Bloom as Executor of the Estate of Farr (deceased) v Paradise Lake Pty Ltd
[2018] FCCA 1959
•20 July 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BLOOM AS EXECUTOR OF THE ESTATE OF FARR (DECEASED) v PARADISE LAKE PTY LTD | [2018] FCCA 1959 |
| Catchwords: CONSUMER LAW – Applicant appointed respondent to act as selling agent of a property – respondent facilitated sale of the property to a company associated with respondent – whether respondent disclosed to the applicant that the company to which property sold was associated with the respondent – no disclosure |
| Legislation: Competition and Consumer Act 2010 (Cth), ss.86AA, 138A, Schedule 2, s.18 |
| Cases cited: Banque Commerciale SA v Akhil Holdings Ltd [1990] HCA 11 Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572 O'Kane v Freelancer International Pty Ltd & Anor [2018] FCCA 933 Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 |
| Applicant: | MELVYN BLOOM AS EXECUTOR OF THE ESTATE OF JOHN RONALD FARR (DECEASED) |
| Respondent: | PARADISE LAKE PTY LTD ACN 059 700 775 |
| File Number: | SYG 1729 of 2017 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 1 November 2017 |
| Date of Last Submission: | 1 November 2017 |
| Delivered at: | Sydney |
| Delivered on: | 20 July 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms M Bateman |
| Solicitors for the Applicant: | Whittens & Mckeough |
| Counsel for the Respondent: | Mr M Pope |
| Solicitors for the Respondent: | Derek Legal |
ORDERS
Pursuant to r.17.02 of the Federal Circuit Court Rules 2001 (Cth) the question of liability is determined separately from the question of relief as follows:
The respondent is liable to compensate the applicant for such loss as the applicant may have suffered as a consequence of the respondent not disclosing to the applicant before the applicant sold the property at Site No: 155 Paradise Lake Resort, 368 Oxley Drive, Runaway Bay to Ripcord Pty Ltd on 20 June 2011 that the director of Ripcord Pty Ltd was the son-in-law of the directors of the respondent.
The matter be listed for further directions on the question of remedy.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1729 of 2017
| MELVYN BLOOM AS EXECUTOR OF THE ESTATE OF JOHN RONALD FARR (DECEASED) |
Applicant
And
| PARADISE LAKE PTY LTD ACN 059 700 775 |
Respondent
REASONS FOR JUDGMENT
Introduction
This proceeding arises out of the sale on 20 June 2011 of a “manufactured home” (Home), being a type of property recognised by the Manufactured Homes (Residential Parks) Act 2003 (Qld) (MH Act). The Home formed part of a “residential park” at Runaway Bay, Queensland (Site). The expressions “manufactured home” and “residential park” have meaning in the context of a particular system of rights that are recognised and regulated by the MH Act; and it would be useful to explain at the outset these and other expressions used in that Act.
A “manufactured home” is a structure, other than a caravan or tent, that has the character of a dwelling, that is designed to be able to be moved from one position to another, and is not permanently attached to land.[1] A “residential park” is an area of land that includes sites, common areas, and facilities for the personal comfort, convenience, or enjoyment of persons residing in manufactured homes positioned on sites.[2] A “home owner” is, among other things, a person who owns a manufactured home that is positioned on a site in a residential park under a “site agreement”.[3] The expression “site agreement” is defined to mean an agreement between a “park owner” and a home owner that provides for the rental by a home owner of particular land in a residential park, and the positioning on the land of a manufactured home, and the home owner’s non-exclusive use of the park’s common areas and communal facilities.[4] Finally, there is the expression “park owner”, which is defined to mean a person who owns a residential park.[5]
[1] Manufactured Homes (Residential Parks) Act 2003 (Qld) (MH Act), s.10
[2] MH Act, s.12
[3] MH Act, s.8
[4] MH Act, s.14
[5] MH Act, s.11
The applicant, Mr Bloom, was the owner of the Home. The Home was and continues to be identified as “Site No: 155 Paradise Lake Resort, 368 Oxley Drive, Runaway Bay”. Mr Bloom became owner of the Home on 16 February 2011 after he was granted probate of the will of his uncle, the late John Ronald Farr, who died on 12 October 2010. The respondent (Paradise Lake) was the “park owner” and manager of the Site. It is common ground that Ms Annette Brown and her husband managed the Site on behalf of Paradise Lake; that commencing in late October 2010 Mr Bloom had a number of communications with Ms Annette Brown in relation to the Home; and on 10 March 2011 Mr Bloom engaged Paradise Lake to act as selling agent of the Home.
Claims and issues arising on claims
Mr Bloom claims that:
a)on being engaged as selling agent, Paradise Lake assumed certain contractual and fiduciary obligations, and a duty of care, to Mr Bloom (Agent Obligations);[6]
b)Paradise Lake negotiated the sale of the Home to Ripcord Pty Limited (Ripcord);[7]
c)a director of Ripcord, Mr Jason Neate, was the husband of Anita Lazzarin, the daughter of the directors of Paradise Lake (Relevant Information);[8]
d)the Agent Obligations required Paradise Lake to disclose the Relevant Information to Mr Bloom; and
e)in breach of the Agent Obligations, and in contravention of s.18 of Australian Consumer Law (ACL),[9] Paradise Lake did not disclose the Relevant Information to Mr Bloom.
[6] Amended Statement of claim, [7], [11], [12], [15], [20]
[7] Amended Statement of claim, [8(b)], paragraph (xi) of particulars; [12(b)], paragraph (xi) of particulars; [16(b)], paragraph (xi) of particulars; [22(b)], paragraph (xi) of particulars
[8] Amended Statement of Claim, [8(b)], paragraphs (vii), (ix),and (x); [12(b)], paragraphs (vii), (ix),and (x); [16(b)], paragraphs (vii), (ix),and (x); [22(b)], paragraphs (vii), (ix),and (x)
[9] Being Schedule 2 to the Competition and Consumer Act 2010 (Cth)
Mr Bloom further alleges that, as a consequence of Paradise Lake’s breaches of the Agent Obligations, and in contravention of the ACL, he was induced to agree to sell the Home to Ripcord for a price that was less than its market value. Mr Bloom, therefore, claims an order that Paradise Lake compensate him in an amount equal to the difference between the market value of the Home as at the date he sold the Home to Ripcord, and the price for which it was sold to Ripcord.
Paradise Lake admits Mr Bloom engaged it as selling agent;[10] that on being so engaged it assumed the Agent Obligations;[11] that it participated in arranging the sale of the Home to Ripcord;[12] and that the Relevant Information was true, that is, Mr Jason Neate was a director of Ripcord and the husband of Anita Lazzarin, the daughter of the directors of Paradise Lake.[13] Paradise Lake denies, however, that it did not disclose the Relevant Information to Mr Bloom. It alleges that it disclosed the Relevant Information to Mr Bloom before 1 June 2011.[14] Paradise Lake also denies that the price for which the Home was sold to Ripcord did not reflect the market value of the Home.
[10] Defence, [1]
[11] Defence, [1], [4], [8]
[12] Defence, [2], [5], [9], [13]
[13] Defence, [2], [5], [9], [13]
[14] Defence, [2(e)], [6(e)], [10(e)], [14(e)]
There is a variance between the words by which Paradise Lake in its defence alleges it disclosed to Mr Bloom the Relevant Information, and the words by which at the hearing it contended it disclosed the Relevant Information. In its defence Paradise Lake alleges it disclosed the Relevant Information by Ms Brown informing Mr Bloom before 1 June 2011 that she had received an offer of $120,000 for the Home “from the son and daughter-in-law of the directors” of Paradise Lake.[15] At the hearing, however, relying on the evidence of Ms Brown, Paradise Lake contended that Ms Brown disclosed the Relevant Information to Mr Bloom by stating words to the effect of “[t]he offer is not from Paradise Lake resort. The offer is from a company associated with Paradise Resort”. [16]
[15] Defence, [2(e)], [5(e)], [9(e)], [14(e)]. The defence is incorrect to the extent it implies that Mr Jason Neate is the son of the directors of Paradise Lake and Ms Lazzarin is the daughter in law of the directors.
