Base Group Property Pty Ltd v Wyllie

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION
PROPERTY LIST

S ECI 2023 06085

BETWEEN:

BASE GROUP PROPERTY PTY LTD (ACN 617 359 145)	Plaintiff
v
MARY LOUISE WYLLIE	Defendant

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JUDGE:	Efthim AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	21 May, 30 May, 11 June 2024
DATE OF JUDGMENT:	1 August 2024
CASE MAY BE CITED AS:	Base Group Property Pty Ltd v Wyllie
MEDIUM NEUTRAL CITATION:	[2024] VSC 523

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PROPERTY LAW – Sale of Land Act 1962 (Vic) ss 32, 32H and 32K(1), (2) and (4) – Whether section 32 statement failed to provide required information – Whether purchaser entitled to rescind contact of sale by reason of the vendor’s non-disclosure of connected services – Whether vendor acted honestly and reasonably – Whether purchaser in substantially as good a position as if disclosure obligations had been complied with – Fifty-Eighth Highwire v Cohen [1996] 2 VR 64 referred to – Property Law Act 1958 (Vic) s 49(2) – Whether purchaser entitled to return of deposit – Finding that purchaser entitled to return of deposit.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr B Harding of counsel	Nicholas James Lawyers Pty Ltd
For the Defendant	Mr W Rimmer of counsel	Davis Lawyers

TABLE OF CONTENTS

Introduction

Background

The issues before the Court

The purchaser’s entitlement to rescind the contract of sale.

The defendant’s defence pursuant to s 32K(4) of the SLA

First element - The defendant acted honestly
Second element - The defendant acted reasonably - Payne v Morrison
Third element – ‘ought fairly to be excused’
Fourth element – ‘Substantially as good as position’

Section 49(2) of the PLA

Conclusion

HIS HONOUR:

Introduction

The plaintiff, Base Group Property Pty Ltd, has filed an originating motion in this proceeding seeking declarations and orders under s 49 of the Property Law Act 1958 (Vic) (‘PLA’). The plaintiff seeks the return of a deposit that was paid under a contract for the purchase of land situated at 790 Arthurs Seat Rd, Arthurs Seat.

Background

By contract of sale of land dated 21 December 2022 (‘contract of sale’), the defendant, Mary Louise Wyllie, sold a property to the plaintiff for $8 million, with a 10% deposit of $800,000 payable on execution. The balance of the sale price was due to be paid one year later, on 21 December 2023. The deposit of $800,000 under the contract of sale was released to the defendant pursuant to s 27 of the Sale of Land Act 1962 (Vic) (‘SLA’).
The property comprises the land described in five titles, one for each of lots 9, 10, 11, 12 and 13. Lots, 9, 11, 12 and 13 are vacant lots. The Arthurs Seat Hotel is on lot 10, but otherwise, the lots are unimproved.
The contract of sale was preceded by a section 32 statement given by the defendant pursuant to section 32 of the SLA (‘section 32 statement’). Item 8 of the section 32 statement provides:
Item 8 of the section 32 statement indicates that electricity, gas, sewerage and telephone services are connected to the vacant lots and there is a water tank connected to the Hotel lot only.
On 16 November 2023, the plaintiff rescinded the contract of sale under s 32K of the SLA on the basis that the defendant had breached s 32H of the SLA by incorrectly advising that electricity, gas, sewerage and telephone services were connected to the vacant lots.
The plaintiff seeks a return of the deposit and has a lodged a caveat over the titles to the property, claiming an interest in the land pursuant to a lien for return of the deposit.
On 20 December 2023, the plaintiff commenced the present proceeding under s 49(1) of the PLA, requesting the Court to answer whether the plaintiff had validly rescinded or terminated the contract of sale under s 32K of the SLA by the email from its solicitors to the defendant’s solicitors dated 16 November 2023.
On 21 December 2023, the defendant gave the plaintiff a notice pursuant to general condition 35 of the contract of sale, requiring the plaintiff to pay the balance of the sale price within 14 days, failing which the contract would be ended in accordance with general condition 35. The notice was not complied with. As a consequence, from the defendant’s perspective, the contract of sale came to an end and pursuant to general condition 35 the deposit was forfeited by the plaintiff.

The issues before the Court

The issues put by the plaintiff before the Court are as follows:
(a)was the purchaser entitled to rescind the contract of sale under s 32K(2) of the SLA by reason of the vendor’s non-disclosure of connected services under s 32H of the SLA?
(b)if the answer to (a) is ‘yes’, then the purchaser seeks ancillary orders for a declaration, return of the deposit and interest.
(c)if the answer to (a) is ‘no’, then is the purchaser entitled to recover its deposit under s 49(2) of the PLA?
(d)notwithstanding an answer of ‘yes’ to (a), is the purchaser disentitled from rescinding the contract of sale on the basis that the vendor can make out the ‘vendor’s defence’ in s 32K(4) of the SLA?

The purchaser’s entitlement to rescind the contract of sale.

