Avis v Mark Bain Constructions Pty Ltd - [2011] QSC 80

SUPREME COURT OF QUEENSLAND

CITATION:

Avis & Anor v Mark Bain Constructions Pty Ltd [2011] QSC 80

PARTIES:

BS2488 of 2007
CAROL LYNETTE AVIS
(plaintiff)
v
MARK BAIN CONSTRUCTIONS PTY LTD
ACN 010 846 385
(defendant)

BS2491 of 2007
BARNSCAPE PTY LTD
ACN 077 636 367
(plaintiff)
v
MARK BAIN CONSTRUCTIONS PTY LTD
ACN 010 846 385
(defendant)

FILE NO/S:

2488 of 2007
2491 of 2007

DIVISION:

Trial

PROCEEDING:

Claim

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

11 April 2011

DELIVERED AT:

Brisbane

HEARING DATES:

15 – 19 February 2010
31 March 2010
16 April 2010
31 May 2010 – 1 June 2010
3 June 2010
Further submissions received 15 June 2010, 22 June 2010 and 25 June 2010

JUDGE:

Atkinson J

ORDERS:

The first defendant in BS2488 of 2007 pay the plaintiff the sum of $283,917 as compensation under s 82 of the Trade Practices Act 1974 (Cth);

The first defendant in BS2491 of 2007 pay the plaintiff the sum of $216,483 as compensation under s 82 of the Trade Practices Act 1974 (Cth).

The court will hear submissions about orders to be made in each matter as to interest and costs.

CATCHWORDS:

TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – ENFORCEMENT AND REMEDIES – ACTIONS FOR DAMAGES – ASSESSMENT OR AVAILABILITY OF DAMAGES – PARTICULAR CASES – DAMAGES ARISING OUT OF PURCHASE OF LAND OR BUSINESS OR LEASE – where plaintiffs separately entered into a contract to purchase a luxury apartment off the plan from the developer vendor – where, in entering the contract, plaintiffs relied on representations made by the real estate agent that the ocean view from the apartment would be uninterrupted – where contracts settled and plaintiffs were dissatisfied with their view as it was obstructed by a new building – where plaintiffs claimed that the representations with respect to the view were false, misleading and deceptive in contravention of s 52 and s 53A Trade Practices Act1974 (Cth) – where plaintiffs instituted proceedings against the developer on the basis that the real estate agent was its agent duly authorised to make these representations – where the defendant contended that the real estate agent was only authorised to market the apartments for sale – whether the representations made by the real estate agent fell within the scope of its actual or apparent authority

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – JURISDICTION AND GENERALLY – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – PLEADING – STATEMENT OF CLAIM – where at trial the pleadings particularised the plaintiffs’ damage on the basis of loss of investment opportunity – where, at the beginning of the trial, the plaintiffs and first defendant compromised proceedings against the second defendants/third party real estate agents on the basis of the plaintiffs’ pleadings as they then were – where after the trial concluded the plaintiffs sought leave to amend pleadings and broaden the particulars of damage – where witnesses were recalled and further evidence led – where first defendant opposed the amendment on the basis of prejudice – whether leave to amend the pleadings should be granted at late stage

EVIDENCE – ADMISSIBILITY AND RELEVANCY – SIMILAR FACTS – TO PROVE FACT IN ISSUE – PARTICULAR CASES – EVIDENCE ADMISSIBLE – where plaintiffs sought to lead evidence of similar representations made to another purchaser who was not a party to the proceedings – whether the similar fact evidence was sufficiently relevant and probative to be admissible

TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION – ENFORCEMENT AND REMEDIES – ACTIONS FOR DAMAGES – ASSESSMENT OR AVAILABILITY OF DAMAGES – WHAT LOSS OR DAMAGE RECOVERABLE – LOST COMMERCIAL OPPORTUNITY – where the plaintiffs claimed damages for loss of investment opportunity on the basis that they would have purchased an alternative property or otherwise invested the money – whether the claim of lost opportunity was sufficiently certain for damages to be assessed on that basis

TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION – ENFORCEMENT AND REMEDIES – ACTIONS FOR DAMAGES – ASSESSMENT OR AVAILABILITY OF DAMAGES – PARTICULAR CASES – DAMAGES ARISING OUT OF PURCHASE OF LAND OR BUSINESS OR LEASE – where, at the beginning of the trial, the plaintiffs and first defendant compromised proceedings against the second defendants/third party real estate agents – where the first defendant argued that the plaintiffs suffered a single loss and the compromise operated as a compromise of the entire proceedings – whether the compromise affected the quantum of damages that should be awarded

Competition and Consumer Act 2010 (Cth)
Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth), s 2, Schedule 3
Corporations Act 2001 (Cth), s 1466
Law Reform Act 1995 (Qld)
Property Agents and Motor Dealers Act 2000 (Qld), s 366(1)
Trade Practices Act1974 (Cth), s 51A, s 52, s 53A, s 82,
s 84

Uniform Civil Procedure Rules 1999 (Qld), r 5, r 156, r 375, r 478, r 658

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, cited
Borg & Ors v Northern Rivers Finance Pty Ltd & Ors [2003] QSC 112, considered
Bull v Attorney-General for New South Wales (1913) 17 CLR 370, cited
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, cited
Coppo v Banalasta Oil Plantation Ltd; Borg v Pawski [2005] QCA 96, applied
Dare v Pulham (1982) 148 CLR 658, cited
Demagogue v Ramensky (1992) 39 FCR 31, cited
Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32, cited

Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199, cited
Gates v City Mutual Life Assurance Society Ltd (1982) 43 ALR 313, considered
Gates v City Mutual Life Assurance Society Ltd (1985) 160 CLR 1, cited

Hehir & Anor v Smith [2002] QSC 92, cited
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546, cited
Henville v Walker (2001) 206 CLR 459, cited
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640, applied
I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109, considered
ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248, cited
MacCormick v Nowland [1988] FCA 53, cited
Marginson v Ian Potter & Co (1976) 136 CLR 161, cited
Mark Bain Constructions Pty Ltd v Tim Barling, Alex Watson and Timothy Scott [2006] QSC 48, cited
Marks v GIO Australia Holdings (1998) 196 CLR 494, considered
Martin v Osborne (1936) 55 CLR 367, considered
Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23, applied
Moore v Flanagan (1920) 1 KB 919, cited
Mullens v Miller (1882) 22 Ch Div 194, applied
Petersen v Moloney (1951) 84 CLR 91, considered
Pollak v National Australia Bank Limited [2002] FCA 237, cited
Potts v Miller (1940) 64 CLR 282, cited
QCoal P/L & Anor v Cliffs Australia Coal P/L & Anor [2009] QCA 358, cited

Re Benlist Pty Limited v Olivetti Australia Pty Limited [1990] FCA 289, cited
Scott v Numurkah Corporation (1954) 91 CLR 300, cited

Sellars v Adelaide Petroleum (1994) 179 CLR 332, cited
South Australia v Johnson (1982) 42 ALR 161, cited
Thompson v Australian Capital Territory Television (1996) 186 CLR 574, cited
Toteff v Antonas (1952) 87 CLR 647, cited
Unsted v Unsted (1947) 47 SR (NSW) 495, cited
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, applied
Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd [2005] WASCA 174, applied

Webb Distributors (Aust) Pty Ltd v Victoria (1993) 179 CLR 15, cited

COUNSEL:

S Monks for the plaintiff in both matters
A Collins for the first defendant in both matters

SOLICITORS:

Boyd Legal for the plaintiff in both matters
Holland & Holland for the first defendant in both matters

The Sunshine Coast, north of Brisbane, is a holiday area which attracts many people to purchase units or houses for the purposes of investment, both for capital growth and rental income, and for personal use. In 2003, two couples from Sydney were quite independently looking to purchase property on the Sunshine Coast. They were Gary and Carol Avis, who intended to purchase a property in her name; and Grant and Lynette Brecht, who intended to purchase a property in the name of their company Barnscape Pty Ltd as trustee for the York Unit Trust (“Barnscape”). Both purchased penthouse units off the plan in a residential unit development known as “Number One Park” situated at 1 Park Crescent, Sunshine Beach. Unfortunately the purchases did not meet their expectations and this litigation is the result.

The plaintiffs in each matter, Carol Lynette Avis, in matter no 2488 of 2007, and Barnscape, in matter no 2491 of 2007, commenced proceedings against the first defendant, Mark Bain Constructions Pty Ltd (“Mark Bain Constructions”), which was the builder, developer and vendor of Number One Park and against the second defendant, the real estate agent who marketed and sold the units in Number One Park off the plan. In the case of Mrs Avis, the real estate agent was Roombridge Pty Ltd which traded as Laguna Real Estate (“Laguna Real Estate”). In the case of Barnscape, the real estate agent was Noblemont Pty Ltd, trading as Dolphin Bay Real Estate (“Dolphin Bay Real Estate”). In each case, the first defendant brought third party proceedings against the second defendant.

In directions prior to the hearing, PD McMurdo J ordered that the two matters be heard together and that evidence in one be evidence in the other. The evidence in one was admissible in the other as similar fact evidence, which is admissible in civil proceedings where it is sufficiently relevant and probative of a fact in issue.

At the commencement of the first day of the trial, senior counsel for the second defendant real estate agent in each matter informed the court that the proceedings against them by the plaintiffs had settled and requested orders granting leave to file a notice of discontinuance in those proceedings. He also sought orders that the third party proceedings in each action be dismissed with no order as to costs. Those orders were made by consent and the second defendants therefore took no further part in the proceedings. The settlement required the second defendant in each matter to pay $200,000 inclusive of interest and costs to the plaintiff in that matter. Barnscape had by then incurred costs of $121,610.16 and Mrs Avis had incurred costs of $113,057.16.

Earlier on that day, at the request of the parties, the court, accompanied by the legal representatives, had a view of the two units the subject of this litigation and their surrounds. Views are permitted by r 478 of the Uniform Civil Procedure Rules (“UCPR”) which provides that the court may inspect a place, process or thing, and witness any demonstration about which a question arises in the proceeding. In relation to the utility of a view, the High Court in Scott v Numurkah Corporation (1954) 91 CLR 300 at 313 and 315 cited Unsted v Unsted (1947) 47 SR (NSW) 495 where, at 498, Davidson J observed that:

“Whilst a view is frequently a valuable adjunct to a hearing to enable the truth to be elicited, there are well-recognised limits within which such a procedure must be kept. … In a general form the rule is that a view is for the purpose of enabling the tribunal to understand the questions that are being raised, to follow the evidence and to apply it, but not to put the result of the view in place of evidence: London and General Omnibus Co. Ltd. v. Lavell.[1] Yet, sometimes, for example, in cases of passing off, or otherwise when what appears to the eye is the ultimate test, the Judge, looking at the exhibits before him or examined by him as if they were exhibits in the case, and also paying attention to the evidence adduced, can apply his own independent judgment notwithstanding what witnesses have deposed to on the particular point: cf. Bourne v. Swan & Edgar Ltd.;[2] Payton & Co. v. Snelling, Lampard & Co.[3] It is not permissible, however, for the Judge to gather anything in the nature of extraneous evidence and apply it in the determination of the issues unless the facts are openly ventilated and exposed to the criticism of the parties: Way v. Way;[4] Kessowji Issar v. The Great Peninsular Railway Co.[5]”

The view was very useful in understanding the evidence which was subsequently given during the trial.

