Director-General of Social Services v Thomson

[1981] FCA 209

Re: MANSARD DEVELOPMENTS PTY. LTD.
And: KAREEN SHERRY SACKVILLE
Nos. WA. G12,13,14 of 1981
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Bowen C.J.
Deane J.
Morling J.

CATCHWORDS

Trade Practices - false statement concerning the existence or availability of facilities associated with land

Trade Practices Act, 1974, s.53A(1)(b)

HEARING

PERTH

#DATE 12:11:1981

ORDER

1. THAT the appeal be allowed with costs.

2. THAT the orders of the learned trial judge be set aside.

3. THAT in lieu thereof there be a judgment of acquittal in respect of each of the three charges and an order that the respondent pay the appellant's costs at first instance.

JUDGE1

This is an appeal from a decision of a single judge of this court given in proceedings brought by Kareen Sherry Sackville (the prosecutrix) alleging that Mansard Developments Pty. Limited (Mansard) contravened s.53A(1)(b) of the Trade Practices Act 1974. That section provides, in part, as follows:

"53A. (1) A corporation shall act, in trade or commerce, in connexion with the sale or grant, or the possible sale or grant, of an interest in land or in connexion with the promotion by any means of the sale or grant of an interest in land -

(a) . . .

(b) make a false or misleading statement concerning the nature of the interest in the land, the price payable for the land, the location of the land, the characteristics of the land, the use to which the land is capable of being put or may lawfully be put or the existence or availability of facilities associated with the land;"

Three charges were made against Mansard. The prosecutrix alleged in each case that Mansard, being a corporation, in trade or commerce, did, contrary to the provisions of s.79(1) of the Act, contravene the provisions of s.53A(1)(b) in that, in connexion with the promotion of the sale of an interest in land, it made a false statement concerning the existence of facilities associated with the land. Section 79(1) provides that a person who contravenes s.53A(1) is guilty of an offence. The three prosecutions were heard together by consent. The particulars of the first charge were that, on or about 26 April 1980:

"(a) the defendant was the registered proprietor of land situate at Kelmscott in Western Australia and known as Illawarra Gardens;

(b) the defendant was the developer of the said land;

(c) the defendant promoted the sale of an interest in the said land by means of a statement in the form of an advertisement published on page 16 of the "Readers Mart" section of "The Sunday Times" newspaper dated 27 April 1980 in the following words:

"BLOCK
LAND SALE
ON SITE TODAY

ILLAWARRA
GARDENS
KELMSCOTT

All lots are fully serviced with gas, electricity, water, kerbed roads and deep sewerage and drainage. MANSARD LAND
DIVISION."; and

(d) not all the lots in the advertisement referred to in paragraph (c) were serviced with electricity."

The particulars of the second and third charges were virtually identical with those given in respect of the first charge, except that they referred to advertisements published in "The Sunday Times" newspaper of 11 and 4 May 1980 respectively.

Mansard admitted that it was a corporation within the meaning of s.53A of the Act and that the three advertisements were made on its behalf.

The material facts were not in dispute at the trial. Mansard is a developer of land in Western Australia. One of its projects is called "Illawarra Gardens Kelmscott". This development is on a large scale and is designed to be undertaken in stages. It involves the subdivision of broad acres into a large number of lots for residential purposes together with the provision of land for a primary school and recreation reserves. Kelmscott is about twenty-five kilometres from Perth.

When the three advertisements the subject of these proceedings were published, the development had reached the point where stages 3a and 4 had been completed in the sense that the land comprised therein had been subdivided into lots for recidential purposes with the approval of the Town Planning Board. The roads had been formed and kerbed and gas, electricity, water, sewerage and drainage were available to the lots. Some of the lots had been sold and some houses erected. The defendant was promoting the sale of the remaining lots.

On 27 April 1980, the date of the first advertisement, stage 5 of the subdivision had progressed to the stage where the ninety-six lots included in it had been surveyed and the plans of subdivision lodged with the Town Planning Board for approval. The roads had been formed and kerbed and provision made for sewerage and drainage of each lot. Electricity mains had been provided along Hemmingway Drive (the southern boundary of stage 5), enabling electricity connections to be made to nine of the lots in that stage of the subdivision; but no electricity services were provided to the remaining lots.

Subject to minor typographical variations the advertisements in question were in the following terms:

"BLOCKS

LAND SALE
ON SITE TODAY

See the
QUALITY
HOMES

Displayed by Perth's
leading builders.

ILLAWARRA
GARDENS
KELMSCOTT

Mansard Land division
offers a lge selection of
high, level building sites
at an affordable price,
$9,000 to $11,050.

You can build with any
builder and sell at any
time. There are absolutely

NO
RESTRICTIONS

All lots are
fully serviced

with gas, elect. water,
kerbed roads and deep
sewerage and drainage.