Section 32(1) of the SLA provides:
(1)A vendor under a contract for the sale of land must give to a purchaser, before the purchaser signs the contract, a statement signed by the vendor that contains the matters and attaches the documents specified in this Division.
Section 32H of the SLA provides:
Disclosure of non-connected services in section 32 statement
A section 32 statement must specify if any of the following services are not connected to the land—
(a)       electricity supply;
(b)       gas supply;
(c)       water supply;
(d)      sewerage;
(e)       telephone services.
Section 32K of the SLA provides:
Supply of false information or failure to supply information in section 32 statement or failure to supply section 32 statement may result in rescission
(1) This section applies if a vendor—
(a)supplies false information to a purchaser in a section 32 statement or in any certificates, notices, policies or other documents attached to a section 32 statement for the purposes of complying with the requirements of this Division; or
(b)fails to supply all the information required to be supplied to a purchaser, either in a section 32 statement or attached to the section 32 statement, as required by this Division; or
(c)fails to give a purchaser a section 32 statement signed by the vendor before the purchaser signs the contract for the sale of land.
(2)The purchaser may rescind any contract for the sale of land which has been entered into on the basis of information contained in the section 32 statement or attached to the section 32 statement at any time before the purchaser accepts title and becomes entitled to possession or to the receipt of rents and profits.
(3)The purchaser may rescind any contract for the sale of land where the vendor fails to give the purchaser a section 32 statement before the purchaser signs the contract at any time before the purchaser accepts title and becomes entitled to possession or to the receipt of rents and profits.
(4)Despite subsection (2) and (3), the purchaser may not rescind a contract for the sale of land if the court is satisfied that—
(a)the vendor has acted honestly and reasonably and ought fairly to be excused for the contravention; and
(b)the purchaser is substantially in as good a position as if all the relevant provisions of this Division had been complied with.
The property comprises of five lots. The Arthurs Hotel is on lot 10, and otherwise the lots are unimproved. Lots 9, 11, 12 and 13 do not have any services connected. The Hotel on lot 10 was serviced on 21 December 2022 as follows:
-electricity by main supply;
-sewerage by main supply;
-telephone by main supply;
-gas by bottled gas; and
-water by tank water.
The defendant does not dispute that the vacant lots are not connected with services. The defendant and the solicitor who prepared the section 32 statement on behalf of the defendant, John Xavier Smith, both agreed that item 8 of the section 32 statement was wrong.[1]
[1]Transcript of Proceedings, Base Group Property Pty Ltd v Wyllie, (Supreme Court of Victoria, S ECI 2023 06085, Efthim AsJ, 21 May 2024) 84.27 and 107.13. (’Transcript 21 May’).
The plaintiff submits that there could be no argument that the section 32 statement failed to comply with s 32H of the SLA and consequently the plaintiff was entitled to rescind the contract of sale.
The defendant notes that the plaintiff started its analysis by pointing straight to item 8 in the section 32 statement and noting that the statement it contains was wrong. The defendant submits that this is the wrong starting point. The defendant states this is a matter of statutory construction, first of s 32K and then the corresponding s 32H of the SLA which specifies the matters regarding services that were required to be disclosed in the section 32 statement.
The defendant submits that it is not enough that there be false information in a section 32 statement. If the information provided was not required in the section 32 statement in the first place, then it was not supplied for the purposes of complying with any applicable requirements of the SLA, whether it is false or not, and no remedy arises under s 32K. Disclosure is only required if negative facts about the services to the land are the case. Positive disclosures are not required of what services are connected.
The defendant submits that the issue for the plaintiff in this case turns on the statutory construction of the term ‘land’ in s 32H of the SLA. It notes that the nub of the plaintiff’s case appears to be that the lots were separately saleable lots comprised within the greater parcel of the land the defendant sold to the plaintiff under the contract of sale, and that each parcel required specific disclosure separately under s 32H of the SLA.
The defendant submits that pursuant to s 32(1) of the SLA, disclosure is required in respect of ‘the land being sold’ under the contract of sale. That, in turn, necessarily lends on to a construction of the particular contract in issue. Here, the contract of sale described the property being sold and in the particulars of sale as ‘Lots 09, 10, 11, 12 and 13’, 790 Arthur’s Seat Road, Arthur’s Seat, VIC, 3936’. The description of the land in the particulars of sale sets out the five titles for each of the five lots.
The defendant states that merely specifying the property being sold comprises five lots does not mean the land being sold is each of those five lots separately. Rather, each lot and each such title referred to merely provides a legal description of the land that is being sold. There are not five separate contracts for each of the lots separately, there is one contract for one sale of one parcel of land as a whole.
The defendant contends, therefore that the vendor need not make any disclosure at all under s 32H of the SLA. The defendant says that the services were connected to the land sold under the contract of sale. They were connected to the Hotel, which happens to be on lot 10. The remedy in s 32K, therefore, does not apply and the plaintiff was not entitled to rescind the control of sale under s 32K(2) of the SLA.
If the land was sold to the plaintiff as one parcel of land, the defendant’s submissions would have more force. Here, the sale related to five lots which is equivalent to five parcels of land and, as such, in my view the plaintiff was entitled to know whether the lots contained the services.
The applicable legislation is consumer protection legislation, and its aim is to protect a purchaser of land. To construe the land as only one parcel when five lots are specifically referred to is not appropriate. Here, the parties acknowledge that the section 32 statement was wrong and the legislation, in my view, protects the plaintiff in such circumstances and the plaintiff was entitled to rescind the contract under s 32K of the SLA.

