Deller v Quigley
[2004] VSCA 198
•4 November 2004
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 3712 of 2003
| ALAN FERRIER DELLER and LYNETTE MAREE DELLER | Appellants |
| v. | |
| SANDRA LEE QUIGLEY and | Respondents |
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JUDGES: | CHARLES and CHERNOV, JJ.A. and HANSEN, A.J.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 11 August 2004 | |
DATE OF JUDGMENT: | 4 November 2004 | |
MEDIUM NEUTRAL CITATION: | [2004] VSCA 198 | |
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CONTRACT – Sale of land – Rescission – Misrepresentation – Inducement – Reliance.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellants | Mr M.G.R. Gronow | Mr Christopher Bunnett |
| For the Respondents | Mr J.R. Dixon | Freehills |
CHARLES, J.A.:
I have had the advantage of reading the reasons for judgment prepared by Hansen, A.J.A. I agree that the appeal should be dismissed for the reasons given by his Honour.
CHERNOV, J.A. :
I also agree that the appeal should be dismissed for the reasons given by Hansen, A.J.A., which I have had the advantage of reading in draft form.
HANSEN, A.J.A.:
This is an appeal from a judgment given in the County Court on 26 March 2003. The trial was of a claim and counterclaim arising out of a contract for the sale of vacant land known as Unit 2, 45 Male Street, Brighton. The vendors were Alan Ferrier Deller and Lynette Maree Deller. They were the defendants to the proceeding and are the appellants in the appeal. The initial purchaser under the contract was the successful bidder at an auction of the property conducted on 9 December 2000, Samuel Peter Quigley. Subsequently, by nomination, Sandra Lee Quigley became also a purchaser under the contract. The Quigleys, who were engaged at the time, subsequently married but Mr Quigley died after the commencement of the County Court proceeding which they instituted as plaintiffs. Mrs Quigley and James Macklin Pfeiffer, the executors and trustees of the estate of Mr Quigley, were added as plaintiffs in their capacity as trustees of the estate; they and Mrs Quigley personally are the respondents to the appeal. I shall refer to the vendors as “the appellants”, and to the Quigleys as “the purchasers” or “the Quigleys”.
The appellants appointed an estate agent, J. R. Buxton Pty Ltd (“Buxton”), as agent for the sale and to conduct the auction. A real estate agent employed by
Buxton, Bertie Alexander Stewart, dealt with the property. In the course of so acting he spoke to the Quigleys. He provided them with a brochure prepared by Buxton which contained information concerning the property. He also provided them with an information sheet, called at the trial a cheat sheet, prepared by Mr Deller for the purpose of the sale.[1] Prior to the auction the respondents saw, but were not given a copy of, a document called a section 173 Agreement relating to the property. The auction was conducted on 9 December 2000 by Leigh Hallamore of Buxton.
[1]The information sheet is Exhibit C.
The contract of sale, dated 9 December 2000, provided for a purchase price of $357,000.00 payable as to $35,700.00 by way of deposit and the balance at the expiration of 90 days. The contract contained the usual special condition by which the purchaser acknowledged that prior to signing the contract he had received from the vendor a statement in writing with the particulars required by s.32 of the Sale of Land Act 1962. The s.32 statement was signed by the parties and is included in the contract. In addition to the usual certificates the s.32 statement included a copy of the s.173 Agreement, to which agreement there was an attached planning permit and plans for the construction of a dwelling on the property.
The appellants and the Quigleys each purported to rescind the contract. The Quigleys sued for a declaration that they had validly rescinded the contract, and an order for the return of the deposit and damages. There were several bases for the claim, namely that the Quigleys had been induced to enter into the contract by misrepresentations as to what could be constructed on the land, breach of s.32 of the Sale of Land Act in the failure to provide information required by that section, negligent misrepresentations, and misleading and deceptive conduct in contravention of the Fair Trading Act 1999. The defence and counterclaim admitted entry into the contract but denied any misrepresentation and alleged, among other things, that if any representation was made it did not induce entry into the contract and was not relied on, that by authorising the release of the deposit on 19 January 2001 the Quigleys had accepted title to the property, and that the respondents had failed to complete the sale notwithstanding a notice of rescission in consequence of which the contract was rescinded by the appellants on 30 March 2001. As a result the deposit was forfeited to the appellants who counterclaimed for $21,523.02 as damages suffered as a result of the respondents’ failure to settle the contract.
The judge concluded that the Quigleys entered into the contract on the inducement of and relying on the following misrepresentations, setting them out as they appear in the statement of claim:
“(aa)the area depicted on the brochure on the first floor above the garage is a habitable room nominated on the brochure as either a study or a fifth bedroom;
(ab)the area depicted on the brochure on the first floor above the garage constitutes a habitable room forming part of the footprint or building envelope approved for building under the planning permit obtained by the vendor;
(ac)there is a permit in place for the immediate construction of the building as depicted in the brochure;
(ad) …
(a)the building represented in the drawings forming part of the Section 32 Statement (drawing no. 99168A) (the “drawings”) could be constructed pursuant to the document forming part of the Section 32 Statement and described as Permit No. 96/2113 (the “Subdivision Permit”);
(b)the building represented in the drawings could be constructed without the need for any further permits from Bayside City Council;
(c)the Subdivision Permit allowed the purchasers to construct either a bedroom or a study (“room”) above the garage, as depicted both in the drawings and in the advertising brochure provided to the purchasers by the vendors prior to the Contract of Sale (“the brochure”);
(d)the property was being sold with a permit to construct the building represented in the said drawings;
(e)the property was being sold with a planning permit to construct the building represented in the said drawings;
(f)the property was being sold with a permit to construct the building represented in the brochure; …
(g) …“
I have omitted the two alleged misrepresentations that were not established. On this finding the judge decided that the Quigleys had validly rescinded the contract. The judgment concluded with a declaration to that effect, an order that the vendors pay the respondents $47,609.00 (made up of the deposit, past expenses and interest), and an order that the counterclaim be dismissed .[2]
[2]The General Form of Order sealed by the Court does not include the declaration or the order that the counterclaim be dismissed. These omissions were not mentioned by counsel who conducted the appeal on the basis of the judge’s determination of the case stated in his judgment.
The judge based his decision on the misrepresentation case. He dealt with the other bases of claim as follows. The Fair Trading Act claim failed because in selling the land the appellants were not engaged in trade or commerce. He rejected the appellants’ plea that the Quigleys had accepted title on the basis that they had not become entitled to possession or to receipt of the rents and profit.[3] It was unnecessary to, and he did not, consider the respondents’ claims based upon negligent misrepresentation and s.32 of the Sale of Land Act. Nor did he deal with other points raised by the appellants which he said largely related to compliance with s.32.
