Callea v Wenfang
[2022] VCC 508
•21 April 2022
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE | Revised Not Restricted Suitable for Publication |
| GENERAL LIST |
Case No. CI-21-00428
| JULIE CALLEA also known as JULIE CALLEA-SMYTH | Plaintiff |
| v | |
| VIVIEN WU WENFANG | Defendant |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 16, 17 and 21 February 2022 | |
DATE OF JUDGMENT: | 21 April 2022 | |
CASE MAY BE CITED AS: | Callea v Wenfang | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 508 | |
REASONS FOR JUDGMENT
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Subject:CONTRACT OF SALE OF LAND – AUSTRALIAN CONSUMER LAW – RECISSION – REPUDIATION
Catchwords: Section 32 statement – vendor’s statement – planning permit – section 173 agreement – agent’s representation – Australian Consumer Law
Legislation Cited: Competition and Consumer Act 2010 (Cth); Planning and Environment Act 1987 (Vic); Sale of Land Act 1962 (Vic);
Cases Cited:607 Sunbury Road Pty Ltd v Melbourne Linh Son Buddhist Society Inc. [2021] VCC 1762; Bonacci v Ruyten [2000] VSC 138; Council v Kiene [2009] VCAT 81; Deemcope Pty Ltd v Cantown Pty Ltd [1995] 2 VR 44; Downing v Lau [2018] VCC 33; Fifty-Eighth Highwire Pty Ltd v Cohen [1996] 2 VR 64; McHutchison v Asli [2017] VSC 258; Lavery v Nelson (1984) 3 BPR 9211; Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 44; Paterson v Batrouney (2001) V ConvR 54-639; Payne v Morrison [1992] V ConvR 54-428; Petrie v Dwyer (1954) 91 CLR 99; Pricom Pty Ltd v Sgarioto (1994) V ConvR 54-508; Vettese v Kemp (2000) 77 SASR 53
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D.P. Lloyd | Cornwalls |
| For the Defendant | Mr B.J. Parker | CLT Lawyers |
HIS HONOUR:
Introduction
1The principal issue in this case is whether the defendant (“Wu”) was entitled to rescind a contract for the sale of the property at 58B Baird Street, Brighton East (“the Property”). If Wu is not so entitled, then she will have repudiated the contract regarding the Property and will be liable to the plaintiff (“Callea”) in damages.
Background
2In 2016, Callea and her then husband, Christopher Smyth (“Smyth”), purchased the property at 58 Baird Street, Brighton East (“the Baird Street Property”). At the time, the plan was to demolish the old house on the site, subdivide the land into two lots and build a house on each lot. They intended to use one house as their matrimonial home and treat the other as an investment property, retaining the option to sell the investment property at some future time. Callea and Smyth retained G & S Lawyers of Mordialloc as their solicitors to undertake the conveyancing work associated with the purchase of the Baird Street Property and its subsequent subdivision and development.
3On 14 July 2017, Bayside City Council (“the Council”) granted a planning permit allowing the construction of two double storey dwellings on the Baird Street Property. Callea and Smyth were to build the houses in accordance with the endorsed plans approved by the Council.
4By about March or April 2018, Callea and Smyth separated. As a result, their plans for the Baird Street Property changed. They determined to complete the construction of a house on one lot, 58B, and to sell the other lot, 58A, as vacant land albeit with a development approval from the Council.
5On 9 May 2018, the Council issued a planning permit allowing Callea and Smyth to subdivide the Baird Street Property into two lots.
6In September 2018, Callea and Smyth entered into an agreement with the Council under section 173 of the Planning and Environment Act 1987 (Vic). The purpose of the section 173 agreement is:
(a) to give effect to:
(i)the planning permit (Permit No 2018/7554/1) (“the subdivision permit”) issued in May 2018 authorising the subdivision of the Baird Street Property in accordance with the plans endorsed by the Council;
(ii)the development permit (Permit No 2016/852/1) issued on 14 July 2017 authorising the development of two dwellings on the Baird Street Property in accordance with plans endorsed by the Council; and
(b) to achieve and advance the objectives of planning in Victoria and the objectives of the planning scheme in respect of the Baird Street Property.
7Under the section 173 agreement, Callea and Smyth were authorised to develop the Baird Street Property in accordance with the development permit and the conditions therein. Further, upon completion of the development, they were not to alter, extend or otherwise change the development without the consent of the Council.
8In January 2019, Wu and her former husband, Peter Kwee (“Kwee”), drove past the Property while inspecting houses in the area. They met the vendor’s real estate agent, Stephen Smith (“Smith”) of Marshall White. Wu said that in the course of discussions with Smith, he represented to them that:
(a) the Property would be ready in 2-3 weeks; and
(b) the vendors would change the address of the Property from 58B Baird Street.
9Later the same day, Smith went to Wu’s house with the contract of sale and vendor’s statement in relation to the Property. Wu signed the documents. The contract of sale provided for a purchase price of $3.6 million. Callea and Smyth signed the contract of sale on the following day. Smith signed the contract on their behalf on the same day as Wu did.
10By email sent on 27 January 2019, Smith asked Wu and Kwee to pay the deposit within 48 hours. This request was unusual in circumstances where the contract of sale specified no specific date for payment of the 10% deposit.
11On 29 January 2019, Wu sent an email to a solicitor, Paul Holdway (“Holdway”), who had assisted her in the past with property purchases. Wu attached the contract of sale and sought his assistance on several matters.
12Later the same day, Wu emailed Smith advising that she had contacted her lawyer for help with the purchase. The balance of the email was in the following terms:
“I have contacted my lawyer to help me with this purchase.
Our major concerns discussed with you last Friday need to check with you and owner so as to proceed next
Since the house is not yet completed, landscaping and many interior area need to be confirmed with us, like carpet (what colour not make known to me), etc.
I understand the land is divided into 2 lot (58A and 58B), 58B is the house I am buying, as requested before signing the contract, the owners should proceed to apply/settle the house to be either 58 or 58A.
Looking forward to hear from you about the solutions of the issues above.”
13After this email, Wu sent another email to Holdway at 11:39am that day about seeking an occupation permit or paying a 10% deposit when the house was completed.
14Smith responded to Wu by email on 29 January 2019 as follows:
“I have asked the vendor what can be done at this stage regarding the address change and await a response but, as per our conversation, I expect it will be a matter of you following up with council after subdivision and settlement. I'll let you know the response.
Carpet went in the day after we met. and the property will be fully landscaped ahead of settlement. It will be completed over the next 2 and a half weeks.