The defendant’s defence pursuant to s 32K(4) of the SLA

Section 32K(4) of the SLA provides:
(4)Despite subsection (2) and (3), the purchaser may not rescind a contract for the sale of land if the court is satisfied that—
(a)the vendor has acted honestly and reasonably and ought fairly to be excused for the contravention; and
(b)the purchaser is substantially in as good a position as if all the relevant provisions of this Division had been complied with.
The defendant must establish each of the following elements for the defence to be made out:
-the defendant acted honestly;
-the defendant acted reasonably;
-the defendant ought fairly to be excused; and
-the plaintiff is in substantially the same position as it would have been if the section 32 statement had complied with the disclosure requirements under s 32H.

First element - The defendant acted honestly

In Sale of Land Act Victoria, Lloyd and Rimmer considered the element of acting honestly and stated:
The first element requires the vendor to have acted honestly. A positive finding of dishonesty is not required; rather, there needs to be a positive finding that the vendor acted honestly and the burden of proof lies with the vendor. In terms of proof, there may be evidence of the vendor's subjective intent; but a lack of subjective intent will not lead the court to conclude that a vendor has acted honestly if a reasonable person in the vendor's position would regard conduct as exhibiting moral turpitude. It may appear to the court that a person has acted honestly from an examination of the surrounding circumstances.
In Civoken v Madden Grove Developments Pty Ltd, McHutchison v Asli and Chatham v Coral Park Pre-Training & Breaking Pty Ltd, the Court was not satisfied that the vendor had acted honestly, in the absence of any relevant evidence on the part of the vendor.[2]
They went on to state:
Acting honestly means acting without moral turpitude. More particularly, the person needs to act without deceit or conscious impropriety, and without intent to gain improper benefit or advantage. A person may fail to act honestly in the absence of an intention to deceive. Conversely, an intention on the part of the vendor to deceive or defraud will stand in the way of a finding of honesty.[3]
[2]D Lloyd and W Rimmer, Sale of Land Act Vic (ThomsonReuters, 2009), 363–364 [S.32K.250] [Citations omitted] (‘Lloyd and Rimmer, Sale of Land Act Vic’).
[3]Ibid, 364 [S.32K.260] [Citations omitted].
In Fifty-Eighth Highwire Pty Ltd v Cohen,[4] Charles and Callaway JJA held that whether a vendor acted honestly is a subjective enquiry.
[4][1996] 2 VR 64, 77.
The plaintiff submits that the defendant presented as confused and unwilling to make any concessions which she perceived to be adverse to her interests, however benign or obvious. It was also submitted her evidence was entirely unhelpful, even to her own case, and there was very little clear, direct, unequivocal evidence from the defendant.
The defendant deposes that:
In or about early 2021 Greg and I instructed our solicitor at the time, being John X. Smith, Esq of 4/300 King Street, Melbourne to prepare a Contract of Sale and Section 32 Statement to sell the Property, as Greg and I had decided to cease operations at the Hotel and sell the Property.
In our instructions, we informed John Smith that the Arthurs Seat Hotel had all services connected to the Property, save for water, gas and telephone connections. I informed John Smith that the Arthurs Seat Hotel has water by way of a water tank, and that gas was only available by bottled gas, however, all other parts of the Property did not have any services connected as they were vacant land.
On or about 1 December 2021 we received the final draft of the Section 32 Statement from the offices of John Smith.
Upon my reading of the Section 32 Statement as Mr Smith had prepared it, in particular section 8, I saw that Mr Smith had made express reference to my instructions regarding the limited gas and water services to the Property. I also saw that he had not put any crosses in any of the boxes pertaining to services (other than the limited water service). I took it that he had determined that there was no need in his opinion to put ticks in those boxes for the purposes of this Section 32 Statement. As those services were in fact all connected when I signed the Section 32 Statement, this caused me no concern.
When cross-examined, the defendant agreed that:
-she gave instructions to Mr Smith about the lack of services at the land;[5]
-Mr Smith provided her with a final section 32 statement;[6]
-she noted that item 8 of the section 32 statement did not reflect her instructions;[7]
-she made an assumption that Mr Smith had already determined there was no need to put ticks in the correct boxes for the purposes of the section 32 statement;[8]
[5]Transcript 21 May (n 1) 100.17.
[6]Ibid 101.18.
[7]Ibid 104.17.
[8]Ibid 103.25.
The plaintiff asserts that the defendant after seeing the section 32 statement decided to take the matter no further. I do not accept that this fairly characterises her evidence. However nothing turns on this.
The plaintiff asks how can the conduct of the defendant, on the evidence, be the conduct of a vendor acting honestly? The plaintiff says that, at the very least, an honest and diligent vendor would have contacted her solicitor and asked whether there was an error in the section 32 statement, rather than simply ignoring it.
In support of its submissions, the plaintiff relies on McHutchison v Asli[9]. In that case, a purchaser checked the section 32 statement , noticed something was not right with the check boxes and made an assumption that it was correct. Digby J was not satisfied that the vendor had discharged her onus to establish that she had acted honestly in the circumstances.
[9][2017] VSC 258.
The vendor in that case tried to characterise the supply of false information in her section 32 statement as a mere clerical error. She put no evidence before the Court why she signed the section 32 statement in an inaccurate and erroneous form, which conveyed false information.
The facts before me are different to those in McHutchison v Asli. Here the defendant adduced evidence of the circumstances surrounding the preparation of the section 32 statement. She also adduced evidence from her solicitor, Mr Smith, and her husband, Mr Greg Wyllie, who gave most of the instructions to Mr Smith in connection with the section 32 statement on her behalf.
In relation to the evidence given by the defendant, I do not accept the submissions made by the plaintiff. In my view, she made her best efforts to answer the questions put to her and tried to remember as best she could to answer the questions. I do not agree that she presented as confusing and unwilling to make any concessions which she perceived to be adverse to her interests.
An assertion was made at the trial by the defendant that the defendant was suffering from the early stages of Parkinson’s Disease. The plaintiff submitted that it was not for the defendant to faintly press an argument about her health to fix up her evidence. If there was an issue of her evidence because of ill health, there should have been a medical report filed before the Court.
Mr Smith gave evidence that the defendant was not well and that was the principal reason why most of the instructions were provided through her husband, Greg Wyllie.[10]
[10]Transcript of Proceedings, Base Group Property Pty Ltd v Wyllie, (Supreme Court of Victoria, S ECI 2023 06085, Efthim AsJ, 30 May 2024) 28.19.