[3]This referred to the terms of special condition 9 in the contract.
Grounds of appeal
In summary, the grounds on which the appellants rely are:
(a)They did not misrepresent the property or a planning issue in relation to it. The appellants merely passed on that which had been provided by the Bayside City Council. Hence, any misrepresentation in that information was a misrepresentation of the Council.
(b)In deciding to purchase the property the Quigleys did not rely on any representation of the appellants concerning the property or a planning issue in relation to it. They inquired of the Council as to the property and relied on what they were told.
(c)If the Quigleys were otherwise entitled to rescind, the requirements of s.32(7) of the Sale of Land Act were satisfied and rescission was thus precluded.
(d)The judge wrongly refused, and there should now be granted, leave to amend the counterclaim to increase the amount claimed to $136,429.00.
The appellants seek an order that the respondents’ claim be dismissed, judgment on the counterclaim for $136,429.00 or $21,523.02 plus interest, and costs.
Section 32(7) Sale of Land Act
A short time into the appeal counsel for the appellants desisted from pressing the ground based on s.32(7). He was correct to do so. The judgment that the Quigleys were entitled to rescind was not based on the right to rescind in s.32(5) of the Act, which arises if the s.32 statement contains false information or omits all required information. For this reason the defence to a rescission on that basis contained in sub-s.(7) was irrelevant. Hence, sub-s.(7), and the factual issues it raises, had not been considered by the judge. Further, the respondents had not given notice of contention to rely on the right of rescission in s.32(5).
Amendment
The ground of appeal relating to amendment to the counterclaim can be dealt with immediately.
The defence and counterclaim that was before the judge at trial had been filed on 5 July 2001, well before the trial which was held between 27 November and 9 December 2002. On the fourth day of the trial counsel for the vendors sought leave to amend the claim for damages in the counterclaim. The judge refused the application in the exercise of his discretion, describing it as “highly inappropriate”. In his reasons for refusing the application, given orally at the time, and which are included in the transcript, he referred to the relevant circumstances of the case. He said that the amendment increased the counterclaim “by a very substantial amount”. The amendment sought is not included in the appeal book and was not produced to the Court on the hearing of the appeal. Notwithstanding those omissions counsel for the appellants pressed the ground in the notice of appeal that the judge had erred in refusing the application to amend the counterclaim by increasing the quantum to $136,429, and sought leave for the amendment from this Court.
The application to amend can only be described as bold. The amendment placed before the judge is not produced on appeal, yet it is said both that the judge erred in his discretion in refusing leave to amend and that this Court should grant leave to amend. In the absence of the amendment which the judge considered it is not possible to conclude that he erred in refusing the application. The absence precludes informed consideration of the matter. That is without referring to any discretionary considerations. In fact, however, the judge’s reasons show that he considered the amendment in light of the circumstances as they then were in the trial, and no particular criticism is made of anything he said save that, on the basis of Queensland v. J.L. Holdings Pty Ltd[4], if the amendment was arguable it should have been allowed subject to an appropriate costs order. In short, the Court can not give leave in respect of an amendment that is not placed before the Court, that neither counsel have a copy of and when neither counsel could provide the Court with an informed submission upon the (missing) draft. Indeed, counsel for the respondents recalled that when the matter was before the judge there were issues about the amounts claimed, or some of them, but his recollection was imprecise.
[4](1997) 189 C.L.R. 146.
For these reasons the appeal against the judge’s refusal to allow the amendment, and the application to this Court to grant leave to amend, must fail.
Facts
For reasons of personal financial stress the appellants decided to capitalise on their property at Male Street, a block of some 648 square metres upon which was erected their family home. They sought to have the land approved for dual occupancy but the application was refused. They then sought a permit for a two lot subdivision, each lot to be of 324 square metres, but the Council refused the application. An appeal to the Administrative Appeals Tribunal was heard in January 1997 and allowed. The determination of the Tribunal, dated 5 February 1997, stated that a permit is granted for a two lot subdivision generally in accordance with the plan submitted and subject to certain conditions, including:
“1.Before the Plan of Sub-Division can be certified, amended plans to the satisfaction of the Responsible Authority must be submitted to and approved by the Responsible Authority. When approved, the plans will be endorsed and will form part of the permit. The plans must be drawn to scale with dimensions and three copies must be provided. The plans must be generally in accordance with the plans submitted with the application but modified by deletion of the building envelope shown on each lot.
6.The Plan of Sub-Division submitted for certification under the Sub-Division Act 1988 must be referred to the relevant authority in accordance with S.8 of that Act.
7.Prior to the certification of the Plan of Sub-Division, the owner must enter into an Agreement under S.173 of the Planning and Environment Act 1987, which provides that any development of a lot must be to the satisfaction of the Responsible Authority and in considering whether to consent to a proposed development of the land, the Responsible Authority must have regard to the provisions of any relevant design guide for medium-density housing.”
The responsible authority, being the Bayside City Council, duly issued permit no. 96/2113 subject to the conditions in the Tribunal determination. The Council sent the appellants a copy of the permit under cover of a letter dated 13 February 1997 advising that:
“I wish to draw your attention to Conditions 1 and 7 of the planning permit and request that you submit the required information as soon as possible.
It is important to note that the use and development must be carried out in accordance with this permit. Failure to do so would breach the Planning Scheme provisions and this permit. Any changes to your plans or permit must be approved by Council. Council looks forward to your co-operation in this matter.”
The appellants submitted plans for a two storey dwelling on lot 2 of the subdivision, the lot which the Quigleys purchased. The plans were considered by the Council in the period April and May 1999. Minutes of a meeting of the Planning and Development Committee of the Council held on 26 April 1999 record that the Committee considered a report from its planning officers who recommended that the dwelling proposed for lot 2 be endorsed under the requirements of Condition 7 of the planning permit. The Council, having later accepted the recommendation, wrote to the appellants on 11 May 1999 referring to the plans submitted for endorsement under the permit and stating that:
“The plans were considered by Council at its meeting of 3rd May 1999 and found to be satisfactory. Please find enclosed your copy of the plans, referenced as 99-168 issue A, dated Feb 99, sheets 2, 3 & 4 and the Landscape Plan marked ‘A’.”