[16] T52.45-T53.5
The proceeding, therefore, gives rise to three principal issues. The first is whether at the time Ms Brown communicated to Mr Bloom that an offer of $120,000 had been made she said to Mr Bloom words to the effect that “[t]he offer is not from Paradise Lake resort. The offer is from a company associated with Paradise Resort”. The second issue arises if I accept Ms Brown did say words to that effect; and the issue is whether the words sufficiently disclosed to Mr Bloom the Relevant Information to support the conclusion that Mr Bloom’s consent to selling the Home to Ripcord was an informed consent. The third issue arises only if I determine the first or second issues adversely to Paradise Lake; and that is whether Mr Bloom suffered any damage by selling the Home to Ripcord.
Course of proceeding
By the time the matter came before me on a first court date on 2 August 2017 I formed the view that it would be appropriate to make an order under r.17.02 of the Federal Circuit Court Rules (Cth) (FCC Rules) that the question of liability be determined separately from the question of relief. My reasons for forming that view were the apparent narrowness of the issues in dispute between the parties, the relatively small amount at stake, and the potentially disproportionate costs the parties may have to incur in obtaining expert valuation evidence. I formed the view that, by making an order under r.17.02 of the FCC Rules, the parties would be saved the expense of obtaining expert valuation evidence if Mr Bloom were to fail in his claims and that, if Mr Bloom were to succeed, the question of the proper value of the Home could be determined by some means other than by me determining the value of the Home after a hearing in which competing valuation evidence is given.
Accordingly on 2 August 2017 I ordered that the question of liability be determined separately from the question of relief, and I made directions. I made the order and directions on the basis of the following assumption which was noted in the orders I made:
The issue of liability turns on whether, as the applicant claims and the respondent denies, the respondent did not disclose to the applicant that the property the subject of this proceeding was sold to an entity with whom or with whose officers a director of the respondent had a relationship . . . .
Somewhat inconsistently with the premise on which I made the order on 2 August 2017, at the hearing on 1 November 2017 counsel for Mr Bloom indicated she intended to press all of Mr Bloom’s pleaded causes of action, and would not be restricted to the cause of action based on non-disclosure. After discussion with counsel for the applicant, I indicated that I would hear every issue on liability and, to the extent such issue turned on my making a finding on market value, I proposed that I would decide as much as I can, other than market value itself. Counsel for Paradise Lake agreed with this course. In these reasons for judgment, therefore, I deal with the question of liability only.
Approach
The issue of liability on the cause of action based on breach of fiduciary duty turns on whether Paradise Lake proves that it disclosed the Relevant Information to Mr Bloom. That is so because, as counsel for Paradise Lake correctly accepted, and in light of the admissions Paradise Lake has made in its defence, the onus rests on Paradise Lake to prove that it disclosed the Relevant Information to Mr Bloom. Given that the only evidence on which Paradise Lake relies is that of Ms Brown, Paradise Lake’s case that it disclosed the Relevant Information to Mr Bloom turns on whether I accept Ms Brown’s evidence that when she conveyed to Mr Bloom that she received an offer of $120,000 she said to Mr Bloom words to the effect of: “The offer is not from Paradise Lake Resort. The offer is from a company associated with Paradise Lake Resort”; and, if so, whether that constituted sufficient disclosure of the Relevant Information. The issues of liability on the other causes of action turn on whether I accept Mr Bloom’s evidence that Ms Brown did not say to him words to the effect of: “The offer is not from Paradise Lake Resort. The offer is from a company associated with Paradise Lake Resort”.
The principal question I consider in these reasons for judgment, therefore, is whether I should accept Ms Brown’s evidence that she had a conversation with Mr Bloom in which she informed him that she had received an offer for $120,000 and that during that conversation she said words to the effect of: “The offer is not from Paradise Lake Resort. The offer is from a company associated with Paradise Lake Resort”. I also consider the question whether I should accept Mr Bloom’s evidence that Ms Brown said no words to that effect, although the answer to that question is likely to depend on the answer to whether I accept Ms Brown’s evidence.
To answer these questions, it will be necessary to identify the relevant context; and that context consists of the dealings between Mr Bloom and Ms Brown up to the time Mr Bloom signed the contract for sale of the Home. I propose, therefore, to proceed as follows.
a)Both Mr Bloom and Ms Brown say that it was in a telephone conversation that Ms Brown conveyed to Mr Bloom she had received an offer for $120,000. I will therefore first set out the evidence of, and make findings in relation to, the dealings between Mr Bloom and Ms Brown before the telephone conversation in which Ms Brown conveyed the $120,000 offer.
b)Second, I will identify Mr Bloom’s and Ms Brown’s evidence about the conversation in which Ms Brown conveyed to Mr Bloom the $120,000 offer. As will be apparent later, Mr Bloom and Ms Brown agree about a number of matters that were said during that meeting; and I make findings about what was said during that conversation based on that agreement.
c)Third, I will set out the evidence, and make findings, in relation to events that occurred after the telephone conversation in which Ms Brown conveyed the offer of $120,000 up to the time at which Mr Bloom signed the contract of sale in relation to the Home.
d)Fourth, I will consider, and make findings about, whether Ms Brown said to Mr Bloom words to the effect of: “The offer is not from Paradise Lake Resort. The offer is from a company associated with Paradise Lake Resort”.
e)Finally, I will consider the legal consequences of my findings, having regard to the causes of action pleaded in the amended statement of claim, and the admissions made by Paradise Lake in its defence.
Evidence and findings - events up to first communication of $120,000 offer
According to Mr Bloom on 12 October 2010 he received an email from Ms Annette Brown, who described herself as the manager of Paradise Lake Resort. Ms Brown stated that Mr Farr had passed away. Mr Bloom responded by email on the same day, stating that he was on a cruise with his mother but would be disembarking on 16 October 2010. Mr Bloom also had a telephone conversation with Ms Brown on 12 October 2010. Mr Bloom informed Ms Brown that he and his mother would come to Queensland to make funeral arrangements, and that Mr Bloom was appointed executor by Mr Farr’s will. Ms Brown said words to the effect:[17]
If you decide to sell his home we can help you sell it. We always have enquiries from interested purchasers. Our regular Saturday afternoon open houses always attract purchasers. We had a good open house just recently.
[17] M Bloom affidavit, 08.09.2017, [12]. Mr Bloom’s affidavit, which was made on 11 September 2017, is in the form prescribed by the Federal Court Rules 2011 (Cth). Mr Bloom’s affidavit is exhibited to an affidavit of Mr Whitten. With the agreement of counsel, I read Mr Bloom’s affidavit as if it ah been filed
Mr Bloom flew to the Gold Coast on 17 October 2010, made some enquiries of local real estate agents about the market value of manufactured homes, and, on 18 October 2010, he met Ms Brown at the onsite management office of Paradise Lake Resort. According to Mr Bloom, he asked Ms Brown whether she had any idea about the value of the Home. Ms Brown said she did not. She did say, however, that “[w]e have open houses on the weekend which are well advertised”. Ms Brown also informed Mr Bloom of “[o]ur selling commission”, by which I find Ms Brown intended to mean the selling commission charged by Paradise Lake, and that Mr Bloom should be aware that, under the site agreement Mr Farr held with Paradise Lake, Paradise Lake had a right of first refusal. Mr Bloom also says that he informed Ms Brown that he had been informed by other agents that $175,000 appeared to be a fair market price for a quiet lakeside two bedroom house, to which Ms Brown responded that she did not think that price was achievable. Mr Bloom said he might try to sell the Home himself, but asked Ms Brown whether she would be prepared to show the Home to prospective purchasers. Ms Brown said that would not be a problem.[18]
[18] M Bloom affidavit, 08.09.2017, [17]
Ms Brown, in her affidavit, says she recalls she met with Mr Bloom and had a conversation with him in which Mr Bloom said he was going to sell the home. Ms Brown recalls there was a general discussion about the Home and the state it was in, and that Mr Bloom asked what Ms Brown thought the Home was worth. Ms Brown said that “at top dollar” the Home “would not be worth more than $150,000”. She said that the Home needed to be cleaned out and fixed up because it had not had any improvements since 1988. Ms Brown says she informed Mr Bloom of Paradise Lake’s having the first right of refusal under the site agreement, and that the “owner would not be interested in purchasing the property for $175,000”. Mr Bloom said that Ms Brown’s estimate of $150,000 was “far too low”, and that Mr Bloom would sell the Home himself. Ms Brown said she would have agreed with Mr Bloom to talk to persons whom he had referred to her about the Site and the site agreement; but she would “definitely not show a home that I was not holding a selling authority for”.[19]
[19] Affidavit of A J Brown, [12]-[16]
The accounts Mr Bloom and Ms Brown give of their conversations in October 2010 at the Site are broadly consistent. I find, therefore, that Mr Bloom and Ms Brown met in the second half of October 2010; that, during the meeting, Ms Brown informed Mr Bloom that Paradise Lake had a right of first refusal under the site agreement; that, in her view, the Home would be able to sold for no more than $150,000; that Mr Bloom indicated that he believed he would be able to obtain a sale price of $175,000 for the Home; and that Ms Brown informed Mr Bloom that Paradise Lake would not be interested in purchasing the Home for $175,000. Although I am prepared to accept that Mr Bloom enquired whether Ms Brown would be prepared to speak to any prospective purchasers Mr Bloom might direct to her, I am not prepared to find that Ms Brown agreed to show prospective purchasers around the Home. Whether or not Ms Brown agreed to do so, however, is not a matter that is relevant to any issue in the proceeding.
