Curragh Coal Sales Co Pty Ltd v Wilcox

[1984] FCA 168

Re: MURRAY NORTON TIPLADY and LAUREL ROSE TIPLADY
And: GOLD COAST CARLTON PTY LIMITED
No: QLD G94 of 1983
(1984) ATPR para 40-472/54 ALR 337
Trade Practices - Contract - Vendor and Purchaser<
3 FCR 426

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Fitzgerald J.(1)

CATCHWORDS

Trade Practices - representations in sale of unit "off the plan" which became contractual promises - whether later non-disclosure of variations or alterations to subject unit misleading or deceptive conduct - effect of election to affirm on any right to rescind for misleading conduct.

Vendor and Purchaser - vendor's essential obligation to transfer the property the subject of the contract - property to be transferred substantially different from property purchaser contracted to buy - purchaser's rights and remedies - jurisdiction of Court of Equity to order compensation - circumstances in which vendor denied specific performance - election to affirm contact - innocent party then repudiating - assessment of damages.

Trade Practices Act, ss. 82, 87, sub-ss. 4(2), 52(1)

Judiciary Act 1903, s.79

Federal Court of Australia Act 1976, s.52

Building Act 1975-1984 (Qld)

Fire Safety Act 1974-1982 (Qld)

Building Units and Group Titles Act 1980-1983 (Qld), sub-ss. 20(3), 22(1)

Property Law Act 1974-1982 (Qld), ss. 62, 67, 68, 69

Common Law Practice Act 1867-1981 (Qld), s.72

Contract - Agreement to purchase building unit "off the plan" - Building to be constructed by vendor - Representations contained in floor plans and brochure - Building not commenced at time of contract - Building plans not approved at time of contract - Proposed plans contravened local building legislation - Building substantially completed before purchasers aware of alterations to proposed floor plans to comply with law - Purchasers tried to resell unit - Purchasers purported to avoid contract - Vendor required purchaser to complete contract - Plan registered - Purchasers failed to complete - Vendors sought specific performance - Proceedings commenced in Supreme Court of Queensland - Whether contract had been rescinded - Damages - Purchasers sought statutory damages - Whether purchasers had knowledge of alterations to building - Vendor sought damages at common law - Meaning of "substantially in accordance with" - Rule in Flight v. Booth.

Vendor and Purchaser - Vendor's essential obligation to transfer property "substantially in accordance with" original building plans - Building plans altered to conform to local building legislation - Whether purchaser would have entered into contract at agreed price for altered building - When purchasers were entitled to give notice of termination - Proper measure of compensation - Purchasers elected to affirm contract - Whether purchasers lost right to rescind by reason of their conduct - Estoppel in pais - Whether purchasers' election kept contract on foot - Loss of right to rescind by completion date - Whether vendor entitled to insist on completion without compensation - Whether purchasers entitled to recover deposit - Whether vendor entitled to damages for purchasers' non-performance - Meaning of "substantially in accordance with" - Rule in Flight v. Booth.

Trade Practices - Representations contained in floor plans and brochure - Agreement to purchase building unit "off the plan" - Proposed plans contravened local building regulations - Building substantially completed before purchasers aware of alterations to proposed floor plans to comply with law - Whether non-disclosure of alterations was misleading or deceptive conduct - Vendor's pre-contract conduct - Whether purchasers lost right to rescind by reason of their conduct - Purchasers elected to affirm contract - Estoppel in pais - Vendor's post-contract conduct - Whether purchasers suffered loss or damage - Purchasers repudiated contract after they lost right to rescind - Whether purchasers had statutory entitlement to relief - Assessment of vendor's damages - Trade Practices Act 1974 (Cth), ss 52(1), 82, 87 - Judiciary Act 1903 (Cth), s. 79 - Federal Court of Australia Act 1976 (Cth), s. 52 - Building Act 1975 (Qld) - Fire Safety Act 1974 (Qld) - Building Units and Group Titles Act 1980 (Qld), Pt II, Div. 2, ss 20(3), 22(1), 49 - Property Law Act 1974 (Qld), ss 62, 67, 68, 69 - Common Law Practices Act 1867 (Qld), s. 72.

HEADNOTE

By a contract dated 14 January 1981, the applicants agreed to purchase from the respondent company unit No. 56, one of two penthouse units on the fourteenth and fifteenth floors of a building which was to be constructed by the respondent at Broadbeach in Queensland. The applicants were given a photostat copy of the architect's floor plan of their unit and they were also sent an advertising brochure containing floor plans for the penthouse units accompanied by a statement "Measurements are approximate. Plans are subject to alterations". According to both sets of floor plans each penthouse was to contain a private vestibule on the fourteenth floor into which separate lifts and fire-stairs would directly open. The floor plans also showed a passage from each private vestibule into each dining area past an open internal stairway leading to the upper level of each penthouse. At the time when the parties entered into the contract, construction of the proposed building had not commenced, nor had the building plans been approved by the relevant local authority. Moreover, evidence showed that the respondent and its architect did not know until after the contract was executed that it was not possible to build the penthouses with the proposed private vestibules consistently with the Building Act 1975 (Qld) or the Fire Safety Act 1974 (Qld).

When constructed, the penthouses did not contain the proposed private vestibules but there was a common lobby on the fourteenth floor off which the lifts and firestairs opened. Further, as a result of the alterations, the internal area of unit 56 had been reduced by 5 or 6 square metres and the dining area had been rendered of very limited use. Evidence showed that by 14 January 1982, the applicants were aware, inter alia, of the manner in which the lobby, private vestibule and dining area on the fourteenth floor had been constructed to comply with the law and to obtain a building permit. The applicants decided to take advantage of the apparently buoyant market to try to resell unit 56 at a profit but the market plummeted and the applicants' solicitors sent a notice dated 2 June 1982, to the respondent purporting to avoid the contract. Meanwhile, the respondent's solicitors wrote a letter dated 4 June 1982, to the applicants' solicitors stating that the respondent did not accept that the applicants had avoided the contract and that, if the applicants did not complete, the respondent would forfeit the deposit moneys and pursue its other rights.

The applicants sought to recover the amount of their deposit together with interest, either on the basis that the contract had been rescinded by them, or ought to be rescinded by the court pursuant to s. 87 of the Trade Practices Act 1974 (the Act); or as damages pursuant to s. 82 of the Act in respect of an alleged contravention of s. 52 of the Act by the respondent. The respondent pleaded that the applicants were precluded from relying upon any representation that may have been made by or on behalf of the respondent by cl. 8(d) and (f) of the contract, and alleged that the applicants had obtained knowledge of the matters of which they complained, and, with such knowledge, "chose to affirm the . . . contract and elected to remain bound by it" . . . with the result that the applicants repudiated the contract by their subsequent persistent refusal to complete.

The respondent claimed damages at common law for breach of contract submitting that, on its proper construction, the contract of sale entitled the respondent to insist that the applicants pay the full purchase price and accept the property as constructed.

Held: (1)(a) The "plans . . . approved by the Council of the City of Gold Coast" referred to in recital (b) of the contract meant "plans to be approved in the future".

Gold Coast Carlton Pty Ltd v. Kamalesvaran unreported (Supreme Court of Queensland, 16 December 1983), referred to.

(b) The "specifications and plans" referred to in cl. 8(d)(ii) of the contract referred to the "Plan as produced to the purchaser" as mentioned in cl. 8(f)(i) of the contract, that is, the original architect's plans produced to the purchaser, pre-contract.

Gold Coast Carlton Pty Ltd v. Kamalesvaran (supra), distinguished.

(2) On any view of cl. 13 (of the contract), the operation of cl. 8(f) was . . . directed to restricting the rights of the applicants in the event that the respondent was not able to transfer a unit which was "substantially in accordance" with the original architect's plans and specifications.

Tramways Advertising Pty Ltd v. Luna Park (N.S.W.) Ltd (1938) 38 SR (N.S.W.) 632; Flight v. Booth (1834) 1 Bing. (NC) 370; 131 ER 1160, applied.

Rutherford v. Acton-Adams (1915) AC 866; Cameron v. Lewis (1975) 1 B.P.R. 9137; Beard v. Drummoyne Municipal Council (1969) 71 SR (NSW) 250; Travinto Nominees Pty Ltd v. Vlattas (1973) 129 CLR 1; Svanosio v. McNamara (1956) 96 CLR 186; Torr v. Harpur (1940) 40 SR (NSW) 585; Jennings v. Zilahi-Kiss (1972) 2 SASR 493; King v. Poggioli (1923) 32 CLR 222; D.TR Nominees Pty Ltd v. Mona Homes Pty Ltd (1978), 138 CLR 423; Shevill v. The Builders' Licensing Board (1982) 56 ALJR 793; Fullers' Theatres Ltd v. Musgrove (1923) 31 CLR 524; King v. Patrick's Day (Minhamite) Pty Ltd (1971) VR 777; Nicita v. Moloney (1971) 1 B.P.R. 9105; Brisbane Unit Developments Pty Ltd v. Robertson (1983) 2 Qd R 105; Shepherd v. Croft (1911) 1 Ch 521; Re Belcham and Gawley's Contract (1930) 1 Ch 56; Codelfa Constructions Pty Ltd v. State Rail Authority of New South Wales (1982) 56 ALJR 459; Borthwick v. Walsh (1980) 1 B.P.R. 9259; Bain v. Fothergill (1874) LR 7 HL 158; Noske v. McGinnis (1932) 47 CLR 563; Re Terry and White's Contract (1886) 32 Ch D 14; Topfell Ltd v. Galley Properties Ltd (1979) 1 WLR 446; Gall v. Mitchell (1924) 35 CLR 222; Raineri v. Miles (1981) AC 1050; Godfrey Constructions Pty Ltd v. Kanangra Park Pty Ltd (1972) 128 CLR 529; Rudd v. Lascelles (1900) 1 Ch 815; Watson v. Burton (1957) 1 WLR 19; Jacobs v. Revell (1900) 2 Ch 858; Re Courcier and Harrold's Contract (1923) 1 Ch 565; Cordingley v. Cheeseborough (1862) 4 De GF & J 379; 45 ER 1230; Re Scott and Alvarez's Contract (1895) 2 Ch 603, referred to.

(3)(a) On its proper construction, the contract entitled the applicants to a unit which accorded with the description of the "Unit Sold", the Tenth Schedule, and cl. 8(d)(ii) of the contract.

Nicita v. Moloney (supra); Abraham v. Mallon (1975) 1 BPR 9157; Beard v. Drummoyne Municipal Council (supra); Cordingley v. Cheeseborough (supra); Mehmet v. Benson (1965) 113 CLR 295; Ogle v. Comboyaro Investments Pty Ltd (1976) 136 CLR 444, referred to.

(b) The unit did not meet that description. The unit as constructed did not accord substantially with the plan in the Tenth Schedule of the contract; the variation between the registered building units plan and the plan in the Tenth Schedule was not "minor"; and the "measurements . . . standard and specifications" of the unit as constructed did not substantially accord with the architect's plans as at the date of contract (which relevantly corresponded with the plans in the brochure).

Flight v. Booth (supra), applied.

(c) The applicants would not have entered into the contract, certainly not at the price which was agreed to be paid, but for the original proposal in respect of the private vestibule and the dining area.

Simons v. Zartom Investments Pty Ltd (1975) 2 NSWLR 30, distinguished.

