they did not constitute disclosure of details for the purposes of s 9AB(4)(d).

On 22 December 2022, when the purchaser gave the vendor notice of its intention to rescind the contracts of sale, no disclosure under s 9AB had been made to the purchaser as required by s 9AB.[68]
[68]Exhibit “APK-1” to the Kennedy affidavit, 253-256.

In a letter dated 20 January 2023, the vendor’s solicitors wrote to the purchaser’s solicitors rejecting the purchaser’s position that it had any entitlement to rescind the contracts and relevantly stating:

2.1 We are instructed that:
(a)the Vendor commenced the Surface Level Works on 1 October 2022;
(b)the Surface Level Works were completed on 24 December 2022; and
(c)for the avoidance of any doubt and notwithstanding all the information that has already been provided by the Vendor to the Purchaser’s appointed project manager and builder, the Vendor will provide the Purchaser with a formal disclosure and notification of the Surface Level Works shortly.

2.2 Given that the:
(a)Surface Level Works were completed on 24 December 2022; and
(b)the Vendor intends to provide the Purchaser with a disclosure and notification of the Surface Level Works (including providing to the Purchaser a copy of the plan(s) of the Surface Level Works) shortly,

the Vendor has not contravened sections 9AB(2) and 9AB(3) of the Act in that the Vendor has not failed to:
(a)provide disclosure and notification of the Surface Level Works to the Purchaser;
(b)disclose details of the Surface Level Works to the Purchaser; and
(c)make such disclosure and notification of the Surface Level Works as soon as practicable after the Surface Level Works have been completed.[69]
(underline added)

[69]Ibid 257–8.

As can be seen this letter does not itself purport to be disclosure to the purchaser of the surface level works. Furthermore, even if the reference to the information already supplied to the ‘Purchaser’s appointed project manager and builder’ could in any way be said to be sufficient ‘details’ of the works for the purposes of s 9AB, the fact that it indicates that notification of the works will be given to the purchaser ‘shortly’ leaves open the possibility that the details to be disclosed would differ. As such, I would not accept that the letter of 20 January 2023 satisfied the vendor’s disclosure obligation under s 9AB of the Act. In any event, in the circumstances, the disclosure was not made as soon as practicable after the details required to be disclosed come to the knowledge of the vendor.

The letters from the vendor’s solicitor dated 17 February 2023, and cited above, did contain an adequate form of disclosure with requisite details to the appropriate person. However, it was not made ‘as soon as practicable’ after the works were proposed to be carried out, had been commenced or had been carried out. I do not accept that the summer period between 24 December 2022 and 17 February 2023 is a reasonable basis to assert that there was no undue delay in disclosing the works once completed.

Was the disclosure made with the requisite details?
Submissions

The purchaser submits that it is insufficient for a vendor to simply provide plans or other documentation containing the details of surface level works to the purchaser. Instead, the purchaser contends that a vendor must bring the fact that relevant surface level works are being proposed to the attention of the purchaser. The purchaser contends that here, the plans themselves disclosed insufficient details. CAD plans were required to enable the purchaser’s agents to create 3D models of the surface level works that sufficiently informed the purchaser of the implications of the plans.

On the other hand, the vendor says sufficient detail was provided. The vendor submits that the decision of the Federal Court in D’Souza v Wedgewood Road Hallam No 1 Pty Ltd (‘D’Souza’),[70] suggests that the provision of plans which contain the technical details of the surface level works to be undertaken is sufficient to comply with the disclosure obligation in s 9AB. It says that s 9AB does not prescribe the format of disclosure nor must a purchaser be expressly told that plans provided show relevant surface level works or that they are being provided for the purposes of the disclosure obligation under s 9AB.
[70][2010] FCA 765.

The purchaser rejects this and submits that D’Souza is not authority for the details required to be disclosed under s 9AB. It concerned an action for a misrepresentation and thus the disclosure obligation was a negative one as there only needed to be disclosure sufficient to avoid a misrepresentation to the purchaser. It contrasts this with the positive disclosure obligation under s 9AB. The purchaser says that D’Souza did not specifically consider the requisite details of surface level works but rather was concerned with whether the disclosure, in all the circumstances including the constructive knowledge of the purchaser, was sufficient to amount to a misrepresentation.

Consideration

In D’Souza, the applicants purchased a lot in a subdivision to be developed on the site of a disused quarry from the respondents. The site had a large rim around the edge of the property and a large crater of varying surface levels occupying the majority of the quarry site.[71]
[71]Ibid 5, 33 (Annexure A, photograph of disused quarry).

The applicants made allegations of common law misrepresentation and statutory misleading or deceptive conduct. They alleged there were misleading or deceptive pre-contractual representations that no fill would be required on the lot. Justice Gordon did not accept that pre-contractual representations had been made that no fill would be required on the lot.