According to Mr Bloom, in the middle of January 2011 he arranged to have the Home listed for sale on a realty Internet platform for $200,000.[20] By the end of February 2011 approximately six persons contacted Mr Bloom about the Home. Mr Bloom suggested to those persons that they attend the Site themselves and view the Home from the exterior, and attempt to gain access through Ms Brown.[21] None of the persons contacted Mr Bloom again;[22] and Ms Brown did not contact Mr Bloom about any enquiry concerning the purchase of the Home.[23] I accept this part of Mr Bloom’s evidence because it was not challenged, and there is no reason why I should not accept it.
[20] M Bloom affidavit, 08.09.2017, [19]
[21] M Bloom affidavit, 08.09.2017, [20]
[22] M Bloom affidavit, 08.09.2017, [21]
[23] M Bloom affidavit, 08.09.2017, [21]
According to Mr Bloom, by late February 2011 he concluded that Paradise Lake, being the park owner and park manager, was best suited to act as selling agent for the Home. Mr Bloom was fortified in his conclusion after he read an email from his solicitor, Mr Abbott, on 2 March 2011 which included the following:[24]
As to the contract to sell the property, the on-site manager/agent is the best option for the sale, clearly commission will be payable as it would be an outside agent. She advises she is aware you have the property for sale of [sic] the internet and has had parties approach her showing some interest. We recommend you instruct us to engage her in respect of the sale. It seems more practical and more likely to achieve a sale.
[24] M Bloom affidavit, 08.09.2017, [23]; Exhibit MB-5
Mr Bloom did not instruct his solicitor to engage Ms Brown. Mr Bloom instead contacted Ms Brown himself and, to the best of his recollection and belief, he contacted her by telephone in March 2011. Mr Bloom says he advised Ms Brown that “the Estate would place the Home for sale” with Paradise Lake; and that Ms Brown said she would forward to Mr Bloom a selling authority. Mr Bloom received a document titled “Selling Authority” which he signed on 10 March 2011 as executor of the estate of the late John Ronald Farr (Estate).[25] The Selling Authority was in a form prescribed by the MH Act.
[25] M Bloom affidavit, 08.09.2017, [24], [25]; Exhibit MB-6
Ms Brown also gives an account of the circumstances in which she provided to Mr Bloom the Selling Authority. Ms Brown says that Mr Bloom returned to the Site and she spoke with him “in the carport area”. Ms Brown says Mr Bloom asked her again about the selling price, but Ms Brown does not say she gave an answer. She then says she sent to Mr Bloom a form of Selling Authority which Mr Bloom completed and returned signed to Ms Brown.[26]
[26] Affidavit of A J Brown, [16]
Mr Bloom’s and Ms Brown’s accounts of the circumstances in which Mr Bloom signed the Selling Authority appointing Paradise Lake as selling agent are consistent to the extent they both agree it was Mr Bloom who approached Ms Brown with a request that Paradise Lake act as selling agent for the Home. Whether that occurred as a result of a conversation by phone or at the site is not relevant to the issues I have to decide. I therefore make no findings other than that by 10 March 2011 Mr Bloom resolved that he would appoint Paradise Lake as selling agent for the Home, he approached Ms Brown to inform her of that decision, Ms Brown sent to Mr Bloom a form of Selling Authority, and on about 10 March 2011 Mr Bloom signed the Selling Authority as executor the Estate, and sent it to Ms Brown.
According to Ms Brown, in about March 2011 she “started showing the house to the interested buyers”; and she recalls “there was a verbal offer as per the diary note attached”.[27] Annexed to her affidavit is a copy of an entry made in a diary as follows:
[27] Affidavit of A J Brown, [23]; Exhibit AB-2
[Name of person and telephone number]
Likes #155 [illegible]
Daughter [telephone number]
Made offer of $135,000
Mel says “no way” at this early stage.
Ms Brown deposes she telephoned Mr Bloom and he stated: “No way at this early stage”.[28] Mr Bloom says that at no time did Ms Brown say to Mr Bloom words to the effect that “an offer of $135,000 has been made”.[29]
[28] Affidavit of A J Brown, [23]
[29] Bloom affidavit 11.10.2017, [11]
Even though it is supported by what appears to be a cotemporaneous record of a conversation, I have difficulty in accepting, and I do not accept, that Ms Brown conveyed to Mr Bloom her having received an offer for the Home of $135,000 and that Mr Bloom stated “No way at this stage”. There are four reasons for my doubts.
a)The first is the inherent implausibility of Mr Bloom’s response, namely, a blank rejection of the offer. It is reasonable to expect that on having been informed of the offer, Mr Bloom would have at the very least made an enquiry about whether the offeror would be prepared to increase the offer. That is what later in these reasons I found Mr Bloom did when Ms Brown conveyed to him the offer of $120,000. He requested that Ms Brown inquire whether the offeror would be willing to increase the offer.
b)Second, there is no evidence that Mr Bloom or Ms Brown again mentioned or referred to Ms Brown’s having conveyed to Mr Bloom an offer for $135,000. Had Ms Brown in truth conveyed to Mr Bloom in March 2011 that she had received an offer for $135,000, it is reasonable to expect that Mr Bloom would have referred to that offer when Ms Brown informed Mr Bloom of the $120,000 offer, at least for the purpose of enquiring whether that person who made the $135,000 was still interested in offering $135,000 for the Home. Instead, as I find later in these reasons, when informed of the $120,000 offer, Mr Bloom requested that Ms Brown inquire whether the offeror would be willing to increase the offer.
c)Third, Although Ms Brown referred to the offer for $120,000 in two letters, she did not refer to the $135,000 offer in any letter.
d)Fourth, in evidence given on re-examination, Ms Brown said that she conveyed the $135,000 offer to Mr Bloom after she first conveyed the $120,000 offer.[30] In evidence that Ms Brown gave in cross-examination, and as I find later in these reasons, when Ms Brown informed Mr Bloom of the $120,000 offer Mr Bloom requested that Ms Brown inquire whether the offeror would be willing to increase the offer. In those circumstances, it is unlikely that when Ms Brown conveyed the $135,000 offer to Mr Bloom what could only have been no more than a week or two later, Mr Bloom would have simply rejected it.
[30] T79.20
On or shortly after 5 April 2011 Mr Bloom received a letter dated 5 April 2011 from his solicitor, Mr Abbott, confirming that all issues relating to the Estate “are finalised, except for the sale of the Unit”.[31] That, I find, was a reference to the Home. After repeating what he said in his email he sent to Mr Bloom on 2 March 2011 that Mr Bloom “use the onsite Agent/Manage”, and after noting he had spoken with Ms Brown, Mr Abbott said “[s]he has had interested buyers but has been unable to access the property”. Mr Bloom understood that Ms Brown did hold keys to the Home, and that Mr Abbott’s statement that she did not was the result of some misunderstanding of what Ms Brown said to Mr Abbott.[32]
[31] M Bloom affidavit, 08.09.2017, [28]; Exhibit MB-7
[32] M Bloom affidavit, 08.09.2017, [27-29]
In her affidavit Ms Brown deposes that on the first open day, after Mr Bloom signed the Selling Authority, Ms Brown realised that she had obtained keys from Mr Bloom that did not work, but she obtained a further key from Mr Bloom that did work.[33] Mr Bloom does not in his affidavit of 11 October 2017 respond to this part of Ms Brown’s affidavit. Although nothing appears to turn on it, I accept Ms Brown’s evidence on this point.