(4) The value of the unit as constructed was at all material times considerably less than it would have been had the fourteenth floor been constructed with a private vestibule and dining area as proposed at the time of the contract.

(5) When it became apparent, as it had by January 1982, that the respondent had no reasonable prospect of performing the essential obligation to transfer to the applicants a penthouse unit constructed substantially in accordance with the contract, the applicants were entitled to give notice of termination.

Bell v. Scott (1922) 30 CLR 387; Rawson v. Hobbs (1961) 107 CLR 466, referred to.

(6) The proper measure of compensation to which the applicants were entitled was a figure equivalent to 10 per cent of the price of the unit, which was fixed by reference to the market at the time when the contract was entered in to.

Per Fitzgerald J. Observations concerning the absence of a modern review of the doctrine of election by the High Court of Australia.

Legione v. Hateley (1983) 57 ALJR 292; Sargent v. A.S.L Developments International Pty Ltd (1974) 131 CLR 634; Turner v. Labafox International Pty Ltd (1974) 131 CLR 660; Wallace v. Hermans (1974) 131 CLR 672; Ogle v. Comboyuro Investments Pty Ltd (supra); Green v. Sommerville (1979) 141 CLR 594; Ciavarella v. Balmer (1983) 57 ALJR 632; Champtaloup v. Thomas (1976) 2 NSWLR 264; Spencer v. Galli unreported (Supreme Court of Queensland, FC., 25 August 1980); Chapman v. Greater Midwest Insurance Pty Ltd (1981) 1 NSWLR 479; Woodhouse AC Israel Cocoa Ltd S.A. v. Nigerian Produce Marketing Co. Ltd (1972) AC 741; Wilson v. Kingsgate Mining Industries Pty Ltd (1973) 2 NSWLR 713; Neylon v. Dickens (1977) 1 NZLR 595, referred to.

(7)(a) By reason of their conduct in attempting to sell the unit at a very considerable profit, whilst telling the respondent that they intended to complete when settlement was due, the applicants lost their right to rescind.

Sargent v. A.S.L. Developments International Pty Ltd (supra); Yarralumla Investments Pty Ltd v. Oriti (1983) 2 Qd R 387; Deming No. 456 Pty Ltd v. Brisbane Unit Development Corporation Pty Ltd (1984) 58 ALJR 1; Allen v. Robles (1969) 1 WLR 1193; Aquis Estates Ltd v. Minton (1975) 3 All ER 1043, referred to.

(b) The effect of the applicants' election was to keep the contract on foot. It left them with the right (and the obligation) to perform the contract, with compensation, but neither party acted on the basis that the contract was in existence and to be performed on that footing.

Tropical Traders Ltd v. Goonan (1964) 111 CLR 41; Holland v. Wiltshire (1954) 90 CLR 409, referred to.

(c) When the date for completion arrived, each party had had, but had lost by election, the right to rescind the contract.

Ogle v. Comboyure Investments Pty Ltd (supra), distinguished.

(8) The proper inference to be drawn from all the circumstances, including the form and content of the respondent's claim, was that the respondent sought to transfer the unit in return for the full balance purchase price. However, the respondent was not entitled to require completion on that basis, that is, to insist on completion without compensation.

Abraham v. Mallon (supra), distinguished.

D.T.R. Nominees Pty Ltd v. Mona Homes Pty Ltd (supra); Green v. Sommerville (supra); Woodar Investment Development Ltd v. Wimpex Construction U.K. Ltd (1980) 1 WLR 277; Johnson v. Agnew (1980) AC 367, referred to.

(9) In so far as the dispute between the parties stood only on contract, the applicants were not entitled to the recovery of the deposit and the respondent was entitled to damages for the applicants' non-performance.

(10) In the circumstances, there was no conduct by the respondent in respect of the fourteenth floor, pre-contract, which was misleading or deceptive or likely to mislead or deceive, pursuant to the provisions of s. 52(1) of the Trade Practices Act 1974.

Lucas and Tait (Investments) Pty Ltd v. Victoria Securities Ltd (1973) 2 NSWLR 117; Taylor v. Raglan Developments Pty Ltd (1981) 2 NSWLR 117; Gates v. The City Mutual Life Assurance Society Ltd (1983) 5 ATPR 40-335; Pennsylvania Shipping Co. v. Compagnie Nationale de Navigation (1936) 55 LT 294; Nicita v. Moloney (supra) referred to.

(11) The respondent was guilty of a contravention of s. 52(1) of the Trade Practices Act 1974 (Cth) after the contract was entered into. Its conduct fell far short of what was acceptable. It took no adequate steps to inform the applicants of the variations and alterations and had no sufficient basis for satisfaction that the applicants had an appropriate appreciation of the true position.

Traill v. Baring 4 De. G.J. & S. 318, applied.

Jennings v. Zihaili-Kiss (supra); Dormer v. Solo Investments Pty Ltd (1974) 1 NSWLR 428; Tsekos v. Finance Corporation of Australia Ltd (1982) 2 NSWLR 347; Faragi v. English Real Estates Ltd (1979) 1 WLR 962; With v. O'Flanagan (1936) Ch 575; Strauss v. Canberra Commercial Development Authority unreported (Federal Court of Australia, Full Court, 25 November 1983), referred to.

(12) However, the applicants suffered no loss or damage by the respondent's contravention of s. 52(1) of the Act.

Wildsmith v. Dainford (1983) 51 ALR 24, referred to.

(13) If the applicants had a right to rescind, or to require the court to rescind the contract by reason of the respondent's misleading conduct after the contract was entered into, they lost that right by their election.

Further, the applicants' liability to pay damages to the respondent for breach of contract was not suffered by any contravention of the Act by the respondent, but by the applicants' own conduct in repudiating the contract after they lost the right to terminate or escape liability under the contract and recover the deposit which they had paid. Therefore, the applicants had no cause of action for loss or damage or entitlement to relief under the Act.

Frith v. Gold Coast Mineral Springs Pty Ltd (1983) ATPR 40-339; State of South Australia v. Johnson (1982) 42 ALR 161; Hellyer Drilling Company v. MacDonald Hamilton & Co. Pty Ltd (1983) ATPR 40-414; T.N. Lucas Pty Ltd v. Centrepoint Freeholds Pty Ltd (1984) 1 FCR 371; Gates v. City Mutual Life Assurance Society Ltd (1983) 5 ATPR 40-335; Payzu Ltd v. Saunders (1919) 2 KB 581, referred to.

(14) The respondent's total damages amounted to $81,770.

Cooper v. Ungar (1980) 100 CLR 510; Amga Pty Ltd v. Michie (No. 2) (1978) 1 BPR 9566; Taylor v. Raglan Developments Pty Ltd (supra); Bullion Sales (International) Pty Ltd v. Fitzgerald (1983) 1 Qd R 215; Leighton Properties Pty Ltd v. Hurley unreported (Thomas J., 30 November 1983), referred to.

(15) The respondent's claim for interest for the period after the unit was resold by the respondent's mortgagee would be disallowed.

Lamb v. Moss (1983) 49 ALR 533; T.N. Lucas Pty Ltd v. Centrepoint Freeholds Pty Ltd (supra) referred to.

(16) Accordingly, the applicants' claim would be dismissed. Judgment for the respondent against the applicants for $81,770. The applicants would pay to the respondent its costs, including any reserved costs, of the claim and cross-claim, to be taxed.

HEARING

Brisbane, 1984, May 16, 17, 18, 21; June 19. #DATE 19:6:1984

APPLICATION AND CROSS-APPLICATION.

In August 1982, the applicants and the respondent commenced separate proceedings which were not proceeded with in the Supreme Court of Queensland relating to the applicants' failure to complete a purchase from the respondent of a property which was to be constructed by the respondent. In September 1983, the applicants filed an application in the Federal Court of Australia claiming the amount of their deposit together with interest, either on the basis that the contract had been rescinded by them, or ought to be rescinded by the court pursuant to s. 87 of the Trade Practices Act 1974 (Cth); or as damages pursuant to s. 82 of that Act, as the respondent had allegedly contravened s. 52 of that Act.

The respondent delivered a cross-claim in the Federal Court of Australia claiming damages at common law for breach of contract and submitting that, on its proper construction, the contract of sale of the property entitled the respondent to insist that the applicants pay the full purchase price and accept the property as constructed.

J.D. Muir, for the applicants.

R.N. Chesterman Q.C. and G.J. Gibson, for the respondent.

Cur. adv. vult.

Solicitors for the applicants: W.J. Wilson & Copley.

Solicitors for the respondent: Rapp, Hickey & Morgan.

J.D.W.

ORDER

1. Applicants' claim be dismissed.

2. Judgment for the respondent against the applicants for $81,770.00.

3. Applicants pay to the respondent its costs, including any reserved costs, of the claim and cross-claim, to be taxed.

Orders accordingly.

JUDGE1

By a contract in writing which bears date 14 January 1981 but which was signed nearly a month later, the applicants agreed to purchase from the respondent unit No. 56, one of two penthouses on the 14th and 15th floors of a building, "Ocean Royale", which was to be constructed by the respondent on land at Old Burleigh Road, Broadbeach in the State of Queensland. The purchase price was $385,000.00, of which ten per cent was payable by way of deposit. At the time the contract was entered into, the construction of "Ocean Royale" had not commenced and plans in respect of the proposed building had not been approved by the local authority, the Gold Coast City Council.

1. The respondent's sales agent in respect of "Ocean Royale" was St. George Real Estate of Main Place, Broadbeach. Late in December 1980 or early in January 1981, the applicants, in company with friends, called at the agent's office and spoke to Mr Robert Quarmby, the agent's Sales Manager. Mr Quarmby had a copy of the architect's plans for the proposed building and a preliminary copy of an advertising brochure. The documents were referred to in the course of a discussion which took place, principally between Mr Quarmby and Mr Tiplady, with respect to penthouse unit 56. A photostat copy of the architect's floor plans with respect to that unit was given to the applicants. The applicants were not informed that the plans had not been approved by the Council or that an application for a building permit had not even been submitted. By the end of the meeting, the applicants had formed an intention to buy penthouse unit 56 but no documentation was signed and no money changed hands.

2. A contract was prepared and forwarded by the respondent to the applicants on or about 15 January 1981. Before the contract was signed and returned, copies of the advertising brochure were printed and a copy of the brochure was sent to the applicants. Floor plans for each of the two penthouses on the 14th and 15th floors were contained in the brochure, accompanied by a statement: "Measurements are approximate. Plans are subject to alterations."

3. The front cover of the advertising brochure bore an "Artists impression" of the proposed "Ocean Royale" building. The "Artists impression" indicated a balcony on the north-eastern corner of the 15th floor, the upper level of the penthouse the subject of the contract between the applicants and the respondent, and that the balcony would have a balustrade consisting of a horizontal rail and spaced vertical bars. Inside the brochure was a statement: "The apartments will be professionally managed by the Broadbeach International Hotel". According to the floor plans for the penthouses on the 14th and 15th floors which were contained in both the architect's plans given to the applicants and the brochure, there was not to be a common lift lobby on the 14th floor in connection with the two lifts in the building. Instead, one lift was to open directly into a private vestibule within one penthouse and the other lift was to open directly into a private vestibule within the other penthouse. Similarly, there were to be separate fire stairs opening directly into the private vestibule in each penthouse. In the course of their discussion in late December 1980 or early January 1981, Mr Tiplady and Mr Quarmby had discussed this feature of the penthouses and associated security arrangements. The floor plans also showed storage space within each penthouse near the entry to the fire stairs from the private vestibule and a passage in each penthouse from the private vestibule into the dining area past an open internal stairway leading to the upper level of each penthouse.