I would be happy to hear from your lawyers or to forward the contract to them directly. As it stands we have an executed contract of sale (you have purchased the property) so congratulations. We do now need transferral of the deposit amount.
I’m happy to assist between sale and settlement to help with any and all aspects to ensure you are happy.”
15Kwee sent an email to Smith on 31 January 2019 about what he said was “an important issue need your clarification”. Kwee noted that neither the subdivision nor the construction was complete yet and no occupation licence had been issued. Kwee said that Wu was not buying the Property off the plan.
16By email on 1 February 2019, Tracey Humphries of the law firm Legal Essentials responded to Wu on behalf of Holdway. She noted that the contract of sale was unconditional and was fairly standard for an off the plan contract. She explained the aim was to protect the purchaser so that, before settlement, the plan of subdivision had to be registered and an occupancy permit issued for the completed building. She recommended that Wu pay the deposit as soon as possible. In relation to the issue about the number, she asked whether Wu had approached the real estate agent about it and the agent’s response.
17In an email sent on 11 February 2019, Carolyn Tadross (“Tadross”) of CLT Lawyers, acting on behalf of Wu, sent a letter to Steven Soldatos (“Soldatos”) of G & S Lawyers advising that the contract of sale was void for the reasons set out in her letter and Wu rescinded the contract with effect from that day. The letter noted that, although the vendor statement said that the subdivision permit was attached as part of the statement, this was not correct. The only planning permit attached was the development permit. Moreover, the section 173 agreement with the Council was not referred to in the search of the title included in the vendor’s statement. It was said that these matters constituted a breach of the vendors’ obligations under the Sale of Land Act 1962 (Vic) (“SLA”) and entitled Wu to rescind the contract.
18Soldatos responded to Tadross by email on 12 February 2019. He rejected the alleged basis for the rescission and said there was no basis for Wu’s actions. He said that even if there were, by reason of section 32K of the SLA, Wu was not entitled to rescind. The letter warned that unless the deposit was paid by 14 February 2019 and the settlement date confirmed by reply, the vendors would treat Wu’s conduct as repudiating the contract of sale and they would immediately list the Property for sale again in order to mitigate their loss.
19By letter dated 14 February 2019, Tadross responded to Soldatos by disagreeing that section 32K of the SLA would assist the vendors. Tadross pointed out that the vendor’s statement contained a title search which was approximately eight months old. It was for this reason that it did not include any reference to the section 173 agreement between the vendors and the Council. The title search was conducted in May 2018 and the section 173 agreement was not made until 20 September 2018. Tadross said that relying on the outdated search constituted a lack of due care and attention by the vendors. She also said that it was unreasonable to refer to a planning permit in the vendor’s statement and not include the same.
20She said that Wu relied on the earlier letter of 11 February 2019 as the basis of her recission of the contract of sale.
21By letter dated 18 February 2019, Soldatos advised Tadross that the vendors treated Wu’s purported recission as a repudiation of the contract of sale. He said that the vendors accepted the repudiation and would move to resell the Property promptly in order to mitigate their loss. Soldatos maintained that Wu was refusing to complete the contract for reasons unrelated to the alleged non-disclosure.
22On 26 February 2019, Tadross wrote again to Soldatos saying that her client had been told over three weeks ago that the work on the Property would be completed within three weeks and as at last week it was not yet finished.
23By letter dated 1 March 2019, Soldatos advised Tadross that, contrary to Wu’s instructions, the Property was completed and the plan of subdivision was ready for lodgement. Soldatos said that but for Wu’s repudiation, settlement could have taken place on 20 April 2019.
24Advance Building Strategies conducted a final inspection of the Property on 25 February 2019 and issued the occupancy permit for the Property on 5 March 2019.
25On 16 March 2019, Wu entered into a contract of sale for the purchase of 28 Binnie Street, Brighton East for an amount of $3.550 million.
26On 21 May 2019, the vendors sold the Property again for $3.15 million.
27On 3 July 2019, Soldatos wrote again to Tadross advising that the vendors had resold the Property and that settlement had taken place. Accordingly, the loss and damage sustained by the vendors in respect of the contract repudiated by Wu had now crystalised in an amount of about $450,000.
28On 22 September 2020, the Family Court of Australia made orders that Smyth assign to Callea any right to initiate proceedings and relinquish to Callea any and all rights and entitlements arising from such proceedings in relation to the failed sale of the Property.
29On 5 February 2021, Callea commenced proceedings against Wu seeking damages arising from the breach of the contract of sale. On 9 July 2021, Callea joined her former solicitors, G & S Lawyers, as the second defendant to the proceeding.
30In November 2021, Callea settled her claim against G & S Lawyers. The solicitors paid Callea the sum of $50,000 in full settlement of the claims against them.
Issues
31The parties determined that in this case the court needs to decide the following issues:
a)Did the section 32 statement given to Wu by Callea and Smyth prior to the contract of sale of land being entered into on 24 January 2019 fail to comply with section 32 of the SLA on the basis that it did not contain:
(i)a description of the section 173 agreement affecting the land, as required by section 32C of the SLA; and/or
(ii)particulars of the subdivision permit affecting the land, as required by section 32D(a) of the SLA?
b)If so, did Wu validly rescind the contract pursuant to section 32K(2) of the SLA?
c)Is Wu not entitled to rescind the contract as provided in section 32K(4) of the SLA on the basis that:
(a)the vendors have acted honestly and reasonably and ought fairly to be excused for the contravention of section 32; and
(b)Wu is substantially in as good a position as if all the relevant provisions of Division 2 of Part II of the SLA had been complied with?
d)Were the claimed representations or either of them made to Wu?
e)If so, was it within the scope of authority of the vendors’ estate agent to make them?
f)If so, were they (or either of them) misrepresentations at common law?
g)If so, is the contract to be set aside at common law for misrepresentation?
h)Was the sale transaction evidenced by the contract “in trade or commerce” within the meaning of section 2 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) (“ACL”)?
i)Were the representations (or either of them) representations with respect to future matters for the purposes of section 4 of the ACL?
j)Were the representations (or either of them) misleading or deceptive or likely to mislead or deceive contrary to section 18 of the ACL?
k)Did Wu rely upon the representations (or either of them) in entering into the contract?
l)If so, should the contract of sale for the Property be declared to have been void ab initio pursuant to section 243(a) of the ACL?
m)Did Wu repudiate the contract by purporting to rescind it on 11 February 2019 in reliance upon section 32K of the SLA?
n)If so, did the vendors validly terminate the contract on 18 February 2019 by accepting Wu’s repudiation?
o)Is the plaintiff entitled to damages at common law from Wu?
p)If so, what is the proper quantum of the plaintiff’s damages?