On 6 August 1999 the appellants entered into an agreement with the Council pursuant to s.173 of the Planning and Environment Act 1987.[5] This is the s.173 Agreement that was incorporated in the s.32 statement. The s.173 Agreement stated that the Agreement was entered into to give effect to the requirements of the planning permit and to achieve and advance the objectives of planning in Victoria and of the planning scheme relating to the subject land. Clause 3 set out the following as obligations of “the owner” (the appellants):
[5]Section 173(1) provides that a Responsible Authority may enter into an agreement with an owner of land in the area covered by a planning scheme for which it is a Responsible Authority. Section 174, which deals with the form and contents of an agreement, provides, in sub-s.(2), that an agreement may provide for any one or more of “(a) the prohibition, restriction or regulation of the use or development of the land; (b) the conditions subject to which the land may be used or developed for specified purposes; (c) any matter intended to achieve or advance – (i) the objectives of planning in Victoria; or (ii) the objectives of the planning scheme …”.
“The owner covenants and agrees that:
3.1 Compliance with Planning Permit
Notwithstanding any rights conferred by the Planning Scheme, except with the consent of Council, any development of the lot must be to the satisfaction of the Responsible Authority and in considering whether to consent to a proposed development of the land, the Responsible Authority must have regard to the provisions of any relevant Design Guide for Medium Density Housing;
3.2 Development must be to approval of Council
If the Planning Permit expires after this Agreement commences, the development of the subject land must be to the satisfaction of Council;
3.3 Things Council can take into account
In deciding whether to give its consent under this Agreement, Council may consider any relevant design guide for medium density housing; and
3.4 No changes without further Council consent
After the completion of the development of a lot, no buildings or any works comprising the development may be altered or extended without the further written consent of Council.”
It is not necessary to refer to other provisions of the Agreement. The planning permit was attached to the Agreement. A copy of the endorsed plan was also attached to the Agreement. In fact there were seven attached plans or drawings, as follows:
(a)The first, marked "B", is an overview of the entire property, showing the outline of a house on each lot in the subdivision and on adjacent properties.
(b)Then follow sheets 2, 3 and 4, ref 99-168 issue A, dated Feb 99. Sheet 2 is an overview of both lots showing the outline of the house on each lot. In the case of lot 2, which was to be sold as a vacant lot, the outline was of the house depicted in the plans. Sheet 3 is a floor plan of the ground and first floors of the proposed house on lot 2. The plan depicts the following: on the ground floor - master bedroom with en suite and walk in robe, living, family, kitchen, laundry and a double garage; on the first floor - 3 bedrooms, bathroom and toilet, an area designated as "Living Computer", and an area above the garage designated as "Optional Study Bed 5 17m²". The following table is endorsed on the plan:
“AREA: M2 M2
UPPER FLOOR: 98.0 M2
LOWER FLOOR: 104.0 M2
GARAGE: 34.5 M2
VERANDAH: 13.5 M2
BALCONY: 13.5 M2
BED FIVE: 17.0 M2”
Sheet 4 is four elevations (north, south, east and west) through the house depicted on lot 2.
(c)Then, there are three drawings which depict the shadow cast by the house on lot 2.
The final attachments to the Agreement were the letters from the Council to the appellants dated 13 February 1997 and 11 May 1999.
Pursuant to the Agreement and s.181 of the Planning and Environment Act the Council applied to the Registrar of Titles, by application dated 10 August 1999, to register the Agreement on title.
On 3 February 2000 the appellants were registered as proprietors of lot 2 on plan of subdivision 4033386Q being the land referred to in Certificate of Title Volume 10495 Folio 578. The s.173 Agreement was noted on the title. That is the land which the Quigley's purchased pursuant to the subject contract dated 9 December 2000.
The appellants were then in a position to sell lot 2. In November 2000 they engaged Buxton as agent for the sale and to conduct an auction on 9 December 2000. As mentioned above, Mr Stewart of Buxton handled the sale.
The judge noted that Buxton's advertising for the auction included the following:
“Bring your dream to life in this brilliant century.
Everything is ready to go – either take advantage of the current permit for a two storey residence with existing plans or design your own creation.”
In another advertisement, published at least on 10 November 2000, it was stated:
“Realise your dreams of a luxury home in a brilliant central location. Take advantage of the current permit for a two storey residence with existing plans or design your own dream: Ideally positioned with northerly aspect, imagine your luxury home with cul de sac seclusion yet in walking distance to Church Street's finest shopping, restaurants and amenities.”
I note that this advertisement, and in the Buxton brochure referred to below, the address of the property is stated as 12 Bleazby Avenue, Brighton. The explanation is that the street frontage of lot 2 was to Bleazby Avenue. As the address of the appellant's property was Male Street, the newly created lot 2 was lot 2 on the plan of subdivision and in the contract of sale was described as Unit 2, 45 Male Street, Brighton. Nothing turns on the statement of the address.
Mr Deller prepared for, and provided to, Buxton the information sheet referred to at [4]. It described the property as “Vacant Land with a Two Storey Permit”, gave formal details of the land, referred to the “Planning and Environment Act s. 173 Agreement” and to registration of the subdivision, set out Condition 3.1 of the Planning Permit, and stated:
“Included in the S.173 Agreement is a plan for a two storey home approved by Bayside Planning Department as appropriate for that site.
The plan can be modified within the general building 'envelope' having regard to the criteria of any design guide used by the council.
A single storey home would not be restricted.
Pre Approved by Bayside for a Two Storey home…”
It so happened that the Quigleys, who lived in Brighton East, had been looking for a property without a garden for two or three years. The judge described the position thus:
“33.Mr and Mrs Quigley were living in Brighton at the time in question. Because of their respective jobs, they had little time for maintenance of their then residence and had been looking for a more suitable property, preferably within a 500 metre radius of the Brighton Railway Station and Church Street, Brighton. Because they were aware of what was said to be the difficulty in getting planning approval for new houses through the Council, they were looking for an established home. They saw an advertisement for the subject lot, and were attracted to the property because it came within their geographical limit, and it was such that they could build “without having to go down the planning path”, as Mrs Quigley said.”
In her evidence Mrs Quigley said that on seeing the advertisement they went and looked at the block. It was vacant land. A billboard was erected that had a footprint showing the floor plan of a two storey house that had five bedrooms, a master downstairs and four upstairs. The plan did not include dimensions.
The Quigleys attended at the next open for inspection occasion where they met Mr Stewart. He gave them a coloured brochure,[6] which included the floor plan that appeared on the billboard. As with the billboard, the floor plan did not include dimensions of the internal spaces. After asking some questions Mr Stewart gave them a “cheat sheet” containing some further information concerning the property. This is the information sheet referred to at [4] and [26] above. The Quigleys read the document. The information that was important to them was that a planning permit “was attached to the block to build that house”.