4. The "Artists impression" on the front cover of the advertising brochure did not accord with the engineering plans which the respondent had at all material times and which provided for a solid concrete balustrade around the north-eastern balcony on the upper level of penthouse unit No. 56. Discussions had taken place between the respondent and persons associated with Broadbeach International Hotel concerning the management of "Ocean Royale" and solicitors had been instructed to draft appropriate documentation but no agreement had been concluded and the matter remained in a state of negotiation only. It was not possible to build the penthouses with the private vestibules as proposed consistently with the Building Act 1975-1984 (Queensland) or the Fire Safety Act 1974-1982 (Queensland) although that was not known to the respondent or its architect. The engineering plans also provided for the floor slab in respect of the upper level in each penthouse to "turn down" for structural reasons where it was terminated in the vicinity of the staircase between the upper and lower levels.

5. The contract document, signed by the applicants, was received by the respondent together with part of the deposit on or about 6 February 1981. The balance deposit was received on 15 February 1981.

6. In the contract signed by the parties, the "Unit Sold" was described in the following terms:
   
   

"UNIT SOLD: No. 56 (Lot 56 in Proposed Building Units Plan No. )

FLOOR: 14 & 15

FLOOR PLAN: In accordance substantially with the Plan in the Tenth Schedule hereto and edged in blue. The said plan is incorporated in this Agreement for identification purposes only."

Clause 16(c) of the contract made provision for a statement "giving certain particulars in connection with the said unit ..." "in accordance with" s.49 of The Building Units and Group Titles Act 1980 as amended (Queensland), and provided that the statement was "set out in the Twelfth Schedule to this Agreement". The Twelfth Schedule included the following entry:

"IDENTIFICATION OF UNIT: Unit 56 on 14 & 15 Floor as identified in sketch plan in subject agreement (where Building Units Plan has been registered, Lot in Registered Building Units Plan No. )."

The sketch plan referred to in the Twelfth Schedule was the "Plan in the Tenth Schedule ... edged in blue". The Tenth Schedule to the contract consisted of an indication as to the direction the building was to face and four floor plans, a "Ground Floor Plan", a "Typical Floor Plan" and floor plans for the 14th and 15th floor penthouses. The floor plan in respect of the 14th floor was not as detailed as the architect's plans or the floor plans in the brochure but did indicate both the private vestibule and the open staircases between the upper and lower levels of each penthouse. A blue line was drawn around the northern sections of the floor plans in respect of the 14th and 15th floors, including the private vestibule within the boundaries of penthouse unit 56.

1. Other parts of the contract were also referred to in argument. The contract contained recitals in the following terms:
   
   

"WHEREAS:

(a) The Vendor is or is entitled to be the registered proprietor of certain land described in the First Schedule hereto;

(b) The Vendor intends, subject to the terms hereof, to construct a multi-storey building (to consist of basement car park ground floor and Fifteen (15) further floors) to be called "Ocean Royale" on the said land in accordance with plans and specifications prepared by the Vendor's Architect and approved by the Council of the City of Gold Coast, the finishes to be substantially in accordance with the Schedule of Finishes annexed hereto;

(c) The Purchaser wishes to purchase from the Vendor the estate in fee simple in that part of the said building hereinbefore described as the unit sold and hereinafter referred to as 'the said unit';

(d) A separate freehold title to the said unit is to be conveyed to the Purchaser by virtue of the 'Building Units and Group Titles Act 1980' as amended."

Clauses 3(a), 8(a) to (f),13 and 18 provided:

"SETTLEMENT:-

3. (a) Settlement shall take place within thirty (30) days ... PROVIDED FURTHER that should the construction of the said building be delayed due in whole or in part to one or more of the following:-

...

(iii) on account of the delay of any local or other authority in giving any necessary approval provided the Vendor has taken all reasonable steps to obtain such approval;

...

TITLE:-

8.(a) The title to the said land described in the First Schedule will be, prior to settlement, under the Real Property Act of Queensland; the title to the said unit will be or is subject to the provisions of the 'Building Units and Group Titles Act 1980' as amended.

(b) The Purchaser or his Solicitors may within fourteen (14) days from the date of registration of the subject Building Units Plan deliver to the Vendor or its Solicitors requisitions or objections (if any) on or to the Vendor's title. All requisitions or objections not so delivered shall be deemed waived by the Purchaser.

(c) If the Purchaser shall within the said fourteen (14) days make any valid requisitions or objections on or to the Vendor's title which the Vendor shall be unable or unwilling to remove or comply with, the Vendor or its Solicitors (whether they shall have attempted to remove or comply with the same and notwithstanding any negotiation or litigation in respect thereof) may give to the Purchaser or his Solicitors notice in writing of the Vendor's intention to rescind the agreement at or before the expiration of seven (7) days without prejudice to any other rights which the Vendor may have. Unless such requisition or objection shall be withdrawn or waived within such seven (7) days the Contract shall thereupon be rescinded and the Vendor shall repay to the Purchaser all deposit and other moneys received by it or its Agent on account of the purchase money but without interest costs or damages and the same shall be accepted by the Purchaser in full satisfaction of all claims. If the Purchaser withdraws or waives his objection or requisition as aforementioned then this Agreement shall remain in full force and operate as if such requisition or objection had not been made and the said written notice of rescission had not been given.

(d) (i) The Purchaser acknowledges that he has not relied on any representations by the Vendor, the Vendor's Agent or any other person or persons or corporation in and about entering into this Contract other than as set out herein and that the conditions and stipulations hereof constitute the only agreement between the Purchaser and the Vendor.

(ii) The Purchaser shall be entitled to premises with measurements and to a standard and specifications substantially in accordance with those set out in the said specifications and plans and the Schedule of Finishes hereinafter set out.

(e) Subject to the provisions of Clause 8(f) hereof the Vendor warrants that the unit entitlement of the respective units in the said building as shown in the relevant Building Units Plan shall be as set out in the Second Schedule hereto.

(f) The Purchaser shall not be entitled to make any objection, requisition or claim for compensation by reason of:-

(i) Any minor variations as regards the said unit between the Plan as produced to the Purchaser and the Building Units Plan as registered by the Registrar of Titles;

(ii) Any alterations in the number, size, location or unit entitlement of the lot or lots in the Building Units Plan (other than the lot or lots hereby sold) or in or to the common property provided that the unit entitlement of the lot or lots hereby sold and the aggregate unit entitlement of all lots shall not thereby be varied.

(iii) Any alteration or variation in the said plans and specifications accordingly.

(iv) Any alteration or variation in the said plans and specifications and in the said Schedule of Finishes as may become necessary during the course of construction by reason of matters beyond the control of the Vendor which may result from, inter alia, the requirements and directions of any governmental or semi-govermental authority or as may be required by the practical exigencies of construction either by, but without limiting the generality of the foregoing, the dictates of good building practice and/or the availability of materials, PROVIDED HOWEVER that the Vendor shall take all available and reasonable steps to adhere wherever possible to the said plans and specifications and Schedule of Finishes.

13. If the Gold Coast City Council or other competent authority imposes any conditions on the granting of the Town Planning Permit or Building Permit for the land and building the subject of this Contract which the Vendor shall be unable or unwilling to comply with, then the Vendor may cancel this Contract by written notice to the Purchaser or his Solicitors and on cancellation all moneys paid by the Purchaser shall be refunded without deduction together with any interest accrued in respect of the deposit, and neither party shall have any claim against the other by virtue of this Contract or its cancellation as aforesaid.

18. The Purchaser expressly acknowledges that at the time the Vendor submits the relevant Building Units Plan to the Council of the City of Gold Coast and in turn to the Registrar of Titles, Queensland both the said Council of the City of Gold Coast and the Registrar of Titles have the right to refuse to allow the Vendor to use the name "Ocean Royale" as the name of the parcel of land for the purposes of the relevant Building Units Plan. In the event of such refusal no objection thereto and to a change of name will be made by the Purchaser. Such new name if required shall be a matter for the sole determination of the Vendor. The Vendor shall take all available steps to reserve so far as possible for the purposes of the subject Building Units Plan the name "Ocean Royale".

1. It was a feature of this case that all of the principal actors were unreliable witnesses. Those who gave evidence included Mr and Mrs Tiplady, their son Warren, who for part of the relevant time was employed as a salesman by St. George Real Estate, Mr George Gauci, the respondent's managing director, and Mr Quarmby. None would score highly if rated for credibility. I have not found it a useful exercise to try to establish an order of preference between these persons as witnesses but have taken the evidence of each and my views concerning it into account in arriving at what seems to me on the evidence overall to have been the probable order of events.

2. The architect's plans, including the floor plans shown to the applicants, were inspected by a Building Inspector at the Gold Coast City Council in February 1981 and, perhaps a little later, by an officer of the South Coast Fire Brigade. The respondent was notified that what was proposed in respect of the private vestibules on the 14th floor was not acceptable. The evidence did not establish that the respondent received that information prior to its execution of the contract between it and the applicants. However, it knew soon afterwards, and had received formal notification by letters from each authority by early April 1981. Amended plans were submitted and the respondent received a building permit referable to the amended plans on or about 4 June 1981.

3. At about the same time, the negotiations concerning the acquisition by Broadbeach International Hotel of the management rights in respect of "Ocean Royale" were terminated.

4. By the end of 1981 or the first week in January 1982, substantial progress had been made in the construction of "Ocean Royale". On the 14th floor, the external entrance doors to the penthouse units were in place and all walls had been constructed subject to two qualifications; internal non-load bearing dividing partitions had not been completed although the metal frames were in place, and solid walls had not been plastered or painted where that was required. It was apparent that there was a common lobby on the 14th floor and that the lifts and the fire stairs opened off the common lobby. The penthouses did not include private vestibules in the form which had been indicated on the plans shown to the applicants. The entrance door to each penthouse opened almost immediately onto an archway which had been constructed between the door and the dining area. The wall containing the archway continued into the dining area around what had previously been depicted as an open staircase, was faced with brick, and contained a section which protruded almost half a metre into the dining area. As a result of the alterations the internal area of penthouse unit 56 had been reduced by 5 or 6 square metres and the dining area, which had always been relatively small, had been rendered unattractive and of extremely limited use. On the 15th floor, the balustrade around the north-east balcony had been constructed of concrete, impeding both the view from a sitting position and the passage of breezes.

5. The applicants also complained in this proceeding of other changes, notably the addition of a cupboard in a room designated as a television room and the altered configuration of shower recesses. However, I am satisfied that these were mere straws seized upon to add weight to the applicants' case and that they are and were entirely immaterial to any question in the present proceeding save as an additional indication of the extent to which the applicants were prepared to go in order to succeed in their claim.

1. Major issues in this proceeding concerned what the applicants knew of the respondent's departures from the original proposals and when that knowledge was acquired. The applicants contended for total innocence until about April 1982, when their surprising discovery caused them dismay and led them to consult their solicitor almost immediately. The respondent's case, on the other hand, sought to suggest that the applicants had full knowledge from a very early stage. Mr Quarmby even stated, quite inaccurately, that the applicants were informed in the very first conversation that the architect's plans which they were shown were only "proposed plans", which was suggested to convey that the plans had not been approved. Other evidence was given that Mr Tiplady "haunted" the site during construction and observed in detail what was being built, and of conversations which he was alleged to have had with Mr Gauci.