[1][1901] 1 Ch. 135 at 139.

[2][1903] 1 Ch. 211 at 224.

[3][1901] AC 308 at 311.

[4](1928) 28 SR (NSW) 345 at 347.

[5](1907) 23 TLR 530.

Issues

In each case the following were in issue:

(1) Were representations made by the second defendants to the plaintiff? If so, what were those representations and were they false, misleading or deceptive? If so, were the representations relied upon by the plaintiff?

(2) Is the first defendant liable to the plaintiff for any such representations made by the second defendants?

(3) Did the plaintiff suffer damage as a result of any such representations and if so, what is the quantum of any such damage?

As the plaintiffs submitted, to succeed they must prove that the representations that they alleged were made to them, that they were made by agents of the first defendant acting within their apparent or actual authority, that they relied upon them in purchasing the units, and that the representations were misleading or deceptive and that, as a result, they suffered loss.

The statement of claim in each matter at the opening of trial was the second further amended statement of claim filed 17 July 2009. It will be referred to in these reasons as the statement of claim. The defence of the first defendant at that time was the second further amended defence filed 5 August 2009. It will be referred to in these reasons as the defence. The pleadings at the opening of trial revealed what was and what was not then in issue. Where facts were not in issue they will be referred to in these reasons without any evidence being required to establish them.

The first defendant admitted that the transaction between itself and each of the plaintiffs for the sale and purchase of units in Number One Park was in “trade and commerce” within the meaning of s 52 of the Trade Practices Act 1974 (“TPA”);[6] was in connection with the sale of an interest in land; and that the representations made concerned the characteristics of land within the meaning of s 53A(1)(b) of the TPA which provides, inter alia:
[6]Trade Practices Act 1974 (Cth) has been replaced by the Competition and Consumer Act 2010 (Cth), which came into effect on 1 January 2011.

“53A False representations and other misleading or offensive conduct in relation to land
(1)A corporation shall not, in trade or commerce, in connexion with the sale … of an interest in land or in connexion with the promotion by any means of the sale … of an interest in land:
…

(b)make a false or misleading representation concerning the … the characteristics of the land … .”

In each case the plaintiff alleged and the first defendant denied that the representations were made by the second defendant or that, if they were made, they were misleading and deceptive.

In each case the plaintiff alleged, and Mark Bain Constructions denied, that the second defendant was duly authorised to act on behalf of or to bind Mark Bain Constructions in all material respects. The first defendant said that the extent of the second defendant’s authority was to market the proposed units for sale.

In each case the first defendant disputed the quantum of damage claimed by the plaintiff.

Procedural matters

In order to deal with a question raised about the pleading with regard to the actual or apparent authority of the first defendant, the plaintiffs sought leave to plead explicitly and particularise apparent authority once the trial was underway. In my view, contrary to the submission made by the first defendant, apparent authority had already been pleaded so I was prepared to allow an amendment which clarified and further particularised a claim of apparent authority. In any event, it is not strictly necessary to plead s 84 of the TPA.[7] The amended pleading was the third further amended statement of claim filed by leave in the Avis matter on 16 February 2010 and in the Barnscape matter on 17 February 2010. They will be referred to in each matter as the amended statement of claim. The first defendant did not seek an adjournment to deal with the amended statement of claim. The amendments were not in my view strictly necessary but were rather sought “out of an abundance of caution” and the first defendant suffered no prejudice because of them.
[7]Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 at [62].

The first defendant pleaded to the amended statements of claim by amended defences filed, after the evidence had been heard, on 25 and 26 February 2010. The amended defences also pleaded the alleged effects of the compromise between the plaintiffs and the second defendant. The plaintiffs objected on the basis that the amended defences raised matters on which they would have led additional evidence at trial. The first of those matters was an allegation in paragraph 12A of the amended defence in the Barnscape matter that alleged that when Mr Conolly made representations to Mrs Brecht and Ms Skinner on the site he was acting as an agent of the plaintiff (and not the first defendant) for the purpose of the plaintiff’s satisfying itself of the matters in cl 34.1 of the Barnscape contract. The second was an allegation in paragraph 26(vi) that Barnscape “owned assets other than the subject property from which income was derived but has not disclosed the nature and extent of that income or any taxation benefits which may have accrued from the ownership of the property.” Counsel for Barnscape said that accountants would have been called to deal with such an allegation. It was then deleted by counsel for the first defendant who submitted that as it went to “proof of damages”, it “matters not whether it was pleaded or not.” The first defendant also deleted the proposed paragraph 12A of the amended defence in the Barnscape matter as it was common ground between the parties that the clause it referred to in the Barnscape contract, clause 34.1, was deleted by the first defendant from the final contract signed between the parties.

After the hearing, as a result of submissions made by the first defendant, the plaintiffs applied to amend the statements of claim based, at least in part, on evidence contained in their expert reports with regards to the appropriate measure of damages to be awarded under s 82 of the TPA. That evidence dealt, inter alia, with the true value of the properties at the time of purchase by the plaintiffs. That evidence was admissible at trial to show that the plaintiffs had in fact suffered a loss at the time they contracted to purchase the properties notwithstanding that the claim for compensation under s 82 of the TPA was not originally pleaded on the basis of the difference between the price paid and the true value.

Rule 375 of the UCPR permits the court to allow an amendment to a pleading “at any stage of a proceeding.” The rule must be read subject to r 5(1) of the UCPR which provides:

“the purpose of these rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.”

The amendment was sought to preclude the possibility that the plaintiffs might succeed in proving that the representations were made to them, that they were made by agents of the first defendant acting within their apparent or actual authority, that the plaintiffs relied upon them in purchasing the units, and that the representations were misleading or deceptive and that, as a result, they suffered loss, but nevertheless fail to convince the court to assess compensation on the pleaded basis.

The first defendant opposed the amendment on three interrelated bases: that the application was made far too late and that the plaintiffs had previously pleaded damages on that basis but had amended their statements of claim on 14 July 2008 abandoning the claim for compensation on that basis and instead claiming compensation for loss of opportunity and consequential damages. The third basis was the prejudice said to have been suffered by the first defendant if the amendment were allowed because it had compromised its third party proceedings with the second defendants on the basis of the pleadings as they were at the commencement of the trial.

Any such application for amendment is to be governed by the relevant factors identified by the High Court in Aon Risk Services Australia Ltd v Australian National University[8] including the nature and importance of the amendment to the party applying, the extent of the delay, costs and other prejudice occasioned by the proposed amendment to the respondents to the application and others and the explanation for the delay in seeking the amendment to the pleadings. I ordered on 16 April 2010 that the plaintiffs pay the costs of the applications to amend and any costs consequential upon those applications such as the costs of obtaining further expert reports as ordered on 16 April 2010. I shall deal with the proposed amendments should it prove necessary when I deal with the question of remedies.
[8](2009) 239 CLR 175 at 214-215.

The Barnscape purchase

The Barnscape purchase occurred first. Lynette and Grant Brecht are the directors of Barnscape. Mr and Mrs Brecht were successful business people who started and developed a business providing corporate psychological services to large corporations and organisations. They sold the business in 2002 for almost $3,000,000. As result, they had money to invest.

At that time they were living at a property in McMahons Point in Sydney. It was high set with an expansive, near 180 degree, view to Sydney Harbour. The view to the harbour was over the top of houses and trees as the land sloped down to the shore line.

In April 2003, Mr and Mrs Brecht holidayed on the Sunshine Coast. At that time they did not own a beach house. They started looking with a view to purchasing an investment property on the Sunshine Coast in the area from Coolum to Noosa. They were interested in buying a house and did not mind if it needed renovation but required it to have uninterrupted sea views. They also required that it be close to the beach. Their long term friend and interior decorator, Linda Skinner, gave evidence that she looked for a property with them. She said the main characteristic they were looking for was a view of the surf.

After some initial searching Mr and Mrs Brecht restricted their search to Sunshine Beach which was at that time within the area of the Noosa Shire Council (“the council”). Sunshine Beach is a discrete area within the Sunshine Coast which has a limited geographical area and generally more expensive properties than the Sunshine Coast as a whole. They approached Dolphin Bay Real Estate which was situated in Duke Street, Sunshine Beach. At Dolphin Bay Real Estate they dealt with a real estate agent, David Conolly. As was admitted in paragraph 2(ii) of the defence, Dolphin Bay Real Estate had been engaged by Mark Bain Constructions to market the units at Number One Park for sale.

Mr and Mrs Brecht both gave evidence in these proceedings. Mrs Brecht was primarily responsible for their investments and took a major role in the dealings with the real estate agent. She was careful and frank in her evidence. I found no reason to disbelieve her. Likewise, she appeared to be careful and honourable in her business dealings. Mr Collins, who appeared for the first defendant, said of the witnesses who by then included all of the lay witnesses called for the plaintiff in the Barnscape matter and almost all of the lay witnesses called for the plaintiff in the Avis matter that “they were intelligent, articulate witnesses who answered responsively to questions”. It is an observation which I readily adopt.

Mr and Mrs Brecht told Mr Conolly that they were looking for real estate at Sunshine Beach, that they preferred a house and did not mind if it needed renovation, but required it to be on the beach or near the beach with uninterrupted ocean views that could not be built out and that they wished to spend about $1,000,000. Mr Conolly informed them, no doubt correctly, that they would not be able to buy a house on the beach at Sunshine Beach for $1,000,000. He drove them around Sunshine Beach and pointed out properties that had sold from $500,000 to $4,000,000 and the prices for which they had sold and told them about the rise in property prices in Sunshine Beach. In fact Mr and Mrs Brecht had more than $1,000,000 available to invest but later used the rest of the money to diversify their investments.

When they returned to the Dolphin Bay Real Estate office, Mr Conolly told Mr and Mrs Brecht about the development which was to be Number One Park. He told them that it was a “crème de la crème real estate investment opportunity”. Number One Park consisted of apartments with four penthouses at the top, two of which had been sold, he said, to a company associated with the former celebrity tennis player, John Newcombe. Those were units 9 and 10. The third penthouse, unit 8, had been sold and the fourth penthouse, unit 7, was being held by the developer because he wished to keep it for himself. However Mr Conolly told them that perhaps the developer could be interested in selling the last penthouse at Number One Park.

Mr Conolly told Mr and Mrs Brecht that unit 7 would be suitable for them because it was going to have uninterrupted views that could never be built out and although there was a development to be built in front called “Splash”, the residents of the penthouses would be able to see over the roof of Splash because the balconies of the penthouses, in particular of unit 7, would be higher than the roof of Splash. Mr Conolly said there would be uninterrupted views from unit 7, Number One Park and those uninterrupted views would be views of the ocean. He said to them that if you were standing on the balcony “you may not see waves breaking onto the sand, but you will see waves breaking.” He said that those surf views were panoramic, which Mrs Brecht understood to mean 180 degree views. In common parlance, the word “surf” is synonymous with the words “breaking waves” or “white water”, so that a view of breaking waves has the same meaning as a view of surf or white water views.

The apartments in Number One Park were yet to be built so they were to be bought off the plan. It was not therefore possible for intending purchasers to stand on the balcony to see if the representation made as to the views was correct. In such circumstances the vendor, real estate agent and intending purchasers all realise that purchasers must rely in the usual course on representations made by the real estate agent retained by the vendor to market the property for sale.