You can't go wrong, Illa-
warra Gardens is within
1 km of the new bus-rail
transfer station, the
Kelmscott Village shopping
centre and the Kelmscott
High School, with 8.5 hcts
of playing fields and the
primary school on the estate.

SEE THE LAND CONSULT-
ANT ON SITE SUNDAY
2-5 P.M. FOLLOW THE
SIGNS OFF ALBANY
HIGHWAY UP LAKE RD
TO CAMMILLO RD.

MANSARD
LAND
Division."

It is clear that the advertisements were statements made by Mansard, in trade or commerce, in connexion with the promotion of the sale of interests in land, and that the statements concerned the existence of facilities associated with the land, namely, electricity. The critical issue in the case was whether the land referred to in the advertisements included the lots in stage 5. If those lots were included then plainly the statement that "all lots are fully serviced with . . . elect." was false because only nine of the ninety-six lots in stage 5 were so serviced.

The Town Planning Board gave its final approval to the subdivision of the land included in stage 5 on 27 May 1980, that is to say, some 16 days after the last of the three advertisements had been published. Mansard did not commence to sell lots in stage 5 until about 1 June 1980. Before that date the lots in that stage could theoretically have been offered for sale (subject to Town Planning Board approval). But they were not, in fact, so offered. There is no evidence that there was any notice or sign erected on the land indicating that the lots in stage 5 formed part of the land being offered for sale before 1 June. It was firm company policy not to sell lots until a subdivision had obtained final Town Planning Board approval.

The advertisements used to publicise the sale of the lots in stage 5 did not contain the words "all lots are fully serviced with gas, electricity, water, kerbed roads and deep sewerage and drainage". Some of these advertisements contained an offer by Mansard to pay stamp duty and legal costs incurred by purchasers who agreed to purchase by 30 July. There is no suggestion that there was anything false or misleading about the advertisements published after Mansard commenced to promote and market the lots in stage 5.

Two purchasers of lots in stage 5 gave evidence for the prosecution. Mr. Ashby who purchased lot 160 saw the advertisement which appeared on 4 May. At that time he was considering the purchase of a block of land in some suitable area, but had not fixed upon Illawarra Gardens as the area in which he wished to live. Subsequently, late in July, he saw one of the Mansard advertisements which referred to the offer to meet legal and transfer fees on purchase. The offer of the payment of these fees particularly interested him. He said: "As they run into quite a reasonable amount of money, I was more than interested in that particular statement in the paper. That was what precipitated me buying this particular block." He inspected the land towards the end of July and signed a contract to buy it on 16 August 1980. He said that when he went to look at the land after seeing the July advertisement he assumed that power would be readily available.

Mr. Moffatt purchased lot 47 in stage 5. Prior to his purchase he was living not far away in another part of Kelmscott. He inspected the Illawarra Gardens subdivision and made contact with a salesman at the beginning of June 1980. He had no discussion with the salesman, or with anyone else, about the facilities in the area. He said: "Having seen the previous stage we were under the impression that it was a fully serviced block; gas, etc". He agreed to purchase his lot on 16 June 1980. It appears that he did not see any advertisements at any time prior to making his purchase.

There was no evidence that the advertisements containing the statement that all the lots were fully serviced with, inter alia, electricity were published or disseminated after 11 May 1980.

The prosecutrix contended that the three advertisements which appeared in April and May referred to all sites, being unsold at the date of publication of those advertisements, included in the general description of "Illawarra Gardens Kelmscott". These included unsold lots in stages 3a and 4 and all lots in stage 5. It was contended on behalf of Mansard that the advertisements referred only to the unsold lots in stages 3a and 4. It seems to have been agreed at the trial that the making of the alleged false statements was complete on the dates of publication of the newspapers in which the advertisements appeared. We agree that this was so. See Thompson v. Riley McKay Pty. Limited (1980) 29 A.L.R. 267 at p. 275.

The learned trial judge accepted the prosecutrix's argument that the advertisements referred to all sites being unsold at the date of publication of each advertisement. He was of the opinion that the land described in the advertisements referred to parcels of land physically laid out as separate building sites within the general description "Illawarra Gardens Kelmscott". In his view, the lots in stages 3a, 4 and 5 fell within the description "Illawarra Gardens". He said that the promotion of the sale of land in subdivisions for residential purposes is an on-going business activity. He thought that the advertising of building sites or lots for sale under the general heading of "Illawarra Gardens Kelmscott" was part of Mansard's promotion of all the unsold land covered by that general description. It thus included parcels of land included in stage 5 as well as stages 3a and 4.

Being of this view, his Honour found the charges had been made out and fined Mansard $300 on each charge. The modesty of the penalties imposed no doubt reflected the view which his Honour appears to have formed (and which we share) that Mansard did not intend to refer to the lots in stage 5 in the advertisements which are the subject of the charges.