[6]Exhibit B.
However the Quigleys did not need a lot of bedrooms as distinct from preferring larger rooms. Hence, Mrs Quigley said, they were not actually “enticed” by the plan – they wanted a space so that they could build their own configuration inside. They discussed that requirement with Mr Stewart, asking him how the plan “could be modified, how rigid was it, what was involved to do that”. He explained that it was his understanding that the purchaser could modify the plans to suit their requirements as long as the building envelope was not exceeded.
The Quigleys attended two or three inspections, on which occasions they spoke to Mr Stewart. In addition to the brochure and information sheet, Mr Stewart had a copy of the planning permit and s.173 Agreement. The Quigleys, the judge recorded:
“35.… examined the documents that Stewart had, several times, and spoke with him on a number of occasions prior to the auction. They asked about the meaning of a S.173 Agreement and were told by Stewart that, according to Mrs Quigley, it was not a planning permit ‘per se’, it attracts the same rights and negated the need for the planning process. They were given to understand that the Agreement gave the purchasers the same value as a planning permit. Mrs Quigley said that Stewart told them that it gave them a right to build within the space that had been approved.”
Mrs Quigley added that Mr Stewart advised that a building permit would be required.
The Quigleys were very interested in the property because of its location and asked the Council for information which, she was told, could only be given in general terms without the approval of the property owner. That involved filling out a form and the process could take three months. They did not take that course. What they did was described by the judge as follows:
“36.Mr Quigley went to the Council with a drawing of what they would like to do, within the ‘footprint’ of that which had been shown on advertising material as being the floor plan of the approved dwelling. Mrs Quigley said that she was told by her husband that the man at the Council had found the file relating to the property, and the S.173 Agreement, and was told again that the purchaser had the same rights as if there were a planning permit. The Council officer had examined the footprint on the advertising material and Mr Quigley’s sketch and had said that:
‘As long as the building envelope was not exceeded and as long as the building conformed to the Good Design Guide, you could build whatever you like’.“
I interpolate that by the time of the trial Mr Quigley’s sketch had been lost.
Mrs Quigley was not involved in any further discussions or negotiations with the Council prior to the auction. However, Mr Quigley pursued enquiries, as the judge recorded:
“37.Mr Quigley’s enquires did not stop there. He contacted a Ms Ganley of the Council’s Planning Department and apparently had a number of conversations with her. She sent him a copy of the Good Design Guide so that the Quigleys could see what might be required for an alternative to the building in the footprint.
38.Further conversations were had with Stewart, who it was said reiterated that it was his understanding that they could build what they liked, but that purchasers should make their own enquiries.”
Her evidence continued:
“I had personally asked him once about the optional study and asked him why was it called optional, was it just because it is – the option is you can call it what you like or is it the option of the purchaser, or what is the option. He said his understanding was that it was completely optional to the purchasers and it is irrelevant what you call it.
You had examined the drawing in the brochure? - - - Yes.
Had you made any particular observations about the nature of the optional fifth bedroom/study and how it related to the rest of the upper floor layout? - - - Yes, the main reason that we found the title confusing, as in optional, was because there was such a large piece of room space taken out of the bedroom that sits on top of it to take up corridor space, so it certainly seemed to be an integral part of the plan otherwise you would put all that space into bedroom 4. So there didn’t seem to be any doubt that the option was relative to the name – otherwise you wouldn’t put a corridor through a bedroom.
Did you have any information about what the total area of the building envelope that was available to you was? - - - Yes, on going through the s.32 statement at Open inspections Sam wrote down some of the dimensions and bits and pieces so that we could go away and do our rough drawings because we didn’t physically have a copy of the s.32 to take, and I don’t know the number off the top of my head but the observation that we made was that it gave us the same floor space as where we are now pretty well, which is about 22 squares.”
Then came the auction on 9 December 2000. The Quigleys arrived early and spoke to Mr Stewart again discussing configuration and s.173. Mrs Quigley said in evidence that she understood the word “envelope”, which Mr Stewart used in discussions, to be the footprint on the floor plan.
The auction commenced, conducted by Mr Hallamore. In his introductory remarks he said, with the brochure in his hand and pointing to the billboard, “You can build this tomorrow subject to building approval of course, and we all know how hard it is to get planning through Brighton these days”, and made a joke of it.
Mr Quigley was the successful bidder. He signed the contract of sale and paid the deposit. Settlement under the contract was due on 9 March 2001.
Mrs Quigley gave the following evidence as to what was important in bidding:
“In making a bid at the auction, can you explain to His Honour what were the important features that you relied upon and in deciding to seek to acquire the property?
… Our understanding was that we didn’t have to go through any planning approval process. We were buying a piece of land that had a planning right, if you want to call it that, to construct a house of the entire area denoted by those plans and that all we would have to do is basically provide working drawings to council to follow up and physically stamp because the internal layout was slightly modified, and then seek building approval by a licensed engineer or the right persons.
Had you been required to undertake the usual process with council of obtaining a planning permit, that is making an application and advertising and dealing with objections and getting formal council permission and so on and so forth, had you been required to undertake that would you have made a bid for this property?
- - - No.
Had you been required to build strictly the internal layout that is represented on that floor plan, would you have made a bid for this property?
- - - No.”
The judge recorded further events as follows:
“44.The Quigleys set about interviewing architects and builders to pursue the building of their house. They had a meeting with Ms Ganley very early on to see if some sort of modifications could be achieved to the actual plans. Then they had an architect draw some plans. There were apparently a number of meetings between the Quigleys and the Planning Department of the Council over this time. Ultimately there was a meeting on the 26th February 2001, at which were present the Quigleys, Mr Pfeiffer and Ms Ganley, together with a building representative of the Quigleys. The Quigleys had with them plans drawn by their architect which fitted the envelope or footprint of the original permit plans, but with modifications within the criteria of the Good Design Guide which Ganley had sent them. The evidence given about that meeting by Mrs Quigley and Mr Pfeiffer have points of conflict but the end result seems not to be in doubt. Mr Pfeiffer made notes of the meeting immediately afterwards, which perhaps gives a clearer guide to what was going on. In this regard, the evidence of Ms Ganley is unhelpful – she could remember little of her dealings with the Quigleys, which is perhaps not surprising.
45.Mr Pfeiffer’s notes, so far as is relevant, are to the following effect:
‘Discussed changes which we wish to make to plans. Most were okay and would not present a problem.
Those which may be an issue are as follows:
(3)Unlikely to get a building permit for study above garage. Inadequate head room.
?Doubt about what Council has approved – no elevations. Suggest may not be approved.