The building referred to as Splash was to be built at 25 Park Crescent, Sunshine Beach. That block was situated to the east, north-east of Number One Park between it and the beach.

Mr Conolly took Mr and Mrs Brecht to the site of Number One Park which was situated on the corner of Park Crescent and Henderson Street, Sunshine Beach. Construction had not yet commenced. He pointed to the building on the left-hand side known as “The Moroccan” and the building on the right known as “Monserrat” and indicated by pointing to them the height of Number One Park. He told them about the building that was to be built called Splash. He said that because of the “lay [sic] of the land”, the contours of the land going down the hill to the right and to the front towards the ocean, together with height restrictions imposed by the council of 12 metres, Splash would be lower than Number One Park and that therefore they would be able to see over the Splash building to the ocean. He told them that the views would be panoramic, expansive and never to be built out. Mr Conolly told them that he had personally checked with the local council on a number of occasions to make sure of that and had looked at the plans to make sure that what he was telling them about height and views was correct. Mr Conolly repeated this assurance on a number of occasions so, understandably, Mr and Mrs Brecht did not think it necessary to search the plans of Splash at the council themselves. Mr Conolly could not have been in doubt how significant this representation was to Mr and Mrs Brecht in their decision to have Barnscape purchase unit 7.

At the first meeting with Mr Conolly, he provided Mr and Mrs Brecht with a brochure with an artist’s impression of Number One Park on the front cover which contained floor plans. He did not give them that brochure to take away because he said that at that stage he was not sure if the property was for sale. Mrs Brecht noticed that the brochure contained plans marked with the name and licence number of Mark Bain Constructions. Mr Brecht said in his evidence that Mr Conolly explained to them that he was acting as real estate agent for Mr Bain through Mr Forsyth of Laguna Real Estate. After the first meeting with Mr Conolly, Mr and Mrs Brecht returned to Sydney.

Consequently, I accept that the representations pleaded in paragraph 7 of the statement of claim were made by Mr Conolly at his first meeting with Mr and Mrs Brecht, namely:

“(a)Number One Park would be a premium quality development with spectacular uninterrupted surf views from the penthouses;
(b)the views from the penthouses would not be built out because of the planned height of Number One Park, local council height restrictions and the slope of the surrounding land; and
(c)another development (the Splash Development) would be commencing shortly but that the Splash Development would have no impact on the views available from the penthouses at Number One Park and, in particular, there would be a view over the roof of the Splash Development to permit continuous surf views;
(d)the views from Number One Park would be outstanding views.”

Mr Conolly contacted Mr and Mrs Brecht after their return to Sydney and said he had spoken to the owner of Number One Park. He said that the owner was Mark Bain of Mark Bain Constructions and that Mr Bain had decided that he would sell unit 7. In an email on 28 April 2003, Mr Conolly said the selling price was $1,250,000. He told them the selling price of nearby units at Splash, Casablanca, Moroccan and Le Onde as well as expected rental returns for the units. He said he would send Mr and Mrs Brecht a marketing guide and details on the fittings and plans.

Mrs Brecht asked Mr Conolly again about the view from unit 7 because of what she referred to as her requirement that the property had to have uninterrupted views of the water and that it could never be built out. He reassured her of those matters. Again he used the term that the property was the “crème de la crème”. On 30 April 2003, Mr and Mrs Brecht sent Mr Conolly a cheque for $500 as a “refundable holding deposit” for unit 7. Mrs Brecht said that they decided on this property rather than another more expensive one they looked at with another agent because it had everything they were looking for.

On 11 June 2003, Mr and Mrs Brecht sent an email to Mr Conolly telling him that their Queensland solicitor, Anne Murray, had checked the contract and, apart from a few small things she had highlighted, the contract was acceptable; a real estate colleague who holidayed at Sunshine Beach had given them positive feedback; they were happy that the builder had a good reputation as a quality operator; and they were happy with the location being at Sunshine Beach. However before they paid the ten percent deposit they wanted to ensure that the view would justify the price so they were planning to come back up in the next few weeks to meet with Mr Conolly and make sure the finished unit would provide good ocean views.

On the following day, 12 June 2003, Mr Conolly replied by email saying that he had met on the previous day with Richard Forsyth from Laguna Real Estate at Noosa who was dealing directly with Mark Bain. He said that after a site inspection he could inform them that the old buildings were being demolished to make way for the construction of Number One Park. He told Mr and Mrs Brecht that he was advised by Mr Forsyth that the floor level of Number One Park was to be one metre higher than the top floor of the adjacent Moroccan building. He said:

“Both Mr Forsyth & Mr Bain have assured me the views as such will be outstanding.”

Mr Conolly said that both the developer and Mr Forsyth were keen to see a signed contract for unit 7 as other interested parties were showing strong interest in the property, particularly John Newcombe’s company who had purchased units 9 and 10. Mr Conolly said that Mr Forsyth and Mr Bain had suggested that he encourage them to sign a contract with a special clause inserted which stated that they would have the opportunity to withdraw should the views not be to their satisfaction. He asked them to contact him to discuss this option. Objection was taken to the receipt into evidence of the email from Mr Conolly to Mr and Mrs Brecht on the grounds that it was not evidence that Mr Conolly had in fact spoken to Mr Bain. The email is only evidence of what Mr Conolly said to Mr and Mrs Brecht. It is evidence that he represented to Mr and Mrs Brecht that Mr Bain had assured him that the views would be outstanding but not that Mr Bain had actually said that to Mr Conolly.

Mr and Mrs Brecht sent a return email to Mr Connolly on the same day saying that they would instruct their solicitor to insert a clause as he had suggested and send the signed contract and deposit to Mr Conolly as soon as their solicitor could get the revised contract to Mr and Mrs Brecht. They said that they would still try to get to Sunshine Beach again for a day to meet with Mr Conolly.

On 13 June 2003 Mr Conolly asked Mr and Mrs Brecht to send him a draft of the clause they wished to insert into the contract so he could have it approved by “the developer”. His suggestion for the clause was:

“Purchasers for this property have 21 days from the date of signing this contract to satisfy themselves the view from the top floor penthouse number 7/ No. 1 Park Crescent, Sunshine Beach is to their satisfaction. Should the purchasers be unsatisfied with the views they will be required to inform the vendors solicitor in writing no later than 21 days from the date of this contract. Should the vendor not receive notice in writing within this period the contract will be binding.”

Mr Conolly sent Mr and Mrs Brecht the marketing brochure as promised. On the front cover was an artist’s impression of the building from Park Crescent. It showed that Number One Park consisted of two buildings with a swimming pool on the frontage facing Park Crescent. Mrs Brecht recalled that it listed the finishes and fixtures and included the plans of each level. It showed that the builder and developer was Mark Bain Constructions. It revealed that there was only one parking space for the penthouse unit 7. Mrs Brecht particularly remembered that because she raised later that they wanted two car parks. There was no representation in the brochure about the view from Number One Park.

On 21 and 22 June 2003 Mrs Brecht returned to Sunshine Beach and, accompanied by her interior director, Linda Skinner, met with Mr Conolly. Mr Conolly took Mrs Brecht and Ms Skinner to a property called Nereus across the street from Number One Park. Nereus is situated at 5/7 Henderson Street, Sunshine Beach. Mr Conolly took them to the balcony of the top storey unit in Nereus and explained to them the outlook that they could expect to see once unit 7 at Number One Park was built. He pointed out the Moroccan building and the Monserrat building and where the Splash building was going up and explained that they would be able to see over the roof of Splash.

The three of them also referred to another site downhill of Number One Park, Sunshine Place, to ensure that the views from unit 7 would not be impeded by the building at Sunshine Place. Mr Conolly informed them that the views from unit 7 Number One Park would be better than the views from the Nereus building because Number One Park was on the other side of the street, closer to the ocean and the land fell away in front of Park Crescent and so they would have uninterrupted views that could never be built out. Ms Skinner’s evidence was that he said the view would be “panoramic and uninterrupted.” He said, “You will have a spectacular view because there will be nothing in front of you.” He said something to the effect “You will not see waves crashing on the beach, but you will see waves.” Ms Skinner candidly admitted that she could not remember his precise words.

Mrs Brecht noticed that there was a television antenna on top of Sunshine Place and she said that she wanted that removed because it interfered with the view. Mr Conolly said that he did not think it would be a problem but that he would go back and discuss it with Mr Bain in order to have it removed. He assured them they would be very happy with the view.

Mr Conolly took Mrs Brecht and Ms Skinner into the Moroccan building both to the second floor and to the roof. He told them that the views from unit 7 Number One Park would be better because the balcony would be higher and they would be able to look “clean over any development, either Splash or Sunshine Place” and once again he said “you may not see the waves breaking on the sand but you will have uninterrupted views of waves breaking.” Those views, he said, would be 180 degree panoramic views never to be built out. Ms Skinner said he kept on with the mantra, “uninterrupted, panoramic views.”

Mrs Brecht and Ms Skinner both said that during the site visit Mr Conolly indicated where the top of the Splash building would be by pointing to trees, antennae and other existing landmarks so that they could get a sightline of exactly where the roof of Splash would be in comparison to the balcony of unit 7. By referring to the photographs taken from the balcony of unit 8 found in exhibit 5, Mrs Brecht was able to give evidence that Mr Conolly pointed out the line that would be occupied by the roof of Splash as about equal to or just under the established tree line which can be seen in photograph 2 in exhibit 5. As that photograph shows, when it was built Splash protruded well above that tree line. In fact it protruded well above the horizon and, as that photograph shows, substantially interrupted the view of the ocean. There was no view of the ocean over the top of Splash from unit 7 Number One Park.

The plaintiff has consequently proved that the representations pleaded in paragraphs 9, 9A, 12 and 13 of the statement of claim were made. Those representations were made on 21 June 2003. They were to the following effect:

“9.Mr Conolly advised that due to the contours of the land and council development restrictions, there would be no opportunity for any development in front of Number One Park to interrupt the surf views from the penthouses.
9A.The conduct of Mr Conolly pleaded and particularised in paragraphs 7 and 9 above, and in paragraphs 12 and 13 below, amounted to representations that the first and second defendants each:
(a)had the means, ability, skill and experience to conduct appropriate searches of local or State government records, make enquiries of relevant local or State government authorities, and otherwise determine (whether themselves or by engaging appropriate qualified experts) whether the views from the penthouses at Number One Park could be built out, and if so the extent to which those views would be built out or impeded by the Splash Development;

(b)had undertaken the said searches and enquiries and made the said determination; and
(c)had exercised due care and diligence in undertaking the said searches and enquiries and making the said determination.

…
12.Mr Conolly, for and on behalf of the first and second defendants, said words to the effect that the views from the property would be equivalent to those from the Moroccan Development and in particular that surf views would be obtainable over the rooftop of the Splash Development.
13.Mr Conolly, for and on behalf of the first and second defendants, also took Mr [sic] Skinner and Mrs Brecht to see the view from the Unit 7, 5-7 Henderson Street, Sunshine Beach and, in the course of conducting that inspection, said words to the effect that the surf views from Park Crescent would be better than the views available from 5-7 Henderson Street.”

In paragraph 16(b) of the statement of claim the plaintiff alleged and I am satisfied that to the extent that the representations were representations as to future matters, they fall within the provisions of s 51A of the TPA which provides:

“51A Interpretation
(1)For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.
(2)For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.
(3)Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.”