Did the section 32 statement comply with section 32 of the SLA?
32The section 32 statement provided by the vendors to Wu before the contract of sale was entered into did not contain a copy of the section 173 agreement affecting the land. Similarly, the register search statement annexed to the section 32 statement did not disclose the existence of the section 173 agreement.
33It seems that this came about because the vendors’ solicitor, Soldatos, obtained the title search of the Property in May 2018. At that time, there was no section 173 agreement registered on title. This did not occur until about 20 September 2018. The vendors appear to have had no contact with Soldatos between October 2018 and February 2019 when they provided the contract of sale and section 32 statement to Wu.
34None of the sections in Division 2 of Part II of the SLA expressly mention a section 173 agreement or require its disclosure in a section 32 statement. There is no judicial decision regarding whether a section 173 agreement falls within the concept of “easement, covenant or other similar restriction” for the purposes of section 32C(a) of the SLA.
35Wu contended that the absence of a reference to the section 173 agreement in the section 32 statement constituted non-compliance with the section. Counsel for Wu, Mr Parker, referred to the leading text on the SLA, ‘Sale of Land Act Victoria’, where the learned authors said:
“Conditions regulating the ongoing use of the land contained in an agreement under s 173 of the Planning and Environment Act 1987 which has been registered on the title to the land fall within the category of “similar restriction”, as they regulate the use of the land in a similar way to a restrictive covenant and they affect the land by virtue of s 182 of that Act. The Victorian Civil and Administrative Tribunal has held in Wodonga City Council v Kiene that a s 173 agreement did not bind a transferee of land subject to the agreement that had not been registered before the transfer was registered, even if the transferee had prior notice of the agreement.”[1]
[1]DP Lloyd and WF Rimmer, Sale of Land Act Victoria (Thomson Reuters, 2009) 170.
36Mr Lloyd, counsel for Callea, while formally contesting the point, acknowledged that it was difficult to contend that the failure to mention the section 173 agreement was compliant with the SLA.
37I find that the vendors contravened section 32 of the SLA to the extent that they omitted any mention of the section 173 agreement. In my view, the effect of the section 173 agreement was that, once it was registered on title, it operated like a restrictive covenant or easement or other similar restriction. It constrained the rights of the registered proprietor and bound successors in title. Where there was no mention of the section 173 agreement, plainly there could be no “description” of the agreement or the restriction it created as required by section 32C(a) of the SLA.
38It is common ground between the parties that there was no copy of the subdivision permit included within the section 32 statement. The permit was referred to in a list of documents said to be within the vendor’s statement but this listing was incorrect. Conversely, the development permit was not referred to in the said list of attached documents but was in fact included.
39Both parties accepted the authority of Bonacci v Ruyten[2] which held that a planning permit is required to be disclosed under section 32D(a) because it constitutes an approved proposal directly and currently affecting the land. Section 32D(a) requires the section 32 statement to include particulars of such an approved proposal.
[2][2000] VSC 138.
40Callea argued that because the section 32 statement contained the identifying number of the subdivision permit, a prospective purchaser had sufficient particulars, if the purchaser were interested, to obtain a copy of the permit from the Council as the responsible body issuing the permit.
41In my view, the section 32 statement was defective because it did not contain particulars of the approved proposal affecting the Property. The aim of the legislation is to provide a prospective buyer with all the relevant information prescribed in the SLA. The intent of the law would be frustrated if interested parties were forced to make their own enquiries about matters covered by the SLA.
Did Wu validly rescind the contract pursuant to section 32K(2) of the SLA?
42Given the problems with the section 32 statement, I find that, prima facie, Wu validly rescinded the contract pursuant to the provisions of the SLA. Wu had not accepted the title and had not become entitled to possession or to the receipt of rents and profits within the meaning of section 32K(2) when CLT Lawyers rescinded the contract on her behalf by letter dated 11 February 2019. However, the ultimate conclusion about Wu’s legal entitlements is subject to the matters discussed below.
Is Wu prevented from rescinding the contract of sale by reason of section 32K(4) of the SLA?
43Section 32K provides as follows:
“(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.”
44It is clear from the authorities that it is the vendor who bears the burden of establishing the matters in section 32K(4).[3] The court must be affirmatively satisfied that each element of the provision is established.[4]
[3]McHutchison v Asli [2017] VSC 258 at [62].
[4]Fifty-Eighth Highwire Pty Ltd v Cohen [1996] 2 VR 64, 72 per Brooking JA.
Did the vendors act honestly?
45It is common ground between the parties that the vendors acted honestly.
Did the vendors act reasonably?
46There is a difference of opinion about whether the vendors acted reasonably.
47Wu contended that the vendors had not acted reasonably. This was due to their failure to include the subdivision permit in the section 32 statement and failure to mention the section 173 agreement.
48Callea contended that the vendors acted reasonably by engaging an apparently competent solicitor to prepare the section 32 statement on their behalf and then relying on the solicitor to prepare the statement in compliance with the requirements of the SLA.
49First, with regard to the failure to include the subdivision permit, Wu accepted that Callea gave evidence about sending the planning permit to Soldatos but did not explain why the permit was not included in the section 32 statement. While Soldatos wrote to Callea noting that the planning permit was omitted due to “an inadvertent error”, the talk of error was vague because it gave no details of the error or whose responsibility it was.
50Wu argued in the alternative that if the court was satisfied that G & S Lawyers were responsible for omitting the planning permit, then the vendors ought be held vicariously responsible for the error of their solicitors.
51Secondly, as regards the section 173 agreement, there was no explicit mention of error. The email from Soldatos to Callea dated 11 February 2019 was said to be revealing to the extent that Soldatos referred to ordering a copy of the section 173 agreement. Implicit in that statement was the fact that he did not already possess a copy. This, in turn, suggested that he did not act for the vendors regarding the section 173 agreement – if he did, surely he would have retained a copy.
52In relation to the section 173 agreement, Wu contended that no question of potential liability for G & S Lawyers could arise because that firm did not act for the vendors in relation to the production of the section 173 agreement. Rather, Wu said that Connelly Surveyors assumed responsibility for the section 173 agreement.
53Wu contended that both vendors acted unreasonably in relation to the agreement.
54Wu submitted that Callea was an experienced solicitor and partner in a mid-tier law firm for 18 years. Through her practice in banking and finance litigation, she was familiar with title searches and encumbrances such as mortgages which were registered on title. Apart from her legal knowledge, Callea had owned several properties before seeking to sell the Property. The properties were both domestic and commercial because she had owned a laundromat in Cheltenham before redeveloping the site, reconstructing a new shop and units above it.