She suggested we submit new plans and elevations showing shadow lines etc. Suggested a ‘consultative approach’.
Could take up to five to six weeks’.
46.So, as at the date of the 26th February 2001, the Quigleys were confronted with the fact that the Council’s representative was saying that the fifth bedroom or optional study could not be built as indicated on the plans annexed to the S.173 Agreement or as advertised. That is, that it could not be built without further plans requiring Council approval and involving the planning process of advertising such alterations and dealing with any objections that might be forthcoming. As the notes indicate, this process would, so Ganley is alleged to have said, take five to six weeks after Council received such plans.
47.It is noteworthy that Mr Pfeiffer’s notes make reference to a ‘building permit’ with regard to the fifth bedroom. I am unsure as to whether that really should be a planning permit because of the further requirement, as Ganley saw it, for more plans showing elevations and shadow lines etc.
48.Whatever the term was used, it seems clear that there was to be no further building of a fifth bedroom or study without further approval by Council at that stage.
49.Mr Pfeiffer, on the same day as the above meeting, contacted the Dellers’ conveyancing agent with the problems as raised at that meeting, and suggested a co-operative approach to the situation and requesting an extension of time for completion of the Contract in the meantime. It is fair to say that the Dellers were implacable in their desire to settle on the appropriate date, that is the 9th March 2001, and maintained a stance that the building depicted in the plans could be built, and indeed that the Quigley’s requests were merely a ruse to get out of the contract itself or to obtain a reduction in the price.
50.Following upon Pfeiffer’s telephone conversation with Dellers’ conveyancing agents, there was protracted correspondence and conversations with legal representatives of the Quigleys, the Dellers and the Council. The Dellers declined to enter into the dispute or problem as to whether the fifth bedroom could be built in accordance with the plans. Then – belatedly I would judge, Council’s representatives raised the issue as to whether there was indeed any form of planning approval in existence at all. This was because the Council had sought an Amendment to the Bayside Planning Scheme, and Amendment 3, which was operative from the 15th March 2000, came into effect. Its effect was to require a permit for the construction or extension of a dwelling on a lot whose size was between 300 and 500 square metres, unless a permit had already been granted. The lot here in question was 324 square metres, and by mid-March 2001, the Council’s representatives subsequently maintained that the ‘planning permit’ under the S.173 Agreement did not fall within such an exception.”
The consequence of that view of the Council, if correct, would be, as Mrs Quigley said, that “a completely new planning process would have to be undertaken, right back to the point of advertising on the block”, and with the change of minimum lot size to 400m2 “there was no guarantee that any application would ever be approved, and if it was, it was most likely it would be [after] a couple of rejections from Council and a VCAT decision to ultimately make such a thing occur. So at the point in time when the decision had to be made, there was no evidence to suggest we were buying anything but a block of land that may never be able to be built on”.
In the circumstances the Quigleys instructed their solicitors to deliver a rescission notice and demand the return of the deposit. As mentioned above, the appellants also served a notice of rescission. The sequence was that the appellants served their notice on 15 March 2001 requiring settlement in 14 days, and the Quigleys served their notice on 28 March 2001.
It is evident from his judgment that the judge generally accepted the evidence of Mrs Quigley. While her evidence referred to above was given in evidence in chief I would, for my part, and having read all of the evidence of Mrs Quigley and the other witnesses, see no reason to differ from that assessment in any respect. Indeed, no such attack was made upon the judgment or otherwise upon Mrs Quigley’s evidence. The same is true of the judge’s preference for the evidence of Mr Du Chateau, the building surveyor called by the respondents, over that of Mr Lorenzini, the like expert called by the appellants. Indeed, the appellants’ submissions do not suggest that any particular finding of fact by the judge was not open to him to have made. Rather, the submission is that the conclusion arrived at by the judge was not open on the evidence.
Appreciating that, it may yet be helpful to note some of Mrs Quigley’s evidence in cross-examination. I mention only a few matters. She agreed that it was not their intention to build the house depicted in the plans in the s.32 statement. They were going to build something different on the same footprint, and they had sought to produce plans that were acceptable to Council within the planning permit. She was asked as to a set of plans produced to the Council on 15 March 2001 and said that “other sets” were presented prior to that. The evidence is that the plans underwent changes in an attempt to accommodate the requirements of Council officers. Mrs Quigley said that by the time they hit 15 March, “we thought that they [the plans] represented something that conformed with every objection that the Council had proposed”, adding that they believed they could build “that footprint as at 15 March 2001 as long as it wasn’t larger than the original footprint without having to go through planning”. She then gave the following evidence:
“Now, in deciding not to complete the contract was the main sticking point for you the room over the garage? - - - In making the decision not to complete the contract, the main decision was that every available bit of information we had told us we may not be able to build anything.
. . .
Leaving aside what other things were happening, you had decided that you would rather rescind the contract than build the dwelling that was designed and approved under the 173 agreement? - - - That’s not correct. If we understood that we could have built that even though we would not have liked to have lived in it, we would have built it and sold it, rather than quite frankly be sitting here.
Did you see a building permit for the dwelling? - - - For this dwelling?
Yes? - - - No, because it hadn’t had ratification from planning.”
Later in the cross-examination Mrs Quigley was asked if she had received advice from her architect or builder as to lowering the garage so as to create a room in the roof space above the garage, and she said they had been advised it was not possible to do that, there was “some issue with the flood plains”. She further said that the issue of building a room above the garage space was discussed with Ms Ganley who advised that “this room could not be built without planning approval”. Ms Ganley said that in her opinion that room “was not included in the permit”.
Then, in re-examination Mrs Quigley’s evidence concluded with the following:
“Was there during that period in March a change from the issue of whether or not the area that has been described as the optional fifth study bedroom could be utilised for you to design your own creation to the question of whether or not anything could be constructed at all? - - - That’s correct.
Was it then the point at which the question arose as to whether anything could be constructed at all, that you sought specific advice from your lawyers about whether or not to proceed with this sale? - - - Yes.”
To complete the evidence it is necessary to refer to the following matters, the first concerning the Council’s point that the Amendment 3 to the Bayside Planning Scheme was applicable, and the second concerning the evidence of the building surveyor, Mr Du Chateau.
Not only did the first point concerning the operation of the Amendment add to the mire of difficulty for the Quigleys but following termination of the contract it left the appellants with an ongoing difficulty by reason of the uncertainty placed on the property. As a result, later in 2001 the appellants commenced an application at VCAT, in which the Council was the respondent, for a declaration to clarify whether the permit was affected by the Amendment. On 7 March 2002 Deputy President Horsfall declared that the endorsement of plans by the Responsible Authority for the development of a dwelling on the subject land pursuant to the agreement made under s.173 pursuant to Condition 7 of permit 96/2113 constituted a right or privilege to construct that dwelling, and that right or privilege remained in force notwithstanding the commencement of Amendment C3 to the Bayside Planning Scheme.