The plaintiff alleged that the representations were false. In paragraph 17 of the statement of claim it alleged:

“(a)the surf views from the property were not going to be uninterrupted views or outstanding views because they would be and were in fact substantially impeded by the roofline of the Splash development which was then under construction; and
(b)the views from Number One Park as planned and built could in fact be built out if a building was built on the site of the Splash development to within the maximum legal height, that such a building (namely the Splash development) had already been approved by Noosa Council and was then under construction, and the views were built out by the Splash development.”

The first defendant denied this allegation and said further that only a minor part of the ocean views from unit 7 were in fact impeded by Splash and the views were consistent with the opinions expressed by Mr Conolly. From the evidence before me to which I have referred, both the oral evidence and photographic evidence, I am satisfied that the representations were false as pleaded in paragraph 17 of the statement of claim.

The first defendant denied the following allegations in the statement of claim:

“18.The representations referred to in paragraph 9 were false in that:
(a)despite the contours of the land in front of Number One Park and Council’s height restrictions, it was and is possible to build a development of such a height that whilst it complies with the height restrictions, it blocks views of the surf from the penthouses in Number One Park; and
(b)a development (namely, the Splash Development) had at that time already been approved and construction of it had commenced, such that when constructed it would and did in fact impinge upon and interrupt the surf views available from the property.

19.The representations referred to in paragraph 12 were false in that:
(a)the views from the Moroccan development would be and were superior to the views available from the property when it was built, because the surf views from the Moroccan development were not comparably affected by any other development in the way that the views from Number One Park would be and were affected by the Splash development when Splash was completed; and
(b)given the contours of the land and the approval that had already been given for the Splash development (which was then under construction), when Splash was completed it would not be and was not possible to obtain surf views over the rooftop of Splash as Splash would and did in fact impinge upon and interrupt the surf views available from the property.

20.The representations referred to in paragraph 13 were false in that:
(a)the surf views from 5-7 Henderson Street would be and were superior to the surf views available from the property when it was built, because the views from 5-7 Henderson Street were not comparably affected by any other development in the way that the views from Number One Park would be and were affected by the Splash development when Splash was completed; and
(b)given the contours of the land and the approval that had already been given for the Splash development (which was then under construction), when Splash was completed it would not be and was not possible to obtain surf views over the rooftop of Splash as Splash would and did in fact impinge upon and interrupt the surf views available from the property.

20A.In the premises pleaded in paragraphs 17, 18, 19 and 20 above, the representations by the first and second defendants that are pleaded in paragraph 9A were false in that the first and second defendants:
(a)lacked the means, ability, skill and experience to conduct appropriate searches of local or State government records, make enquiries of relevant local or State government authorities, and otherwise determine (whether themselves or by engaging appropriately qualified experts) whether the views from the penthouses at Number One Park could be built out, and if so the extent to which those views would be built out or impeded by the Splash Development;
(b)had failed to undertake the said searches and enquiries and make the said determination; or
(c)had failed to exercise due care and diligence in undertaking the said searches and enquiries and making the said determination.”

I am satisfied that the representations were false for the reasons pleaded in paragraphs 18(a) and (b), 19(b), 20(b) and 20A(c). Contrary to what Mr Conolly said it was possible to build a development in front of Number One Park which was within allowable height limits and which interrupted the white water views from the penthouse units, and the white water views from the penthouse units at Number One Park were adversely affected by Splash. If Mr Conolly did carry out council searches as he told Mr and Mrs Brecht, then he must have carried them out without due care and diligence.

The representations were made in trade or commerce in connection with the sale of an interest in land. They were misleading and deceptive in contravention of s 52 of the TPA and false and misleading in contravention of s 53A of the TPA.

In June 2003 Mrs Brecht also saw an artist’s impression of the building with the heading “Sunshine Beach white water”. She referred to an advertisement, which was found in exhibit 10, in the Sunshine Coast Daily Property section dated 17 January 2004 under the Laguna Realty heading which contained an artist’s impression of Number One Park, showed a photograph of white water breaking waves and referred to the development with the headline “Sunshine Beach white water penthouses”.[9] The narrative said:

“Positioned to catch magnificent views of the waves crashing on to the sand at Sunshine Beach, with beach access only metres away, No. 1 Park will stand as a testament to state-of-the art ingenuity in design.”

Mrs Brecht said she had seen an advertisement similar to that but without the reference to Laguna Real Estate.

[9]See exhibit 2, vol 2, p 484.

It appeared from evidence given by Alexander Watson, who was one of the purchasers of units 9 and 10 of Number One Park, that this advertisement was produced by Laguna Real Estate to on-sell those units before settlement and so is not relevant to any case against Mark Bain Constructions.

However, the evidence given by Mr Watson fortifies me in the conclusion I have already drawn that misleading and false representations were made by the real estate agents marketing Number One Park for sale.

The Watson purchase

Mr Watson gave evidence about the circumstances of his purchase of units 9 and 10 at Number One Park. His evidence was admissible as similar fact evidence which is admissible in civil proceedings where it is relevant to and probative of facts in issue. Its admissibility is established by relevant case authority.

One of the earliest Australian cases to consider the admissibility of similar fact evidence in civil proceedings is Martin v Osborne.[10] In that case, the respondent was charged with driving an unlicensed commercial passenger vehicle. In order to prove that the passengers on the day in question were being carried for reward between Ballarat and Melbourne, the appellant sought to lead similar fact evidence of the defendant’s carrying passengers for reward on the same route during the two preceding days. The High Court held that the evidence was admissible to show that the defendant was operating the vehicle regularly for the carriage of passengers between Ballarat and Melbourne and was sufficient to make it improbable that the passengers were not carried for reward. As Dixon J observed at 375, the similar fact evidence was admitted on the basis that it was relevant to the “probability or increased probability, judged rationally upon common experience”, that the fact in issue existed.
[10](1936) 55 CLR 367.

Significantly, similar fact evidence has been admitted in proceedings where the making of misleading and deceptive representations within the meaning of the TPA was in issue. In Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd[11] the applicant alleged that a number of fraudulent, misleading and deceptive representations were made to it by the respondent’s agent to induce the applicant to enter into two leases of shops in a shopping centre. The applicant sought to lead evidence of representations made to eight other tenants in the shopping centre on the basis that there was a probability or increased probability that similar representations had been made to the applicant. In considering the admissibility of the evidence, Northrop J observed at 28:

“… The general principle is that proof of ‘similar facts’ done by a party to litigation does not tend to prove that the party did a particular act in issue alleged in litigation. The general principle is stated in Cross on Evidence, Second Australian Edition, para 14.2, p 342, as follows: ‘Evidence of the misconduct of a party on other occasions (including his possession of incriminating material) must not be given if the only reason why it is substantially relevant is that it shows a disposition towards wrongdoing in general, or the commission of the particular crime or civil wrong with which such party is charged, unless such a disposition is of particular relevance to a matter in issue in the proceedings.’
This is a general principle and there are many instances where evidence of ‘similar facts’ is admissible. Thus evidence of ‘similar facts’ is admissible where the facts include ‘circumstances whose relation to the fact in issue consists in the probability or increased probability, judged rationally upon common experience, that they would not be found unless the fact to be proved also existed’ … .”

[11](1981) 36 ALR 23.

Northrop J allowed the similar fact evidence sought to be led by the applicant on the basis that it was sufficiently probative, saying at 30:

“If it is established by evidence that Robertson [the respondent’s agent] made representations which constituted conduct under s 52 of the Act to other prospective tenants of shops in the same complex, there is a probability or increased probability judged rationally upon common experience, that similar representations were made to Figgins. The representations, if constituting conduct of the requisite kind, established a pattern which would lead to support the proof of the fact in issue. The evidence of the eight witnesses would, in my opinion, have probative value and is logically probative of a fact in issue.”

His Honour also distinguished between the admissibility of similar fact evidence in civil and criminal proceedings and, at 31, expressed the opinion that in civil proceedings “the evidence of witnesses, otherwise logically probative of a fact in issue, is not rendered inadmissible by reason of oppression and unfairness.”

In a similar vein, similar fact evidence was admitted in Gates v City Mutual Life Assurance Society Ltd,[12] another case involving allegations of misleading and deceptive representations. In that case, the applicant alleged that an agent of the respondent, an insurance salesman, had made misleading and deceptive representations to induce him into purchasing disability cover. At the hearing the applicant led evidence of representations of a similar nature which had been made by the respondent’s agent to five other persons. Citing Dixon J’s comments in Martin v Osborne,[13] the evidence was allowed by Ellicott J on the basis that it was relevant to the issue of whether the representations alleged were made to the applicant and tended to support the probability of similar misrepresentations being made to the applicant.
[12](1982) 43 ALR 313.
[13](1936) 55 CLR 367.

Two recent Queensland Supreme Court decisions have considered the admissibility of similar fact evidence in civil proceedings. Hehir v Smith[14] was an appeal against orders made by the Anti-Discrimination Tribunal that the appellants pay the respondent compensation for sexual harassment. One of the grounds of appeal was that the Tribunal had erred in admitting as similar fact evidence the evidence of a former employee who gave evidence of unnecessary touching and inappropriate remarks by the first appellant. After considering this ground of appeal, Wilson J held that there was no error of principle in the Tribunal’s use of the evidence of the former employee. At [18] – [20], her Honour discussed similar fact evidence in civil proceedings, highlighting relevance as the single criterion for admissibility:

“[19] In criminal proceedings, propensity evidence is not admissible unless it is sufficiently highly probative of a fact in issue to outweigh the prejudice it may cause. This is illustrative of the Court’s discretion in weighing the probative value of evidence against its prejudicial effect. See Pfennig v The Queen (1994-95) 182 CLR 461; Hoch v The Queen (1988) 165 CLR 292.
[20] In civil proceedings it is doubtful that the Court has such a discretion to refuse to admit evidence: see CDJ v VAJ (No 1) (1998) 197 CLR 172 at 215 per McHugh, Gummow and Callinan JJ, footnote 106. The basic test is that of relevance, subject to well known specific rules of exclusion.”

[14][2002] QSC 092.

Her Honour cited with approval Northrop J’s comments in Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd referred to earlier.

Even more on point is Borg v Northern Rivers Finance Pty Ltd,[15] a case involving 21 plaintiffs all of whom alleged that the sellers of three tax minimisation schemes made misleading and deceptive representations that investments in the schemes were lawfully tax deductible and that each of the schemes was approved by the Australian Taxation Office. The plaintiffs sought to admit evidence which suggested that similar representations had been made to each plaintiff. At [84] – [86], Mackenzie J made the following observations:

“[84] It was common ground that in a civil matter evidence that similar representations were made to others is admissible (see Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23, 30-31; Gates v City Mutual Life Society Ltd (1982) 43 ALR 313, 327; D.F. Lyons Pty Ltd v Commonwealth Bank of Australia (1991) 28 FCR 597, 603-7). It was accepted that such evidence was relevant as having a bearing on the issue of whether the probability that particular representations were made to a particular plaintiff was increased and, ultimately, whether they were proved to a satisfactory level.
[85] However, it was submitted by the fourth and eighth defendants that different plaintiffs had significantly different recollections of what was said to them and there was therefore a risk that using evidence of what was said to others to buttress the credibility of individual plaintiffs may too readily lead to an erroneous conclusion (cf Sheldon v Sun Alliance Australia Ltd (1988) 50 SASR 236). While that risk is accepted, such concern is not a reason for excluding such evidence in a civil trial by judge alone. It is correct that automatic extrapolation of evidence from one witness into another’s case does not pay due regard to other individual credibility issues arising from the plaintiff’s evidence in the case then under consideration.
[86] It may be observed, too, that evidence of this kind may not only be useful in favour of a plaintiff. In this kind of case, it may suggest that the particular plaintiff misconstrued a particular document or event if there is a considerable body of evidence from other plaintiffs placing a different construction on it or describing it differently. However, that issue has in each case to be considered in conjunction with other aspects of credibility of the particular plaintiff, and the circumstances of the particular transaction.”