55Overall, Wu argued that Callea’s evidence was evasive and unreliable in the sense of recalling matters which assisted her case and not recalling matters which might weaken her position.
56Wu noted that Callea could not explain how the estate agent obtained the contract of sale and section 32 statement. Callea’s evidence was that she thought G & S Lawyers might have supplied them to the real estate agent. She could not recall asking Smith to sign the section 32 statement on her behalf. Callea received correspondence from Luke Considine (“Considine”) of Connelly Surveyors about the section 173 agreement in May 2018. She also received a proposal from Maddocks about costs and a flow chart explaining the process governing the section 173 agreement. Callea signed and returned the agreement to Maddocks. While Callea agreed that titles office searches were important documents in the context of a conveyance, she could not recall looking at the search document in the section 32 statement when she looked at the document in January 2019.
57Wu submitted that Smyth had purchased a number of properties and had some experience with section 32 statements and was aware that it was important that they be accurate. Smyth had dealings with Considine about the section 173 agreement.
58Wu contended that Smyth did not act reasonably because:
(a) Smyth commenced a process with Connelly Surveyors and Maddocks Lawyers for the preparation of the section 173 agreement. He accepted that he read emails setting out the process;
(b) on 23 August 2018, Smyth received the contract and vendor’s statement from Soldatos and failed to respond to his request for information regarding the status of the preparation of the section 173 agreement. Soldatos asked Smyth whether the section 173 agreement had been prepared by Maddocks so that he could progress the registration of the plan of subdivision. Smyth said he could not remember specifically responding to Soldatos about this matter;
(c) Smyth accepted that he did not communicate with G & S Lawyers between receiving the contract and section 32 statement in August 2018 and contracting with Wu to sell the Property; and
(d) Smyth read the contract of sale and section 32 statement and did not appreciate that the section 173 agreement was not registered on the title.
59Wu argued that in circumstances where Smyth was involved in the process of producing the section 173 agreement, was informed and/or realised that the agreement would be registered on title and that the agreement was important for the development of the Property, he acted without proper care in failing to:
·obtain or ask for an updated titles office search;
·check if the section 32 statement supplied in August was appropriate to sign; and
·respond to Soldatos’ query about the section 173 agreement.
Wu suggested that, if anything, Smyth’s conduct was worse than Callea’s given his communications with Soldatos and Considine about the section 173 agreement.
Analysis
60There appears to be some confusion regarding the legal position of vendors whose agents do not act with due care and attention. While there is no doubt that the requirement to act reasonably entails application of an objective test requiring it to be found that the vendor acted with due care and attention and without negligence,[5] the authorities regarding the extent to which vendors can be bound by the actions of their solicitors seems conflicting. On the one hand, assuming that the cause of the non-disclosure in the section 32 statement was attributable to the conduct of the vendors’ solicitor, two Supreme Court decisions prima facie support Wu’s contention that the vendor is bound by the conduct of its solicitor. In Payne v Morrison[6], the vendor’s statement prepared by an estate agent on behalf of the vendor was found to be deficient in failing to disclose the existence of a drain under the property. The vendor was effectively held to be vicariously liable for the estate agent’s negligence. Also, in Deemcope Pty Ltd v Cantown Pty Ltd[7] the court was not persuaded that the vendor acted reasonably for the purposes of a provision of the SLA relating to terms contracts which is in similar form to section 32K(4) based on the contention that “he relied entirely upon [his solicitor] in the conduct of this whole transaction”. The vendor again was effectively held vicariously liable for the solicitor’s negligence.
[5]Payne v Morrison [1992] V ConvR 54-428, 65,050.
[6] Ibid.
[7][1995] 2 VR 44.
61On the other hand, other Supreme Court decisions point in the opposite direction. In Pricom Pty Ltd v Sgarioto[8], the court accepted that the vendors acted reasonably in relying upon their solicitors to prepare the section 32 statement. Similarly, in Paterson v Batrouney[9] the court decided that the vendors acted reasonably in placing the preparation of the section 32 statement in the hands of their solicitor.
[8](1994) V ConvR 54-508.
[9](2001) V ConvR 54-639.
62The only appellate court decision in Victoria regarding the provision looks to be Fifty-Eighth Highwire Pty Ltd v Cohen.[10] There, a vendor of property failed to disclose in the section 32 statement the existence of a combined drain which sewered the subject property and two neighbouring properties. The drain ran beneath the house on the property. When the purchasers learnt of the drain, they rescinded the contract. They filed an originating motion raising for determination whether they were entitled to so act. The purchasers swore that if they had known of the existence of the drain, they would not have agreed to buy the property on the terms in the contract. The purchasers also filed an affidavit by an estate agent expressing the opinion that the existence of the drain reduced the value of the property. The vendor filed an affidavit from its director disclosing that he had owned 12 homes over the years and that many of them had been serviced by a combined drain. He said that when the purchasers bought the property, the existence of the drain had been disclosed in the section 32 statement. The vendor also filed affidavits from experts that the existence of the drain did not reduce the value of the property. At the hearing of the originating motion, there was no cross-examination of any deponent. The trial judge held that the vendor had contravened section 32 of the SLA and was not to be excused. The vendor appealed.
[10][1996] 2 VR 64, 72.
63The Court of Appeal unanimously dismissed the appeal. The court agreed that the vendor failed because it did not act reasonably and because the purchaser was not in substantially as good a position as if all the relevant provisions of section 32 had been complied with.
64In a joint judgment which agreed with the decision of Brooking JA, Charles and Callaway JJA commented on the earlier provision which now takes the form of section 32K(4) as follows:
“Turning to subs(7):
(a) the first three requirements focus exclusively, or almost exclusively, on the position of the vendor;
(b) they import a subjective inquiry (whether the vendor has acted honestly), an objective inquiry (whether the vendor has acted reasonably) and an exercise of judicial discretion (whether the vendor ought fairly to be excused);
(c) the fourth requirement focuses on the purchaser; and
(d) it imports an inquiry whether he or she is substantially in as good a position as if s32 had been complied with.”[11]
[11] Ibid, 77.
65The joint judgment then commented that the fourth requirement involved asking whether the difference between the purchaser’s actual and hypothetical positions is “real or of substance as distinct from ephemeral or nominal” and suggested that it would usually be sufficient to consider that question objectively.
66The joint judgment also said:
“The complete protection that the fourth requirement 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; but that need not be decided in the present case, where the alter ego of the appellant himself failed to act reasonably.”[12]
[12] Ibid.