[33] Affidavit of A J Brown, [19]
Evidence and some findings – first communication of $120,000 offer
On Mr Bloom’s evidence, the first occasion on which Ms Brown informed him she had received an offer of $120,000 for the Home was in a telephone conversation Mr Bloom says he had with Ms Brown in late May 2011. According to Mr Bloom, the conversation was to the following effect: [34]
Ms Brown:I have an offer of $120,000.
Mr Bloom:$120,000 seems awfully low. What about the interested purchasers you told my solicitor, Tony Abbott about?
Ms Brown:They lost interest after they heard the price you are asking. There are plenty of other houses for sale at much more competitive prices. You should consider the $120,000 offer seriously. The purchaser can settle within 14 days and then you’re done with it. The house is still costing site charges. The market is not good and who knows when it will get better.
Mr Bloom:See if you can get the purchaser up in price a bit. Come back to me please.
Ms Brown:I will.
[34] M Bloom affidavit, 08.09.2017, [34]
Ms Brown’s evidence accords with Mr Bloom’s to the extent Ms Brown says that it was in a telephone conversation that she first conveyed to Mr Bloom that she had received an offer of $120,000. Ms Brown purported to give evidence of that conversation in paragraph 22 of her affidavit. In response to an objection from Mr Bloom’s counsel, I rejected that part of her affidavit on the ground of form, but I granted counsel for Paradise Lake leave to ask Ms Brown questions in chief about the conversation. Ms Brown gave the following evidence:[35]
I’m not exactly sure of the date when – when I did make this – have this conversation with him. There were several conversations that I had with Mr Bloom. But the offer that I made for the 120,000, when I actually phone him – or in a telephone conversation with him it went that I made the offer and that the offer was not from Paradise Lake Resort, the offer – but it was with a company associated with Paradise Lake Resort. At the time when I made the offer I didn’t know the name of the company so I couldn’t tell him the name of the company and I certainly didn’t tell him the name of the person I knew that was involved with the company. I didn’t find that out until such time as I drew a contract up.
[35] T41.10
Ms Brown repeated more distinctly the effect of this evidence in evidence she gave under cross-examination:[36]
I have an offer of $120,000 on your home at 155. . . . “The offer is not from Paradise Lake resort. The offer is from a company associated with Paradise Resort”. They, as true as I’m sitting here, are my exact words. He didn’t ask who the other company was and, at that time, I didn’t know who the company was. I knew it was Jason’s company but I didn’t have a name for the company.
[36] T52.45-T53.5
This evidence repeats the substance of the paragraph of her affidavit that I had rejected. Mr Bloom, however, in his affidavit of 11 October 2017, responded to the paragraph of Ms Brown’s affidavit that I had rejected. Mr Bloom says that “[w]hile Mrs Brown may have used the word “company” she did not use any words to the effect that the purchaser “company was associated with Paradise Lake Resort””; and that “at no time did Mrs Brown advise me that the purchase was a company related or connected in any way to Paradise Lake resort”.[37]
[37] M Bloom affidavit 11.10.2017, [9] (emphasis in original)
Ms Brown does not say in her affidavit when she had the conversation with Mr Bloom; and she was not asked in chief when the conversation occurred. Nor did Ms Brown set out in her affidavit, nor was she asked in chief about, the matters on the basis of which she stated in the witness box that she knew it was “Jason’s company”. (There is no doubt that “Jason” is a reference to Mr Jason Neate, the son-in-law of the directors of Paradise Lake.) Further, although Ms Brown purported to state in her affidavit the circumstances in which Mr Jason Neate offered to purchase the Home, I rejected that paragraph on objection from counsel for Mr Bloom. Ms Brown was not asked in chief about the circumstances in which Mr Jason Neate offered to purchase the Home for $120,000. Ms Brown, however, was asked questions about these matters in cross-examination.
In evidence she gave under cross-examination, Ms Brown said or accepted that she had a telephone conversation with Mr Bloom and told him about an offer of $120,000;[38] Ms Brown could not remember the exact date on which the conversation happened;[39] before that telephone conversation Mr Jason Neate communicated an offer to Ms Brown by stating “I will make an offer of 120,000”;[40] before he made the offer Mr Jason Neate asked Ms Brown what she thought of the Home, and Ms Brown does not doubt she would have said something to Mr Jason Neate, but cannot remember what she said him;[41] in her telephone conversation with Mr Bloom Ms Brown said “I have an offer of $120,000 on your home at 155. The offer is not from Paradise Lake resort. The offer is from a company associated with Paradise Resort”;[42] Ms Brown knew that a company was going to buy it because “Jason said it would be purchased through a company”, and he said that “[a]t the time he made the offer to me – for me to present the offer”;[43] Ms Brown knew that the purchaser was associated with Jason Neate because she “knew who Jason Neate was”, namely, the son-in-law of the directors of Paradise Lake;[44] Mr Bloom’s response to Ms Brown’s informing him of the $120,000 offer was that he told Ms Brown that the offer was a bit low,[45] Mr Bloom “refused to accept the $120,000 offer when I made it”;[46] Mr Bloom asked Ms Brown to go and see if the purchaser could bring the offer up a bit and to come back to Mr Bloom;[47] and Ms Brown agreed to do that.
[38] T48.20
[39] T48.25
[40] T51.30
[41] T51.45
[42] T53.5
[43] T53.10
[44] T53.45-T54.5
[45] T49.5
[46] T49.20
[47] T49.30
It is common to the evidence of both Mr Bloom and Ms Brown that they had a conversation in which Ms Brown informed Mr Bloom that she had received an offer from an interested purchaser to buy the Home for $120,000; and that Mr Bloom indicated that the offer was a little low or awfully low, and that he requested Ms Brown to see if the purchaser would increase the offer. I find, therefore, that before 1 June 2011, being the date of the first document that refers to a purchaser having made an offer of $120,000 for the Home,[48] Mr Jason Neate informed Ms Brown that he was interested in purchasing the Home for $120,000; Ms Brown communicated the offer to Mr Bloom in a telephone conversation she had with him; Mr Bloom indicated he would not accept the offer and requested Ms Brown go and see if the purchaser would increase the offer and to come back to Mr Bloom; and Ms Brown agreed to do that.
[48] Being a letter dated 1 June 2011 from Ms Brown to Mr Bloom which is referred to the M Bloom affidavit, 08.09.2017, [33]; Exhibit MB-8
A final matter I should note is that it was put to Mr Bloom in cross-examination that when Ms Brown presented to Mr Bloom the offer of $120,000, Ms Brown said that the offer “was clear for the property”,[49] and “that meant no commission was being payable”.[50] Mr Bloom did not accept that. I do not accept that Ms Brown used the word “clear” when she conveyed the offer of $120,000. Ms Brown did say in that part of paragraph 22 of her affidavit that I rejected that she used the word “clear”.[51] Ms Brown did not, however, use that word when she gave evidence from the witness box of the words she used to convey the $120,000 offer. That means there is no evidence before me that Ms Brown uttered the word “clear” when she conveyed to Mr Bloom the $120,000 offer. Further, the evidence suggests that Ms Brown used no such word. In her letters of 1 June 2011 and 7 June 2011 to which I refer later in these reasons, Ms Brown referred to the purchaser having offered or being committed to pay $120,000, but Ms Brown said nothing in these letters about the $120,000 being “clear”.
[49] T27.5
[50] T28.15
[51] In paragraph 8 of his affidavit of 11 October 2011 Mr Bloom deposes: “Nothing was either said or written by Mrs Brown to me advising me that the offer was $120,000 clear”. (Underlining is my emphasis.)”
Evidence and findings – events after first communication of $120,000 offer
According to evidence given by Ms Brown under cross-examination, after her telephone conversation with Mr Bloom she telephoned Mr Jason Neate and told him the vendor was not going to accept $120,000, and Ms Brown asked Mr Jason Neate whether he wanted to increase his offer. Mr Jason Neate said “no”.[52] This evidence is consistent with what I found was said during Ms Brown’s conversation with Mr Bloom when she first conveyed the $120,000. I therefore accept this part of Ms Brown’s evidence.
[52] T50.20
On or about 1 June 2011 Ms Brown sent to Mr Bloom a letter dated 1 June 2011.[53] The letter referred to “relevant information to the increase in Site Fees as of 01/07/2011” for the Home[54]. After referring to Mr Farr having paid site fees on a 6 monthly basis, and that the site fees for the Home had been paid to 30 June 2011, the letter stated:
[53] M Bloom affidavit, 08.09.2017, [33]; Exhibit MB-8
[54] That appears to be a reference to the document which is Exhibit MB-17 to the M Bloom affidavit, 08.09.2017
I still have an offer on this home for $120,000-00 and I do believe the purchaser could settle within 14 days.