[15][2003] QSC 112.

Mr Watson’s evidence was useful in determining whether or not the real estate agents marketing the units for sale on behalf of the first defendant made misleading, deceptive and false representations and what those representations were.

Mr Watson gave evidence that he met Mr Forsyth from Laguna Real Estate when Laguna Real Estate sponsored a tennis tournament with which Mr Watson was involved. Mr Forsyth told Mr Watson that he was going to be selling the property at Number One Park and it would be a very good investment in Sunshine Beach. He said there was an opportunity to buy it off the plan. He said it would be a good opportunity because of the high capital gains at Sunshine Beach and also because it was one of the best streets in Sunshine Beach and the way the building was designed it would have outstanding views of the beach and the ocean.

Mr Forsyth guaranteed to Mr Watson that the views were as shown in photographs that he provided to Mr Watson. One of the major aspects of the project would be its outstanding ocean views. He said the photographs had been taken from a cherry picker which had been put on the site with a photographer at the same height and aspect as the finished unit that he would be able to purchase.

The brochure which was tendered in evidence as exhibit 8 had numerous photos showing unobstructed ocean and white water views. The views were described in words as “outstanding ocean views”. The brochure also said that the units were “positioned to capture magnificent views of the Pacific Ocean”.

Mr Watson gave evidence that subsequent to that, Splash was built between Number One Park and the ocean with its construction having a detrimental effect on the views of Number One Park. Mr Watson had contracted to purchase two penthouse units, 9 and 10, together with two colleagues of his. However the construction of Splash took away most of the views from those units.

Mr Watson noticed Splash being constructed and a sign on it saying it was being marketed by Laguna Real Estate. He contacted Mr Forsyth and asked him what was the situation with regard to Splash and where was it going to finish in relation to Number One Park and if there was going to be any impact on the views from Number One Park. Mr Forsyth told him that due to there being a downward slope from Number One Park to Splash and in view of the council regulations imposing strict height limits, the views from Number One Park would not be impacted upon adversely.

Mr Watson arranged to meet Mr Forsyth on the site. They went there in May 2004. They went to the level of the balconies of units 9 and 10 and observed the views they believed they were going to receive. Mr Watson asked Mr Forsyth to indicate where Splash was going to finish and where the views from Number One Park would be left in relation to that. Mr Forsyth said that they would lose their view of Park Crescent but the views of the beach and of the ocean would be unaffected.

Mr Watson said he returned to the site before the contracts were due to settle and at that stage there was already a major problem with the deterioration of the views of Number One Park from the construction of Splash. He complained to Mr Forsyth. Mr Forsyth said that he believed it was due to circumstances beyond his control and that Splash had exceeded its building height. Mr Watson started investigations of his own and had a valuation done which showed a downgrading in value of the units.

Mr Watson said they were not prepared to go ahead and fulfil the contracts and did not complete them. Mark Bain Constructions sued Mr Watson and the other two purchasers but the purchasers were successful in defending that claim because the warning statements required at that time by s 366(1) of the Property Agents and Motor Dealers Act 2000 (Qld) were not attached to the contracts: see Mark Bain Constructions Pty Ltd v Tim Barling, Alex Watson and Timothy Scott [2006] QSC 48.

Evidence given by Paul Caspers, a registered valuer, showed that unit 10 was sold on 15 April 2005 and unit 9 was sold on 30 April 2005. The sale price of each was $900,000.

The Barnscape contract

On Monday, 23 June 2003 Mrs Brecht sent an email to Mr Conolly thanking him for showing her the site on the weekend. She raised a number of questions prior to finalising the exchange of contracts. The first was about the removal of the antenna at the property known as Sunshine Place so as not to detract from the view from the unit they wished to purchase at Number One Park.

On Wednesday 25 June 2003 Mr Conolly forwarded to Mr and Mrs Brecht an email from Richard Forsyth from Laguna Real Estate which said that the developer would move the TV antenna at his own cost.

On 2 July 2003 Barnscape signed a contract to purchase unit 7 for $1,200,000 (the “Barnscape contract”) and forwarded it and a bank guarantee for the deposit of $120,000 to Mr Conolly. The contract contained, inter alia, the following standard terms:

“14.1.7that the Buyer has not relied on any representations by or from the Seller, the Seller’s agent or any other person or corporation, other than those representations specified in this Contract about the Lot, Scheme Land, Schedule of Finishes, Chattels, Common Property, Building Works, proposed management operation, achievable occupancies, financial returns or tax benefits.
14.1.8that in entering into this Contract the Buyer confirms and agrees that all representations made by or on behalf of the Seller are as set out in this Contract and that the terms, covenants and conditions of this Contract constitute the only agreement between the Buyer and the Seller to the exclusion of all other representations to the fullest extent permitted by law. The Buyer waives any claim or right inconsistent with this acknowledgment and agrees to indemnify the Seller from any claim brought by the Buyer in breach of this clause and the Seller’s costs of resisting any such claim calculated on a solicitor and own client basis.”

The Barnscape contract also then contained the following relevant special conditions written in Mrs Brecht’s handwriting:

“34.1This contract is subject to the purchaser satisfying itself within 21 days from the date hereof that the view from the subject property will be as it anticipates. If it is not the Purchaser shall notify the Vendors solicitors in writing and all deposit monies shall be refunded in full to the Purchaser.
…
34.3At their cost the developer will relocate the TV antenna from the roof of the building in front of the balcony to Unit 7, so as not to interfere with the view or outlook from the balcony of unit 7.”

The contract was concluded on 3 July 2003 when it was signed and dated by Mark Bain on behalf of Mark Bain Constructions. Clause 34.1 was crossed out and initialled by Mr Bain. It was no longer part of the contract that the first defendant signed.

Mrs Brecht had consulted with her solicitor before inserting clause 34 and relied on her advice as to the standard and special terms of the contract. However, as pleaded in paragraph 10 of the statement of claim, when signing the contract on behalf of Barnscape Mr and Mrs Brecht relied on the representations made to them referred to in paragraphs 7, 9 and 9A of the statement of claim about the views. Mrs Brecht informed Mr Brecht of the representations made to her by Mr Conolly on her visit to Sunshine Beach when he was not present. Mrs Brecht said in her evidence:

“If those views weren’t there we weren’t buying that property. If those views weren’t as we were told they were going to be, we were not buying that property.”

Her response to a question by counsel for Barnscape showed her state of mind:

“If back in 2003 when you signed the contract, when you had the contract in front of you, if you had known that Splash would in fact be built as high as it was, would you have agreed to sign the contract and go ahead with the purchase?”

Mrs Brecht answered, “Absolutely no way.”

I accept that had Mr Conolly not made the representations pleaded in paragraphs 7, 9, 9A, 12 and 13 of the statement of claim, Barnscape would not have entered into any agreement to purchase unit 7 of Number One Park. The contract was entered into in reliance on the representations in paragraphs 7, 9 and 9A of the statement of claim and allowed to become unconditional because of those representations and the representations in paragraphs 12 and 13 of the statement of claim. As the unit was bought off the plan, the Brechts in fact relied upon the detailed representations made to them by Mr Conolly. They had no reason to suspect that the representations were false. At no time did he act as agent for Barnscape or the Brechts.

The standard terms found in clauses 14.1.7 and 14.1.8 could not, without more, exclude the operation of the TPA.[16] As Steytler P held in Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd [2005] WASCA 174 at [59]:

“In the case of a claim arising out of a contravention of s 52 of the Act the relevant question, in this context at least, is always one of reliance or inducement. If, as a result of misleading conduct, a person is induced to enter into a contract and suffers loss, the right to a remedy will subsist whatever the parties may provide in their agreement: Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367 at 371, per Sheppard J with whom Fox J and, relevantly, Jackson J were in agreement; Petera Pty Ltd v EAJ Pty Ltd (1985) 7 FCR 375 at 378, per Wilcox J; and Oraka Pty Ltd v Leda Holdings Ltd (1997) ATPR 41-558 at 43, 717. Exclusion clauses in a contract will only preclude a remedy under the Act when those clauses demonstrate that the party in question did not, in fact, rely on the conduct or where the conduct could not, as a whole, have been seen to be misleading: Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535 at 557; Kewside Pty Ltd v Warman International Ltd (1990) ATPR 41-012.”

[16]Demagogue v Ramensky (1992) 39 FCR 31 at 46 per Gummow J; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 at 561 per Lockhart J; Downey v Carlson HotelsAsia Pacific P/L [2005] QCA 199 at [82].

It is a question of fact whether those clauses erased the effect of the representation in the minds of Mr and Mrs Brecht on behalf of Barnscape.[17] Those clauses did not have that effect in this case. They relied on the representations made as to what would be the view from unit 7, Number One Park and their reliance induced them to enter into the Barnscape contract.
[17]See Re Benlist Pty Limited v Olivetti Australia Pty Limited [1990] FCA 289 at [24]-[25]; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [130].

After the Brechts signed the contract as directors of Barnscape they had many telephone calls from Mr Conolly, about every month or six weeks, telling how the development was going and that they would be “very, very happy” with the views and the building. He told them he had spoken to the builder on many occasions and everything was going wonderfully well.

In December 2003 – January 2004, Mrs Brecht went to Sunshine Beach and saw that the Splash building had been commenced. She returned on 3 March 2004 and noticed that the Splash building was quite high and thought that it was “absolutely plain and obvious” that there was going to be a problem. The Splash building had not been completed but it was obvious to Mrs Brecht that it was not going to be at the height that Mr Conolly had represented. She visited again later in March 2004. Mrs Brecht told Mr Conolly on one of her visits in March 2004 that she did not think that the height of Splash was what he had represented it would be. He reassured her that they would still be able to see over the top of Splash once it was finished. By then, Number One Park had been built and they were able to stand on the balcony. They also had a long discussion about Sunshine Place. Mr Conolly assured Mrs Brecht that the views could never be built out. He told her that he had checked with the council and the Brechts would still be able to have the views he had told them over the top of Splash when it was completed.

When Mrs Brecht expressed further concern after a site visit in early June just before settlement, Mr Conolly told her that the problem was with Splash, that it had been built too high. He made the same statement to Mr Brecht by telephone. When Mrs Brecht asked if settlement could be delayed, she was told by Mr Conolly that Mr Bain had said that if they did not settle on the date due for settlement, they would lose their deposit. She said, on cross-examination, that if she had been able to terminate the contract at that time without financial penalty, she would have done so. The Brechts took legal advice and decided they had to settle on the Barnscape contract. The legal advice was however based on the representations made to the plaintiff and so tainted by that. The Barnscape contract settled on 9 June 2004. The representations made on behalf of the first defendant before the entry into, and prior to the settlement of, the Barnscape contract were relied upon by the plaintiff and so caused whatever recoverable loss it suffered. The decision to settle was reasonable in the circumstances and did not break the chain of causation.[18]
[18]See MacCormick v Nowland [1988] FCA 53 at [11].