2. It is sufficient for present purposes to find, as I do, that, by 14 January 1982, the applicants were aware both that "Ocean Royale" was not to be professionally managed by Broadbeach International Hotel, of the manner in which the lobby, private vestibule, and dining area on the 14th floor had been constructed, and of the nature of the balustrade of the north-eastern balcony on the 15th floor.

3. Although efficient and competent management of a building such as "Ocean Royale" might well be a matter of legitimate interest and concern to a purchaser of a unit in the building, even one who was to reside in the unit and not use it to produce income, I am satisfied that the identity of the particular manager originally named, "Broadbeach International Hotel", was not a factor which played any part in the applicants' decision to sign the contract to purchase penthouse unit 56 in "Ocean Royale". Further, the applicants learned that Broadbeach International Hotel was not to manage "Ocean Royale" sometime during 1981. For a period after Broadbeach International Hotel withdrew from negotiations with the respondent, the applicants' son Warren, in his role as a salesman employed by St George Real Estate, attempted to find a new purchaser for the management rights in respect of the building. During that period the applicants were in close contact with their son. The applicants were occasioned no concern by the knowledge that "Ocean Royale" was not to be managed by Broadbeach International Hotel and did not for that reason reconsider their purchase under the contract.

4. The applicants did not learn of the changes in respect of the balustrade, lobby, private vestibule, and dining area until the end of December 1981 or very early in January 1982 when Mr Tiplady visited the site first with Mr Quarmby and then with his son, Warren. The applicants had contracted to purchase penthouse unit 56 to use as their residence on the Gold Coast. When they became aware of the alterations, they no longer regarded it as suitable for use for that purpose. As the applicants knew from what they were informed, there was no possibility of further alteration to make the unit correspond to what had originally been contemplated. The alteration or variation to the 14th floor in the vicinity of the lifts and stairways had been essential to comply with the law and obtain a building permit.

5. When the contract between the applicants and the respondent had been entered into early in 1981, the Gold Coast had been enjoying a period of considerable prosperity. Later, especially in the second and third quarters of the year, the market for new units on the Gold Coast became quite unrealistically buoyant. With the advantage of hindsight, it is now known that the boom had peaked before the end of 1981 and that by early 1982 a downward trend had entered the market. However, that was not generally apparent in January 1982. The applicants took no step at that time to resile from their purchase of penthouse unit 56 in "Ocean Royale". Nor did they give any indication that they might not proceed to complete the purchase. On the contrary, having decided that they did not wish themselves to live in "Ocean Royale", they decided to take advantage of the apparently high prices available for Gold Coast units and to resell at a profit the unit which they had contracted to purchase.

6. On 14 January 1982, the male applicant contacted Surfers Paradise Real Estate Pty Ltd, a real estate agency with which the applicants had had a previous dealing, and indicated that their penthouse unit in "Ocean Royale" was available for resale. It is not entirely clear whether the original resale price was $785,000.00 and was subsequently reduced to $585,000.00 or whether there was some confusion because of a suggestion that a sum of $200,000.00 might be available as "vendor finance" at 14 1/2%. The applicants also contacted other agents. Attempts were made to sell the unit. Both applicants went to the unit, Mr Tiplady on more than one occasion. Mr Gauci became aware of the applicants' proposal to resell and had a conversation with Mr Tiplady in which the latter confirmed that the applicants intended to complete the contract between the applicants and the respondent if they did not resell the unit before the time for completion fell due. The applicants made no complaint to the respondent or its agent. I do not accept that they told Mr Quarmby that they were contemplating legal action or that there was or might be some obstacle to a resale. Presumably, they were confident that they would be able to resell the unit at a profit and did not wish any complications to be introduced into their transaction with the respondent.

7. There was no basis for optimism. The downturn in the market accelerated and grew more severe, prices fell, and it became increasingly difficult to find purchasers for units.

8. The applicants changed their minds and decided to strive to escape from the contract. They consulted their solicitors. I find that they did so shortly before a notice dated 2 June 1982 was forwarded to the respondent purporting to avoid the contract. Considerable ingenuity and imagination were employed in the drafting of the grounds relied upon which, however, failed to make any identifiable reference to the alterations to the unit which the applicants had contracted to purchase. Nonetheless, I am satisfied that the applicants did inform their solicitors of those alterations and, in the same month, an architect was engaged on behalf of the applicants to inspect the unit and report. A letter from the applicants' solicitors to the respondent's solicitors dated 9 July 1982 does make reference to the diffences between the building as constructed and "as depicted in plans shown to our client prior to the execution by them of the contract".

9. Meanwhile, by letter dated 4 June 1982, the solicitors for the respondent wrote to the solicitors for the applicants informing them that the respondent did not accept that the applicants had avoided the contract and that if the applicants did not complete the respondent would forfeit the deposit monies and pursue its other rights. On 22 June 1982, the day upon which the Building Units Plan (No. 5013) in respect of "Ocean Royale" was registered, the solicitors for the respondent called for completion on 23 July 1982 in accordance with the contract. Insofar as it refers to penthouse unit 56, the registered Building Units Plan corresponds with what has been constructed, showing the common lobby on the 14th floor.

10. Further correspondence was exchanged between 22 June and 23 July 1982. By letter dated 7 July, the respondent indicated its intention to seek specific performance if the applicants did not complete. Reference has already been made to the applicants' letter of 9 July; in it they confirmed their intention not to proceed. By letter dated 16 July the respondent again called for completion on 23 July and enclosed transfer documents, showing a purchase price of $385,000.00.

11. The applicants did not complete. The respondent wrote a further letter dated 26 July 1982 indicating its intention to commence proceedings for, inter alia, specific performance. But the applicants struck first, commencing proceedings in the Supreme Court of Queensland on 4 August 1982. The respondent commenced a separate proceeding in the Supreme Court on 9 August 1982 and unsuccessfully applied for summary judgment for specific performance in September or October 1982. A further demand by the respondent in December 1982 for completion was ignored by the applicants and, by letter dated 10 January 1983, the respondent notified the applicants that it accepted their repudiation of the contract. The respondent's mortgagee, Seventeen Pty Ltd, later resold the unit for $225,000, and that sale was completed on 3 May 1983. At an unspecified date, the respondent's agent accounted to it for the full deposit plus interest which it had attracted. The amount was unproven but it appears from correspondence that, as at 8 July 1982, the interest which had accrued on the deposit was $6312.77. Neither Supreme Court action had come to trial when the present proceeding was commenced in this Court by an application filed on 22 September 1983 and thereafter the actions in the Supreme Court were not proceeded with but the respondent delivered a cross-claim in this Court.

12. The applicants' claim is to recover the amount of the deposit together with interest, either on the basis that the contract had been rescinded by the applicants or ought be rescinded by the Court pursuant to s.87 of the Trade Practices Act 1974 ("the Act") or as damages pursuant to s.82 of the Act in respect of an alleged contravention by the respondent of s.52 of the Act. No claim was made by the applicants for damages for breach of contract and no reference was made to s.87 of the Act in argument. No suggestion was advanced that the contract was illegal, for example as requiring the construction of a building contrary to the Building Act 1975-1984 (Queensland) or the Fire Safety Act 1974-1982 (Queensland).

13. The respondent pleaded that the applicants were "precluded from relying upon any representation that may have been made by or on behalf of the respondent" by sub-clauses 8(d) and (f) of the contract but raised no other plea of estoppel. By a late amendment, the respondent added an allegation that the applicants obtained knowledge of the matters of which they complained and with such knowledge "chose to affirm the ... contract and elected to remain bound by it" by making "no attempt to rescind the contract and/or (the Applicants) put the said unit in the hands of Surfers Paradise Real Estate and St. George Real Estate for resale". The plea of election, and the respondent's counter-claim which followed upon it, assumed that the applicants' choice, if they had one, was either to terminate the contract or pay the full purchase price, a view which was not challenged in argument by the applicants.

14. The result of the applicants' election to proceed, according to the respondent, was that the applicants repudiated the contract by their subsequent persistent refusal to complete and are liable to the respondent in damages for breach of contract. It is unnecessary to consider further at this point the basis upon which the respondent sought to quantify its damages or the details of its claim.

15. Some of the applicants' complaints, notably the cupboard in the television room, the altered configuration of the shower recesses, and the change in identity of the manager of "Ocean Royale", have already been disposed of. The nature of the balustrade on the north-eastern balcony on the upper level of penthouse unit 56 can similarly be excluded from further consideration. The nature of the balustrade formed no part of the contractual arrangements between the parties. Some attempt was made on behalf of the applicants to establish that the architect's plans given to the applicants pre-contract depicted the balustrade as being of the same character as that shown in the "Artists impression" in the brochure but I do not accept that that was so. Further, even if the respondent's conduct was misleading or deceptive or likely to mislead or deceive by reason of the "Artists impression" of the balustrade on the brochure, I am satisfied that the applicants placed no reliance whatever upon the "Artists impression" of the balustrade in arriving at their decision to purchase the unit. In addition, I am also satisfied that the concrete balustrade had no appreciable effect on the unit's value.

16. The remaining matter of complaint concerns the lobby and vestibule and dining area on the 14th floor.

17. The respondent submitted that, on its proper construction, the contract entitled the respondent to insist that the applicants pay the full purchase price and accept the unit as constructed.

18. The starting point for the respondent's argument was a submission that the contract accepted that the architect's plans, including the 14th floor plan, shown to the applicants had not been approved. It was submitted that the reference to "plans ... approved by the Council of the City of Gold Coast" in recital (b) meant plans to be approved in the future. Reliance was placed on clause 13 which it was said envisaged the future grant of a building permit by the local authority, and it was pointed out that it is by the grant of a building permit that plans are approved. The respondent's argument on this issue found favour with a single judge of the Supreme Court of Queensland in other litigation related to a relevantly identical contract: see Gold Coast Carlton Pty Ltd v. Kamalesvaran (unreported judgment delivered 16 December 1983). His Honour gave no reason for his opinion on the particular question other than the need to read the contract as a whole and his judgment is presently under review on an appeal to the Queensland Full Court.

19. The next step in the respondent's argument did not find acceptance in the Supreme Courtin that case. The respondent submitted that, by sub-clause 8(d)(ii), the applicants' entitlement was to "premises ... substantially in accordance with those set out in the ... plans" in whatever form they were eventually approved because the "said specifications and plans" mentioned in sub-clause 8(d)(ii) referred back to the "plans and specifications" mentioned in recital (b). In the Supreme Court, it was held that that was not so but that "the said specifications and plans" in sub-clause 8(d)(ii) referred to the "Plan as produced to the purchaser" of which mention was made in sub-clause 8(f)(i). According to the respondent, the latter plan is that contained in the Tenth Schedule to the contract; however, in the Supreme Court, it was held against the respondent that sub-clause 8(f)(i) referred to the plan produced to the purchaser, pre-contract. Accordingly, it was held in the Supreme Court that the plans referred to in sub-clause 8(d)(ii) were the original architect's plans. I have arrived at the same conclusion, but for different reasons.