House sales are extremely slow here on the Gold Coast. Open house during the past month has not been encouraging.
I will await your direction.
Ms Brown sent to Mr Bloom another letter, one dated 7 June 2011:[55]
[55] M Bloom affidavit, 08.09.2017, [35]; Exhibit MB-9
Further to our telephone conversation today I hereby fax an incomplete copy of a contract for sale for the home of the last [sic] John Farr.
At this point in time the purchaser will commit to paying $120,000 only for the home situated at site 155, Paradise Lake Resort.
The property would be purchased though a company and they are in a position to settle 7-14 days after agreement is reached by both parties to the sale price and date of settlement and both parties and myself have all signed the contract of sale.
Proof of responsibility to carry out this sale will be required before settlement can take place.
The Commission on $120,000-00 is $3,450-00 plus GST of $345-00 being a total of $3,7950-00 [sic] payable to Paradise Lake Resort.
The “incomplete copy of a contract for sale” referred to in the letter is what appears to be a standard form of contract for sale.[56] It identifies the Home, but it does not state the names of the vendor or of the purchaser; nor does it include any price.
[56] M Bloom affidavit, 08.09.2017, [35]; Exhibit MB-9, pages41-43
Mr Bloom annexed a copy of this letter to his affidavit.[57] He says he cannot recall the telephone conversation to which Ms Brown referred in that letter. He also says he has been unable to locate the “incomplete copy of a contract for sale for the home of the last [sic] John Farr”. It is unclear what Mr Bloom intended to mean by that statement, because Mr Bloom has annexed to his affidavit not only the letter dated 7 June 2011, but a contract for sale of home which fits the description incomplete copy of a contract for sale for the home of the last [sic] John Farr”. Mr Bloom also says that he denies requesting a contract, and he does not know why Ms Brown sent him the contract.[58] Ms Brown also annexed a copy of the letter to her affidavit, but she does not say anything about the circumstances in which it was sent. Notwithstanding Mr Bloom’s denial, I find that Ms Brown sent the contract after she had a conversation with Mr Bloom; and that in that conversation Ms Brown said she would send a contract to Mr Bloom. I rely on the letter being prefaced with the words “[f]urther to our telephone conversation”, and the absence of any evidence, contemporaneous or otherwise, that Mr Bloom made any enquiry of Ms Brown about why she had sent the letter and the contract referred to in the letter. I also rely on the letter dated 13 June 2011 Mr Bloom sent to Ms Brown to which I refer in the following paragraph.
[57] M Bloom affidavit, 08.09.2017, [35]; Exhibit MB-9
[58] M Bloom affidavit, 08.09.2017, [36]
There is in evidence an email Ms Brown sent to “Anita Laz”.[59] As Ms Brown deposed in her affidavit, that is a reference to Ms Anita Lazzarin. After referring to matters not relevant to the issues before me, Ms Brown stated:
[59] Affidavit of A J Brown, [28]; Exhibit AB-6
#155 has not accepted the $120,000 offer he is asking for $130,000-00
Do you want to counter offer?
On the basis of this email, Ms Brown said that she must have had a telephone conversation with Mr Bloom on 9 June 2011 in which “Mr Bloom wanted $130,000 for the property”.[60] In his affidavit of 11 October 2017 Mr Bloom does not respond to this part of Ms Brown’s affidavit. In evidence given under cross-examination, Mr Bloom said he did not recall having any conversation with Ms Brown in which he said he was prepared to accept $130,000.[61] Given it has not been suggested that the document that purports to be an email from Ms Brown to Ms Lazzarin is not genuine, I find on the basis of that email that at some time before the email was sent Mr Bloom informed Ms Brown that he wanted $130,000 for the Home.
[60] Affidavit of A J Brown, [28]
[61] T31.30
Mr Bloom sent to Ms Brown a letter dated 13 June 2011 which referred to “our recent telephone conversation and the purchaser’s offer of $120,000”, and stated that “the family won’t accept such a low offer”.[62] Mr Bloom stated that “a member of our extended family will purchase at a higher price”. Mr Bloom said that the intended purchaser wanted to be satisfied there is a valid site agreement, and he requested Ms Brown provide him a copy. Mr Bloom provided details of the purchaser and vendor, and said there was some urgency in settling the transaction because the purchaser wishes to complete on 21 June 2011. After noting other matters Mr Bloom said he intended to visit the Gold Coast “late on Friday afternoon and could meet with you on Saturday, 18 June 2011 or later that day if convenient”.
[62] M Bloom affidavit, 08.09.2017, [37]; Exhibit MB-10
Mr Bloom identifies in his first affidavit the “member of our extended family” referred to in this letter to Ms Brown. Mr Bloom says that it was proposed that the Home would be valued, and sold to the relative; but this proposal did not materialise because “within a few days” the relative advised Mr Bloom that the “proposed sale would not be proceeding due to her serious health problems”.[63] I accept Mr Bloom’s evidence on these matters.
[63] M Bloom affidavit, 08.09.2017, [38], [39]
According to Mr Bloom, after the relative advised him she did not propose to acquire the Home, he telephoned Ms Brown and had a conversation with her to the following effect:[64]
Mr Bloom:The sale to [the relative] has fallen through due to her poor health. Can you try for a higher price with your interested purchaser?
Ms Brown:There is no way the purchaser will increase their offer.
Mr Bloom:Can you at least try?
Ms Brown:I’ll try but the market is not good and you could regret not taking this offer. I’ll try and then get in contact with you again.
[64] M Bloom affidavit, 08.09.2017, [40]
Mr Bloom also says that a day or so later Ms Brown telephoned him and had a conversation in which words to the following effect were spoken:[65]
Ms Brown:I’ve spoken to the purchaser and he’s coming up a bit. He’ll now pay $121,000 and pay our commission so that you won’t be up for it. You’ll be four or five thousand dollars better off. I really do think it’s a good offer.
Mr Bloom:From what you’re saying I don’t have much choice but to accept this offer, but I want it conditional upon settling the sale before the end of the financial year. Also I want to remove my late uncle’s goods and furniture from the Home. The purchaser can keep anything left behind.
Ms BrownI’m sure that will be okay. I’ll send you out a contract for signing.
[65] M Bloom affidavit, 08.09.2017, [41]
Mr Bloom does not say he received any draft of the contract of sale before he signed it. He says that he went to the Gold Coast on or about Saturday, 18 June 2011 and signed contract for the sale of the Home at a meeting with Ms Brown at Paradise Lake’s on-site office on 20 June 2011.[66]
[66] M Bloom affidavit, 08.09.2017, [44]
Ms Brown does not in her affidavit refer to this part of Mr Bloom’s affidavit. She does say, however, that on a date she cannot remember Mr Bloom contacted her and asked if the $120,000 offer was still available. She says she contacted Mr Jason Neate and enquired whether he was still prepared to pay $120,000 for the Home and that she told Mr Jason Neate that Mr Bloom had told her he would go ahead with the sale at that amount.[67] Ms Brown also says that on a date she cannot remember she spoke to Mr Bloom who dictated to her the terms of the contract with a settlement date to be completed before 30 June 2011.[68] Mr Bloom came to the “Recreation Hall” on 18 June 2011, and said he now wanted $121,000 for the Home. Ms Brown “rang Jason and remember[ed] that Anita [Lazzarin] was part of the conversation and they laughingly agreed to give it to him saying they would not fight over $121,000”.[69]
[67] Affidavit of A J Brown, [30]
[68] Affidavit of A J Brown, [31]
[69] Affidavit of A J Brown, [33]
Mr Bloom does not in his affidavit of 11 October 2011 respond to this part of Ms Brown’s affidavit. Under cross-examination, however, Mr Bloom did not agree with the proposition put by counsel for Paradise Lake that it was only in the last minute that Mr Bloom wanted $121,000. Mr Bloom repeated the substance of what he had deposed in his affidavit.[70]
[70] T31.45
The evidence Ms Brown gave under cross-examination is not entirely consistent with what she deposed in her affidavit, but is consistent with what Mr Bloom deposed in his affidavit:[71]
[71] T69.1-T69.25
What did you do to prepare the contract?‑‑‑Mel Bloom dictated over the phone to me what I had to write on the contract of sale.