After settlement, Mr and Mrs Brecht (and Mrs Avis) engaged a surveyor to investigate whether Splash was in breach of council limits on its height. By letter dated 15 September 2004, they were informed by the council that the council took the view that Splash was not built above the permitted height. This advice was queried by their surveyor but confirmed by letters of 8 October 2004 and 23 November 2004. They then took legal advice from the solicitors acting for them in these proceedings.

The Avis purchase

The plaintiff in the Avis matter is Carol Lynette Avis, usually known as Lyn, as she was the purchaser of unit 8 at Number One Park. However both she and her husband Gary Leonard Avis were involved in the negotiations for the purchase. In the case of Mr and Mrs Avis, it was Mr Avis who was more actively involved in their financial matters. Although he is now semi-retired he is financially astute having been the head of a major financial advisory company and then appointed to the Board of a private equity firm.

In 2003, the main residence of Mr and Mrs Avis was in Mosman in Sydney and they had a holiday house at Avoca Beach in New South Wales. They had purchased the house in Mosman because of its proximity to the city but also because it had “exceptional water views”. It had in Mr Avis’s words “about 270 degree uninterrupted water views of Sydney Harbour over Balmoral.” His description was matched by photographs found in exhibit 2 at p 493. It is an expansive view unobstructed by buildings or other structures. The holiday house at Avoca Beach also had expansive ocean and beach views as demonstrated by the photographs in exhibit 2 at p 492.

From about 2001, Mr and Mrs Avis started looking for a home outside Sydney where they could spend six months a year. Eventually they restricted their search to Noosa and Sunshine Beach. They discussed their desire to buy in the area with Christopher Shannon, who was a friend of friends of theirs and apparently knowledgeable about real estate. He had moved to Sunshine Beach from Melbourne many years earlier. He was, in fact, an experienced real estate agent.

Mr Avis said he had a list of desirable characteristics for a property which he always used when buying and selling property. The first requirement was for the property to have a north to north-easterly aspect and the second was that it had views. Mr Avis told Mr Shannon of the views that they had from their homes in Sydney and Avoca Beach and said that as nearly as possible they wanted to get that sort of view otherwise they were not interested in buying a property. At that time they were thinking of spending about $1,500,000. Mr Shannon drove Mr and Mrs Avis through Noosaville, Noosa Waters and Noosa and then Sunshine Beach. He took them to the site of Number One Park and said, based on Mark Bain’s reputation as a builder and what was going to be constructed, he thought that the apartments which were to be built there would cover all of Mr Avis’s criteria. Mr and Mrs Avis told Mr Shannon that the main two on their list were aspect and uninterrupted water views. Those two criteria would have to be satisfied first before they would continue to look at it.

Mr Shannon suggested that they meet with the real estate agency handling Number One Park, Laguna Real Estate. Mr Shannon rang Richard Forsyth from Laguna Real Estate, the principal agent marketing Number One Park, who told Mr Shannon that the unit was in one of the positions in Sunshine Beach which has an uninterrupted view of the ocean. Mr Shannon arranged for Mr and Mrs Avis to meet Mr Forsyth, the principal of Laguna Real Estate, in Mr Forsyth’s office. That meeting occurred in June 2003. Mr Forsyth told Mr Avis that he was the senior person at Laguna Real Estate. Mark Bain Constructions admitted in its defence that it engaged Laguna Real Estate to market the units in Number One Park for sale.

Mr Forsyth showed Mr and Mrs Avis some of his marketing material including a fit out board which had the colour of the carpets, paint and tiles.

Mr Avis said the main focus of their conversation with Mr Forsyth was to confirm the views that would be enjoyed by the penthouse units. Mr Forsyth said that they would be “spectacular, magnificent.” Mr Avis told him about the views they had from their Sydney home and their holiday home and asked in more detail about the views from Number One Park. Mr Forsyth said to him the view would be “white water breaking onto the beach and uninterrupted views.” Mrs Avis remembers Mr Forsyth telling them that they would have spectacular uninterrupted white water views. She also remembers her husband carefully questioning him about the expected views. They talked about the prospect of the building which was to be or being built between Number One Park and the ocean and Mr Forsyth said that, because of the contour sloping away from Number One Park and the height regulations of the council, they would have uninterrupted white water views across the top of that building.

Mr Forsyth gave Mr and Mrs Avis a marketing brochure with his business card stapled to the front of it. The marketing brochure is exhibit 4. Mr Avis said that when Mr Forsyth said that they would be able to see waves breaking on the beach, he questioned him with regard to the photograph which showed white water waves and said that he would call that “white water” not “waves breaking on the beach”. Mr Forsyth conceded Mr Avis was correct. Mr Avis noted that the artist’s impression on the front of the brochure showed sky and ocean between the two buildings of Number One Park. Mr Forsyth told Mr Avis that they would be able to see over the roof of the building which was to be constructed, Splash, because of the contours and the height limit of 12 metres for a building in that area.

Mr Shannon said that Mr and Mrs Avis were also shown a number of photographs in a brochure which was exhibit 8. The numerous photographs showed unobstructed white water views to the north, north-east and east.

The photographs in exhibit 5 which were taken from the balcony of the unit which Mrs Avis purchased clearly shows that, contrary to that representation, the view was interrupted by the Splash building. What was depicted in photographs in exhibit 5 conformed more or less precisely to a view which I was invited to have with the legal representatives on the first day of the trial. Mrs Avis said that if she had known what the view from the unit was actually going to be like, she would not have bought the unit.

I accept that the pre-contractual representations pleaded in paragraph 5 of the statement of claim were made by Mr Forsyth during the course of his meeting with Mr and Mrs Avis and Mr Shannon at Laguna Real Estate in June 2003. They were:

“(a)Number One Park would be a premium quality development with spectacular uninterrupted surf views from the penthouses (oral representation);
(b)the views from the penthouses would not be built out because of local council height restrictions and the contours of the surrounding land (oral representation);
(c)another development (the Splash Development) would be commencing shortly but that the Splash Development would have no impact on the views available from the penthouse at Number One Park and, in particular, there would be a view over the roof of the Splash Development to permit continuous surf views along the whole horizon (oral representation); and
(d)that the penthouses at Number One Park were planned to and would:
(i)be ‘Spectacular White Water Apartments’;
(ii)be ‘Positioned to capture magnificent views of the waves crashing onto the sand at Sunshine Beach’; and
(iii)have views similar to those in a photograph that showed an uninterrupted view of the ocean, of waves breaking and the white water from them, but in which the beach was obscured by buildings and trees in the foreground (representations (d)(i) to (iii) were written, being contained in a colour photocopy of an advertisement (similar to one which appeared in the ‘Noosa News’ in or about January 2004) that Mr Forsyth gave to Mr & Mrs Avis);

(e)that the view in the photograph (namely the photograph referred to in subparagraph (d)(iii) herein) is the view that will be available from the penthouses at Number One Park (oral representation).”

Neither Mr nor Mrs Avis spoke to Mr Forsyth again after the meeting in his office before settling the contract. Mr Avis did however speak to Mr Shannon on several occasions. Mr Shannon conveyed to Mr Avis what was said to him by Mr Forsyth about the views from unit 8.

In about July 2003, Mr Shannon and Mr Forsyth went to the site of Number One Park. Mr Shannon suggested they hire a cherry picker to determine precisely the comparative levels of unit 8 of Number One Park and the top of Splash. Mr Forsyth declined, saying he had checked the levels from the building next to Number One Park and that the views were going to be as they had been shown to Mr and Mrs Avis. Mr Shannon said that Mr Forsyth “again” qualified that by saying that the foreground view would be obstructed. Mr Monks, counsel for the plaintiffs, asked Mr Shannon to explain what he meant by foreground. He referred to trees and buildings down to the beach but not the ocean itself. He understood it to mean that while the foreground view would be affected, the view of the ocean would not be affected.

(iii)the Plaintiff with full knowledge of the facts elected to affirm the contract to purchase unit 8;
(iv)any actual impediment to the view from unit 8 caused by the ‘Splash’ complex does not and did not affect the value of unit 8.”

The first defendant then referred to clauses 14.1.7 and 14.1.8 of the statement of claim to allege in paragraph 21 of the defence:

“(ii)None of the representations referred to in the further amended Statement of Claim are contained in the contract;
(iii)In the premises:-
(a)the Plaintiff is estopped from asserting that she relied on the representations or any of them in entering into the contract to purchase unit 8; and
(b)in the event the Plaintiff is entitled to recover any loss or damage from the First Defendant (which is denied) the First Defendant is entitled to an indemnity from the Plaintiff for the full amount thereof together with the costs referred to in clause 14.1.8 of the contract.”

For the reasons already referred to, the exclusion clause does not have those effects.

Mrs Avis alleged in paragraph 21 of her statement of claim that if the representations had not been made, she would not have entered into any agreement to purchase unit 8, Number One Park and:

“ …
(b)Mrs Avis would have searched for a penthouse or other type of apartment or a house in the Noosa or Sunshine Beach area (i.e. somewhere between Coolum and Noosa, that had uninterrupted surf views (alternative property);
(c)Mrs Avis would have found an alternative property sometime in the middle of 2003; and
(d)Mrs Avis would have succeeded in purchasing that alternative property for a price within her budget, namely between $1.0 and $1.45 million.
Particulars of alternative property
(i)Unit 1, ‘Splash’ 25 Park Crescent, Sunshine Beach
(ii)Unit 2, ‘Splash’ 25 Park Crescent, Sunshine Beach

(e)Further or alternatively to sub-paragraphs (c) and (d) herein, Mrs Avis would not have purchased any property, having failed to fine [sic] or purchased [sic] an alternative property having uninterrupted surf views.

22.Further or alternatively to paragraph 21 above, despite the making of the representations pleaded in paragraphs 5, 6 and 8A above, had Mr Bain not made the representations referred to in paragraph 11 above:
(a)Mrs Avis would refused [sic] to settle the contract for the purchase of the property on the basis of the misleading or deceptive conduct pleaded in paragraph 17 above; and
(b)Mrs Avis would have acted as pleaded at paragraphs 21(b) to 21(e) above.

23.The alternative property would have increased in value in line with the general appreciation in values in the Sunshine Beach area of approximately 34% between the middle of 2003 and May 2008 and thus (if purchased for $1,225,000) be worth at May 2008 approximately $1,646,400.
24A.The plaintiff sold the property in January 2009 for $890,000.
25.In the premises pleaded in paragraphs 21 to 24A above, by the making of the representations pleaded in paragraphs 5, 6, 8A and 11 above, the plaintiff lost the opportunity to acquire an alternative property and profit from its increase in value since the middle of 2003, the quantum thereof being the difference between the present value of an alternative property ($1,646,400) and the value of the property at the time the plaintiff sold it ($890,000), namely $756,400.
26.Further or alternatively to paragraph 25 above, in the premises pleaded in paragraph 21(e) above, by the making of the representations pleaded in paragraphs 5, 6, 8A and 11 above, the plaintiff purchased a property that she would otherwise not have purchased, and as a result of that transaction suffered loss and damage, namely:
(a)interest paid on the purchase price of $1,225,000 that was borrowed from Westpac Banking Corporation from 9 June 2004 until 24 February 2009, totalling $409,221;
(b)loss on capital, being the purchase price of $1,225,000 minus sale price of $890,000, totalling $335,000; and
(c)transaction costs such as bank fees and conveyancing charges.”