20. The contract is not without its difficulties but its meaning becomes less obscure if regard is had to the surrounding circumstances and the purposes of the various provisions. The contract was an unconditional contract for the sale of a unit yet to be constructed - what is commonly described as a "sale off the plan". One or more plans by which the property the subject of the sale might be identified pre-contract and described in the contract as an item of property were therefore essential. The latter function was performed by the Tenth Schedule. It is obvious enough that the plan by which the property was described in the contract as an item of property should and normally would correspond with that "produced to the purchaser" pre-contract to identify the property. Further, the possibility of that plan (or the corresponding plans) differing in some respect from the registered building units plan relating to the finished building was an appropriate matter for the draftsman of the contract to cater for: that was the role assigned to sub-clause 8(f)(i). Although the architect's plans produced to the applicants by Quarmby and the advertising brochure contained dimensions and other details, only the position and external size and shape of the unit was needed for the identification of the unit sold, the description of it as an item of property in the contract, and its comparison with the registered building units plan as called for by sub-clause 8(f)(i). The other matters in the architect's plans and the advertising brochure were not part of the description of the "Unit Sold" or of the subject matter of sub-clause 8(f)(i) or the Tenth or Twelfth Schedules.

21. However, the contract was not silent as to such matters which were the subject of sub-clause 8(d)(ii); see also the proviso to sub-clause 8(f)(iv). Sub-clause 8(d)(ii) further delineated the subject matter of the sale. By it, provision was made with respect to the "measurements" and the "standard and specifications" of the "premises" to which the purchaser was entitled under the contract; the measurements standard and specifications were required to be "substantially in accordance with those set out in the said specifications and plans and the Schedule of Finishes hereinafter set out". To my mind, the words in sub-clause 8(d)(ii) constitute the clearest reference back to recital (b) which recorded the vendor's intention to construct the building "in accordance with plans and specifications prepared by the Vendor's Architect and approved by the Council of the City of Gold Coast, the finishes to be substantially in accordance with the Schedule of Finishes annexed hereto". Further, recital (b) obviously referred to architect's plans in existence at the date of the contract, even if the statement that they had been approved by the local authority was not only inaccurate but also in conflict with clause 13. Any such conflict would not be resolved by distorting the plain meaning of the recital to read it as though it referred to plans which had not been and might never be approved with or without variation or alteration. But, in any event, the recital related to plans which had been prepared and were in existence, not to future plans which were intended to be prepared by the vendor's architect, just as it was concerned with existing specifications and to an existing (and annexed) Schedule of Finishes. The additional misdescription "and approved by the Council of the City of Gold Coast" was immaterial to the identification of the plans and specifications, whatever its possible significance in relation to any claim which a purchaser might found on its inaccuracy. Further, it was equally immaterial that the contract might elsewhere suggest that the plans were not approved. Nowhere, including clause 13, was it suggested that plans had not been prepared and were not in existence and, even if a building permit had to be obtained, what was envisaged was a building permit which, whether it was conditional or unconditional, related to those existing plans subject to any alteration or variation permissible in accordance with the terms of the contract.

22. Of course, the applicants' apparententitlement under clause 8(d)(ii) of the contract might have been qualified or varied in any way by other contractual terms. By sub-clauses 8(f)(i) and (iii), the applicants were disqualified from any objection, requisition or claim for compensation by reason of any minor variations as regards the said unit between the Plan as produced to the Purchaser and the Building Units Plan as registered by the Registrar of Titles or any consequential variations and alterations to the plans and specifications in respect of the unit. That was entirely consistent with the "substantial" compliance with the plans and specifications required by sub-clause 8(d)(ii). The respondent submitted that, in the events which occurred, the applicants' entitlement was not to a unit substantially in accordance with the original plans by virtue of sub-clause 8(d)(ii), but only to a unit in accordance with the later approved plans, and reference was made to clauses 3(a), 8(f)(ii), (iii) and (iv), 13 and 18. Clause 18 is plainly irrelevant for present purposes, being concerned not with approval of the architect's plans by the grant of a building permit but with approval of different plans, the building units plan, at a later stage of the project.

1. Shortly stated, the respondent's principal argument seemed to be that since clause 13, and arguably also sub-clause 3(a), acknowledged that the architect's plans had not been approved, any alteration or variations to the original plans which was necessary to obtain a building permit was properly described as an "alteration or variation in the said plans" which had become "necessary during the course of construction by reason of matters beyond the control of the Vendor" resulting from "the requirements and directions of any governmental or semi-governmental authority" or "required by the practical exigencies of construction", and such an alteration or variation, however radical, was within the operation of sub-clause 8(f)(iv) of the contract. Similarly, but without reference to clauses 3(a) or 13, it seemed to be argued that the alterations or variation were within the operation of sub-clause 8(f)(iii) insofar as it related back to sub-clause 8(f)(ii). These propositions provided the foundation for the further argument that, given the circumstances to which sub-clause 8(f)(iii) or sub-clause 8(f)(iv) were directed, it was implicit in the contract that the applicants' entitlement under the contract was not to a unit substantially in accordance with sub-clause 8(d)(ii) but to a unit in accordance with the later approved plans.

2. Both clauses 3(a) and 13 were generally expressed provisions intended to protect the vendor under the contract against possible eventualities. Sub-clause 3(a) was designed to protect the vendor in the event of unexpected and unavoidable delay in completion of the project. Its generality was such that it might operate by reference to "any necessary approval" from a "local or other authority", whether before or after the grant of a building permit and irrespective of whether or not construction had commenced. It carried no implication concerning whether or not a building permit had been granted at the time of the contract.

3. In terms, clause 13 was not concerned with alterations to plans but with conditions to which permits might be subjected. There is no basis for a suggestion that the alterations which were made to the original plans were required by such a condition. On the contrary, the evidence clearly indicates that alterations to the original plans were necessary to obtain a building permit, and that no building permit, conditional or otherwise, would have been granted in respect of the original plans. The significance of clause 13 for the respondent's argument is that clause 13 was expressed in prospective terms and apparently presupposed that a building permit was yet to be issued, and thus that plans had not yet been approved at the time of the contract.

4. It may be said immediately that there are reasons why clause 13 should be treated with caution. On the basis of other contracts which have been the subject of litigation in the aftermath of the most recent unit boom there is reason to suspect that the "Ocean Royale" contract document was based on a standard form which was adapted to particular projects by the insertion of appropriate details, including recitals. However, the parties made no reference to such a possibility and I have not based any conclusion upon it. Nonetheless, if clause 13 implied the lack of a building permit, it also implied that a town planning permit was needed and had not been obtained. There was no suggestion that a town planning permit was needed or, if needed, had not been obtained. Although there is no direct evidence on the question, the clear inference was that no town planning permit was sought or obtained after the contract between the applicants and the respondent.

5. However, even were it correct, as the respondent would have it, that the contract did not provide that the architect's plans had been approved but envisaged that the grant of a building permit lay in the future, the remainder of its argument would not necessarily follow from the fact that the alterations or variations which were made to the original architect's plans in respect of the 14th floor lobby and vestibules were necessary in order to have the plans approved and the building permit granted. In order to consider that question further, and also the respondent's other argument based upon sub-clause 8(f)(iii), further analysis of sub-clauses 8(d)(ii) and 8(f) is essential.

6. It is curious, but not necessarily critical that, unlike sub-clause 8(e), sub-clause 8(d) is not expressed to be subject to sub-clause 8(f). No doubt the two must nonetheless be read together. All that is expressly limited or excluded by sub-clause 8(f) is the right of the applicants as purchasers to make "any objection, requisition or claim for compensation": see the introductory words to the sub-clause. The reference to objections or requisitions is a reference back to requisitions or objections "on or to the Vendor's title" in sub-clause 8(b). There is no provision in the contract which expressly provides any right to compensation in any circumstances but it is a well known jurisdiction of a Court of Equity in suits for specific performance to order compensation for discrepancy between what was agreed to be transferred and what can be transferred: Rutherford v. Acton-Adams (1915) AC 866 at p 869 (PC).

7. Expressly at least, sub-clause 8(f) does no more than limit the applicants' rights to deliver requisitions or objections or to claim compensation. Even in the circumstances in which it applies, sub-clause 8(f) does not expressly seek to modify the applicants' entitlement under sub-clause 8(d)(ii) or to limit or exclude any rights which the purchaser may have to terminate the contract (although there is authority that a provision excluding the right to make an objection in respect of a particular matter includes the right to rely upon that matter as a basis upon which to rescind: Cameron v. Lewis (1975) 1 BPR 9137 at p 9138), or to recover the amount of the deposit and/or other damages. The effect of sub-clause 8(f) on the rights of the parties in the circumstances which have occurred, including whether it obliged the applicants, as purchasers, to accept the unit as constructed without compensation "has to be considered against the background of the law governing the relationship of vendor and purchaser of land and the remedies available to them": Beard v. Drummoyne Municipal Council (1969) 71 SR (NSW) 250, per Walsh J.A. at p 262; Travinto Nominees Pty Ltd v. Vlattas (1973) 129 CLR 1, per Menzies J. at p 27.

8. The law in relation to contracts for the sale of land possesses special features (Svanosio v. McNamara (1956) 96 CLR 186 at p 206; Beard v. Drummoyne Municipal Council, supra, per Walsh J.A. at p 265), and there are areas of uncertainty, including perhaps the exact relationship between compensation and damages in relation to any difference between the subject matter of a contract of sale of land and what the vendor can transfer, and concerning the effect of completion of the transaction on such rights: see, for example, Torr v. Harpur (1940) 40 SR (N.S.W.) 585; Beard v. Drummoyne Municipal Council, supra, at pp 264-265 (Walsh J.A.) and p 268 (Mason J.A.); Jennings v. Zilahi-Kiss (1972) 2 SASR 493 at p 510 (Bray C.J.); Stephens v. Selsey Renovations Pty Ltd (1974) 1 NSWLR 273 at p 276 ff (Mahoney J.); and Voumard's "The Sale of Land" 3rd Ed., pp.216-217. It is not essential to pursue all the various questions which can arise in detail at this point, although it may be observed that, other considerations aside, any breach by a vendor of a promise in respect of the subject matter to be transferred which was adjusted by compensation would seldom, if ever, result in additional loss to the purchaser. King v. Poggioli (1923) 32 CLR 222 distinguishes between differences between the property agreed to be conveyed and what the vendor is able to convey and other breaches of contract: see especially per Starke J. at pp. 248 and 249.

9. The obligation of a vendor to transfer the property the subject of the contract is an essential obligation. The nature of an essential obligation can be conveniently demonstrated by a passage from the judgment of Sir Frederick Jordan C.J. in Tramways Advertising Pty Ltd v. Luna Park (N.S.W.) Ltd (1938) 38 SR (NSW) 632 at p 641. Omitting the authorities to which reference was made, his Honour said:
   
   

"The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor... If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may in general treat himself as discharged upon any breach of the promise, however slight. If he contracted in reliance upon a substantial performance of the promise, any substantial breach will ordinarily justify a discharge."

The above statement has frequently been cited with approval, for example in D.TR Nominees Pty Ltd v. Mona Homes Pty Ltd (1978) 138 CLR 423 at pp 430-431. In the latter case, in their joint judgment, Stephen, Mason and Jacobs JJ said at p.431:

"... the quality of essentiality depends for its existence on a judgment which is made of the general nature of the contract and its particular provisions, a judgment which takes close account of the importance which the parties have attached to the provision as evidenced by the contract itself as applied to the surrounding circumstances."