The Council did not seek to appeal from this decision. Hence, the point raised by the Council and its lawyers, was found to be of no substance.
I have referred to this matter because the judge did and the appellants’ counsel referred to it in his submissions as demonstrating that the Council’s alteration of its position on the issue was unlawful and wrong. However, the reasoning of the judge was not based on any supposed effect of the Amendment. That is, the case below was not, and the judge did not conclude that, any of the pleaded representations were false because, by reason of the Amendment, there was no planning approval for a dwelling on the site. Rather, the conclusion was that the representations were false in that a useable bedroom of 17m2 could not be achieved in the space above the garage on the permit plan. For this reason the subsequent decision of VCAT does not affect the resolution of the case.
The second matter concerns the evidence of Mr Du Chateau. This evidence, and that given by Mr Lorenzini, particularly concerned the so-called “optional study/bedroom 5” shown on the plan above the garage. To appreciate the significance of the evidence it is first necessary to note in more detail what was depicted in the brochure and the plans.
The brochure depicted the internal lay-out of the ground floor and first floor of the house but did not state any dimensions or provide a scale. The ground floor plan depicted a “Double Garage” attached to one side of the house. The first floor plan depicted an area above the garage described as “Optional Study/Bedroom 5” the entry to which was by a door entered from a passage between two bedrooms. It is apparent on visual examination that the perimeter walls of the first floor room are within (by an unstated distance) the perimeter walls of the garage. That is, the upper room is of a lesser area than the garage. No other detail is shown. The judge noted the following evidence of Mrs Quigley:
“52.… that she enquired of Stewart as to what was meant by ‘optional’. She said he in effect told her that it was completely optional to the purchaser and it was irrelevant what you call it. Because of the depiction of the corridor into that bedroom as portrayed, she took it to be integral part of the plan.”
It is to be noted that at the bottom of the page in the brochure which showed the floor plans it was stated that while care had been taken in compiling the information, “as a purchaser you should satisfy yourself about all aspects of the property before entering a contract of sale”.
The plans attached to the s.173 Agreement include much greater detail. The particular plan is sheet 3. It shows the first floor superimposed on and in relation to the perimeter walls of the garage. There are lines on the first floor drawing which mark the roof lines of the garage. The room under the roof is described as “Optional Study Bed 5 17m2” and the perimeter walls of that room are marked by a line. The plan is endorsed with the areas of the upper floor, lower floor, garage, verandah, balcony and bed 5; I referred to this and set out the areas (by square metre) at [20]. It is to be noted that the room above the garage is the only room for which an area is stated. The garage has a measurement of 34.5m2 but otherwise no individual areas are stated.
The next point to note is that the elevations in the plans do not depict any windows, skylights or other features which would suggest a habitable room under the roof of the garage.
The judge noted that the question why the optional study/bedroom 5 was singled out in the plans for specific mention of its area, was never answered by the appellants.
Further, as to the intended or possible use of the area above the garage, the following further points were noted by the judge. First, in the description of the proposed development in the report of the Council officers that contained the recommendation to endorse the dwelling proposed under the requirements of Condition 7 of the planning permit (referred to at [18]), it is stated that the dwelling has a floor area of 202m2. That is the total of all the areas stated on the plan excluding the area of 17m2 for the optional study/bedroom 5. In other words, it is clear enough that at that time the latter area or room was not counted in the dwelling area. That would be consistent with the area being regarded as an area for storage as distinct from human habitation.
Secondly, Mrs Quigley produced a copy of sheet 3 of the plans which she found in the Council file. It became Exhibit P. It was sheet 3 but with two alterations. In place of the description –
“Optional
Study
Bed 5 17 m2”
appeared -
“Storage
m2”
The second change appeared in the list of areas. There, for “Bed 5” appeared “Storage”.
The judge noted that it seemed the original of Exhibit P had disappeared. As to that I note that the Council file was subpoenaed, and Ms Ganley, who no longer worked for the Council, gave evidence. However, in evidence Mr Deller acknowledged that it was he who had altered the plan. He described the change as some sort of “preliminary consideration” before the final plans were submitted to the Council. He denied that the altered floor plan had been submitted. The judge considered that:
“57.This assertion does not fit comfortably with a telephone conversation that Mr Quigley had with Mr Deller on the 7th March 2001. Mr Quigley’s notes of that conversation became Exhibit N. Mr Deller, in cross-examination, did not deny the general accuracy of the note of that conversation. That note reads:
‘Deller has spoken to town planner. Tells him planning permit can be obtained and building permit can be obtained as long as built within roofline.
He won’t give extension of time.
He done what he believes is right thing – he concedes can build room under roofline but that what S.32 shows and said ‘maybe should have said storage or something’.
He said he has commitments and won’t delay settlement – I said without time and his help, we won’t settle, so if he relying on settlement to fulfil his obligations then we both have problems – he reiterated – ‘ring my lawyer’ – he can’t see that he can help any further and won’t delay settlement – says we have to resolve issue with Bayside’.
58.I have to say that I regard this aspect of the evidence and its explanation as highly suspicious and unsatisfactory. Having heard evidence now from the building consultants who were called on either side, as to the implications of seeking to build a ‘bedroom’ above the garage and within the roofline depicted on the plans, the designation of ‘storage’ would seem to have been more appropriate.”
Having noted those matters the judge turned to the evidence of the building surveyors concerning the “buildability” of a fifth bedroom or study above the garage, as depicted in the brochure and the plan. The judge said and found as follows:
“60.. . . Mr Lorenzini, who agreed that his brief was to find an acceptable means of building a bedroom within that 17 square metre floor area, gave me the impression of trying, unsuccessfully, to squeeze a quart into a pint pot. Insofar as it matters, where his evidence conflicted with that [of] Mr Du Chateau, I would prefer the evidence of the latter. But even Mr Lorenzini was driven in the end I thought to agree that a bedroom with a meaningful ceiling height could not be achieved in the parameters of the critical dimensions of the garage wall height and the height of the ridge of the garage roof.
61.The reference to acceptable ceiling heights of 1,500 and 1,700 millimetres in the context of this description of an optional study/bedroom, I regard as unacceptable. Perhaps the issue may never have arisen if the term ‘attic’ had been used in conjunction with the description on the plan.