The issue of whether the defendant was well or not did not, in my view, impact on her evidence.
The onus is on the defendant to prove, positively, that she acted without conscious impropriety and without intent to gain improper benefit or advantage from, and in relation to any false information communicated by her section 32 statement.[11] It is my view that there is nothing in the evidence in this case which shows any dishonest intent by the defendant.
[11]See McHutchison v Asli [2017] VSC 258.
The defendant admitted to reading the section 32 statement and conceded that the section 32 statement was wrong. She was advised by Mr Smith that it was not necessary for her to re-check the section 32 statement and she relied on his professional opinion on how the boxes in item 8 should be completed.
On the evidence, I conclude that the defendant was acting without moral turpitude. I accept that the defendant acted ‘without deceit or conscious impropriety, and without intent to gain improper benefit or advantage’.

Second element - The defendant acted reasonably - Payne v Morrison[12]

[12](1992) V Conv R 54-428.

In the case of Payne v Morrison, O’Bryan J considered the question of whether a defendant acted reasonably. His Honour held that to act reasonably involves an objective test and is one of acting with due care, attention, and without negligence.[13]
[13]Ibid 65-056.
Here the defendant submits that she acted reasonably by retaining a solicitor to act for her in the conveyance of the land. The plaintiff, on the other hand, submits that simply retaining a solicitor to act does not discharge the defendant’s burden to demonstrate that she acted reasonably.
The plaintiff contends that the question before the Court is: if a vendor engages a solicitor or a conveyancer to prepare a section 32 statement which turns out to be defective, can the negligence of the solicitor or conveyance be attributed to the vendor themselves so that the vendor acted without due care and attention, and with negligence?
The plaintiff submits that the law of agency would say yes. After an analysis of the authorities in this area, the plaintiff further submits there is no obvious policy reason why the usual rules of agency should not apply to the defendant’s defence in s 32K(4) of the SLA if the defendant’s solicitor acted negligently. If the defendant’s solicitor acts negligently and causes the defendant loss, then the defendant has a claim against the solicitor which will be met by professional indemnity insurance. Conversely, if the plaintiff is disentitled to relief based on the defendant’s solicitor’s negligence, they are left with no remedy at all.
The plaintiff submits that the issue of whether or not the negligence of a solicitor can be attributed to their client has not been conclusively determined. The plaintiff says that there are two conflicting lines of authority on whether a vendor can be found liable for their solicitor/conveyancer’s negligence:
-a vendor was found liable in Payne v Morrison[14] and Deemcope Pty Ltd v Cantown Pty Ltd[15]; and
-a vendor was found not to be liable in Pricom Pty Ltd v Sgarioto[16] and Paterson v Batrouney.[17]
[14](1992) V Conv R 54-428.
[15][1995] 2 VR 44.
[16](1994) V Conv R 54-508.
[17](2001) V Conv R 54-639.
In Fifty-Eighth Highwire Pty Ltd v Cohen & Anor,[18] Charles and Callaway JJA stated:
The complete protection that the fourth [element] affords the purchaser probably means that the first three requirements are concerned with the vendor personally, so that it will usually be inappropriate to visit the negligence of a solicitor on his or her client…[19]
[18][1996] 2 VR 64, 77.
[19]Ibid.
Although this statement was in obiter, it has been followed by Beach J in Paterson v Batrouney[20] and John Dixon J in Longforest Estate Pty Ltd v Singh[21].
[20][2000] VSC 313.
[21][2020] VSC 604.
The plaintiff in support of its submissions referred to the first edition of Sale of Land Act Victoria where the learned authors Lloyd and Rimmer considered the conflicting authorities and said:
In none of the reported cases on the subject of the second element has reference been made to the definition of vendor in s 30, which includes a person acting as agent for the vendor. Plainly enough, a solicitor, estate agent or conveyancer preparing a section 32 statement on instructions from the vendor can be said to be acting in the capacity of an agent of the vendor for the purposes of s 32. Taking the s 30 definition of vendor into account, it seems inevitable that for the purposes of the second element of s 32K(4) a vendor should not be entitled to escape the consequences of negligence on the part of an agent in terms of the drafting of the section 32 statement, as the negligence is by virtue of the s 30 definition effectively that of the vendor personally. In these circumstances, it should not be open for a court to find affirmatively that the vendor has acted reasonably for the purposes of s 32K(4) where the vendor’s agent has been guilty of negligence in relation to the drafting of the section 32 statement. [22]