See also Shevill v. The Builders Licensing Board (1982) 56 ALJR 793. It is only the first part of the statement in Tramways Advertising Pty Ltd, supra, which is directly concerned with the test of what is an essential obligation. The second portion of what was said is concerned not with what constitutes an essential obligation or a breach of an essential obligation but with what constitutes such a breach as entitles the other party to terminate the contract. There are alternative possibilities which are related to the character of the particular promise.

1. It has been established by a long line of authority that a purchaser's right to rescind is limited to cases in which the difference between the property agreed to be transferred and the property which the vendor was able to transfer was substantial. It is sufficient to refer to Flight v. Booth (1834) 1 Bing (NC) 370; 131 ER 1160; Fullers' Theatres Limited v. Musgrove (1923) 31 CLR 524 especially at pp 537-538; King v. Patrick's Day (Minhamite) Pty Ltd (1971) VR 777; Nicita v. Moloney (1971) 1 BPR 9105 at p 9107; and Brisbane Unit Developments Corporation Pty Ltd v. Robertson (1983) 2 QdR 105. See also Voumard's "The Sale of Land", 3rd Ed., at p 212. Shortly stated, the test is whether the property which the purchaser would receive is substantially different from that which he contracted to buy. The critical importance of identifying the subject matter of the contract as a preliminary to any assessment of whether or not the difference is substantial is emphasised by the judgment of Barwick C.J. in Travinto Nominees, supra. The subject matter of the contract must be identified by a construction of the written instrument: Nicita v. Moloney, supra, at p 9106. However, in assessing whether what the purchaser would receive is substantially different from that which he contracted to buy, the Court is not bound in all cases to have regard only to the written instrument but may take into consideration the purpose which the purchaser had in mind for buying, if that purpose was known to the vendor: Shepherd v. Croft (1911) 1 Ch 521 at p 528; In re Belcham and Gawley's Contract (1930) 1 Ch 56; Codelfa Construction Pty Ltd v. State Rail Authority of New South Wales (1982) 56 ALJR 459. The question is a question of fact to be decided in all the circumstances of each case and the Court must consider "every incident" by which the property to be transferred can be differentiated from that which is the subject of the contract: Fullers' Theatres, supra. The test has been invoked to permit rescission by purchasers in a wide range of circumstances; for example, a defect of title, a substantial deficiency in the dimensions or area of the property contracted to be sold, the absence of an important physical attribute stated in the contract, or a material misstatement about other matters upon which the value of the property was calculated. There has been some doubt expressed concerning whether the purchaser's right of rescission is the usual common law right to terminate a contract for fundamental breach or a special equitable right, and, if the latter, whether the general rule is applicable that a rescission may be valid although not correctly based: King v. Patrick's Day (Minhamite) Pty Ltd, supra, at pp 786-787. However in Nicita v. Moloney, supra, Jacobs J.A., with whom the other members of the New South Wales Court of Appeal agreed, clearly treated such a rescission as a rescission at law for breach of an essential contractual term.

2. In general, the consequence of rescission was to entitle the purchaser to the return of his deposit with interest and expenses of investigation of title: Borthwick v. Walsh (1980) 1 BPR 9259 at p 9266. That course was in accordance with well established limitations on the damages which were usually recoverable from a vendor unable to transfer what had been agreed to be sold: Bain v. Fothergill (1874) LR 7 HL 158; Noske v. McGinnis (1932) 47 CLR 563. See now s.68 of the Property Law Act, 1974-1982 (Queensland).

3. The equitable remedy of specific performance at the suit of the vendor was by and large co-extensive with the absence of a right of rescission in the purchaser; "For present purposes, ... the right of a vendor to a decree of specific performance and the right of a purchaser to repudiate the contract are but two sides of the one coin": King v. Patrick's Day (Minhamite) Pty Ltd, supra, at p 786. That is to say, in general the vendor could insist on specific performance if the difference between the property agreed to be transferred and the property which the vendor was able to transfer was not substantial although there is some authority that a "less serious misleading" that a substantial misdescription entitling a purchaser to rescind might have been "sufficient to enable a purchaser to resist specific performance": In re Terry and White's Contract (1886) 32 Ch D 14, at p 29. It is not presently necessary to embark upon a consideration of the discretionary bases upon which a Court of Equity may refuse specific performance. However, it will be necessary in due course to consider the position of a vendor who is unable to obtain a decree of specific performance notwithstanding that the purchaser is not entitled to rescind.

4. The quid pro quo imposed by equity was a requirement that the vendor compensate the purchaser for the discrepancy. "Substantially, compensation is given for some diminution or deterioration in the value of the property contracted to be sold ..." King v. Poggioli, supra, per Starke J. (with whom Knox C.J. agreed) at p 246. "The cases have never made a distinction, for purposes of compensation, as to the nature of the deficiency of the subject matter, whether the deficiency is in size of the land or in character of title ...": ibid per Higgins J. at pp. 238-239. The measure of the compensation seems to be generally equivalent to the amount which would be recoverable by the purchaser as damages on the basis that the difference between the property agreed to be transferred and what the vendor was able to transfer constituted a breach of warranty: cf. Topfell Ltd v. Galley Properties Ltd (1979) 1 WLR 446, at pp 451-452.

5. Whether or not entirely consistent with pure equitable theory, the right of a purchaser to specific performance was somewhat greater than that of the vendor. A purchaser entitled to rescind because the property agreed to be transferred was substantially different from that available for transfer was, in the absence of any other discretionary ground for refusal, nonetheless entitled to specific performance with compensation subject to any consideration of hardship upon the vendor: Beard v. Drummoyne Municipal Council, supra, especially per Mason J.A. at p 268 and cases there cited, to which may be added a reference to Gall v. Mitchell (1924) 35 CLR 222. As was pointed out by Mason J.A. in Beard, supra, it may well be correct that hardship may comprehend an obligation on the vendor to transfer a substantially different subject matter, and the cases tend to suggest that this was more likely to be so if there were associated difficulties in assessing compensation and thus in arriving at a new just price. See also Voumard, supra, at pp.208-210.

6. The general law position was affected by special provisions which were commonly inserted in contracts for the sale of land, often in terms that errors omissions and misdescriptions were not to annul the sale, sometimes accompanied by a provision entitling the purchaser to compensation and sometimes expressed to deny compensation to the purchaser. Equity influenced the effect of such clauses, not by altering their construction (although that is how it would often appear from the language of some of the decisions) but by its control, despite what they provide, of the grant or refusal of equitable relief: see In re Terry and White's Contract, supra; Beard v. Drummoyne Municipal Council, supra; Raineri v. Miles (1981) AC 1050; and compare Godfrey Constructions Pty Ltd v. Kanangra Park Pty Ltd (1972) 128 C.L.R 529. Thus, for example, if the case was one in which a vendor seeking specific performance would have been required to give compensation but for a clause providing that no compensation was payable, the Court would not necessarily make a decree at the suit of the vendor without imposing conditions but might refuse it leaving the vendor to his remedy at law (In re Terry and White's Contract, supra, at p 22) or might, in the exercise of its discretion, make payment of compensation a condition of granting equitable relief to the vendor: ibid, at pp. 24, 28 and 29. A purchaser's claim to specific performance could not be defeated by a vendor's unreasonable exercise of a power to rescind in pursuance of a clause expressed to entitle it to do so when subjected to a requisition or objection on or to title with which it was unable or unwilling to comply (Godfrey Constructions Pty Ltd v. Kanangra Park Pty Ltd, supra; Travinto Nominees Pty Ltd v. Vlattas, supra; and see now s.67 of the Property Law Act (Queensland)). Further, whatever the contract provided, a vendor was not permitted to insist on performance if there was a substantial difference between the property agreed to be transferred and the property which the vendor was able to transfer: Voumard, supra, at p.211. Common law and equity also had different approaches to provisions in a contract of sale of land with respect to the time of completion: see now the Property Law Act (Queensland), s.62; Raineri v. Miles, supra.

7. Nonetheless, contractual provisions had a number of significant effects. Thus, there was authority that, where there was a term that the contract would not be annulled by error or omission or misdescription, the purchaser could be required to accept differences of a more substantial nature than otherwise, at least where the contract made provision for compensation in respect of such errors, omissions or misdescription: see Rudd v. Lascelles (1900) 1 Ch 815 at p 818; Watson v. Burton (1957) 1 WLR 19 at p 25. (An attempt to exclude the right to compensation may have had the opposite effect: Jacobs v. Revell (1900) 2 Ch 858; In re Courcier and Harrold's Contract (1923) 1 Ch 565 at p 574.) In a suitable case, a clause entitling a vendor to rescind might be used to defeat a purchaser's claim to specific performance (In re Terry and White's Contract, supra). Further, if a purchaser sought specific performance despite the existence of a clause expressed to exclude a right to compensation, he was not entitled to performance with compensation: ibid, pp 22, 30; Cordingley v. Cheeseborough (1862) 4 DeGF & J 379; 45 ER 1230; although a compensation clause did not derogate from the purchaser's equitable right to specific performance with compensation for deficiencies in the property not falling within the strict terms of the clause: Beard v. Drummoyne Municipal Council, supra.

1. The respondent was guilty of a contravention of sub-s. 52(1) after the contract was entered into. Its conduct fell far short of what was acceptable. It took no adequate steps to inform the applicants of the variations and alterations and had no sufficient basis for satisfaction that they had an appropriate appreciation of the true position, although no doubt it did know or suspect that the applicants had some information from their son and their visits to the premises.

2. However, the applicants suffered no loss or damage by the respondent's contravention of sub-s. 52(1) of the Act.

3. That conclusion is not dependent upon acceptance of the statements of Smithers J. in Wildsmith v. Dainford Ltd (unreported judgment delivered 11 November 1983) if it was there intended to suggest that there is no recoverable loss or damage if the value of contractual rights at the time when a contract induced by a contravention of sub-s. 52(1) of the Act is entered into equals or exceeds the amount agreed to be paid under the contract notwithstanding that the contract is not to be performed immediately. In point of fact, there may be no loss or damage, for example, if the purchaser sells the contractual rights in question for the amount agreed to be paid or a higher amount or the loss may be limited to payments made prior to discovery of the true position if the transaction is not completed. However, I respectfully dissent from any proposition of intended general application to the effect that the time at which it must be determined whether loss or damage has been suffered by the conduct of a party who enters a contract in reliance upon a contravention of sub-s. 52(1) of the Act is the date when the contract is entered into, not the date when it is performed or, if such occurs, the date when the rights under it are sold, if indeed, which I doubt, any such general rule was intended. There is no reason in principle which I can perceive why loss or damage suffered by performance of contractual obligations under a contract entered into in consequence of a contravention of sub-s. 52(1) of the Act is not loss or damage suffered by that conduct and recoverable under s.82 (or s.87) of the Act.

4. I have elsewhere discussed the relationship between the measure of damages in actions for tort and the assessment of damages in proceedings founded on breach of Part V of the Act, (see Frith v. Gold Coast Mineral Springs Pty Ltd (1983) ATPR 40-339, at pp 44-082 ff.). I adhere to the view which I there expressed that the common law measure can provide guidance but cannot control the assessment of damages under the Act. In any event, although there are statements in the authorities with respect to tort which, taken out of context, might support the view that the relevant date to determine the value of what was acquired is the date of the contract, modern authority would lend no support to such a proposition in a case involving the future transfer of property to be bought into existence after the contract which is diminished, or further diminished, in value at the time of performance by market fluctuations. The emphasis rather is upon the innocent party's position at the end of the transaction, "the object being to place him in a position equivalent to that which he would have occupied had the transaction not taken place": State of South Australia v. Johnson (1982) 42 ALR 161 at p 170.