62.Much play was sought to be made of the difference between plans for a planning permit and plans required for building approval. The former was said to be, of necessity, not as detailed as those required for the latter. Be that as it may, I am satisfied that a usable bedroom of an approximate floor area of 17 square metres, that is with a meaningful headroom height, could not be achieved upon the permit plans as they stood.”
The judge’s reasons
I now turn to the reasoning by which the judge concluded in favour of the respondents. I refer only to the reasoning so far as it relates to the case which he upheld, namely the case based on misrepresentations.
His Honour commenced by observing that there was ample evidence that the representations set out at [7] above were made, assuming that the permit referred to is the planning permit. Mr Stewart represented that the pre-approved plan “can be modified within the general building ‘envelope’, having regard to the criteria of any design guide used by the Council”. This assertion emanated from Exhibit C (the information sheet) which came from Mr Deller. That is, Mr Deller provided the assertion quoted. That representation was of particular importance to the Quigleys. While they did not intend to build a house with the internal layout depicted on the plans the subject of the permit, the key to their decision to purchase was that a modification in accordance with design criteria used by the Council could be had within the building envelope and without further planning approval. Then, on enquiry to the Council before the auction the Quigleys were told that that was indeed the case.
Then, subsequent to the auction when the Quigleys were seeking to settle on a plan, it was discovered, by 26 February 2001, that there were problems with utilising the space designated as the optional study/bedroom. It was a misnomer to so describe the proposed room over the garage. The house had been advertised as one that could be built with up to five bedrooms whereas it was clear from the evidence of the building experts that to achieve five bedrooms and utilise the space above the garage for anything other than an attic with adequate headroom, the plans would need to be adjusted as Ms Ganley indicated and that would require further planning approval. I add to what his Honour there said, that the construction of a habitable room was precluded by the design of the roof which, as Ms Ganley said, could not be altered without undertaking a further planning process. The alteration would necessarily have lifted the roof and presumably added a window, as to which matters the neighbours may have objected, having regard alone to the history of objections to the appellants’ planning applications.
Accordingly, his Honour was satisfied that the representations and the implied representations concerning the habitability of the fifth bedroom had been shown to be false in a material sense. A fifth bedroom with a floor space of 17m2 or even thereabouts could not have been built in a habitable form. That was true from the beginning.
His Honour found that the misrepresentation was not discovered until at or about 26 February 2001. He held that it was no answer to the respondents’ case that the Quigleys intended to build a home with a different layout from that shown on the approved plans. That was because, save for some minor matters and the issue of the study/bedroom height, Ms Ganley agreed with what the Quigleys proposed at the meeting on 26 February 2001. Nor could it be said that the Quigleys did not make all reasonable enquiries, as the brochure, Mr Stewart and the s.32 statement had enjoined them to do.
Submissions
Counsel for the appellants identified the issue for determination as being the entitlement of the Quigleys to rescind. If they were so entitled, they were entitled to the damages awarded to them. The award of damages was not otherwise challenged. If it was held that the Quigleys had not been entitled to rescind there should be an order that the claim be dismissed and an order for damages on the counterclaim.
The respondents’ case should have failed because (a) the appellants and their agent made no untrue representation concerning the property or a planning issue, and (b) in purchasing the property the Quigleys did not rely on any such representation of the appellants or their agent. Counsel for the appellants submitted that it had not been open to the judge to conclude in favour of the respondents on these issues.
Commencing with the first issue as to the appellants making an untrue representation, the submission focused on the role of the Council. The central point made was that any relevant representation had come from the Council and not the appellants. Hence, if there were any error in any representation, the appellants were not liable if the Quigleys acted upon it, as the appellants were not responsible for the error.
The submission was developed as follows. There was nothing in the s.32 statement or other information supplied to the Quigleys by the appellants or their agent that was incorrect, or which could constitute a misrepresentation of any kind. The inclusion in the s.32 statement of the s.173 Agreement and the various certificates was no more than a representation that the Agreement had been entered into, and that the certificates had been provided by the Council and other authorities, all of which was true; see Argy v. Blunts and Lane Cove Real Estate Pty Ltd.[7] In providing the information in the s.32 statement, the appellants acted as a mere conduit pipe for passing on information which had been provided by the Council. The documents were passed on as being statements of, and agreements made by, the Council, and accurately reflected the Council’s then position. It would be absurd if a right to rescind arose by reason of incorrect information included in such documents where the error in the document was not the fault of the appellants. Further, to the extent that the Council later resiled from the position it had adopted prior to the auction, that was not the responsibility of the appellants. In any event, as the subsequent decision of VCAT demonstrated, the Council’s later alteration of its position on the issue was wrong.
[7](1990) 26 FCR 112 at 131-132.
If the inclusion of the fifth bedroom conveyed that the Council had given permission to construct the dwelling with that room, that information was true. Even if the plan conveyed a representation by the appellants that a useable bedroom could lawfully be constructed in the space shown above the garage, that information was true, provided the roofline (or building envelope) was not exceeded. Any difficulty caused by altering the plans within the building envelope was clear from a close and professional inspection of the plans, which the Quigleys and their advisers undertook.
Turning to the second issue of reliance, the appellants submitted that on the facts found by the judge, the Quigleys did not rely on the s.32 statement or anything said by the appellants or their agent. Rather, the Quigleys made their own inquiries of the Council, as suggested by the brochure and Mr Stewart, and relied on what they were told; see Attorney-General of New South Wales v. Peters.[8]
[8](1924) 34 CLR 146 at 150 – 153.
Conclusion
The establishment of these submissions depended on their support in the facts, and it was thus to the facts that the submissions of both counsel turned and concentrated upon. While, in their submissions, there was reference to authority concerning the law relating to misrepresentation, there was no dispute between counsel as to the applicable principles. The question is whether on the facts as found by the judge it was open to him to conclude as he did.
In considering this question it is useful, in light of the appellants’ submissions to recall the statement of Lord Blackburn in Smith v. Chadwick that if a defendant “with a view to inducing the plaintiff to enter into a contract made a statement to the plaintiff of such a nature as would be likely to induce a person to enter into a contract, and … the plaintiff did enter into the contract, it is a fair inference of fact that he was induced to do so by the statement”.[9] See too Gould v. Vaggelas.[10] The onus that arises is an evidentiary one.
[9](1884) 9 App. Cas. 187 at 196 and in the Court of Appeal at (1882) 20 Ch.D. 27 at 44 - 45 per Jessel M.R.
[10](1985) 157 C.L.R. 215 at 238 - 239 per Wilson J., and 250-251 per Brennan J.