Right. Yes. And did you prepare it on that basis?‑‑‑Yes.
Okay. All right. And do you recall what those things were?‑‑‑There’s three statements on the third page of the contract.
Right. Okay?‑‑‑And there is a diary note where I scribbled them into a diary as he was dictating it to me over the phone.
Right. So those are the special conditions. Is that what you’re referring to?‑‑‑Yes. And how to have the sale was made Mel Bloom as executor of the estate of Mr John Farr.
All right. And you took out the term and the conditions of sale for commission to be paid; is that right?‑‑‑Correct.
Okay. And that was on the basis that the agreement was that it would be $121,000 without any commission?‑‑‑Clear, yes.
Okay. So that put Mr Bloom probably, what, 4 or $5000 ahead of the other offer of $120,000. Would you agree about that? So it’s the 1000 plus the commission. Would you agree about that?‑‑‑Yes.
Right. And that was enough to get it over the line and for the parties to agree to the sale. Is that correct?‑‑‑Yes. Must have been.
In my opinion, Mr Bloom’s account of how the $121,000 purchase was agreed is more likely than the account Ms Brown has given in her affidavit. Ms Brown accepted in cross-examination that the $121,000 was without commission, by which I understand she meant that Mr Bloom would not pay any commission; and the only mention in the evidence of Mr Bloom receiving an amount for the purchase price without his having to pay any commission is the conversation he deposes he had with Ms Brown.
I find, therefore, that between 13 and 18 June 2011 Mr Bloom had two telephone conversations with Ms Brown. In the first Mr Bloom informed Ms Brown that the sale to his relative and fallen through, and he asked whether Ms Brown could “try for a higher price with your interested purchaser”. In the second conversation Ms Brown told Mr Bloom the purchaser would now pay $121,000 and pay Paradise Lake’s commission so that Mr Bloom would not be up for it. Ms Brown also said that Mr Bloom would be four or five thousand dollars better off, and that she thought it was a good offer. Mr Bloom agreed to sell the Home on this basis, but he wanted the sale conditional on its being settled before the end of the financial year.
Summary of findings
It will be convenient if at this stage I set out the findings I have made before I consider whether I should accept Ms Brown’s evidence that at the time she first informed Mr Bloom of the $120,000 offer she said words to the effect of: “The offer is not from Paradise Lake Resort. The offer is from a company associated with Paradise Lake Resort”:
a)Mr Bloom and Ms Brown met in the second half of October 2010; that, during the meeting, Ms Brown informed Mr Bloom that Paradise Lake had a right of first refusal under the site agreement; that, in her view, the Home would be able to sold for no more than $150,000; that Mr Bloom indicated that he believed he would be able to obtain a sale price of $175,000 for the Home; and that Ms Brown informed Mr Bloom that Paradise Lake would not be interested in purchasing the Home for $175,000.
b)In the middle of January 2011 Mr Bloom arranged to have the Home listed for sale on a realty Internet platform for $200,000. By the end of February 2011 approximately six persons contacted Mr Bloom about the Home. Mr Bloom suggested to those persons that they attend the Site themselves and view the Home from the exterior, and attempt to gain access through Ms Brown. None of the persons contacted Mr Bloom again; and Ms Brown did not contact Mr Bloom about any enquiry concerning the purchase of the Home.
c)By 10 March 2011 Mr Bloom resolved that he would appoint Paradise Lake as selling agent for the Home, he approached Ms Brown to inform her of that decision, Ms Brown sent to Mr Bloom a form of Selling Authority, and on about 10 March 2011 Mr Bloom signed the Selling Authority as executor of the Estate and sent it to Ms Brown.
d)Before 1 June 2011 Mr Jason Neate informed Ms Brown that he was interested in purchasing the Home for $120,000. Ms Brown communicated the offer to Mr Bloom in a telephone conversation she had with him. Mr Bloom indicated he would not accept the offer and requested Ms Brown go and see if the purchaser would increase the offer and to come back to Mr Bloom. Ms Brown agreed to do that.
e)After her telephone conversation with Mr Bloom, Ms Brown telephoned Mr Jason Neate and told him the vendor was not going to accept $120,000, and Ms Brown asked Mr Jason Neate whether he wanted to increase his offer. Mr Jason Neate said “no”.
f)By letter dated 1 July 2011 Ms Brown informed Mr Bloom that “I still have an offer on this home for $120,000-00 and I do believe the purchaser could settle within 14 days”; and by letter dated 7 June 2011 Ms Brown informed Mr Bloom that “[a]t this point in time the purchaser will commit to paying $120,000 only for the home situated at site 155, Paradise Lake Resort”.
g)On or before 9 June 2011 Mr Bloom informed Ms Brown that he wanted $130,000 for the Home. Ms Brown communicated that offer to Ms Lazzarin and asked whether “you want to counter offer”.
h)By letter dated 13 June 2011 to Ms Brown Mr Bloom referred to the purchaser’s offer of $120,000”, and stated that “the family won’t accept such a low offer”; and that “a member of our extended family will purchase at a higher price”.
i)Between 13 and 18 June 2011 Mr Bloom had two telephone conversations with Ms Brown. In the first Mr Bloom informed Ms Brown that the sale to his relative and fallen through, and he asked whether Ms Brown could “try for a higher price with your interested purchaser”. In the second conversation, Ms Brown told Mr Bloom the purchaser would now pay $121,000 and pay Paradise Lake’s commission so that Mr Bloom would not be up for it. Ms Brown also said that Mr Bloom would be four or five thousand dollars better off, and that Ms Brown said she thought it was a good offer. Mr Bloom agreed to sell the Home on this basis, but he wanted the sale conditional on its being settled before the end of the financial year.
j)On 20 June 2011 Mr Bloom signed a contract for sale of the Home as executor of the Estate under which he agreed to sell the Home to Ripcord.
Did Ms Brown say the purchaser was a company associated with Paradise Lake?
Parties’ submissions
Counsel for Mr Bloom submits I should not accept Ms Brown’s evidence that she said words to the effect of “The offer is not from Paradise Lake resort. The offer is from a company associated with Paradise Resort” at the time she first communicated the $120,000 offer to Mr Bloom. Counsel submitted Ms Brown’s evidence was vague and changed in the course of her giving evidence. Counsel particularly relied on Ms Brown having deposed in paragraph 22 of the affidavit (which, as I have already noted, I rejected) using the word “clear” when she conveyed the $120,000 offer to Mr Bloom, yet, in the evidence she gave in chief of the conversation she said she had with Mr Bloom she did not say she used the word “clear”. Counsel also relied on Ms Brown having sent to Mr Bloom two letters in which she referred to the purchaser, yet she did not in those letters state that the purchaser was a company associated with Paradise Lake.
Counsel for Paradise Lake, on the other hand, submitted that given the conversation about which Ms Brown has given evidence occurred more than six years ago, it could not be expected that she would be able to recall details of the conversation. Counsel also submitted Ms Brown was a witness of truth, and that she has “no axe to grind”.
Matters relevant to whether Ms Brown’s evidence should be accepted
I do not agree with the submission made by counsel for Mr Bloom that Ms Brown gave changing and vague evidence; the evidence Ms Brown gave in chief of the effect of the words she says she used by which she conveyed to Mr Bloom the $120,000 offer repeated the substance of what was contained in paragraph 22 of her affidavit, and Ms Brown did not depart from her evidence under cross-examination. I place no weight on Ms Brown’s omitting the word “clear” when recounting in her evidence in chief the effect of the words she says she used by which she conveyed to Mr Bloom the $120,000 offer. The conversation between Ms Brown and Mr Bloom occurred more than six years before the time Ms Brown gave evidence of it; and in any event, as I have already noted, the consequence of Ms Brown not having given evidence that she used the word “clear” is that there is no evidence before me that when Ms Brown first conveyed to Mr Bloom the $120,000 offer she qualified the $120,000 offer with the word “clear”.
I accept the submission made by counsel for Paradise Lake that it could not be expected that Ms Brown would be able to recall details of the conversation. I also accept that Ms Brown attempted to tell the truth as she saw it. My accepting these submissions, however, does not mean I must accept as true what Ms Brown said. I have considered elsewhere what is involved in assessing the credibility of testimony.[72] That assessment is to be determined largely by reference to facts that are not in dispute or cannot reasonably be disputed, and contemporaneous documents. And here there are four matters that are not in dispute and which are relevant.