67More recently, section 32K of the SLA or analogous provisions have been considered in this court in Downing v Lau[13] and 607 Sunbury Road Pty Ltd v Melbourne Linh Son Buddhist Society Inc.[14]
[13][2018] VCC 33.
[14][2021] VCC 1762.
68In the former, Marks J conducted a detailed examination of the various cases dealing with the question of whether a want of care by someone engaged to prepare the section 32 statement could be visited upon the vendor.[15] The purchaser in that case argued that the conveyancer who omitted any reference to a planning permit in the section 32 statement was the vendor’s agent in preparing the statement and the contract of sale. The evidence showed that the vendor himself read the draft documents and signed them. The vendor argued that the conveyancer, in preparing the section 32 statement, was not her agent as that term is used in section 30 of the SLA. The section defines “vendor” as including any person acting as agent for the vendor.
[15] Downing v Lau [2018] VCC 33, [36] – [110].
69The trial judge accepted that the conveyancer was a professional retained to perform certain work for the vendor including the production of a section 32 statement and contract of sale. Her Honour found that when doing this work, the conveyancer was not the agent of the vendor but a retained expert, even if she acted as agent in a different context by corresponding with the third party. In so finding, the trial judge disagreed with the views expressed by the authors of Sale of Land Act Victoria where they 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.” [16]
[16]DP Lloyd and WF Rimmer, Sale of Land Act Victoria (Thomson Reuters, 2009) 204.
70I 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.
71I too query the validity of the commentary in Sale of Land Act Victoria.[17] If the commentary were correct, then any negligence or want of care by a solicitor or conveyancer preparing a section 32 statement would compromise the vendor because the agent would bind the principal. This would mean that, even if the negligence were relatively minor and caused minimal harm to the purchaser, so that, in substance, the purchaser was no worse off, the purchaser could nonetheless avoid the contract. Such an outcome would not, in my opinion, serve the purposes of the legislation but would frustrate them.
[17]Ibid.
72I am satisfied that, insofar as any negligent omission in the section 32 statement was due to the conduct of G & S Lawyers, it cannot be attributed to the vendors with the result that they are thereby found to have acted unreasonably.
73This approach is consistent with the plurality in Fifty-Eighth Highwire Pty Ltd v Cohen[18] and the approach of Beach J in Paterson v Batrouney[19] where His Honour said[20] that where one is dealing with the question whether a vendor has acted reasonably regarding the preparation of a vendor’s statement, one considers the conduct of the vendor personally. Moreover it seems to be also consistent with the rationale of the predecessor to section 32K(4) whereby the law sought to excuse honest error and prevent purchasers from taking advantage of immaterial technical failures.[21]
[18] [1996] 2 VR 64.
[19] (2001) V ConvR 54-639.
[20] Ibid, [33].
[21] See Eames J in Pricom Pty Ltd v Sgarioto (1994) V ConvR 54-508, 65,858.
74However, the personal conduct of the vendors must be examined.
75Callea, although a lawyer and partner in a city law firm for many years, claimed no expertise in conveyancing. She was involved in banking and finance litigation. She gave no directions or instructions to the solicitor which caused him to omit material references. When she received the subdivision planning permit from the surveyor, she forwarded it to Soldatos. There is no suggestion that Callea failed to respond to queries from Soldatos or any other relevant person. I find that Callea acted reasonably in retaining Soldatos to act regarding the sale of the Property.
76Smyth said that he was an investor. As might be expected, his recollection of events was a little sketchy. He was frequently asked if he recalled seeing or receiving or responding to particular emails or letters. The common response was, “No”, but where his name appeared as a sender or recipient of an email, he assumed (and accepted) that he sent or received the email as the case might be.
77While Smyth had owned some properties before selling the Property, he was not an experienced landlord or property developer. I accept that, on the contrary, he was a relative novice in developing property and that he had not previously been involved in a subdivision of land. I also accept that he did not, initially at least, know what a section 173 agreement was or its significance. His earlier property transactions did not involve a section 173 agreement.
78The vendors had previously used Soldatos as their solicitor in conveyancing matters and had found his work very good. Callea would have given him a five-star rating. On the evidence, the vendors had no reason to doubt the competence or reliability of Soldatos.
79In my view, Smyth presented as a person who, in view of his marital situation, was keen to move forward with the sale of the Property as soon as reasonably possible. He thought it in his best interest financially to accept Wu’s offer for the Property and move on, even though the offer was considerably less than the price he was hoping for, which was in excess of $4 million.
80Smyth presented as an intelligent person but he had no pretentions to being an expert in conveyancing, legal and property development matters. He spoke of following a bouncing ball – he received emails and responded to them. But he lacked the knowledge and experience to drive the process. Smyth was reactive rather than proactive. This was apparent from the correspondence which passed between the vendors, Soldatos and Considine between May and August 2018. It was not uncommon for requests to be made of Smyth or for Smyth to seek or pass on information. Although, due to the litigation, Smyth might now have a better understanding of the conveyancing process and the role of section 173 agreements, I am satisfied that around the time of the transaction, his understanding was limited and technically, he did not fully grasp the significance of the section 173 agreement and the need to include the same and the named planning permit in the section 32 statement. While Smyth’s check of the section 32 statement and contract of sale was relatively cursory and focussed on a few details which were to be filled in the documents and not just part of the standard form document, I do not regard it as justified to criticise his conduct in this respect. I consider that very few people would have read such documents carefully from cover to cover especially when they were unlikely to fully understand them. Smyth’s attitude was that he assumed all was well with the documentation prepared by the solicitors until he was told otherwise. It simply did not occur to him to ask for another titles office search of the Property to check if the documents prepared in 2018 could be used in 2019. If Smyth were a conveyancing solicitor and he had failed to understand the significance of a section 173 agreement or had failed to detect that the agreement was not included in the section 32 statement, then the position might well be different. But Smyth is not a solicitor or a conveyancer.
81Wu sought to make much of Soldatos sending the contract of sale and section 32 statement to Smyth on 23 August 2018 asking whether the section 173 agreement had been prepared by Maddocks. Wu argued that Smyth failed to respond to Soldatos’ request for information.[22] In my view, the transcript reference relied upon for this proposition was equivocal and did not reflect an admission by Smyth that he failed to respond. The more accurate evidence which I do accept is that Smyth did not recall responding to Soldatos.[23] However, as pointed out earlier, Smyth was keen to finalise the sale. Hence, he did not wish to delay or stall the process. He did everything he could to keep the process moving.
[22] Defendant’s Outline of Closing Submissions, [36(b)].
[23] Transcript, 93.