In our opinion the critical question is whether the words "all lots" in the advertisements refer to all identifiable lots in the "Illawarra Gardens" subdivision, whether or not they were being offered for sale at the time the advertisements were published. The matter is one of impression upon which minds can easily differ and we have not found it easy to decide with confidence. The conclusion to which we have come is that the reference to "all lots" in the advertisements should not be understood as referring to all identifiable unsold lots in the overall Illawarra Gardens Estate, whether actually offered for sale or not, but to those lots to which the advertisements refer as being the subject of the "land sale on site today". A number of considerations has led us to that conclusion. We shall briefly indicate what they are.

First, the advertisements make clear that Illawarra Gardens is a very extensive development. Reference is made to 8.5 hectares of playing fields and a primary school being situated "on the estate". There would certainly be no predisposition to believe that all the lots in such an estate would be offered for sale at the one time or that lots, which were not at that stage included in a subdivision approved by the Town Planning Board, would be so offered.

Secondly, as has been mentioned, the advertisements commence with express reference to Blocks the subject of a "land sale on site to-day". It seems to us that an ordinary reading of the advertisements makes it tolerably plain that these are the large selection of "building sites" to which the advertisements subsequently refer. Plainly, not all lots in the overall estate were included in that "large selection": some lots had already been sold; others were set aside for public use. The advertisements invite identification of the blocks to which they refer in opening with the large selection which is subsequently mentioned.

Thirdly, the critical reference to "all lots are fully serviced . . . with elect. . . . " follows the reference to the large selection of "building sites". While we are conscious of the force of the argument that this reference should be seen as part of an overall promotion of the estate and therefore as referring to lots other than those presently offered for sale, we consider that an ordinary reading of the advertisement leads to the conclusion that the reference to "all lots" in this part of the advertisement is a reference to the large selection of building sites, being the blocks offered for sale in the "land sale on site to-day", to which reference has already been made.

We see the force of reasoning that led his Honour to his decision and have hesitated before placing a different construction upon the advertisements from that which commended itself to him. The meaning of the words used is not free from doubt and it is unfortunate that the land offered for sale was not described with greater clarity. It may well be that the words used in the advertisements were misleading within the meaning of s.55(1)(b) of the Act but that was not alleged.

If there had been evidence that Mansard led purchasers of lots within stage 5 to believe that the May advertisements referred to such lots, the position would have been different. If that had been the case, contraventions of the section would have been established. Such contraventions would have occurred, not at the dates of publication of the advertisements, but at the dates of the subsequent conduct leading purchasers to believe that the advertisements referred to the lots in stage 5. But there is no suggestion that this was the case. Mr. Ashby said that he assumed that the lots in stage 5 were serviced with electricity. It is true that he read the May advertisements but subsequently he read other advertisements before purchasing his lot. Those other advertisements made no reference to the lots being fully serviced. Apparently Mr. Moffatt did not read any of the advertisements. He made the assumption that the block he purchased was serviced with electricity because he had observed that lots in the earlier stages of the subdivision had been so serviced.

It may be conceded that although the three advertisements, when originally published, referred only to the land within stages 3a and 4, subsequent events could have caused them to refer also to the land in stage 5. For example, if the company had in June 1980 affixed a copy of one of the advertisements to a noticeboard advertising the sale of land within stage 5, the reference to "all lots" in the advertisement would clearly refer to the lots then being offered for sale in stage 5, although the words originally did not have that meaning. But there is nothing in the evidence to suggest that the company did anything after the publication of the advertisements to bring that result about.

Mr. Lee contended that it is possible to promote the sale of land without selling it or offering it for sale, and that the advertisements promoted the sale of the lots in stage 5 of the subdivision although such lots were not being offered for sale. We agree that a person may promote the sale of land without, at the same time, offering it for sale. But we do not think the argument assists in determining whether, as a matter of construction, the advertisements referred to the lots in stage 5. If the statement that "all lots are fully serviced" did not refer to the lots in stage 6 there was nothing false about the statement and the offences were not made out.

It is true that the sale of the lots in stage 5 commenced within about three weeks of the publication of the advertisement published on 11 May. That may explain why Mr. Ashby believed that the lots in stage 5 were serviced with electricity. But that is not to say that Mansard made a false statement about the availability of electricity to lots in stage 5. In the absence of evidence that the statements in the three advertisements were applied, expressly or by implication, to the lots in stage 5, we do not think that contraventions of the section were established.

The appeal should be allowed with costs. The orders mane by the learned trial judge are set aside and in lieu thereof there should be a judgment of acquittal and an order that the respondent pay the appellant's costs of the proceedings at first instance.