[22]Lloyd and Rimmer, Sale of Land Act Vic (n 2) 204.
However, this section was removed in the second edition after it was criticised by Marks J in Downing v Lau[23] and by Judge Cosgrave (as his Honour then was) in Callea v Wenfang[24].
[23][2018] VCC 33.
[24][2022] VCC 508.
The defendant submits that the principle enunciated by Charles and Callaway JJA should now be accepted as part of the law in Victoria for the time being. After the reviewing the authorities, I am of the same view as the defendant.
I note that in Callea v Wenfang[25], Judge Cosgrave stated:
I consider that the approach taken by Marks J has merit. If A engages B for various tasks, it is possible for B to act as A’s agent on some tasks but not others. When a solicitor or conveyancer produces a section 32 statement and contract of sale, they are acting as professionals to produce particular documents used to effect a sale of land. If such work is affected by an error such as an omitted reference or document, the consequences of the error should not automatically be visited upon the vendor. The position might be different if, for example, the vendor was aware of the problem and did nothing to correct it or instructed the solicitor to omit the reference or document. But these kinds of issues do not arise in the present case.[26]
[25]Ibid.
[26]Ibid [70].
The plaintiff submits that the above passage is on all fours with the present case. The plaintiff says that the evidence shows unequivocally that the defendant was aware that item 8 of the section 32 statement was incorrect but did nothing to correct it.
The plaintiff asserts that this is not a case of ‘honest error’ and an ‘immaterial technical failure’, and that the defendant knowingly failed to advise her solicitor that the section 32 statement was incorrect.
On the evidence, I accept that:
-it was reasonable for the defendant to appoint Mr Smith as her solicitor to prepare the section 32 statement;
-it was reasonable for the defendant to rely on her husband, Mr Wyllie, to give Mr Smith most of his instructions about the sale;
-Mr Smith had the correct information about services connected with the land, including the vacant lots;
-the defendant produced evidence to the Court from Mr Smith and in her own evidence to explain the error which was that of Mr Smith;
-Mr Smith only once provided the defendant with the draft section 32 statement for the sale to the plaintiff, which was the final draft. That email stated:
Hi Greg & Mary,
I attach draft contract of sale with vendor statement annexed.
Please carefully check over the document and confirm that it is in satisfactory form and may be sent to the agent.
No need to re-check the vendor statement which is annexed, only the contract of sale part of the document (the first 35 pages).
-the defendant took it that Mr Smith, in his professional opinion, had determined that there was no need to put ticks in all of the boxes. In cross-examination, she conceded that the statement in Item 8 was wrong. She said that she should have noticed it with the benefit of hindsight. It was an important document and needed to be correct.[27]
[27]Transcript 21 May (n 1) 107.7.
It was reasonable for the defendant to give the final draft of the section 32 statement a mere cursory reading to form the view that she did because:
-Mr Smith told her there was no reason to re-check the section 32 statement and by telling her that there was no need to re-check the section 32 statement, Mr Smith in effect told her that, in his opinion, it had been completed as required for the purposes of the section 32 statement; and
-The defendant noted that her instructions about the standard of services connected to the hotel on lot 10 had been completed accurately. In those circumstances, it was reasonable for the defendant to assume Mr Smith had completed the section 32 statement in the manner he intended and not notice his error, when specific instructions Mr Smith had been given about services to the hotel, had been included.
Here, in my view, the defendant acted reasonably.