82I accept that Smyth thought his best interests were served by promptly selling the Property. I find that he would have acted in whatever manner best achieved that objective. For that reason, although he had no specific recollection of responding to Soldatos, he may well have done so. In this context, I note that the absence of any further correspondence from Soldatos to Smyth after 23 August 2018 is consistent with this scenario. If Soldatos had sought further information from Smyth and did not receive it, it is likely he would have emailed him again.
83In the circumstances, I find that Smyth acted reasonably in relation to the terminated contract of sale.
84The evidence does not show that the vendors withheld documents from Soldatos or gave him false information for inclusion in the section 32 documents. Soldatos received a copy of the subdivision permit from Callea in May 2018 and he was aware from around the same time that there was to be a section 173 agreement with the Council. Soldatos also had a copy of the development permit because he included that as part of the section 32 statement. Given his knowledge of the section 173 agreement and its significance, if Soldatos did not later obtain a satisfactory response from either vendor about the agreement, one would expect him to have followed up the matter in order to discharge his professional obligations. In my opinion, as a conveyancing solicitor who knew about the section 173 agreement and its importance, Soldatos should have taken greater steps to either amend the section 32 statement or warn the vendors against using a statement which did not refer to the agreement or to otherwise bring the section 173 agreement to the attention of a prospective buyer.
Ought the vendors reasonably be excused?
85Wu submitted that the vendors ought not be excused. It was said that there was ample opportunity for them to turn their minds to the position regarding the registration of the section 173 agreement. If, for whatever reason, they neglected to read the documents or failed to appreciate their full significance and took no steps to update them, they should bear the consequences.
86In circumstances where I have found that the vendors acted honestly and reasonably with regard to the preparation of the section 32 statement, there is, in my view, no reason why they ought not be fairly excused for any contravention of section 32 of the SLA.
Is Wu substantially in as good a position as she would have been had the vendors complied with section 32 of the SLA?
87Wu agreed that she was happy with the Property and that it met her expectations – a new house, located near the children’s school with enough bedrooms. She had no plans to change or redevelop the site.
88However, Wu suggested that she was worse off due to the situation with the section 173 agreement. This was registered on the title to the Property and bound successors in title. To remove the agreement from the title would, said Wu, entail a payment to the Council.
89Callea argued that the deficiencies in the section 32 statement were relatively minor in scope and had no significant impact upon Wu as the purchaser.
90The missing subdivision permit allowed a two-lot subdivision of the Baird Street Property. It imposed no relevant restrictions or limitations on the use of the land or the lots created from the subdivision. The primary obligation imposed in the section 173 agreement was in Clause 6. This stated that, except with the Council’s prior written consent, the registered proprietor could only develop the land in accordance with the development permit and must not, upon completing the development alter or extend or otherwise change the development.
Analysis
91In Fifty-Eighth Highwire Pty Ltd v Cohen[24], Brooking JA observed:
“… whether the purchaser is in substantially the same position as if all the relevant provisions of s. 32 had been complied with must be considered “objectively”. To say this is not, however, to say, that in a case like the present the possible reaction of potential purchasers to the burden is not relevant or even determinative. Some burdens are of such a nature that their adverse and depreciatory effect on the property is manifest. With other burdens, the depreciatory effect will be more doubtful. If a significant number of potential purchasers might regard the burden as having a significant adverse effect on the property, then it seems to me impossible to find affirmatively, where the existence of the burden is not disclosed to the purchaser, that the purchaser is substantially in as good a position as if its existence had been disclosed.” [25]
[24] [1996] 2 VR 64.
[25]Ibid, 75-6.
92In the same case, 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” … 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 sometimes be relevant too, for example where the purchaser wishes to put the land to particular use. In some cases such factors will not be affected by opportunism or hindsight. They may have been mentioned earlier to the vendor or to third parties. Where they surface for the first time after the 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.”[26]
[26] Ibid, 77.
93In my opinion, Wu was substantially in as good a position as if the section 32 statement had been complied with.
94The subdivision permit was uncontroversial and had no adverse effect upon the purchaser. It was obvious to Wu in January 2019 that the block was divided in two and she was to buy only the lot with the new house.
95As to the section 173 agreement, I find that Wu was substantially in as good a position even though the agreement was not in the section 32 statement. The section 173 agreement imposed no major obligations on the owner of the land other than those in clause 6. This clause, which I have referred to above, set out the owner’s specific obligations. I infer that the Council required a landowner to have a development permit to develop the land in the way proposed by the vendors. The vendors sought and obtained such a permit (and included it in the section 32 statement). The dwellings on the two lots could be constructed only in accordance with the plans approved by the Council. The subdivision permit did not restrict or limit the use which the owner could make of the land.
96Clause 6 of the section 173 agreement reinforced the importance of performing the development in accordance with the development permit and forbade any changes to the development without the Council’s consent. Given the house which Wu contracted to purchase was nearly complete and she had no intent to alter or modify the building, the effect of the section 173 agreement upon Wu was negligible.
97I note that Clause 5 of the section 173 agreement said the agreement would continue to be required unless the Council confirmed in writing that it was no longer required. On a fair reading, it appears that if the Council agreed with the registered proprietor that the section 173 agreement was no longer required, then it would impose no burden on the registered proprietor.
Were the representations made to Wu?
98Wu alleges that the vendors’ real estate agent, Smith, represented to her that:
(a) the Property would be ready in three weeks (“the timing representation”); and
(b) the vendors would change the address of the Property from 58B Baird Street (“the address representation”).[27]
The timing representation
[27]Further Amended Defence and Counterclaim, [35] – [35A].
99Wu said that when she and Kwee first inspected the house, she asked Smith when the house could be completed and he said, “Real quick” and that it could be done in 2-3 weeks. The only areas not yet complete were the floor and landscaping.
100Kwee said that on 24 January 2019, he told Smith that they needed the house urgently for the kids. The couple’s three school aged children had recently enrolled at St Leonards and the parents wanted a house near the school so the children could walk to school. Kwee intimated that Smith said that the work could be done in 2‑3 weeks. Kwee was okay with this. Kwee said that he could see the carpet was not laid and the flooring had not been done. He regarded these as minor matters which should be done within 2-3 weeks.
101Smith said that he did not recall the exact conversation at the Property on 24 January 2019. He did not recall any exact discussion about timing. Smith says he would have told Wu and Kwee that the Property would be finished by settlement. Smith said that he did not believe he would have said the Property would be ready in two weeks. His recollection of the state of the Property at the time was such that it was clearly going to take longer than that for all the necessary work to be completed.