The applicants also alleged that it was misleading or deceptive to omit a north-south cross-section of the site showing the need for fill on the lot from the contract of sale. Justice Gordon found that the north-south cross-section of the site had been omitted from the contract but that a ‘pad plan’ was also included in the contract.[72]
[72]Ibid 36 (Annexure D, pad plan).

In these circumstances, Gordon J considered whether the pad plan constituted sufficient disclosure in the contract of sale for the purposes of s 9AB(1) of the Act. Relevantly, Gordon J considered whether the contract of sale disclosed that fill was required in the following manner:[73]

What is the content of that duty of disclosure? Section 9AB does not prescribe how disclosure of the ‘detail of any works affecting the natural surface level of the land’ is to be made. This is not surprising. Only a few decided cases concern s 9AB and those that do have not addressed the issue of disclosure: see, for example, Everest Project Developments Pty Ltd v Mendoza [2008] VSC 366 at [102] to [109] and Clifford v Solid Investments Australia Pty Ltd [2009] VSC 223. For present purposes it is sufficient to note that s 9AB imposes a duty to disclose any works affecting the natural surface of the land and that even if that were not so, there would be a duty of that kind: see Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477.
…
The question that must be resolved in this matter is whether the Contract of Sale disclosed that fill was required on Lot 10 and, if so, whether that disclosure was adequately conveyed.
As noted earlier, [Special Condition (‘SC’)] 18.1 of the Contract of Sale provided that Lot 10 or parts of it may be filled land: see [25(6)] above. SC 18.3 provided that if Lot 10 was to include filling exceeding 300mm compacted depth (finished surface level), this would be indicated in the Layout Plan attached to the s 32 statement. Neither of the parties could confirm whether the plans attached to the s 32 statement were ‘layout plans’ for the purpose of SC 18.3. However, the Applicants submitted that the ‘closest thing that comes to a [layout] plan’ is that pad plan. The Respondent submitted that a ‘careful reading’ of the pad plan and the contour lines on that document showed a discrepancy between the natural surface area of the land and the proposed pad level so that fill was needed in the south-east corner of Lot 10 to raise it to pad level.
In my view, a reading of the pad plan and the Contract of Sale shows that fill was required. On the pad plan, the contours of the lot clearly show a discrepancy between the levels of the land on the subdivision and that there are some very steep slopes within the land. I accept the Respondent’s evidence that this shows the need for fill on Lot 10. This is fortified by the photograph of the undeveloped site (Annexure A) showing the varying surface levels (and in particular the large crater occupying the majority of the quarry site, of which the Purchasers were aware). Although I accept that the omitted north-south cross section would have made it abundantly clear that fill was required, the failure to include the north-south cross section did not alter what was disclosed by the Contract of Sale – that fill of more than 300mm was required on Lot 10.

[73]Ibid [76], [78]–[80].

Justice Gordon considered whether anything more than the plan was required to be disclosed: [74]
[74]Ibid [82]–[85].

Was anything more than the pad plan required? The applicants submitted (without reference to any authority) that a more detailed plan (such as a north-south cross section) was required to constitute disclosure of ‘details of any works affecting the natural surface level of the land’ for the purposes of s 9AB of the Sale of Land Act. The Respondent submitted that the provision of the pad plan in the Contract of Sale was sufficient. Although the Applicants do not assert a breach of s 32 of the Sale of Land Act, the Respondent referred to s 33(4) in support of its submission. That subsection provides:
Where the information required by any one of the paragraphs (c), (d) or (e) of subsection (2) is contained in a certificate issued by the relevant authority it shall be sufficient compliance with the requirements of that paragraph of subsection (2) if that certificate or a copy of that certificate is attached to the statement required by paragraph (a) of subsection (1) or to the contract.

The Respondent further relied on Molotu Pty Ltd v Solar Power Ltd (1989) NSW ConvR ¶55-490 where Young J stated:
The words ‘specifically disclosed’ do not necessarily carry the connotation that every detail of every affection must be plainly state in the contract.
…
… It must be noted that the word used in the Regulation is not ‘described’ but merely ‘disclosed’. That word, in the current context, appears to me to mean no more than ‘tells’…
…
It is not possible to spell out every possible matter which a purchaser might consider affects the land within cl. 5 of the Regulation … {I]t is also of no value to anybody to shower so many pieces of paper that the real message is hidden in the small print somewhere in the middle. In my view, despite the use of the words ‘specifically disclosed’ as opposed to ‘disclosed’ or ‘disclosed the substance’, it is still sufficient if the vendor indicates to the purchaser the existence of a planning scheme or plan which is a public document which affects the land and which the purchaser can examine if he or she wishes to do so.