The amendment sought on 16 April 2010 was to add to paragraph 26(b) the words “or alternatively to those particulars and sub-paragraph (a) herein, loss on capital, being the purchase price of $1,225,000 minus the value at the date of settlement, being approximately $810,000, totalling approximately $415,000.” For the same reasons as articulated with regard to Barnscape, I do not regard it as necessary for the plaintiff to amend its pleading in order to claim that relief.

In the prayer for relief, the plaintiff then claimed damages pursuant to s 82 of the TPA in the estimated amount of $450,000.

In response, the first defendant pleaded in paragraph 22(ii) of the amended defence that:

“(a)Mrs Avis did not enter the contract to purchase the property on the basis of any false representations or misleading and deceptive conduct on the part of Mr Forsyth and/or the First Defendant as alleged because no such representations were made and no such conduct existed;
(b)Mrs Avis would not have found and purchased an alternative property as alleged for between $1 million - $1.45 million.
Particulars

If, which is denied, Mrs Avis was interested in purchasing a penthouse having uninterrupted surf views (as alleged in paragraph 4 of the third further amended statement of claim) then neither of the alternative properties would have been purchased by her as they did not have any or all of those characteristics.
Further there were no other properties for sale which possessed the characteristics which the Plaintiff required a property to have before the Plaintiff would contemplate purchasing that property.
(c)The First Defendant says further:-
(i) that it does not admit that either of the alleged alternative properties were in fact available to be purchased in the middle of 2003 by the plaintiff. The First Defendant has made reasonable enquiries and remains uncertain of the truth or otherwise of the allegation and is unable to admit it for that reason;
(ii) at no time was the First Defendant or Mr Forsyth advised by the plaintiff that her budget was between $1 million - $1.45 million.
(d)The First Defendant admits that the plaintiff would have failed to find and purchase an alternative property having uninterrupted surf views, as alleged in sub-paragraph (e) of the second further amended statement of claim, but denies the allegations otherwise made in sub-paragraph (e) because they are untrue for the reasons set out in paragraph 22(i) and (ii) hereof.”

Paragraphs 22 to 26 of the statement of claim were partly admitted and otherwise denied.

As in the Barnscape case, it is necessary to refer in detail to the evidence to determine what damage was suffered by Mrs Avis and therefore the appropriate measure of compensation.

Mrs Avis’s evidence was that if she had not purchased the unit at Number One Park, they would either have bought another unit or house somewhere on the east coast or not have purchased at all. She had access to an additional $250,000 should those moneys have been required. However, it is in my view, unlikely that she would have purchased unit 1 or unit 2 in Splash as neither had the required surf views. It is therefore more likely that they would not have purchased a property at Sunshine Beach. It could not therefore be said that they lost the opportunity to achieve the 34 per cent increase in value of units in that area. This is a case where, put simply, Mrs Avis bought a property which she would not otherwise have bought if it had not been for the misleading and deceptive conduct.

After settlement, Mr and Mrs Avis furnished the unit and used it for themselves and their family for holidays. The fitout had been completed before they found out in September 2004 that Splash was not in breach of the height limits of the council.

The funds used to purchase unit 8 were borrowed from Westpac. The Avises borrowed 100 per cent of the purchase price. Although the unit was purchased for capital growth, the unit was not used for income producing purposes, so the interest on the loan used to purchase the property was not tax deductible.

Mr Avis said that they did not attempt to sell the unit until they had resolved the question of whether Splash was above the regulated height or not. Once they took legal proceedings they were uncertain whether or not to sell. Other reasons for selling were more personal. An additional reason for selling was the Avises’ daughters had moved overseas and one had given birth so they started travelling to visit them rather than just visiting one holiday site in Australia. Mr Avis also needed to travel overseas because of a new position that he had taken up.

On 1 August 2008 Mr and Mrs Avis decided to sell unit 8 and appointed Ray White Real Estate and Dowling & Neylan Real Estate to sell the unit for $1,035,000. The contract settled on 23 February 2009 for $890,000. The marketing brochure by Ray White Real Estate correctly referred to the unit having “ocean views”.

There is no dispute that the price obtained by Mrs Avis when she sold the unit was the market price and it was sold after a proper marketing campaign.

In his evidence Mr Caspers valued unit 8 with its impeded view as being worth $755,000.00 as at 1 September 2003 and as at 9 June 2004 as $775,000. If the property had had an unimpeded view, as represented, its value would have been $875,000.00.

Mr Caspers valued unit 8 as at 18 February 2008 at $985,000. Had it had an unimpeded view, it would have been valued at $1,145,000.

If it had not been for the misrepresentations Mrs Avis would not have purchased unit 8. She would not then have suffered the capital loss of $335,000 pleaded in paragraphs 26(b); she would not have had to pay the interest on the capital borrowed of $409,221 and she would have saved on bank fees and conveyancing charges. However, Mr and Mrs Avis would not have enjoyed the personal use of the property. Their sale of the property was influenced by personal factors not related to the representations which induced its purchase. Those matters are particularly difficult to quantify.

For similar reasons to those set out with regard to the calculation of the loss suffered by Barnscape, I would value the loss suffered by Mrs Avis as the difference between the price paid for the unit and its true value at the time of settlement of the Avis contract, $450,000, ie $1,225,000 less $775,000.

Effect on quantum of the compromise between plaintiffs and second defendant

The first defendant submitted that in this instance the loss claimed by the plaintiffs is a single loss said to be occasioned by the first and second defendants. Agency, they submitted, is said to arise by virtue of s 84(2) of the TPA which has a deeming effect whereby the conduct of the agent is said to be conduct of the principal. In other words, the conduct of the second defendants is said to be exactly the same as the conduct of the first defendant. It was submitted that this is not a matter where there are joint tortfeasors and the plaintiff has the benefit of the provisions of the Law Reform Act 1995 (Qld) in respect of joint liability and being able to compromise with one of the defendants and pursue the other.[31] The first defendant submitted that in this instance, as it is exactly the same liability and loss and in circumstances where the plaintiffs compromise with one defendant in respect of exactly the same loss, it operates as a compromise of the entirety of the proceedings. The position would not be any different to that which exists at common law which was only abrogated in respect of tortious claims of and relating to joint liabilities. In the absence of an express provision abrogating it, where there is a compromise with the agent for the same loss, there is a compromise with the principal.
[31]See Thompson v Australian Capital Territory Television (1996) 186 CLR 574.

The first defendant argued that where there are alternative claims between an agent and principal, judgment against one amounts to an election which precludes pursuit of the other.[32] In this instance, the first defendant submitted that there was one loss and no evidence to suggest that the loss sustained by the plaintiffs exceeded that for which the plaintiffs compromised the entire action by each accepting the payment of $200,000 from the second defendant. In the absence of proof that the loss was greater than the payment made, there should be no damages awarded.
[32]Petersen v Moloney (1951) 84 CLR 91.

The first defendant also argued that the plaintiffs, if they were entitled to pursue their claim against the first defendant, were not entitled to double recovery. That is not disputed by the plaintiffs.

The plaintiff raised four issues in response. The first was that when the Avis contract and the Barnscape contract settled on 9 June 2004 there was no provision for proportionate liability between the first defendant and the second defendant under Part VIA of the TPA. Part VIA which received Royal assent on 30 June 2004 does not apply to causes of action which arose before that date.[33]
[33]See Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth) s 2, Schedule 3 and s 1466 of the Corporations Act 2001 (Cth).

With regard to the question of election, the plaintiffs referred to the ratio of Petersen v Moloney at [19]. In Petersen v Moloney the plaintiff, who was the vendor of the property, sued the purchaser for recovery of the purchase price. The purchaser pleaded that he had paid the estate agent who was the vendor’s agent with authority to receive the purchase money. The estate agent was thereupon joined as a defendant and as against him the vendor claimed, in the alternative, the purchase price as money received by him for her use. In such a case judgment entered against one defendant precluded judgment being entered against the other defendant since they were sued in the alternative.

Dixon, Fullagar and Kitto JJ discussed the role of a real estate agent at 94-95:

“In connection with sales and purchases of property the word ‘agent’ is apt to be used in a misleading way. The legal conception of agency is expressed in the maxim ‘Qui facit per alium facit per se’, and an ‘agent’ is a person who is able, by virtue of authority conferred upon him, to create or affect legal rights and duties as between another person, who is called his principal, and third parties. When a person is employed to find a buyer of property, he is commonly said to be employed as an agent, and the term ‘estate agent’ is a common description of a class of persons whose business is to find buyers for owners who wish to sell property. But the mere employment of such a person under the designation of agent does not, apart from the general rule that the employer will be responsible for misrepresentations made by him, necessarily create any authority to do anything which will affect the legal position of his employer.”

In that case the purchaser paid the whole of the purchase price to the real estate agent who failed to pass it on to the vendor. The vendor took action in the alternative against the real estate agent or the purchaser. The High Court held that the real estate agent did not have authority to receive the purchase moneys on behalf of the vendor and that the vendor should not have succeeded therefore against the real estate agent but rather against the purchaser. The High Court held at 102:

“The case is clearly one of alternative liability. Either Maloney [the purchaser] or Pulbrook [the real estate agent] might be liable to the plaintiff, but both could not be. In such a case a final election to treat either as liable would preclude the plaintiff from proceeding against the other, and it is a well-settled general principle that, while the commencement of action against one of two persons alternatively liable does not, the entry of judgment against one of them does, constitute a final and irrevocable election: See Morel Bros & Co Ltd v Earl of Westmoreland.[34] In the present case the plaintiff (as she was clearly entitled to do) proceeded against both of the persons possibly liable, claiming alternatively as against each. After [the trial judge] had pronounced his decision she entered judgment against [the real estate agent]. Did this amount to a final election to treat [the real estate agent] as liable to the exclusion of [the purchaser]? Apart from appeal, clearly it would amount to such an election.”

[34](1903) 1 KB 64; (1904) AC 11.

That was a case in which “one but not both might have been liable”. Their Honours referred to the rule stated by Atkin LJ (as he then was) in Moore v Flanagan[35] that:

“A plaintiff cannot sue an agent to judgment and then sue the principal”.

[35](1920) 1 KB 919 at 928.

Their Honours held that the plaintiff in Petersen v Moloney did not offend against that rule. They observed at 103:

“It is to be noted that, although the rule is often stated in terms which would seem to make it depend on election, Vaughan Williams J (as he then was) in Hammond v Schofield[36] said:
‘The basis of this defence is not the election or unconscious election, if there can be such a thing, of the plaintiff, but the right of the co-contractor when sued in a second action on the same contract to insist, though not a party to the first action, on the rule that there shall not be more than one judgment on one entire contract.’

This passage is quoted by Scrutton LJ in Moore v Flanagan [1902] I KB 919 at 925. Moore v Flanagan was not, and this case is not, a case of ‘co-contractors’, but the same rule is applicable, and it must rest on the same basis. There must not be more than one judgment where there is only one antecedent obligation.”