Third element – ‘ought fairly to be excused’

The element of ‘ought to be excused’ involves an exercise of judicial discretion by the Court.[28]
[28]See Fifty-Eighth Highwire v Cohen [1996] 2 VR 64, 73, 77.
The plaintiff submits that given the defendant’s continued insistence that she did nothing wrong, it is not clear how she would be excused from the breach, and in all the circumstances the Court should not fairly excuse the non-disclosure by the defendant.
The defendant submits that the Court can be satisfied in this case that the defendant ought fairly to be excused:
-provided that the Court is satisfied that she acted honestly and reasonably;
-she assisted the Court with the relevant evidence;
-she gave evidence herself truthfully and honestly, without attempting to cover up the mistake of her solicitor or her own conduct in relation to this;
-her solicitor, on whom she relied, had the instructions he needed to make the right disclosure in the section 32 statement; and
-she has not acted unfairly or exhibited bad faith in relation to the preparation and signing of the section 32 statement, or in the way she conducted her defence of the proceeding.
I accept the five matters raised by the defendant are correct and, in my view in those circumstances, the defendant ought fairly to be excused.

Fourth element – ‘Substantially as good as position’

This element was considered in Fifty-Eighth Highwire Pty Ltd v Cohen by the Court of Appeal. Charles and Callaway JJA said:
The fourth requirement involves asking whether the difference between the purchaser's actual and hypothetical positions is "real or of substance as distinct from ephemeral or nominal". Compare Tzllmanns Butcheries Pty. Ltd. v. Australasian Meat Industry Employees' Union (1979) 42 F.L.R. 331 at 348; 27 A.L.R. 367 at 382. It will usually be sufficient to consider that question objectively. The market value of the land is one, but only one, of the factors that will then be taken into account. We leave for consideration in an appropriate case whether subjective factors may not sometime be relevant too. For example, where the purchaser wishes to put the land to a particular use. In some cases such factors will not be affected by opportunism or hindsight. They may have mentioned earlier to the vendor or to third parties. Where they surface for the first time after non-compliance with s 32 is discovered, it will be a matter for the tribunal of fact whether or not it accepts the purchaser’s assertions.[29]
[29][1996] 2 VR 64, 77.
In Downing v Lau[30], her Honour Judge Marks considered what is required to meet the fourth element. She noted that in Nicolacopoulos v Khoury[31], Judge Ginnane (as he then was) held that he was bound by Fifty-Eighth Highwire Pty Ltd v Cohen to determine the issues objectively. She also noted that in McHutchison v Asli[32], Digby J rejected the plaintiff’s submission that the purchaser was substantially in as good a position as if all the relevant provisions of the SLA had been complied with, assessed on an objective basis.
[30][2018] VCC 33.
[31][2010] VCC 1576.
[32][2017] VSC 258.
Her Honour said:
The possibility of a purchaser’s subjective position being a relevant matter to take into account in the objective enquiry under s32K(4)(b) does not appear to have been taken up or addressed in authorities subsequent to 58th Highwire.
It is clear that the fundamental enquiry remains objective. There may be appropriate cases where subjective matters may be relevant to that objective enquiry. This does not mean the enquiry becomes a subjective enquiry.
Timing is relevant. In 58th Highwire, Brooking JA said at [74] that in considering whether the purchaser is in substantially as good a position, ‘[t]he court may consider events occurring down to the time when the matter comes before it’. In Pricom the relevant burden affecting the land was able to be removed before the matter came on in court. In Curtain the effect of the burden was partly ameliorated by the vendor by the time the matter came on in court.[33]
[33][2018] VCC 33 [141]–[143].
Here the plaintiff submits that it cannot be said that it is substantially in as good a position as it would have been if the defendant had made the proper disclosure. The vacant lots cannot be used without the ultimate purchaser expending significant monies on infrastructure, works for electricity, gas, sewerage and telephone services.
The defendant’s solicitors provided the plaintiff’s solicitors with an unredacted copy of the most recent contract of sale for the land. The new contract of sale was executed on 18 April 2024. At page 97 of that contract, an engineering fee proposal from John Fitzgerald (consulting engineer to Mr Wyllie) was attached. It contained the estimated costs of works to connect subservices to the vacant lots which was in the sum of $317,484.36. Based on that report, the plaintiff says that the defendant cannot seriously contend that the plaintiff is in substantially the same position as it would have been if non-disclosure did not occur.
In support of its submissions the plaintiff relies on McHutchison v Asli[34] where Digby J found that the potential costs of having to connect a suburban house in Park Orchards to main sewerage meant that the purchaser would not be found to be in substantially the same position, despite the vendor offering to pay the costs of maintaining the septic tank for the following six years.
[34][2017] VSC 258.
His Honour held:
The potential costs associated with the replacement of the Septic Tank on the Property with a mains sewer connection highlight the substantial costs likely to be involved in connection with the owner of the Property acquiring the facility and convenience of a mains sewerage system. Those costs therefore, in my view, also support the conclusion that there is likely to be a substantial qualitative and value difference between a property which has its sewerage connected to the mains as compared to a property which relies on a Septic tank waste treatment system. In the latter case it appears likely that on both bases the owner of the Property would not be substantially in as good a position, and accordingly here the defendants who were wrongly informed that the Property had a connected mains sewer system are not substantially in as good a position as they would have been if the Act had been complied with and they had been informed before sale that the Property was served by a Septic Tank system only.
I am persuaded that in this particular case that the contravention of the requirements of s 32(1) and 32D and 32H of the Act, in all the circumstances, places the defendants/purchasers in a real and substantially disadvantaged position as compared to the position a purchaser would be in if all the relevant provisions of the Act had been complied with whereby the purchaser would have been clearly and expressly advised before committing to the purchase of the land, that sewerage was a service which was not connected to the Property.[35]
[35]Ibid [87]-[88].
The defendant submits that it is relevant to consider the purpose for which the plaintiff acquired the land, and the nature of the land in question. She contends that not every purchaser is in the same position by reason of services not being connected to the land.
