Bennett v Elysium Noosa Pty Ltd. (in liq) [2012] FCA 211
Citation:
Bennett v Elysium Noosa Pty Ltd. (in liq) [2012] FCA 211
Parties:
LUKE ANTHONY BENNETT v ELYSIUM NOOSA PTY LTD. (ACN 101 485 634) (IN LIQUIDATION), CONSOLO LTD (ACN 000 022 266), PEARSON PROPERTY GROUP (NOOSA) PTY LIMITED (ACN 112 256 612), PEARSON PROPERTY GROUP PTY LIMITED (ACN 076 423 268) and CONSOLO PROPERTY PTY. LTD. (ACN 093 500 059)
File number:
QUD 171 of 2010
Judge:
REEVES J
Date of judgment:
9 March 2012
Corrigendum:
12 September 2012
Catchwords:
TRADE AND COMMERCE – s 52 Trade Practices Act 1974 (Cth) – pre-contract representations – sale of lot in Community Title Scheme – facilities to be provided as part of Scheme – Scheme – whether misleading or deceptive representations made – conduct likely to mislead or deceive – implied representations – conveying something more – whether lead into error – content and circumstances of conduct
TRADE AND COMMERCE – s 53A(1)(b) Trade Practices Act 1974 (Cth) – false or misleading representations in connection with the sale of an interest in land –– sale of lot in Community Title Scheme – false or misleading representations in connection with facilities associated the land – common property
TRADE AND COMMERCE – s 51A Trade Practices Act 1974 (Cth) – misleading representations as to future matters – sale of lot in Community Title Scheme – facilities to be provided as part of Scheme – reasonable grounds for making – evidence to the contrary – operation of deeming provision in s 51A(2) – whether misleading under s 51A(1)
TRADE AND COMMERCE – s 84(2) Trade Practices Act 1974 (Cth) – misrepresentations by sales agents – sale of lot in Community Title Scheme – conduct engaged in on behalf of corporation – conduct engaged in as part of central and main part of the business, affairs and activities of corporation – at the behest of – director and agent of corporations giving direction – joint venture
TRADE AND COMMERCE – s 82(1) Trade Practices Act 1974 (Cth) – damages – quantum – loss claimed for being induced to enter contract – sale of lot in Community Title Scheme – loss assessed at date of acquisition – consideration of common approach and alternative approach – true value of asset acquired – onus of proof
TRADE AND COMMERCE – s 87CB(1) Trade Practices Act 1974 (Cth) – apportionment – claims for damages under s 82 and 87 – contraventions of s 52 and 53A – whether apportionable claims
REAL PROPERTY – Community Title Schemes – s 223(3) Body Corporate Community Management Act 1997 (Qld) – seller’s warranties – material prejudice to buyer – breach of seller’s warranty – disclosure statement
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Bennett v Elysium Noosa Pty Ltd (in liq) was a case before the Federal Court of Australia in which Dr Bennett, the plaintiff, alleged that Elysium Noosa Pty Ltd (in liq), the defendant, made misleading and deceptive representations in relation to the sale of a lot within a community title scheme. The court was required to determine whether the pre-contract representations made by the defendant's sales representatives, the Burkes, to Dr Bennett were misleading or deceptive, and whether the defendant's conduct engaged in on behalf of them amounted to a contravention of the Trade Practices Act 1974 (Cth). The court also had to decide whether the representations were made with reasonable grounds, and if not, whether they were misleading under the Act. Additionally, the court had to assess the quantum of damages to be awarded to Dr Bennett for the misleading representations.
The court found that Dr Bennett had established that certain pre-contract representations were made by the Burkes, however, it did not find that any implied representations were made. The court held that the representations made by the Burkes did not convey that the planning, costing and funding of the development had reached a stage of finality. Furthermore, the court found that the pre-completion representations alleged by Dr Bennett were not made as pleaded and that the pleading had many deficiencies. The court concluded that the representations were not misleading or deceptive, and therefore, did not amount to a contravention of the Trade Practices Act 1974 (Cth). Finally, the court ordered that the respondents pay the applicant $500,000 in damages.
Orders
Orders of the court
1. The respondents pay the applicant $500,000.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Whether or not conduct amounts to a representation is “a question of fact to be decided by considering what [was] said and done against the background of all surrounding circumstances”: Campomar Sociedad Limiteda v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12 at [100]. Furthermore, the conduct concerned must be viewed as a whole and “where the conduct complained of consists of words it would not be right to select some words only and to ignore others which provided the context which gave meaning to the particular words”: Parkdale Custombuilt Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 (“Parkdale”) at 199 per Gibbs CJ. However, it is important to note that s 52 of the TPA is not confined to representations, but proscribes “conduct” that is misleading or deceptive: see Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [103]. Nonetheless, in this case, the conduct is confined to words, both oral and written. Furthermore, the words were used in pre-contract negotiations between individuals, as distinct from statements made to the public, or a particular section of the public, in a non-contractual setting. This distinction was highlighted by French CJ in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 (“Campbell”) at [25]. Taking into account these principles, I will now turn to consider the evidence going to whether Dr Bennett has established that the pre-contract representations described above were made.Dr Bennett’s evidence Dr Bennett made an affidavit in which he set out his evidence about the statements the Burkes made to him and the promotional and other material that they provided to him in the weeks before he signed the contract to purchase Lot 181 in February 2005. I interpolate that while Dr Bennett signed the Buyer’s Acknowledgement section and one other part of the contract on 14 February 2005, his signature on the execution clause was not dated. Nonetheless, the “contract particulars” section of the contract states that the contract date was 7 March 2005. While he was challenged in cross-examination about other aspects of his evidence, particularly that going to whether he relied upon the various representations allegedly made to him, Dr Bennett was not challenged on his evidence as to whether the various representations were in fact made. Furthermore, neither the Burkes, nor the Majors who (as noted above) were present at the time of Dr Bennett’s visits to the site in early 2005, were called to give evidence. Accordingly, I accept Dr Bennett’s evidence on what he saw and what the Burkes said to him, and gave to him, during his visits to the Elysium Noosa site in January and February 2005. That evidence was to the following effect. Dr Bennett first became aware of the Elysium Noosa development from articles he read in the local media in January 2005. As is already noted above, some time in January 2005, together with his friends Robb and Maree Major, Dr Bennett visited the site of the proposed development. There he met Nick and Julieanne Burke, who introduced themselves as the on-site sales representatives of the developer. He informed the Burkes that he wished to gain a better understanding of the development and he asked them to explain it to him. This meeting and discussion took place in the on-site sales office at the development. Dr Bennett observed that this sales office was well set-up to provide information about the development to interested parties.