[36](1891) 1 QB 453 at 457.

The principle was referred to by Gibbs and Mason JJ in Marginson v Ian Potter & Co[37] as follows:

“… once a third party has sued the agent to judgment he cannot thereafter, without setting aside that judgment, sue the undisclosed principal even if the existence of the principal was [not] known to the third party at the time when the judgment was obtained. This proposition rests not on the doctrine of election which depends in general upon knowledge of relevant facts but on another principle, namely that when judgment is obtained on a cause of action the cause of action merges in the judgment. Thus the liability of an undisclosed principal merges in a judgment obtained against the agent by the third party [Priestly v Fernie (1863) 3 H&C 977; 159 ER 820; Kendall v Hamilton (1879) 4 App Cas 504 at 514-515; Petersen v Moloney].”

[37](1976) 136 CLR 161 at 169.

The plaintiffs argued that those cases do not apply here because the liability is not alternate as it is with third party contracts with an agent on behalf of the principal, it is joint.

The principal in this case is jointly liable with the agents for the misrepresentations. It can offset the amount paid in the action by the agent but that does not in my view extinguish the principal’s liability.

The third issue dealt with by the plaintiffs in their submissions was the matter raised by the first defendant’s submission that the compromise with the real estate agent was in respect of the same joint liability and therefore it amounted to a compromise of the entire proceedings. The plaintiffs conceded that if the settlement agreement be construed as a release, it would release all others who were jointly liable for the same conduct. However if the settlement agreement be construed merely as a covenant not to sue, it would not release the other debtors. Even if a settlement agreement purports to be a release, if it discloses an intention to reserve rights against the other joint tortfeasor, or can be construed such that the intention was that the other jointly liable parties were to remain liable, it will be treated as a mere covenant not to sue.

The correspondence between the solicitors for the real estate agents and the solicitors for the plaintiffs clearly show that the offer to settle made by the second defendant real estate agents was made with the clear understanding that the plaintiffs could pursue their action against the first defendant. The settlement agreement between the plaintiffs and the second defendants was a contract between the plaintiff and the second defendant which compromised the action between them but did not affect the liabilities of the first defendant to the plaintiffs. It clearly disclosed an intention to reserve rights against the first defendant and as such is to be construed as a covenant not to sue the second defendant rather than a release of the whole action: see Pollak v National Australia Bank Limited.[38]
[38][2002] FCA 237 at [15] – [17].

The fourth matter raised by the plaintiffs was that they accepted that they must bring into account the settlement moneys they received from the second defendant in the assessment of any award of damages against the first defendant. The settlement sum in each case was an all-up figure inclusive of costs.

Conclusion

In the Barnscape matter the all-up payment by the second defendant was $200,000. By that stage the plaintiff had incurred costs of $121,610.16. One can assume that those costs were apportioned equally between the two defendants and so one half of the costs, $60,805, was attributable to the case against the first defendant. The plaintiff submitted, and there is no reason to dispute, that that figure would be likely to be discounted by some 40 per cent in a costs assessment leaving an amount payable for costs of $36,483. The rest of the settlement of $200,000, that is $163,517, can be taken to be the damages part of that settlement and should be deducted from the damages awarded against the first defendant in this judgment. I would therefore order the first defendant to pay Barnscape the sum of $216,483 (being $380,000 less $163,517) together with interest.

So far as the Avis matter is concerned the payment made by the second defendant was a payment of $200,000 inclusive of the claim, interest and costs. Exhibit 1 in that matter shows that the actual costs incurred by the plaintiff to that time were $113,057.16. One can assume that those costs were incurred equally by the plaintiff between the two defendants and so the amount of $56,528.58 was attributable to the legal costs involving the claim against the first defendant. As the plaintiff conceded in submissions, that should be reduced by another 40 per cent to take account of the amount that would be allowed on taxation bringing the amount to $33,917. The rest of the settlement i.e. $166,083 can be taken to be the damages part of that settlement and should be deducted against the damages awarded against the first defendant in this judgment. I would therefore order the first defendant to pay Mrs Avis the sum of $283,917 (being $450,000 less $166,083) together with interest.

I shall hear submissions as to the precise form of the orders and costs.

CITATION:	Avis & Anor v Mark Bain Constructions Pty Ltd [2011] QSC 80
PARTIES:	BS2488 of 2007 CAROL LYNETTE AVIS (plaintiff) v MARK BAIN CONSTRUCTIONS PTY LTD ACN 010 846 385 (defendant) BS2491 of 2007 BARNSCAPE PTY LTD ACN 077 636 367 (plaintiff) v MARK BAIN CONSTRUCTIONS PTY LTD ACN 010 846 385 (defendant)
FILE NO/S:	2488 of 2007 2491 of 2007
DIVISION:	Trial
PROCEEDING:	Claim
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	11 April 2011
DELIVERED AT:	Brisbane
HEARING DATES:	15 – 19 February 2010 31 March 2010 16 April 2010 31 May 2010 – 1 June 2010 3 June 2010 Further submissions received 15 June 2010, 22 June 2010 and 25 June 2010
JUDGE:	Atkinson J
ORDERS:	*The first defendant in BS2488 of 2007 pay the plaintiff the sum of $283,917 as compensation under s 82 of the Trade Practices Act 1974* (Cth); The first defendant in BS2491 of 2007 pay the plaintiff the sum of $216,483 as compensation under s 82 of the Trade Practices Act 1974 (Cth). The court will hear submissions about orders to be made in each matter as to interest and costs.**
CATCHWORDS:	TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – ENFORCEMENT AND REMEDIES – ACTIONS FOR DAMAGES – ASSESSMENT OR AVAILABILITY OF DAMAGES – PARTICULAR CASES – DAMAGES ARISING OUT OF PURCHASE OF LAND OR BUSINESS OR LEASE – where plaintiffs separately entered into a contract to purchase a luxury apartment off the plan from the developer vendor – where, in entering the contract, plaintiffs relied on representations made by the real estate agent that the ocean view from the apartment would be uninterrupted – where contracts settled and plaintiffs were dissatisfied with their view as it was obstructed by a new building – where plaintiffs claimed that the representations with respect to the view were false, misleading and deceptive in contravention of s 52 and s 53A Trade Practices Act1974 (Cth) – where plaintiffs instituted proceedings against the developer on the basis that the real estate agent was its agent duly authorised to make these representations – where the defendant contended that the real estate agent was only authorised to market the apartments for sale – whether the representations made by the real estate agent fell within the scope of its actual or apparent authority PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – JURISDICTION AND GENERALLY – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – PLEADING – STATEMENT OF CLAIM – where at trial the pleadings particularised the plaintiffs’ damage on the basis of loss of investment opportunity – where, at the beginning of the trial, the plaintiffs and first defendant compromised proceedings against the second defendants/third party real estate agents on the basis of the plaintiffs’ pleadings as they then were – where after the trial concluded the plaintiffs sought leave to amend pleadings and broaden the particulars of damage – where witnesses were recalled and further evidence led – where first defendant opposed the amendment on the basis of prejudice – whether leave to amend the pleadings should be granted at late stage EVIDENCE – ADMISSIBILITY AND RELEVANCY – SIMILAR FACTS – TO PROVE FACT IN ISSUE – PARTICULAR CASES – EVIDENCE ADMISSIBLE – where plaintiffs sought to lead evidence of similar representations made to another purchaser who was not a party to the proceedings – whether the similar fact evidence was sufficiently relevant and probative to be admissible TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION – ENFORCEMENT AND REMEDIES – ACTIONS FOR DAMAGES – ASSESSMENT OR AVAILABILITY OF DAMAGES – WHAT LOSS OR DAMAGE RECOVERABLE – LOST COMMERCIAL OPPORTUNITY – where the plaintiffs claimed damages for loss of investment opportunity on the basis that they would have purchased an alternative property or otherwise invested the money – whether the claim of lost opportunity was sufficiently certain for damages to be assessed on that basis TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION – ENFORCEMENT AND REMEDIES – ACTIONS FOR DAMAGES – ASSESSMENT OR AVAILABILITY OF DAMAGES – PARTICULAR CASES – DAMAGES ARISING OUT OF PURCHASE OF LAND OR BUSINESS OR LEASE – where, at the beginning of the trial, the plaintiffs and first defendant compromised proceedings against the second defendants/third party real estate agents – where the first defendant argued that the plaintiffs suffered a single loss and the compromise operated as a compromise of the entire proceedings – whether the compromise affected the quantum of damages that should be awarded Competition and Consumer Act 2010 (Cth) Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth), s 2, Schedule 3 Corporations Act 2001 (Cth), s 1466 Law Reform Act 1995 (Qld) Property Agents and Motor Dealers Act 2000 (Qld), s 366(1) Trade Practices Act1974 (Cth), s 51A, s 52, s 53A, s 82, s 84 Uniform Civil Procedure Rules 1999 (Qld), r 5, r 156, r 375, r 478, r 658 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, cited Borg & Ors v Northern Rivers Finance Pty Ltd & Ors [2003] QSC 112, considered Bull v Attorney-General for New South Wales (1913) 17 CLR 370, cited Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, cited Coppo v Banalasta Oil Plantation Ltd; Borg v Pawski [2005] QCA 96, applied Dare v Pulham (1982) 148 CLR 658, cited Demagogue v Ramensky (1992) 39 FCR 31, cited Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32, cited Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199, cited Gates v City Mutual Life Assurance Society Ltd (1982) 43 ALR 313, considered Gates v City Mutual Life Assurance Society Ltd (1985) 160 CLR 1, cited Hehir & Anor v Smith [2002] QSC 92, cited Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546, cited Henville v Walker (2001) 206 CLR 459, cited HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640, applied I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109, considered ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248, cited MacCormick v Nowland [1988] FCA 53, cited Marginson v Ian Potter & Co (1976) 136 CLR 161, cited Mark Bain Constructions Pty Ltd v Tim Barling, Alex Watson and Timothy Scott [2006] QSC 48, cited Marks v GIO Australia Holdings (1998) 196 CLR 494, considered Martin v Osborne (1936) 55 CLR 367, considered Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23, applied Moore v Flanagan (1920) 1 KB 919, cited Mullens v Miller (1882) 22 Ch Div 194, applied Petersen v Moloney (1951) 84 CLR 91, considered Pollak v National Australia Bank Limited [2002] FCA 237, cited Potts v Miller (1940) 64 CLR 282, cited QCoal P/L & Anor v Cliffs Australia Coal P/L & Anor [2009] QCA 358, cited Re Benlist Pty Limited v Olivetti Australia Pty Limited [1990] FCA 289, cited Scott v Numurkah Corporation (1954) 91 CLR 300, cited Sellars v Adelaide Petroleum (1994) 179 CLR 332, cited South Australia v Johnson (1982) 42 ALR 161, cited Thompson v Australian Capital Territory Television (1996) 186 CLR 574, cited Toteff v Antonas (1952) 87 CLR 647, cited Unsted v Unsted (1947) 47 SR (NSW) 495, cited Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, applied Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd [2005] WASCA 174, applied Webb Distributors (Aust) Pty Ltd v Victoria (1993) 179 CLR 15, cited
COUNSEL:	S Monks for the plaintiff in both matters A Collins for the first defendant in both matters
SOLICITORS:	Boyd Legal for the plaintiff in both matters Holland & Holland for the first defendant in both matters