5. Although such views have not been entirely and unreservedly accepted by all other members of the Court, further consideration has not led me to alter the views which I expressed in Frith, supra, and in Hellyer Drilling Company v. MacDonald Hamilton and Co Pty Ltd (1983) ATPR 40-414.

6. In Frith, supra, I said at pp. 44086-44087:
   
   

"It seems plain that the statutory right to damages now under consideration serves a wider purpose and is intended to have a broader ambit than the common law actions of tort or negligent misstatement. There is no indication of a legislative intention that the relevant common law rules should be first discovered, the reasons that led to their development, understood, and then that they should be adopted or adapted consistently with the policy of the Act, before the Court performs its duty of assessing the amount to which applicants are entitled under the Act. It seems an arid exercise to enter upon such problems when what is in questin is a claim founded on the Act. Particularly is this so, where, as in the case of deceit, there is scope for at least a degree of uncertainty as to what is the appropriate measure of damages.

The broad statement of the appropriate measure of damages in deceit which was adopted in Dolby's Case, supra, accords with the statutory test, if, as I think, applicants who establish a cause of action under the Act are entitled to those losses which are the immediate result of the offending conduct and also to consequential losses if sufficiently direct. It is on that footing that I proceed in this case.

There is a further matter to be kept in mind in some cases, and this is one, in which damages are sought under the Act. A purchase of property may be one element in a course of conduct which is embarked upon in reliance on conduct which is misleading or deceptive or likely to mislead or deceive. The statutory entitlement to compensation is not restricted to losses involved in the single element constituted by the transaction of purchase. Applicants for relief under the Act are entitled to have each act or omission shown to have been taken in reliance upon offending conduct considered for the purpose of a detemination of whether they thereby suffered loss or damage.

In my opinion, therefore, irrespective of how the applicants' damages might have been calculated had their claim been made and pressed in deceit, it is appropriate, in the determination in these proceedings of the damages to which they are entitled under the Act, merely to seek to identify what were the immediate and what were the direct consequential losses sustained by the applicants by the conduct of the respondent. The operation of that test will, as in all cases, depend on the circumstances. Particularly perhaps where damages claimed relate to alleged consequential losses, care is needed to be satisfied that there is a sufficient causal connection and not a mere following on between the offending conduct of the respondents on the one hand and, on the other hand, the losses of an applicant and that the chain of causation has not been broken by some conduct or event. For that purpose, investigation will often be needed of the relationship between the offending conduct of a respondent, the acts or omissions of an applicant which are said to have been taken as a result and which are alleged to have been productive of loss, and the loss which is said to have occurred in consequence. Commonly, and this case is a prime example, the evidence will be something less than comprehensive and detailed. Whilst, in some cases, precise calculation may be necessary or possible, in circumstances such as the present, after the general process of reasoning has been exposed, the final step necessarily involves a broad subjective estimate.

The major step taken by the applicants in reliance upon the respondent's misrepresentations was the entry into and performance of the contract. I will return to that transaction, and its relevant consequences for present purposes, in a moment. ..."

Later, I said at p. 44,090, at pp. 44,090-44,091 and again at p.44,091:

"The matters thus far referred to provide a sound enough foundation for a broad estimate of the difference between what has been paid by the applicants ($68,000 on the hypothesis which has been adopted) and the value of what they received. They provide less assistance as to the current value of the plant and equipment, if that be relevant. Having regard to the point at which the applicants' proof in this case stopped, I consider that it is not relevant.

The applicants did not merely purchase chattels as an investment for resale. They purchased a business to operate and they operated it at a loss. After five months, they closed the business. It had then totally failed. The failure was in no sense attributable to any lack of skill or effort on their part. On the other hand, although the work available had never been as represented by the respondents, the almost total absence of work during the period in which the business was operated by the applicants, was, I find, contributed to by the economic recession.

Nonetheless, the applicants would not have purchased or operated the business but for the respondent's misrepresentations. In my opinion, the fact that the state of the economy was a major reason for the losses incurred in the operation of the business does not sever the causative link between the losses and the respondents' breaches of the Act. ..."

"The discussion to date assumes that, if the applicants are entitled to recover operating losses sustained in the business, they are entitled to recover them in respect of the entire period. In the circumstances of this case in view of the amounts involved the question is of little consequence. Were the amounts larger, or the losses continuing because the business was still operating, additional consideration such as whether or not there has been a break in the chain of causation between the offending conduct and the losses of the applicants or whether the applicants acted reasonably might well arise. A variety of questions related to causation or mitigation might fall for decision. There was no real investigation of such issues in these proceedings. ..."

"By a parity of reasoning it seems to me appropriate to choose some point of time after the contract as the appropriate date, in this case, at which to assess the value of the plant and equipment which they received in return for the purchase moneys paid. It is the figure thus arrived at, not the value of the plant and equipment at some other date, which falls to be deducted, in the calculation of their loss, from the payments which have been made to the first respondent. Any loss in value of the plant and equipment over the period during which it was legitimately retained by the applicants for use in the operation of the business in reliance upon the misrepresentations of the respondents seems but another element of loss resulting from the operation of the business especially perhaps where, as here, no reason exists for attributing the loss in value to effluxion of time or wear and tear or, indeed, to other than the market downturn.

On the other hand, the applicants' failure to dispose of the plant and equipment even after the close of business at the end of September 1982 is wholly unexplained ....

It might, in some cases, be appropriate to fix the date chosen for such an exercise as I have been discussing with some precision. That is not the position here. The 'rough-and-ready' estimate called for permits no more, on the available evidence, than recognition that there was some further relevant loss of value of the plant and equipment after the date of the contract."

In the result, the applicants received as damages, inter alia, the difference between what they paid and the value of what they received at the time of completion. An appeal was unsuccessful, but, it should be noted, without approval of the approach which I adopted to damages which was not questioned on the appeal.

1. In Hellyer, supra, after referring to Frith, at p.44,825, I said at p.44,826:
   
   

"The common law has developed 'connected doctrines' (McGregor on Damages, 14th ed. para. 181) in relation to issues of remoteness, mitigation, intervening acts or events, and contributory negligence with respect to damages both in tort and, more recently, for breach of contract (ibid). It may be anticipated with some confidence that similar questions to those which have given rise to such doctrines will fall for consideration in due course in proceedings for relief under sec. 82. The ultimate test under sec. 82 is likely to be one of causation. There is no present need to seek to elaborate upon that observation beyond commenting that there seems no reason to doubt that, in general, loss or damage may not necessarily be irrecoverable because its immediate cause is not the contravention complained of; for example, if it is some action reasonably taken by the applicant in the circumstances in which he finds himself in consequence of the contravention, including such action taken in an attempt to mitigate loss or damage. Reasonableness is a question of fact and I have, for the purposes of this case, proceeded on the footing that, while reasonableness is to be determined in all the circumstances including the interests of the respondent as well as the applicant, the standard required of the applicant is not high and must be assessed by reference to the circumstances at the time not as they appeared with the advantage of hindsight, and that the applicant is not required to risk his money too far; neither steps which prove to have been mistakenly taken nor the fact that other measures would have proved less burdensome to a respondent necessarily mean a loss is not recoverable. Conversely, there seems no reason to doubt that, in general, it will be open to a respondent not merely to contest the elements of an applicant's claim, including the reasonableness of any action taken by the applicant, but to set up a positive case that the applicant ought have mitigated the loss or damage by other steps asserted to have been reasonably open. Again speaking only generally, it seems likely that the onus of proof of a particular issue, including reasonableness of conduct, will depend upon whether the applicant asserts that issue as a constituent element of its damages claim or whether the issue is raised only by the nature of the respondent's defence.

In the end, what must be remembered is that it is only loss or damage suffered by conduct of the respondent that an applicant is entitled to recover under sec. 82 and it is essential for an appropriate evidentiary basis to be established for the claim. Costs and consequences of one of a number of possible courses of conduct pursued by an applicant to meet a situation occasioned by a respondent's contravention of sec. 52 cannot, without more, be characterized as the result of an attempt to mitigate the loss or otherwise as loss or damage suffered by conduct of a respondent."

1. It is entirely consistent with these observations to acknowledge that, while entry into a contract or an omission to terminate it earlier may have been causally related to a contravention of sub-s. 52(1) of the Act, no such relationship will necessarily later exist between the contravention and a particular loss.

2. Further, as I comprehend it, the judgment of Jenkinson J. in T.N. Lucas Pty Ltd v. Centrepoint Freeholds Pty Ltd (1984) ATPR 40-440 is not to the contrary.

3. In that case, his Honour rejected an argument for a respondent which he had held had engaged in conduct which contravened sub-s. 52(1) and which had resulted in the applicant executing a lease pursuant to which it had occupied premises and conducted a business. His Honour said that the argument was that:
   
   

"... because the lease had been affirmed by the applicant, what was recoverable in damages, whether at common law or pursuant to Pt. VI of the Trade Practices Act 1974, was the difference between the real value of the leasehold interest enjoyed by the applicant and the amount payable by the applicant to the respondent under the lease in respect of the short period during which that interest had been enjoyed. ..."

The submission for the respondent was summarized by his Honour at p. 45,051 in the following terms:

"The reasoning of Mr Goldberg's submission concerning the measure of the applicant's damages commences with the proposition that, if a contract to purchase a business, the making of which was induced by fraudulent misrepresentation, be affirmed, loss sustained in carrying on the business is, except in certain exceptional circumstances, irrecoverable in an action for damages by the purchaser for deceit. The next step in Mr Goldberg's argument is the submission that the suggested irrecoverability of such a loss is a consequence of the breaking of the legally significant causal connection, between the tortious act and the loss, which in his submission the affirmation of the contract effects. The final step in the argument is the submission that, since irrecoverability of the loss is a consequence of a breaking of the causal nexus between the inducing conduct and the loss, recovery of the loss is also to be denied in an action upon the cause of action conferred by sec. 52(1) and 82(1) of the Trade Practices Act 1974, and is to be denied whether the contract is for the purchase of a business or merely for a lease of premises in which a business is to be commenced by the lessee."

1. I do not propose to refer in detail to the comprehensive discussion by Jenkinson J. which underlay the conclusion at which he arrived. It is sufficient for present purposes to observe that the second stage of the respondent's submission was based upon a misconception. The inconsistent rights of a party induced to enter a contract by fraud are to rescind the contract or to affirm it and recover damages. An election to affirm carries with it the right to damages and, a fortiori, there is no automatic "breaking of the legally significant causal connection between the tortious act and the loss" effected by the affirmation. See, to similar effect, T.N. Lucas, supra, at p. 45,054. Where loss sustained in carrying on a business after affirmation was irrecoverable, it was because of "rules of practice" which had been introduced by which the measure of damages recoverable in principle for deceit had been restricted. I have already reaffirmed my opposition to any attempt to introduce any similar complications into the assessment of damages under the Act in violation of the clear statutory language.