Decision
Reasons for decision
Taking into account the terms of the express pre-contract representations themselves and all these surrounding circumstances, I do not consider that the express representations that the Burkes made to Dr Bennett before 7 March 2005 could reasonably be said to give rise to an implied representation that at about that time the planning, costing and funding of Stage 1 of the Elysium Noosa development had reached a stage of finality. To the contrary, I consider that what the Burkes actually said or provided to Dr Bennett at that time conveyed that finality was not to be reached in relation to the planning, costing and funding of the development until 31 December 2005, at the earliest, which was the last date by which Elysium Noosa Pty Ltd could act to give notice that it did not wish to proceed with the development under the terms of the draft contract: see cl 3.1(c) above. I do not therefore consider Dr Bennett has established there was an implied representation of the kind I have assumed is pleaded in para 18(aa) of the final amended statement of claim.Conclusion on issue 1 – were the pre-contract representations made? To sum up on this issue, for the reasons set out above, I consider Dr Bennett has established that:(a)the pre-contract representations set out in paras 1–10 of Schedule A were made by the Burkes; and(b)the pre-contract representations set out in paras 13, 14, 19 and 20 of Schedule A were made based on the plans attached to the draft contract that Mr Nick Burke provided to Dr Bennett. However, I do not consider that Dr Bennett has established any of the implied pre-contract representations, whether that pleaded: in para 11 of Schedule A about the future value of Lot 181; or in para 15A of the final amended statement of claim about the future funding for the house construction on Lot 181; or in para 18 about the finality of the plans, costing and funding for Stage 1 of the development, as at early 2005.ISSUE 2 – WERE THE PRE-COMPLETION REPRESENTATIONS MADE?The deficiencies in the pleading The pre-completion representations were allegedly made after the contract to purchase Lot 181 was entered into in March 2005 and before that purchase was completed in March 2008. As is apparent from the pleading of these representations (set out hereunder), Dr Bennett has not nominated when, in this three year period, these representations were said to have been made. Furthermore, this pleading has many other deficiencies which I will turn to consider after setting it out in full. It is contained in para 18A of the final amended statement of claim as follows:18AFurther or in the alternative, subsequent to the Applicant entering into the Agreement but before completion thereof:(a)there came a point in time (which the Applicant cannot further particularise on the state of the Respondent’s disclosure) when there existed no credit provider finance approval, or other dedicated separate body of funds such as would allow and be sufficient for the completion of the Development, in the manner and with the timing represented, to be undertaken irrespective of the number of sales effected in the Development, or like market or financial condition;(b)The lastmentioned fact was known by each of:A.Pearson, as a director of PPG and PPG Noosa;B.Austin, as a director of Consolo, Consolo Property, Evenland, NRN and Elysium;C.The other directors and general managers of these companies.(c)Each of the Respondents knew that the Applicant had entered into the Agreement and that such Agreement was eventually due for completion on its terms;(d)The lastmentioned fact was known by each of:A.Pearson, as a director of PPG and PPG Noosa;B.Austin, as a director of Consolo, Consolo Property, Evenland, NRN and Elysium;C.The other directors and general managers of these companies.(e)No attempt was made to communicate to the Applicant, in the sense that there was silence apropos the Applicant, the fact referred to in (a) above;(f)The pre-completion conduct referred to above in this paragraph was conduct:(i)engaged in “in trade or commerce” within the meaning of the TPA, in that it was engaged in or about the sale to the public of proposed lots of residential land, in the course of a business;(ii)engaged in by Consolo, Consolo Property, NRN, Evenland, Elysium, PPG and PPG Noosa or one or some of them;(iii)engaged in the course of the business, affairs or activities of each of the Respondents;(iv)by reason of the above matters in this paragraph and paragraphs 1 and 4C(a) to (e), was engaged in on behalf of each Respondent, or one or some of them, within the meaning of s 84(2) of the TPA;(g)Such pre-completion conduct was misleading and (sic) deceptive or likely to mislead or deceive the Applicant as a prospective purchaser, in contravention of s 52, and or in the alternative s 53A of the TPA in that, by reason of such conduct, any person in the position of the applicant may have been induced to believe that the lot construction, infrastructure and services the subject of Schedule A to this pleading would be constructed within a short period, namely by completion but if transcending the date of completion then with (sic) a short period thereafter;(h)the Applicant was so induced to the lastmentioned belief.
