Cityrose Trading Pty Ltd v Booth - [2008] VSC 495

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 5673 of 2008

BETWEEN:

CITYROSE TRADING PTY LTD (ACN 077 934 671)	Appellant
and
NOEL BOOTH	First Respondent
and
KAY & BURTON PTY LTD (ACN 005 488 175)	Second Respondent

No. 5719 of 2008

BETWEEN:

KAY & BURTON PTY LTD (ACN 005 488 175)	Appellant
and
NOEL BOOTH	First Respondent
and
CITYROSE TRADING PTY LTD (ACN 077 934 671)	Second Respondent

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JUDGE:	WHELAN J
WHERE HELD:	Melbourne
DATE OF HEARING:	30 & 31 October 2008
DATE OF JUDGMENT:	21 November 2008
CASE MAY BE CITED AS:	Cityrose Trading Pty Ltd v Booth & Anor
MEDIUM NEUTRAL CITATION:	[2008] VSC 495

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ADMINISTRATIVE LAW – Appeal from the Victorian Civil and Administrative Tribunal – Dispute concerning GST clause in contract for sale of land – VCAT orders inconsistent with each other – Appeal allowed, matter remitted.

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APPEARANCES:	Counsel	Solicitors
For Cityrose Trading Pty Ltd	Mr RS Randall	B2B Lawyers
For Kay & Burton Pty Ltd	Ms R Sofroniou	Monahan + Rowell
For Mr Noel Booth	Mr M Flynn	Russell Kennedy

HIS HONOUR:

Introduction

On 20 May 2006 Noel Booth executed a contract pursuant to which he purchased a property in Sorrento, Victoria from Cityrose Trading Pty Ltd (“Cityrose”). The contract specified in the particulars of sale a purchase price of $2,250,000. The contract had a special condition (condition 7) which dealt with goods and services tax. Shortly prior to settlement the vendor advised that goods and services tax was payable and that under special condition 7 the purchaser was liable to pay to the vendor, in addition to the purchase price provided for in the particulars of sale, the amount of GST that was payable. Mr Booth objected but paid under protest. He then took proceedings in the Victorian Civil and Administrative Tribunal (“VCAT”) against Cityrose, and against Cityrose’s selling agent, Kay & Burton Pty Ltd (“Kay & Burton”). The matter was heard in October and November 2007 and orders were made and reasons delivered on 17 March 2008.

Each of Kay & Burton and Cityrose have appealed to this Court under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (“the VCAT Act”). Appeals under s 148 of the VCAT Act are confined to questions of law.

The orders and declarations made

The published decision of VCAT records the following orders and declarations:

“The Tribunal:
1 Declares that the contract price was inclusive of GST.
2The First Respondent is to pay the Applicant the sum of $189,900.00 being 80% of the claim plus interest of $35,676.30 totalling $225,576.30.
3The Second Respondent is to pay the Applicant the sum of $47,475.00 being 20% of the claim plus interest of $8,919.07 totalling $56,394.07.

4 Total amount payable by the Respondents to the Applicant is $281,970.37 payable within 45 days of this date.
5Liberty to the parties to apply in relation to the question of costs.”

Seen in isolation, order 1 might…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] VSC 495
Decision Date: 21 November 2008

CaseChat Overview and Summary

Cityrose Trading Pty Ltd v Booth concerns a dispute over the interpretation of a Goods and Services Tax (GST) clause in a contract for the sale of land. The appellants, Cityrose Trading Pty Ltd and Kay & Burton Pty Ltd, appeal against orders made by the Victorian Civil and Administrative Tribunal (VCAT) in relation to the contract, which was executed by Noel Booth and Cityrose. The primary legal issue before the Court was whether VCAT had made legal errors in its orders that were inconsistent with each other. The Court found that VCAT had indeed made such errors, which led to the appeal being allowed and the matter being remitted for rehearing.

The Court held that VCAT had erred by making an order that the contract price was inclusive of GST, while simultaneously ordering the respondents to pay compensation for misleading and deceptive conduct. These orders were inconsistent, as if the contract price was GST inclusive, there could be no claim for misleading and deceptive conduct. Additionally, the Court found that VCAT had failed to properly determine the legal effect of the written contract, and instead used rectification as a means of addressing a lack of clarity in the relevant provision. This was also a legal error, as rectification is a remedy that is based upon the prevention of unconscionable conduct and can only arise where a written contract fails to accurately record the parties' intentions due to a common or unilateral mistake.

The Court considered several courses that might be followed in light of the legal errors, but ultimately decided that the most appropriate course was to remit the matter for a re-hearing by VCAT. The Court found that the legal errors had significance, the facts were not undisputed, and there were diverse outcomes which were open depending upon the findings on the disputed issues of fact. The Court also declined to decide the construction of the written contract itself, as it was not clear that the construction issue was in controversy between the contracting parties, Cityrose and Mr Booth. Instead, the Court determined that the construction issue should be determined after a hearing at first instance where it is clear that this is a matter of controversy between the contracting parties.

The Court allowed both appeals, set aside the orders of VCAT, and remitted the proceeding to be heard and decided again by a differently constituted tribunal. The Court also tentatively decided to reserve the costs and deal with them once the matter had been dealt with again in VCAT.

Orders