1. Nonetheless, it is essential to keep in mind that the Act does require a sufficient causal nexus between the contravention of Part V and the loss or damage sought to be recovered. It is probably unwise, if not impossible, to seek to define the nature and extent of the relationship which is required: cf. Gates v. The City Mutual Life Assurance Society Ltd, supra. There is no reason to hold that an election to affirm a contract which has been induced by misleading conduct necessarily disentitles the applicant from recovering damage occasioned by performance of the contract equivalent to the amount recoverable if the contract had been completed without affirmation, subject to any question which may arise related to the reasonableness of the decision to affirm: cf. Payzu Ltd v. Saunders (1919) 2 KB 581.

2. However, the position is quite obviously different when, having elected to affirm with a concomitant right to any loss, including loss consequential on performance, the innocent party then repudiates and the contract is terminated for his breach. The loss to the originally innocent party, namely the damages which he must pay for his breach of contract, flow from his own breach, not the original misconduct of the other party. Payments previously made by the originally innocent party under the contract go to reducing the amount which he must pay as damages for his breach. Accordingly, since the originally innocent party obtains full benefit from them, they do not constitute loss or damage suffered by him referable to the other party's misleading conduct.

3. If the applicants had a right to rescind or to require the Court to rescind the contract by reason of the respondent's misleading conduct after the contract was entered into, they lost that right by election for reasons earlier discussed.

4. Further, the applicants' liability to pay to the respondent damages for breach of contract was not suffered by any contravention of the Act by the respondent, but by the applicants' own conduct in repudiating the contract after they lost the right to terminate or escape liability under the contract and recover the deposit which they had paid.

5. The applicants therefore have no cause of action for loss or damage or entitlement to relief under the Act.

6. It remains to assess the quantum of the respondent's damage.

7. The respondent claimed damages at common law and not under clause 6 of the contract which gave the respondent certain rights on the applicants' default. Although it commonly seems to be overlooked, it is essential to maintain the distinction: see, for example, Cooper v. Ungar (1980) 100 CLR 510; Amga Pty Ltd v. Michie (No. 2) (1978) 1 BPR 9566; Taylor v. Raglan Developments Pty Ltd, supra; Bullion Sales (International) Pty Ltd v. Fitzgerald (1983) 1 QdR 215 at p 220; Leighton Properties Pty Ltd v. Hurley (unreported judgment of Thomas J. delivered 30 November 1983). See also Voumard, supra, at pp 413 ff. The contract date for completion was 23 July 1982. The contract was terminated for the applicants' repudiation on or about 18 January 1983. Thereafter, as a result of its election, the respondent was no longer acting under the contract but was pursuing its common law rights; contrast Taylor v. Raglan Developments Pty Ltd, supra. Immediately prior to termination the respondent had a claim against the applicants for delay in completion and, upon termination, had a claim for the then difference between the contract price (subject to abatement for compensation but calculated according to the contractual provisions relating to late completion) and the value of the unit at the time of termination. The applicants did not contend that the respondents were not entitled to any deficiency in excess of the forfeited deposit.

8. As finally particularised, the respondent's claim for damages for breach of contract was as follows:
   
   

(a) Contract price of unit $385,000.00

(b) Less deposit paid 38,500.00

(c) Less agents commission 9,875.00 $336,625.00

(d) Less price at which unit resold 225,000.00

(e) Plus rates paid by cross-claimant from 23/7/82 to 3/5/83 (date of settlement of resale) 338.46

(f) Plus maintenance levy paid by cross- claimant from 23/7/82 to 3/5/83 (date of settlement of resale) 2,857.18

(g) Plus legal costs in respect of resale 1,316.00

(h) Plus agents commission on resale 5,875.00 $122,011.64

(i) Plus interest at twelve percentum per annum (12%) on $336,625.00 from 23/7/82 to 3/5/83 31,430.63

(j) Plus interest at twelve percentum per annum (12%) on $122,011.64 from 3/5/83 to 16/5/84 15,203.00 $168,645.27

1. Neither party seemed particularly concerned by the questions raised by the respondent's formulation of its claim. Notwithstanding the Court's Rules, the applicants were content to leave their plea in answer to the relevant elements of the respondent's cross-claim to be caught up by a general denial.

2. The resale referred to was a resale by the respondent's mortgagee which was completed on 3 May 1983 but nothing was proved concerning the circumstances of that sale, or why the unit had not been resold earlier by the respondent. The applicants accepted that the resale price was the market value of the unit as at the time of its resale but neither party sought to establish what its value as constructed was at the time of termination of the contract. The only evidence of value was given in connection with a quite separate issue by a valuer called for the applicants whose evidence as to the value of the unit as constructed may be summarized as January 1981, $345,000; July 1982, $270,000, 3 May 1983, $225,000. Neither party made any reference to an abatement of the original contract price in respect of compensation. However, the applicants' valuation evidence was again of assistance, although not directed to the issue. The attitudes on both sides tended to cancel out. The value of the unit as proposed and as constructed at material times was an obvious issue and was investigated, even if not to the appropriate degree. There is no room for any suggestion that either party was influenced in the conduct of its case by any misapprehension occasioned by the other's pleadings. It was for the respondent to prove its case on damages but it is entitled to have the applicants' valuation evidence bought into account. In short, despite the unsatisfactory nature of the manner in which the quantification of the respondent's damages was approached, I am satisfied that the Court is not precluded by the pleadings or the manner in which the case was conducted from deciding the case according to law: cf. Green v. Sommerville, supra, at p 599 per Barwick CJ. and per Mason J. at pp 607-608; Cooper v. Ungar, supra, at p 517. Were it necessary, which I am satisfied that it is not, I would give leave to amend to each party: see as to amendment Dare v. Pulham (1983) 57 ALJR 80; Chalmers Leask Underwriting Agencies v. Mayne Nickless Ltd (1983) 57 ALJR 626.

3. I find that the purchaser was entitled to compensation in an amount of $38,500, reducing the contract price to $346,500.

4. However, more than that would have been payable by the applicants on completion upon the date when the contract was terminated. Although not all referred to in argument, it is necessary to notice clauses 2, 7, 15A and 15B of the contract which provided:
   
   

"2. THE SUM OF $385,000.00 being the purchase price shall be payable as follows:

(a) The sum of $38,500.00 as a deposit in part payment of the purchase price on or before the execution hereof in the manner as directed by the vendor, that is to say:

EITHER ...

OR (iv) to an Interest Bearing Trust Account in the name of the Vendor's Agent or the Vendor, as the case may be, with a branch in Queensland of a Bank carrying on business under the authority of an Act of the State of Queensland or of the Commonwealth of Australia to be maintained for the exclusive benefit of the Vendor both as to the said sum of $38,500.00 and as to interest accrued thereon, subject only to the provisions of clause 15A hereof,

and the parties hereto hereby direct the Vendor's Agent to pay as soon as is permissible by law the said Deposit to the Vendor together with interest thereon (if any).

(b) The sum of $346,500.00 being the balance, on settlement as hereinafter provided.

...

DELAY:-

7. Should there be any delay in payment of the balance of the purchase money or any instalment thereof by virtue of default on the part of the Purchaser then without prejudice to any other rights of the Vendor the Purchaser will pay to the Vendor at completion a sum for liquidated damages equivalent to interest at the rate of sixteen per centum

(16%) per annum on the moneys so owing from the date for payment thereof until payment shall have been made.

15A. Notwithstanding anything to the contrary herein it is hereby agreed by and between the parties hereto that in the event that the Vendor obtains the benefit of any interest accrued on the Deposit moneys paid under this Contract by the Purchaser as hereinbefore provided then the Vendor will on the date of settlement give and allow to the Purchaser a reduction in the balance purchase moneys then payable of an amount equivalent to the amount of interest accrued as aforesaid.

15B. In the event that this Contract is cancelled pursuant to the provisions of Clause 3(a) hereof then the Purchaser shall be paid, in addition to those moneys payable to him pursuant to the provisions of the said Clause 3(a), an amount equivalent to the amount of interest (if any) accrued on the said Deposit moneys as hereinbefore provided."

1. The evidence established that the respondent was paying more than 16% provided for in clause 7 to its mortgagee. There is no reason to question the effect of clause 7 on the amount payable by the applicants under the contract on completion. Interest on the abated purchase price less the deposit from 23 July 1982 to 18 January 1983 (not 3 May 1983) is appropriately to be added to the purchase price: cf. Harvey v. Rogers (1982) 32 SASR 247. On the other hand, consistently with this approach, the respondent must acknowledge the entitlement of the applicants to credit for interest received on the deposit. Between February 1981 and 8 July 1982, the amount of interest which had accrued on the deposit was $6312.77. If the deposit was only paid to the respondent on 18 January 1983, this would have increased by another one-third.

2. Precision is not possible and no greater accuracy is called for in the absence of aid from the parties. The contract price, as at the termination date, must be increased to $365,900.00. Although it is obvious, it may be added that the accretion to the purchase price is not awarded as interest on other damages for breach of contract: see Simonius Vischer and Co v. Holt and Thompson (1979) 2 NSWLR 322.

3. The respondent also claimed additional amounts related to maintenance levies and rates (see clause 5 of the contract). There was no dispute concerning these adjustments and no suggestion was made that there should be an offset in respect of the respondent's possession, rents or profits. I do not feel called upon to engage in absolutely precise calculations which the parties did not undertake, even if that were possible on the material. Having regard to the respondent's uncontested figures in respect of the period from 23 July 1982 to 3 May 1983, I fix a sum of $2054.00 as applicable in respect of the period to the termination of the contract.

4. The total of these figures is $367,954.00. From that amount must be deducted the deposit, $38,500.00, and the value of the unit at the termination of the contract, which I find was $245,000.00. The difference is $84,454.00.

5. The respondent claimed to debit the applicants with both "legal costs in respect of resale $1316.00" and "agents commission on resale $5875.00" but credited them with "agents commission $9875.00" but no "legal costs" in respect of the original sale. There was no discussion of these claims beyond the acceptance of the figures by the applicants. As I understand the reasoning behind the respondent's approach, it is that such amounts would have reduced its net receipts from the respective sales or perhaps the pleader had in mind clause 6 of the contract. Since the overall effect is to reduce the damages payable by the applicants by $2684.00, I consider that I should act on the basis of the respondent's concession.

6. The respondent's total damages accordingly amount to $81,770.00.

7. The respondent had another claim for interest which related to the period after the unit was resold by its mortgagee and, although expressed as a claim for damages, seemed to be based on the s.72 of the Common Law Practice Act 1867-1981 (Queensland) although this was not developed in argument. Any such claim would depend upon the application of the Queensland provision by s.79 of the Judiciary Act 1903, as to which see Lamb v. Moss (1983) 49 ALR 533 at pp 561 ff; Thomas v. Ducret (1984) 58 ALJR 210. There is authority which, although not specifically concerned with the Queensland statute, is prima facie inconsistent with such a claim: see T.N. Lucas Pty Ltd v. Centrepoint Freeholds Pty Ltd, supra, at pp 45067 ff, and cases cited. Although it is not immediately clear to me that s.72 of the Queensland Act, as applied by s.79 of the Judiciary Act, could not have a complementary operation to s.52 of the Federal Court of Australia Act, 1976, in the circumstances, in the absence of argument, I propose to disallow the claim.

8. In the result, the applicants' claim will be dismissed and there will be judgment for the respondent against the applicants for $81,770.00 damages. No sufficient reason has emerged to deny to the respondent its costs, including reserved costs, of the claim and cross-claim, to be taxed.