The defendant states that McHutchison v Asli[36] is a very different cases to a plaintiff buying the property for the purposes of reselling it to future purchasers where the plaintiff had no intention to occupy the land or develop it, but intends to leave the decision to future purchasers. Those purchasers may or may not incur the costs of connecting services as part of the development costs, depending on whether those future purchasers decide to develop the vacant land, or occupy it in its undeveloped form.
[36][2017] VSC 258.
The defendant submits that the actual position of Harry Fung (the director of the plaintiff) on the day that Mr Fung terminated the contract is substantially not different to the position he would have been in anyway on that date had item 8 in the section 32 statement stated that none of the four services corresponding to the unticked boxes in item 8 were connected to the land.
In relation to the water, the box had been ticked as not being connected to the vacant lots. It was disclosed that even from lot 10, only tank water was connected.
In relation to gas, the defendant submits that Mr Fung was not concerned about the gas to the vacant lots, or the meaning of the reference to bottled gas in the section 32 statement.
As for electricity, the defendant submits that Mr Fung had the right information available to him, and he had notice of that information through his inspection of the vacant land. He saw that it was a neglected winery. He saw electricity poles and wires on the public road in front of the three lots at the front, he saw there was no connections within the vacant lots themselves.
In relation to sewerage, the defendant submits that Mr Fung had the right information about sewerage connected to the property from the South-East Water Certificate and the Asset Information Sewer and Drainage plan attached to the section 32 statement.
As to telephone services, the defendant submits that Mr Fung assumed this was connected together with other services as part of his assumption that all lots were connected or, like gas, was not concerned about electricity to the vacant lots.
The defendant also asserts that Mr Fung took no real interest in the section 32 statement or the information within it. His evidence about how carefully he read the section 32 statement is said to be equivocal. It is also asserted that Mr Fung was even more equivocal about whether he read the certificates attached to the statements cursorily, or whether he had even read anything more than the first few pages.
The defendant submits that Mr Fung was not seriously interested in the services when purchasing the land, or at any time until he decided that he no longer wished to continue with the purchase.
I do not accept these submissions. In my view, the evidence given by Mr Fung does not accord with the defendant’s submissions. Mr Fung, when cross-examined, gave the following evidence:
Did you read the statement before you signed the contract?‑‑‑Ah, are we talking about the s32 statement?
Section - yes - 32 statement, yes?‑‑‑Yep. I briefly read through it, yes.
You briefly read it?‑‑‑M'hmm.
Okay. You understand the importance of it and the information in it is important?‑‑‑Yes.
But it’s your evidence that you only briefly read it?‑‑‑Yes, that’s correct.
Well, would it be fair to say that you glanced at it, perhaps?‑‑‑Glanced at it? No, I - I read through it.
Right. The whole of it?‑‑‑Yes.[37]
[37]Transcript 21 May (n 1) 51.26.
…
Don’t worry about where I’m going ‑ ‑ ‑?‑‑‑The (indistinct) – after reading this paragraph when I originally entered into the contract, it was like – it was that the services are in place, there’s an issue with the water tank. I didn’t know what it was in detail but there was a letter explaining it. I was exhausted at this point because it was the best part of the year in negotiation that I was just very keen that I got an acquisition and then just signed and dealt with it later, like I do quite often.
So what I’m putting to you then is that it wasn’t what was in the s32 statement that made you understand those services were connected. It was an assumption that you made yourself?‑‑‑Well, the – what’s saying here is that the services are connected.
Yes, but what I’m putting to you is that you didn’t read that statement carefully and that’s not the basis of your understanding. The basis for your understanding was an assumption. That’s what you’ve been saying, that you assumed that the services were connected?‑‑‑I was paying (indistinct words) ‑ ‑ ‑
(Indistinct) what was the s32. It was what – it was the assumption that you made?‑‑‑I paid $8 million for five blocks of land and I wanted services and that’s what it’s saying in the contract or in the s32, that services came with each block of land.
Does it say that in the contract? It doesn’t say that in the contract, does it?‑‑‑I purchased the property on the basis that each block of land had water services, the power services, the electricity – the sewerage services and telephone services.
You didn’t negotiate with the agent on that basis? You didn’t say that to the agent, you didn’t ask any questions of the agent about the services ‑ ‑ ‑?‑‑‑It’s like I said ‑ ‑ ‑
I’m sorry?‑‑‑The services were part of the five blocks of land that I was purchasing. It was like saying grass is part of the land. Well, the land is the land and it – when it’s got five blocks of land it had the services.[38]
[38]Transcript 21 May (n 1) 54.13.
…
When you inspected the land you didn’t see any evidence of the services, did you?‑‑‑I don’t know how you can see evidence of the services from a sewerage point of view or anything like that but most importantly, I – if you have a look at the land, it’s on a slope and each time I inspected the property it was a hotel area only because that’s where the main works were required, in the hotel area only. Everything else was external.
Yes, so you assumed on the basis of that that there were services on other blocks?‑‑‑Yes.
Because the hotel was on the hill?‑‑‑Yes.
Now, in relation to the gas supply, if you look at the paragraph 11 of your affidavit and s8, there’s no cross in the box for gas supply but there’s reference there to bottled gas, isn’t there?‑‑‑Yes.
So what did you take that to mean?‑‑‑I didn’t, I just assumed that the gas was there.
You didn’t – you just assumed the gas was there, yes. So what did you think the reference to bottled gas meant?‑‑‑I didn’t.
So I'm sorry, what’s your answer?‑‑‑Well, my answer is that I didn’t assume the – I just – as I’ve explained previously, it was more – it was mainly more about the – when you’re doing land development it’s more about water and electricity. They’re the two main drivers. Gas is over and above – call it additional, if you – extras. But it was mainly water and power was there. Like, telephone services is another example. It’s very rare that any property nowadays – it’s more internet services than telephone services. So gas sort of fits into a similar spot to that.
So what you’re saying is that these services were really important to you. Is that right?‑‑‑Yes.
But you didn’t make any mention of services to the vacant lots to the agent, did you?‑‑‑I assumed that the services were available as per the documentation.
So you didn’t make any inquiries of the agent, did you?‑‑‑I assumed. No, I didn’t make any further inquiries because it was in the documentation that the services were there.[39]
[39]Transcript 21 May (n 1) 55.21.