The address representation
102Wu said that she told Smith that she had not bought the nearby property at 2B Garden Avenue because of the “B” in the address. In Chinese slang, the letter “B” has coarse connotations and, combined with “2” meant someone was a fool or a jerk. Wu said she told Smith that she would not buy a house with “B” in the address. She claimed Smith said that the subdivision of the land was not yet complete, so the number of the Property was not finalised. An application could be made to the Council to vary the existing number. According to Wu, Smith said it was not a big issue. He said he would talk to the vendor about it. Smith allegedly said that it was no problem and they could apply to the Council to change the number. Wu said that she asked Smith to include in the contract provisions giving effect to the timing representation and the address representation. But Smith told her that it was a standard contract, so they made no changes. From Wu’s perspective, they agreed on the two representations so that they were not included in the contract.
103Kwee said that when they raised with Smith the issue about the house number, Smith said it was “no problem” to change. He said Smith indicated that the change of address would not be a problem.
104Smith did not recall the exact details of his conversation with Wu and Kwee on 24 January 2019. However, he agreed that they were concerned about the address and asked if the vendors could change it. Smith says he told them that the vendors would not be willing to undertake such work (T 99). Smith said that he certainly would have told them that the vendors were not going to change the address. If it was important to Wu and Kwee, they should take the matter up with the Council. Because the land adjacent to the building was vacant, Smith said he encouraged Wu and Kwee to buy both lots and, hopefully, overcome any problem this way.
105Smith had no recollection of saying, as Wu claimed, that it would not be a problem to change the address. Similarly, Smith did not recall saying, as Wu alleged, that provisions about the timing representation and the address representation did not need to be included in the contract of sale because it was a standard form of contract. Smith did not recall Wu telling him that she did not make an offer on 2B Garden Avenue, a house she otherwise liked, because of the problem with number.
Analysis
The timing representation
106I am not satisfied that Smith made the timing representation alleged by Wu. I say this for several reasons.
107First, generally speaking, on contested matters of fact, I preferred the evidence of Smith to that of Wu and Kwee.
108Smith presented as a witness who sought to tell the truth. He made no extravagant claims to recall the details of conversations which took place several years ago. He frankly admitted that he had no recollection of various matters which were put to him. This would be expected from someone who has been a licensed estate agent since 2013. In the course of his work over a period of years, one could readily imagine that Smith would have had very many conversations with actual and prospective buyers.
109To the extent that there was no evidence suggesting that Wu and Kwee had been involved in a multitude of property transactions, one might expect that they could have a better recollection of the dealings with Smith.
110Both Wu and Kwee presented as able and intelligent individuals. This is perhaps borne out by their family life where, as parents, they take turns living in Melbourne and caring for their three children and then living in Singapore managing their respective business interests in that country. Indeed, Kwee gave evidence from his office in Singapore.
111Kwee’s recollection of events was poor. The defendant’s counsel corrected him in his evidence when he referred to Smith as Mr White. Kwee said he could not remember aspects of the conversation with Smith. These things were not merely trivial. For example, when it was put to Kwee that Smith did not say something to the effect that the street number would be changed, Kwee at one point said he could not recall. One might summarise the effect of Kwee’s evidence as being that Smith said it was “no problem” to complete the Property in 2-3 weeks and change the address.
112Wu seemed to be a savvy and assertive businesswoman who was not intimidated by the court process. The essence of her evidence was to the same effect as Kwee. However, there were aspects of her evidence which troubled me.
113On 29 January 2019, she sent Smith an email advising that she had contacted her lawyer for help with the purchase. In the email, she referred to the Property being incomplete and that “many interior area need to be confirmed with us like carpet”. She also commented on her request before signing the contract of sale that the vendors arrange for the Property to be numbered 58 or 58A.
114The email suggests that Wu spoke to Smith about the vendors consulting with her about the internal finishes to the house such as carpet. She gave no detailed evidence about this or put such material to Smith.
115Smith responded by email at 1:33pm the same day, about 2 hours later. In the email, Smith advised that:
· he had asked the vendor what could be done about the address change and was awaiting a response;
· but “as per our conversation” he expected that Wu would have to follow the matter up with the Council after the subdivision and settlement; and
· the carpet was installed on 25 January and the Property would be fully landscaped before settlement. It would be completed over the next two and a half weeks.
116The gist of Smith’s email in relation to the address confirmed Smith’s evidence that he indicated to Wu that she would have to engage with the Council to change the address. While Smith indicated that he spoke to the vendor about the issue, there was no suggestion that the vendor agreed to make the contract conditional or agreed to take action to effect a change of address before settlement.
117Although Wu at trial contested the accuracy of Smith’s email, she did not take issue at the time by sending Smith another email pointing out the alleged inconsistency between his then stated position and what he said before the contract of sale was signed. For someone who was assertive and familiar with email, this was a little surprising. Although Wu sought to address this point at trial by referring to a conversation she had with Smith, her evidence as to the timing of the conversation and the detail of the conversation was vague and confusing. As a result, her evidence on the issue was not persuasive.
118The agreed chronology referred to an email between Wu and her former solicitor, Paul Holdway, dated 29 January 2019. The email was sent at 8:20am. In the email, Wu commented that:
·she had just purchased a house;
·the vendors claimed that it would take 3-4 weeks to complete the house; and
·currently, the landscaping and “many interior areas” were not complete.
119This email was written four days after Wu entered the contract of sale. I would expect that her recollection at that time of the events leading to the execution of the contract of sale would be better than it was at the hearing. That being so, I found it curious that neither in the evidence of Wu or Kwee was there any suggestion that the vendors, either directly or indirectly, had indicated that the construction and landscaping work on the Property might take up to four weeks to complete. Also, during her evidence Wu referred to the flooring, the lighting and landscaping as the only areas requiring completion. On the basis of this email, it seems that many areas required work.
120Secondly, it appears to be common ground between Smith and Wu that there was such a quantity of work required to be performed in order to complete the building at the Property that it could not have been completed in two weeks.
121Thirdly, if the defendant wanted the house urgently in order for her children to move house either before the school year began or very early in the school year, it was odd (and unexplained by Wu) that she would sign a contract which allowed for settlement to occur, at the earliest, on 30 April 2019.
122Wu said she asked about changing the contract of sale to give effect to the timing representation and the address representation. She said that Smith rebuffed her with his comments about the standard contract. I do not accept Wu’s evidence on this point.