Further, it is not necessary that the misrepresentation be the sole inducing factor.[11] As Hutley, J.A., for instance, stated in Australian Steel and Mining Pty Ltd v. Corben:[12]
“Once there is acceptable evidence that the representation was one among the factors which induced the contract, that is sufficient.”
In Gould Brennan J observed (at 250-251) that the question at the end of the case is “whether the misrepresentation alone, or with or notwithstanding other things that accompanied it, was a real inducement, or one of the real inducements to the plaintiff to do whatever caused his loss”.
[11]See Leighton Properties Pty Ltd v Hurley [1984] 2 Qd.R. 534.
[12][1974] 2 N.S.W.L.R. 202 at 207.
The judge’s conclusion that the pleaded representations referred to at [7] were made constituted a finding of fact which was open on the evidence. Contrary to the appellants’ submission the evidence in this respect was not confined to representations or statements of the Council or its officers, or to the s.32 statement. Further, it is not correct to characterise the s.32 statement as consisting only of representations or statements of the Council or as being complete and accurate in relation to the fifth bedroom.
There was the information contained in or represented by the billboard, the Buxton brochure, Mr Deller’s information sheet and the statements of Mr Stewart. The information thus communicated included that there was a planning permit to build the two storey home depicted on the plan approved by the Council, which plan could be modified within the general building envelope. The plan included the “optional study bedroom 5” (according to the billboard and brochure), or the “optional study bed 5 17 M2” (on the plan attached to the s.173Agreement), which statements were addressed by the information sheet of Mr Deller. Further, all these sources of information came from the appellants or their agent (the billboard, brochure, and information sheet and statements of Mr Stewart). Then, as regards the s.173 Agreement and the attached plans of the house, two points are to be made: first, the Agreement is a document of the Council and the appellants, and secondly the plans record the appellants as the “Client” and could only reasonably be taken as having been procured by the appellants for their purpose of the subdivision of their land. That is, the Agreement and the plans do not represent, and could not reasonably have been so understood, as a unilateral action of the Council. The reality is that the plans were plans of the appellants obtained by them for the purpose of the subdivision and, having been provided, they were approved by the Council and attached to the permit. It is correct that the s.173 Agreement and its attachments constitute a statement of the planning situation but it is altogether too narrow and artificial to characterise the documents as a representation or statement of the Council alone as to the matter contained therein. In truth, in my view, the documents are as much to be regarded as put forward by the appellants. There is an obvious contrast with the certificates from the various authorities including the Council which set forth information from the records of the authority. As Hill, J. stated in Argy v. Blunts and Lane Cove Real Estate,[13] a misleading and deceptive conduct case, the attaching of a Council certificate to a contract could, as against the person (there the solicitor who prepared the document) constitute no more than a representation that the certificate is a certificate issued by the Council. In contrast in the present case, the various antecedent and contemporaneous representations of the appellants and their agent linked, and were purposely linked, to the s.173Agreement and plans. Contrary to the submission of the appellants, the Agreement and plans can not be equated to or regarded as a mere certificate of a Council or unilateral representation of the Council.
[13]At 131 – 132.
The appellants’ submission sought not only to characterise the s.173 Agreement and plans as akin to a Council certificate but, having done so, to then submit that the brochure (and billboard and information sheet) said no more than the “certificate”. In my view the submission is flawed for the reasons already discussed and for the following further reasons. The written and oral representations as to what could be built with the existing planning permission led on to information from Mr Stewart as to the s.173 Agreement giving a right to build, to inquiries with the Council which in substance confirmed that advice, and finally to the auction at which the auctioneer stated that the house could be built tomorrow subject to a building permit. It is unnecessary to further elaborate on the evidence. It is sufficient to conclude, as I do, that in light of all the circumstances the submission that the appellants acted as a mere conduit pipe passing on information provided by the Council, and not as in any way themselves making any of the alleged representations, can not stand in light of the judge’s findings which in my view were open to him. That is to say, the conclusions of the judge referred to above which include that the Quigleys relied on representations which emanated from Mr Deller. The representation as to what could be built was clearly made with the intention that it be relied on by a person in deciding to purchase the land.
It is evident from the judge’s findings that he did not accept that in entering into the contract the Quigleys relied only on advice of the Council and its officers and not at all on the representations of the appellants or their agent. In my view it was open to the judge to so find on the evidence.
On the judge’s findings the critical steps were these. The Quigleys, having been told that they could build the house shown on the approved plan or with a different internal layout within the envelope, purchased the property intent on the latter course. Then, on 26 February 2001, they were told, and it became apparent, that the fifth bedroom or optional study could not be built “as indicated on the plans annexed to the s.173 Agreement or as advertised”, to quote the judge, without going through the planning process. That is to say, the house depicted on the plans could not be built. The difficulty, clearly enough, had not been apparent prior to the auction, which, notwithstanding counsel’s submission, was not surprising. Except to the trained eye it was not obvious from the plans that there might be the difficulty that was subsequently discovered. In effect the plan had contained a trap of which there was not merely no warning but an affirmative representation the other way. It must also be remembered that the plans were attached to the s.173 Agreement and the Quigleys did not have a copy of them before they purchased. Thus, while on perusal of the plans before the auction a very trained and quizzical eye might have appreciated the potential for difficulty, the Quigleys did not have that appreciation. In the circumstances, and without the benefit of a three dimensional appreciation of what they were looking at and frank advice as to the “buildability” and use of the area above the garage, the Quigleys are not to be criticized in that respect. It was after all the appellants who put forward an unachievable thing as being able to be built.
The inability to build a fifth bedroom (or study) of 17m2 was due to the height and slope of the roof. As the judge found, that which was described in the plans could not be built. In other words, the representation that a purchaser could build the five bedroom house shown on the approved plan was false. This representation was fundamental and underlay the representation that the internal layout could be modified while still building within the envelope. In the end, if the Quigleys could have built the house depicted on the plans they would have completed the purchase, built the house and sold it. But that option was not open as the house could not be built without new plans and new planning approval, the very thing that they had been told was not required and which, together with the representation as to being able to vary the plan, induced them to enter into the contract. The fact that the Council raised a further point based on the planning amendment was an additional complication, but that was a subsequent and separate matter which did not negate the representation and affect the right of the Quigleys to rescind on the ground of the misrepresentation or misrepresentations found by the judge, the effect of which continued until the time of rescission.
In my view it was open to the judge to find both that the appellants made a material false representation to the Quigleys for the purpose of inducing entry into a contract, that the Quigleys entered into the contract in reliance thereon, and that they were entitled to rescind. I would dismiss the appeal with costs.
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