[72] O'Kane v Freelancer International Pty Ltd & Anor [2018] FCCA 933, [19]-[23]
First, there is the letter dated 1 June 2011. There Ms Brown simply referred to “the purchaser” without referring to the purchaser being a company or a company associated with Paradise Lake. That she described in a letter the person who had made the offer as “the purchaser” is a basis for inferring that that is how, in her telephone conversation with Mr Bloom, Ms Brown described the person who had made the offer for $120,000.
Second, there is the letter dated 7 June 2011 in which Ms Brown stated the “property would be purchased through a company and they are in a position to settle”. There are three matters to note about this statement:
a)It announces that the purchase of the Home will occur “through a company”. That suggests Ms Brown had not previously revealed that fact to Mr Bloom which, in turn, suggests that when she first conveyed to Mr Bloom the offer for $120,000 she did not describe the purchaser as a company and, therefore, did not describe the person who made the offer as a company associated with Paradise Lake.
b)That Ms Brown stated the Home would be purchased “through a company” and that “they are in a position to settle” suggests Ms Brown distinguished between the purchaser or purchasers and the means by which the purchaser or purchasers intended to acquire the Home, namely, “through a company”. That suggests that when she first conveyed to Mr Bloom the offer of $120,000 Ms Brown described the person who made the offer as “the purchaser”. It also suggests that the person whom she had in mind as the purchaser was Mr Jason Neate, or perhaps both Mr Jason Neate and Ms Anita Lazzarin, not some company, named or unnamed.
c)Although the statement refers to the purchaser acquiring the Home “through a company”, the letter says nothing about the company. In particular, it does not say that the company is or will be associated with Paradise Lake. That suggests that if, when she first conveyed the $120,000 offer to Mr Bloom, Ms Brown described the person who made the offer as a company, she did not also mention that the company was associated with Paradise Lake.
It might be said that it did not occur to Ms Brown to say in her letter dated 7 June 2011 that the company through which the Home was to be purchased was associated with Paradise Lake because, on her evidence, she had already disclosed that fact to Mr Bloom by having stated in her telephone conversation with Mr Bloom that the offer for $120,000 was made by a company associated with Paradise Lake. The difficulty with accepting this possibility, however, is that Ms Brown stated in her letter part of that which, on her evidence, she stated to Mr Bloom when she conveyed to him the $120,000 offer, namely, that the purchaser would be a company. If the explanation for Ms Brown not stating in her letter that the company through which the Home was to be purchased was associated with Paradise Lake is that she had previously disclosed that fact to Mr Bloom, there would have been no reason for Ms Brown to have stated in her letter that the purchaser would be a company because, on her evidence, she had already informed Mr Bloom of that fact.
Third, on the evidence of Ms Brown, Mr Bloom said nothing when Ms Brown informed him that the $120,000 offer was made by a company associated with Paradise Lake. The implication is that Mr Bloom said nothing about the offer being made by a company associated with Paradise Lake. This, however, is implausible. It may be accepted that, had Ms Brown stated to Mr Bloom that an offer was made by “a company associated with Paradise Lake”, Mr Bloom, being a barrister, would have understood Ms Brown to have intended to convey to Mr Bloom that there was some connection or relationship between, on the one hand, the company making the offer, or its directors or shareholders and, on the other hand, Paradise Lake or its directors or shareholders; but Ms Brown’s use of the expression would not have conveyed the nature or extent of the relationship or connection. That means that had Ms Brown stated that the $120,000 offer was made by a company associated with Paradise Lake, Mr Bloom at the very least would have asked questions of Ms Brown about the nature and extent of the connection or relationship between the company that had made the offer and Paradise Lake. That there is no evidence that Mr Bloom asked any such questions is a basis for finding, and I do find, that Mr Bloom asked no such questions. And Mr Bloom’s not asking any such questions is a matter that weighs against Ms Brown having stated to Mr Bloom that the offer for $120,000 was made by a company associated with Paradise Lake.
Fourth, there is no evidence that from the day on which, according to Ms Brown’s evidence, she informed Mr Bloom that the $120,000 offer was made by a company associated with Paradise Lake, until 20 June 2011, when Mr Bloom signed the contract for sale, that Mr Bloom referred to, or made any comment about, the purchaser being a company associated with Paradise Lake. Assuming Ms Brown did tell Mr Bloom that the purchaser was a company associated with Paradise Lake, and Mr Bloom would have understood that expression without having to ask Ms Brown any question about what it meant, Mr Bloom would have realised the obvious, namely, that because there was a company associated with Paradise Lake that was interested in purchasing the Home, Paradise Lake might not have the interest or incentive to actively market the sale of the Home to obtain a price as high as the $175,000 Mr Bloom told Ms Brown he believed could be obtained for the Home. In those circumstances, it is reasonable to expect that Mr Bloom would at the very least have expressed concerns about Paradise Lake acting as a selling agent at or around the time he would have been told that the $120,000 offer came from a company associated with Paradise Lake. That there is no evidence Mr Bloom expressed any such concerns is a basis for finding he had no such concerns; and he had no such concerns because Ms Brown had not informed Mr Bloom that the purchaser was a company associated with Paradise Lake.
Further, had Mr Bloom been told that the $120,000 offer came from a company associated with Paradise Lake, but nevertheless he continued to retain Paradise Lake as his selling agent, there would have come a time before 20 June 2011 when Mr Bloom may have come to believe or have concerns that a possible reason he had received (on my findings) only one offer was because Paradise Lake had received an offer from the associated company, and Paradise Lake had no interest to seek to market the Home to obtain a higher price; and that in those circumstances Mr Bloom would have said something to Ms Brown about his belief or concerns. There is no evidence that Mr Bloom raised any concerns. That suggests that Ms Brown did not inform Mr Bloom at the time she first conveyed the $120,000 offer that the prospective purchaser was a company associated with Paradise Lake.
Other matters
There are three other matters I should mention. The first is the submissions counsel for Mr Bloom made on the basis of contracts of sale of other homes on the Site, in some of which Ripcord is a purchaser, and in others of which Ripcord is the vendor. Counsel submitted on the basis of these documents that Paradise Lake was engaging in a scheme with Ripcord under which Ripcord would purchase homes from vulnerable owners at an undervalue with a view to on-selling them at a profit. I do not propose to make any findings about whether the contracts disclose any scheme; and the reason is that it was not put to Ms Brown that she was aware of or participated in any such scheme. Whether or not such scheme existed, therefore, has no bearing on whether I should accept Ms Brown’s evidence.
The second matter I should mention is that counsel for Paradise Lake put to Mr Bloom that he delayed commencing the proceeding because he knew that Ms Brown was the only person on behalf of Paradise Lake with whom he had dealt and, therefore, would have been the only person who could have given evidence on its behalf; and that Mr Bloom delayed commencing the proceeding because if Paradise Lake encountered any difficulty in finding Ms Brown “six years down the track”[73] Mr Bloom would have obtained an advantage in the proceeding. This was not accepted by Mr Bloom; and he gave an explanation why he delayed commencing the proceeding. That Mr Bloom commenced the proceeding when he did does not by itself afford any basis for not accepting his evidence. The evidence reveals that Mr Bloom first gave notice to Paradise Lake of the matters of which he complains in this proceeding by instructing his solicitor to send to Paradise Lake a letter dated 23 August 2012;[74] and Paradise Lake responded by its solicitor’s letter 14 September 2012.[75] It is apparent from that response that Ms Brown was told of Mr Bloom’s allegations because the letter from Paradise Lake contains detailed information of what Paradise Lake claimed were Ms Brown’s dealings with Mr Bloom.[76]
[73] T27.25
[74] M Bloom affidavit, 08.09.2017, [65]; Exhibit MB-19
[75] M Bloom affidavit, 08.09.2017, [65]; Exhibit MB-19
[76] M Bloom affidavit, 08.09.2017, Exhibit MB-20. In may be noted in passing that Paradise Lake’s solicitor’s letter stated that “Ms Brown specifically advised your client that the offer was not made by Paradise Lake, but by a company which was operated by a member of the Lazzarin family. Our client acknowledges that the name of the family member was not disclosed to your client.” This letter was not put to Ms Brown under cross-examination.