123Wu insisted on handwritten amendments to the contract of sale regarding settlement. Wu was considering a mortgage at the time and required a grace period of 60 days from when the plan of subdivision was registered and the occupancy permit issued. Wu was obviously alive to the concept of making handwritten amendments to the contract of sale in order to achieve her objectives. I am not satisfied that she asked for the relevant changes before signing the contract to purchase the Property. Moreover, had she asked for the changes, in circumstances where the vendors were keen to sell promptly and arrange a severing of their marital and financial relationship (as Smyth clearly was) it is quite likely in my view that the vendors would have agreed to the changes sought.
The address representation
124For similar reasons, I am not satisfied that Smith made the address representation. I have set out above the email which gives some support to Smith’s version of events and fails to provide evidence of any commitment by the vendors to effect a change of address.
Was it within the scope of the vendors’ estate agent’s authority to make the timing representation and the address representation?
125I have found that the estate agent did not make the timing representation or the address representation. To that extent, it is unnecessary to resolve this question about his authority. Accordingly, I note only in passing that it is well accepted that it falls within the usual scope of an estate agent’s authority to describe a property and to state any fact or circumstance which might affect its value.[28] Such statements will bind the vendor. It seems to me that the two representations alleged do not fall within that usual authority and so, the vendors would not be vicariously liable for such representations if they had been made.
[28] Lavery v Nelson (1984) 3 BPR 9211, 9212; Vettese v Kemp (2000) 77 SASR 53, [45].
Was either the timing representation or the address representation a misrepresentation at common law?
126Again, it is not necessary to answer this question because I have found that the alleged representations were not made.
127However, if I am wrong about that, I find that Wu pleaded and argued in her final submissions that the two representations were representations as to the future – the first concerned when the Property would be ready for habitation and the second concerned the action which the vendors would take to change the address.[29] I agree with Wu’s submission on this point.
[29]Defendant’s Final Closing Submissions, [55] and Further Amended Defence and Counterclaim, [35] – [35A].
128In the text Actionable Misrepresentation[30], the author observes that there are two essential elements in a representation:
(a) a communication between two or more persons;
(b) relating to a fact, past or present.[31]
[30] George Spencer Bower and The Honourable Mr Justice K R Handley, Actionable Misrepresentation (Butterworths, 2000).
[31] Ibid, [11].
129If I had found the representations had been made, I would have considered they were predictions as to the future. Because the representations were not about a past or present fact but related to the future, they were not actionable representations at common law.
If so, can the contract be set aside at common law for misrepresentation?
130Although both parties agreed that recission is a remedy available for common law misrepresentation, I find there was no applicable misrepresentation in this case.
Was the transaction evidenced by the contract of sale ‘in trade or commerce’ within the meaning of section 2 of schedule 2 of the Competition and Consumer Act 2010 (Cth)?
131The parties agreed that the sale of the Property occurred in a context where the vendors developed the land with the intention to sell. That being so, the transaction could fairly be described as occurring in trade or commerce as defined within the ACL.
Was the timing representation and/or the address representation a representation with respect to future matters for the purpose of section 4 of the ACL?
132As discussed previously, the answer to this question is ‘yes’.
Was the timing representation and/or the address representation misleading or deceptive contrary to section 18 of the ACL?
133This question is hard to answer where I have found no representation was made. It is logically difficult to say that there were reasonable grounds for two non-existent representations.
134I note that, because Wu rescinded the contract of sale shortly after signing it, it is especially difficult to say whether the address representation (had it been made) was misleading or deceptive. The early rescission gave the vendors only a short time to work with the Council to change the address.
Did Wu rely upon the timing representation and/or the address representation in entering into the contract of sale?
135Again this question is irrelevant where I have found that the alleged representations were not made. But I will state my views briefly on the assumption that the agent made the alleged representations.
The timing representation
136It is difficult to accept Wu’s evidence that she would not have bought the Property if the construction work on the house and landscaping were not completed in 2-3 weeks from 24 January 2019. As observed before, the earliest possible date for settlement was 30 April 2019 which was about three months after signing the contract of sale. The terms of the contract provided for settlement on 30 April 2019 or 60 days after the registration of the plan of subdivision or 60 days after the issue of the occupancy permit, whichever occurred last. Accordingly, by the terms of the contract of sale, there could be no settlement three weeks after signing the contract. For that reason, I do not accept that Wu relied on the representation when signing the contract. This is especially so when the settlement terms were amended by hand at Wu’s request.
The address representation
137I am not satisfied that Wu relied on the address representation in entering the contract of sale. The terms of the contract were clear in identifying the property at 58B Baird Street as the property which Wu was purchasing. She knew or should have known that the address contained a ‘B’.
Should the contract of sale for the Property be declared void ab initio pursuant to section 243 of the ACL?
138Because I have found no contravention of the ACL, the answer to this question is no.
Did Wu repudiate the contract of sale by purporting to rescind it on 11 February 2019 in reliance on section 32K on the SLA?
139It is well accepted as a general rule that the unjustified termination of a contract constitutes a repudiation of the contract which the innocent party can accept.[32]
[32]Petrie v Dwyer (1954) 91 CLR 99, 104; Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444, 453.
Did the vendors validly terminate the contract of sale on 18 February 2019 by accepting Wu’s repudiation?
140The vendors purported to accept Wu’s repudiation by communicating this fact to her solicitors on 18 February 2019. An innocent party to a repudiated contract is entitled to accept the repudiation and bring the contract to an end. Accordingly, the vendors validly terminated the contract of sale on that date.
Is the plaintiff entitled to common law damages from the defendant?
141Where a party to a contract wrongfully repudiates the contract, the innocent party is entitled to damages which place the innocent party in the position it would have been in had the contract been performed in accordance with its terms.
What is the proper quantum of the plaintiff’s damages?
142The parties agreed that if the plaintiff were successful she was entitled to damages of $400,000. This amount was arrived at by assessing the difference between the price due under the contract of sale less the market value of the land at the date of termination of the contract. An expert valuer valued the market value at $3.150 million. Given the contract price was $3.6 million the difference was $450,000. In addition, the plaintiff was obliged to deduct $50,000 being the amount paid to the plaintiff by the second defendant in settlement of the claim against that party.
Conclusion
143For the reasons set out I find for the plaintiff and award her damages in the sum of $400,000. The defendant’s counterclaim is dismissed.
144I direct the parties to confer about the form of final order and costs in an effort to agree upon orders giving effect to this judgment. If they cannot agree, then by 4:00pm on 2 May 2022, each party is to file with my chambers and serve a written submission setting out the orders sought and the reasons therefor. The submissions are not to exceed five A4 pages, a minimum 12 point typeface, and 40mm margins on either side of the page. By 12:00pm on 6 May 2022, each party may file a reply submission limited to no more than three A4 pages.
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