I accept that Mr Fung read the section 32 statement and that he was not substantially in as good a position as he would have been if all the relevant disclosures had been made.
The fact that there may have been a water certificate attached to the section 32 statement does not, in my view, absolve the error contained in the section 32 statement.
Mr Fung read the section 32 statement. He may not have read the water certificate. There were no certificates for gas or electricity attached to the section 32 statement. It was up to the defendant to ensure that the section 32 statement was correct.
The evidence shows that Mr Fung read the statement and took a real interest in it. He made it quite clear that he was seriously interested in the services when purchasing the land.
As the fourth element requires an objective enquiry, the land without services does not have the same value as the land with services connected to all of the lots. The plaintiff cannot be in substantially as good a position to make an informed choice about to whether to enter into the contract as it would have been if the information had been provided.
The plaintiff asserts that if there were further costs of connecting the services, it was clear that the plaintiff was not going to incur them and it was also clear, on the evidence, that the extra costs did not enter into the plaintiff’s thinking about the on-sale of the property.
In my view, who bears the costs ultimately is irrelevant. If proper disclosure had been made, evidence was given by Mr Fung, that the plaintiff would never have purchased the land.
When re-examined Mr Fung gave the following evidence:
Can you just read that paragraph?---Paragraph 22: 'Had I been made aware that these services were not connected to all lots, I would not have entered into the contract of sale for that price, as I would either be required to undertake further works to establish these services, or would have 18 to on-sell these lots without these services in place, which I believe reduces their attractiveness and, therefore, value.'
Do you have anything you wish to add to that paragraph?---No, that's - that's true and correct. [40]
[40]Transcript 21 May (n 1) 73.14
In my view, Mr Fung was a truthful witness and I accept that he was not substantially in as good a position as he would have been if all the relevant disclosures had been made.

Section 49(2) of the PLA

Section 49(2) of the PLA
Applications to the Court by vendor and purchaser
…
(2)Where the Court refuses to grant specific performance of a contract, or in any action for the return of a deposit, the Court may, if it thinks fit, order the repayment of any deposit.
There is no need to consider whether the deposit should be returned under section 49(2) of the PLA because the plaintiff has validly rescinded the contract and section 49(2) does not apply. If I concluded that the contract was not validly rescinded by the plaintiff I would not have ordered that the deposit be returned under this provision.

Conclusion

The answers to the following issues raised by the plaintiff are:
(a)was the purchaser entitled to rescind the contract of sale under s 32K(2) of the SLA by reason of the vendor’s non-disclosure of connected services under s 32H of the SLA? Yes.
(b)if the answer to (a) is ‘yes’, then the purchaser seeks ancillary orders for a declaration, return of the deposit and interest. This will be done.
(c)if the answer to (a) is ‘no’, then is the purchaser entitled to recover its deposit under s 49(2) of the PLA? Not applicable
(d)notwithstanding an answer of ‘yes’ to (a), is the purchaser disentitled from rescinding the contract of sale on the basis that the vendor can make out the ‘vendor’s defence’ in s 32K(4) of the SLA? No.

SCHEDULE OF PARTIES

S ECI 2023 06085
BETWEEN:
BASE GROUP PROPERTY PTY LTD (ACN 617 359 145)	Plaintiff
- v -
MARY LOUISE WYLLIE	Defendant

[2024] VSC 523

1 August 2024