The third and final matter I should mention is the submission counsel for Mr Bloom made that the evidence of the words Ms Brown says she used to convey to Mr Bloom that she disclosed that Ripcord was an associated company of Paradise Lake differs from the words Paradise Lake’s defence says were used. Counsel submitted I should therefore have no regard to Ms Brown’s evidence.
It is true, as I noted at the beginning of these reasons, that in its defence Paradise Lake pleaded that before 1 June 2011 Ms Brown informed Mr Bloom that she had received an offer of $120,000 for the Home “from the son and daughter-in-law of the directors” of Paradise Lake; and it is true that, in general, “relief is confined to that available on the pleadings”.[77] There are, however, “circumstances in which a case may be decided on a basis different from that disclosed by the pleadings”, but these “are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities”.[78] Counsel for Mr Bloom did not object to Ms Brown giving evidence that varied from what was pleaded in the defence on the ground of relevance, and the case was conducted on the basis that the question I am required to determine is whether I should accept Ms Brown’s evidence. Had counsel objected to Ms Brown’s evidence on the ground of relevance, this would have been met with an application by Paradise Lake to amend the pleading; and given that Ms Brown deposed in her affidavit the effect of what she said in the witness box, and Mr Bloom responded to that affidavit, such application to amend would have been granted.
[77] Banque Commerciale SA v Akhil Holdings Ltd [1990] HCA 11, at [18]
[78] Banque Commerciale SA v Akhil Holdings Ltd [1990] HCA 11, at [18]
Conclusion and additional findings
Having considered all of these matters, I am not satisfied that when Ms Brown first communicated to Mr Bloom the offer for $120,000 she said to Mr Bloom words to the effect of: “The offer is not from Paradise Lake resort. The offer is from a company associated with Paradise Lake Resort”. I am satisfied she said no such words. I instead accept Mr Bloom’s evidence of what was said in the conversation in which Ms Brown first conveyed to Mr Bloom that an offer of $120,000 had been received. That is, I am satisfied that shortly before Ms Brown sent her letter of 1 June 2011 to Mr Bloom, Ms Brown telephoned Mr Bloom and informed him she had an offer of $120,000; and that, as I have already found, Mr Bloom indicated he would not accept the offer and requested Ms Brown go and see if the purchaser would increase the offer and to come back to Mr Bloom; and Ms Brown agreed to do that.
Given these findings, it would be appropriate if I refer to, and make findings in relation to the following evidence Mr Bloom gave in his first affidavit:[79]
At no stage of the marketing campaign conducted by the Respondent was I advised that the prospective purchaser was related or associated with the Respondent. If I had been so advised I would not have agreed to this price, but would have instructed the sales campaign to the Respondent to continue and/or appointed additional sales agent.
[79] M Bloom affidavit, 08.09.2017, [42]
Given the only evidence that Mr Bloom was informed the purchaser was a company associated with Paradise Lake was the evidence of Ms Brown that I have not accepted, I find that Mr Bloom was not advised that the prospective purchaser was related to or associated with the Respondent. I also accept the second sentence from this passage. That is so because, had Mr Bloom been informed that the offer for $120,000 had come from a company associated with Paradise Lake, he would have appreciated that Paradise Lake would have had a conflict or potential conflict between its serving Mr Bloom’s interests by actively marketing the Home to obtain the fair market value for the Home, and serving its own interests or those of its associated company by not actively marketing the Home to facilitate the associated company purchasing the Home for an amount less than its market value. In those circumstances Mr Bloom would not, therefore, have accepted Ms Brown’s advice that the $121,000 was a good offer; he would have insisted either on more marketing or, perhaps more likely, Mr Bloom would have investigated the possibility of marketing the Home in some other way.
Legal consequences of findings
As I have already noted, Paradise Lake accepts that the issue of liability turns on whether Paradise Lake disclosed to Mr Bloom the Relevant Information. Given I have concluded Paradise Lake did not disclose the Relevant Information, it follows that it accepts liability. Notwithstanding these concessions, it will be necessary for me to consider whether the concessions are well made and, if so, consider the nature of the liability Paradise Lake has to Mr Bloom. The consideration of those questions is necessary to the question of the remedy or remedies that are or may be available to Mr Bloom.
I begin with the question of the jurisdiction of this Court. The statement of claim pleads causes of action on the basis of which Mr Bloom alleges Paradise Lake breached fiduciary, contractual, and tortious duties it owed to Mr Bloom; and that Paradise Lake contravened the ACL. All four causes of action depend on the same alleged facts and, for that reason, all four causes of actions arise out of a “common substratum of facts”.[80] Given this Court has jurisdiction under s.138A of the Competition and Consumer Act 2010 (Cth) in relation to any matter under the ACL,[81] I am satisfied that all four causes of action form part of a single matter that includes a cause of action over which this Court does have jurisdiction; and, for that reason, the Court has jurisdiction to entertain all four causes of action. Further, I am satisfied that the cause of action based on contravention of s.18 of the ACL is not “colourable in the sense that it was made for the improper purpose of fabricating jurisdiction”.[82] That means it is open to me to dispose of the matter by considering any one or more of the causes of action pleaded in the amended statement of claim. It would be convenient that I consider only the cause of action based on breach of fiduciary duty.
[80] Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457, at page 512
[81] Subject to s.86AA of the Competition and Consumer Act 2010 (Cth) which limits this Court’s jurisdiction to awarding damages for loss or damage to no more than $750,000
[82] Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572, at [29]; [88]
In the amended statement of claim it is alleged that Mr Bloom entered into an “agency contract”, being a contract under which Mr Bloom authorised Paradise Lake to act as Mr Bloom’s agent to sell or to negotiate the sale of the Home; that as agent Paradise Lake assumed a number of fiduciary obligations which included a duty not to place itself in a position of conflict of interest and duty in respect of Mr Bloom, to disclose possible conflicts of interest, and to seek the informed consent of Mr Bloom to possible conflicts of interest; that Paradise Lake placed itself in a position of conflict of interest and duty by facilitating the purchase of the Home by Ripcord, a company associated with Paradise Lake; Paradise Lake, however, failed to disclose the nature of the relationship between Paradise Lake and Ripcord at or before the time Mr Bloom sold the Home to Ripcord. I am satisfied that these elements pleaded in the amended statement of claim state a cause of action for breach of fiduciary duty; that the evidence before me supports each of those elements; and, for these reasons, the concessions Paradise Lake made have been properly made.
That, finally, leads me to the question of relief. It appears to be common ground that if Mr Bloom were to succeed on his cause of action based on breach of fiduciary duty:
a)he would be entitled to recover compensation for any loss he may have sustained as a consequence Paradise Lake’s breach of fiduciary duty;
b)Mr Bloom would suffer loss if the price for which he sold the Home to Ripcord was less than the market value of the Home; and
c)if the market value of the Home exceeded the price for which Mr Bloom sold it to Ripcord, the measure of the compensation to which he would be entitled is the difference between the market value of the Home and the price for which he sold the Home to Ripcord.
Assuming this does reflect the common position of the parties, and given the findings I have made, including my finding that, had the Relevant Information been disclosed to Mr Bloom, he would not have sold the Home to Ripcord but would have taken other action, I am satisfied that if the Home were sold for less than its market value, the difference between the market value as at 20 June 2011 and the price at which the Home was sold would represent loss to Mr Bloom, that this loss would have occurred as a consequence of Paradise Lake’s breach of fiduciary duty, and that such loss would be loss that could be compensated by making an award of equitable compensation.[83]
[83] See the discussion of the principles of equitable compensation in Meagher, Gummow & Lehane’s Equity Doctrine and remedies, 5th edition, chapter 23, especially at [23-165] – [23-225]
Disposition
I propose to dispose of this part of the proceeding by answering the question of liability that I have previously ordered be determined separately from remedy as follows:
The respondent is liable to compensate the applicant for such loss as the applicant may have suffered as a consequence of the respondent not disclosing to the applicant before the applicant sold the property at Site No: 155 Paradise Lake Resort, 368 Oxley Drive, Runaway Bay to Ripcord Pty Ltd on 20 June 2011 that the director of the Ripcord Pty Ltd was the son-in-law of the directors of the respondent.
I also propose that I will list the matter for directions to determine the course the proceeding should take on the question of remedy. Assuming I have correctly understood the common position of the parties, it seems that the Home will need to be valued as at 20 June 2011. One option the parties may consider is to agree that the question of the value of the Home as at 20 June 2011 be determined by an expert jointly appointed by the parties.
I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Date: 9 August 2017
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