See also Beverly Manufacturing Co Pty Ltd v ANS Nominees Pty Ltd (1978) 22 ALR 237.
I accept the Respondent’s submission. The Applicants could not and did not identify with any specificity what additional ‘details of the works’ would have been necessary. In circumstances where no pre-contractual representations were made to the Purchasers and where Mr D’Souza was (on his own evidence) an experienced businessman, I am of the view that it was reasonable for the Respondent to attach the plans that it did (which inadvertently omitted the north-south cross section but attached a pad plan which disclosed the need for fill) and for the Applicants to examine them if they wished to do so.
Having concluded that the Contract of Sale sufficiently disclosed that fill was required on Lot 10 and that no pre-contractual representations were made to indicate the contrary, the Applicants’ claim for common law misrepresentation must necessarily fail. The Applicants’ claim under s 53A of the TPA must also fail because the Contract of Sale did not falsely represent the characteristics of Lot 10.

As the purchaser submitted, D’Souza was concerned with a different question, being whether the vendor had made a misrepresentation or engaged in misleading or deceptive conduct. Moreover, the land in D’Souza was drastically different to the land at the subject of this claim, given the large crater on the disused quarry site that so clearly required levelling. The inclusion of plans in the contract of sale and the special conditions drew the purchaser’s attention to the fact that there would be surface level works on the lot. Justice Gordon held there was sufficient disclosure for that purpose, not for the purpose of fulfilling the positive disclosure obligation under s 9AB. I therefore reject the defendant’s submission that D’Souza is determinative here.

Ultimately, s 9AB(2) has a purpose of consumer protection and not all purchasers under off-the-plan contracts will be sophisticated enough to identify that surface level works affecting their lot are being undertaken by reference to plans. This suggests that disclosure of ‘details’ of s 9AB(2) was intended to include more than the mere provision of plans and that the purchaser’s attention should be drawn to the reason the plans are being provided to them. There is no requirement for a detailed annotation accompanying the plans.

The text of s 9AB(4)(d) is consistent with disclosure being express, rather than the mere provision of plans. There are distinct and separate references to the provision of the copy of plans and the disclosure: the vendor must provide the purchaser with ‘a copy of the plans at the time of that disclosure’. Accordingly, s 9AB(4)(d) contemplates that the plans will accompany the disclosure pursuant to s 9AB(2). Disclosure is directed to the purchaser. No assumptions can be made that a purchaser has specialised knowledge that would ensure they could draw an inference of proposed surface works from the provision of technical plans without reference to the purpose of the disclosure being of proposed surface level works. The vendor’s submission that any sensible contractor, engineer, project manager or architect would be on notice as to the substance of the works does not assist with determining the degree of signposting required for disclosure of proposed surface works under the provision.

I accept the vendor’s submission that the 23 August 2021 Not for Construction Plans and the 24 December 2021 Council Approved Plans contained adequate details for the purposes of s 9AB. However, there was no reference to the proposed surface works, or the intent to make disclosure pursuant to s 9AB of the Act. I find the purported disclosure did not fulfil the vendor’s statutory obligation.

The vendor ultimately provided requisite details of disclosure in the form of the 17 February 2023 letters. The 17 February 2023 letters were addressed to Mr Khuda and in accordance with the contact details provided in the contracts of sale stated:

We refer to the Contract of Sale between the Vendor and Asia Digital Investments Pty Ltd ATF Asia Digital Investments Trust (Purchaser) in respect of Lot 111 dated 27 June 2021 (Contract).
In accordance with s 9AB(2)(a) of the Sale of Land Act 1962 (Vic) (Act), the Vendor hereby discloses to the Purchaser natural surface level works which, to the Vendor’s knowledge, have been carried out on the Lots (Works).
Please find enclosed by way of disclosure, a letter from the Mornington Peninsula Shire enclosing a copy of the plans that were submitted and approved in respect of the Works (as required to be disclosed under s 9AB(4)(d) of the Act).
This letter has been served on you in accordance with the requirements of special condition 33.1 of the Contract.[75]

[75]Exhibit “APK-1” to the Kennedy affidavit, 268, 287.

However, this disclosure was not ‘as soon as practicable’ nor to the purchaser.

Conclusion

On 30 January 2023, the purchaser sought to rescind the contracts of sale. For the reasons set out above, at that time, the vendor had failed to comply with the disclosure requirements in s 9AB.

The purchaser was therefore entitled, under s 9AE(1), to rescind the contracts due to the vendor’s failure to comply with s 9AB. In accordance with s 9AF(1)(b), the vendor was immediately entitled to the return of their deposit payments.

I will make orders granting the purchaser relief, namely declarations that: the vendor failed to comply with ss 9AB(2), 9AB(3) and 9AB(4) of the Act), by notices dated 30 January 2023 the purchaser validly rescinded the contracts under s 9AE(1) of the Act, and the purchaser is immediately entitled to the return of the deposits under the contracts under s 9AF(1)(b). I will make orders for the vendor to pay the purchaser the deposit payments, together with interest in accordance with special condition 8.4 of the contracts of sale.

The parties will be given an opportunity to confer on consequential orders and costs. If necessary, I will hear submissions on costs.

[2023] VSC 565

21 September 2023