Downing v Lau
[2018] VCC 33
•20 February 2018
a
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-16-04603
| SARAH LOUISE DOWNING | Plaintiff |
| v | |
| JOHN LAU & ORS | Defendants |
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JUDGE: | HER HONOUR JUDGE MARKS | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 30 and 31 May, 1 and 2 June, 28 July and 1 September 2017 | |
DATE OF JUDGMENT: | 20 February 2018 | |
CASE MAY BE CITED AS: | Downing v Lau | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 33 | |
REASONS FOR JUDGMENT
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Catchwords: REAL PROPERTY – CONTRACT FOR SALE OF LAND – SALE OF LAND ACT (VIC) 1962 - where vendor did not include information about a current planning permit required to be included in the s32 statement – whether purchaser entitled to rescind the contract under s32K of the Sale of Land Act (Vic) 1962 - whether vendor acted honestly and reasonably – whether conveyancer employed by vendor was agent of vendor in preparing the s32 statement – whether the purchaser was in substantially as good a position as if information about the planning permit had been included
Cases Cited:Australian Horizons (Vic) Pty Ltd v Ryan Land Co Pty Ltd & Ors (1993) V Conv R 54-470; Bonacci v Ruyten [2000] VSC 138; Bot v Ristevski [1981] VR 120; Colonial Mutual Life Assurance Society Limited v Producers and Citizens Co‑operative Assurance Company of Australia Limited (1931) 46 CLR 41; Commissioner of Taxation v Reliance Carpet Pty Ltd [2008] 236 CLR 342; Curtain v Aparo (1988) V Conv R 54-316; Danjeet Nominees Pty Ltd v Ellul (1995) V Conv R 54-421; Deemcope Pty Ltd v Cantown Pty Ltd [1995] 2 VR 44; Erikson v Carr (1945) 46 SR (NSW) 9; Fifty-Eighth Highwire v Cohen & Anor [1996] 2 VR 64; Garnac Grain Co v HMF Faure [1968] AC 1130; Houlahan & Ors v Trentham Investment Management Pty Ltd & Ors [2016] VSC 240; Howe v Smith (1884) 27 Ch D 89; Lo v Russell [2016] VSCA 323; McDonald v. Dennys Lascelles Ltd [1933] 48 CLR 457; McHutchison v Asli [2017] VSC 258; Narcan v Piccol Credit Co-op (1992) V Conv R 54-226; Nicolacopoulos v Khoury [2010] VCC 1576; Nund v McWaters [1982] VR 575; Overton v Baker [1997] 2 VR 297; Paterson v Batrouney (2001) V Conv R 54-639; Payne & Anor v Morrison (1992) V Conv R 54-428; Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd [2014] VSC 57.Pricom Pty Ltd v Sgarioto (1994) V Conv R 54-508; Walters v Cooper [1967] VR 583;
Judgment:For plaintiff
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Stirling | Richmond & Bennison |
| For the First Defendant | Ms A Golding (30 and 31 May, 1 and 2 June 2017) Mr P Cawthorn QC with Ms A Golding (28 July and 1 September 2017) | Moray & Agnew |
CONTENTS
OVERVIEW
TRIAL
s32 SALE OF LAND ACT
THE s32K(4) TEST
VENDOR ACTED REASONABLY
AGENCY NOT PLEADED
MEANING OF ‘AGENT’ GENERALLY
EFFECT OF DEFINITION OF VENDOR IN SECTION 30 OF THE ACT
PURCHASER IS IN SUBSTANTIALLY AS GOOD A POSITION
CASE ON PLEADINGS
CASE PUT AT TRIAL
LEGAL PRINCIPLES
ANALYSIS
WHY DEPOSIT IS DUE
INTEREST DUE ON DEPOSIT
THE ALTERNATIVE DAMAGES CLAIM
JUDGMENT
HER HONOUR:
OVERVIEW
On Saturday, 19 March 2016, John Lau bid at an auction over a property in Earl Street, Kew. The property had an old weatherboard house built in 1925, with a shed behind it and a large garden area with trees up the other end. The property ran between Earl Street (where the house was) through to Walpole Street. The property was ripe for development, and Mr Lau hoped to develop it to put seven or eight units on it.
Mr Lau (‘the purchaser’) was the successful bidder. He signed the contract of sale of real estate at the auction, agreeing to purchase the property from Sarah Downing (‘the vendor’) for $3,050,500 with a six month settlement period. He handed a cheque for the deposit of $305,050 to the vendor’s real estate agent, David Oster of Kay & Burton (‘the estate agent’).
The next day, Sunday 20 March 2016, the vendor’s husband, Jason Downing, emailed a Dropbox link containing documents about the property to the purchaser. The documents in the Dropbox link included a VCAT decision made 8 August 2014 (‘VCAT decision’), which set aside a Boorondara Council decision made July 2013 to refuse an application to develop the property by putting five buildings on it. The VCAT decision allowed a four building development.
The documents in the Dropbox link included the current planning permit which was issued by the Boorondara Council on 2 September 2014 (‘planning permit’) after the VCAT decision. It gave permission to develop the property to build four double storey buildings on it.
On Monday 21 March 2016 the purchaser asked for a further three month period until settlement. It was refused. The deposit cheque was cancelled.
On 29 March 2016, the purchaser’s solicitors sent a letter on his behalf saying that he was rescinding the contract, because the s32 statement attached to the contract had failed to disclose the planning permit, in breach of s32D of the Sale of Land Act 1962 (Vic) (‘the Act’).
On 7 April 2016, the vendor’s solicitors sent a letter on her behalf treating the purported rescission as a repudiation of the contract, and accepting the repudiation.
In September 2016, the vendor resold the property for $185,000 less than the price at which it was sold to Mr Lau.
The vendor sued the purchaser for the $305,050 deposit due under the contract, or alternatively for damages for breach of the contract.
Section 32K of the Act provides:
(1) This section applies if a vendor—
…
(b)fails to supply all the information required to be supplied to a purchaser, either in a section 32 statement or attached to the section 32 statement, as required by this Division; …
(2) The purchaser may rescind any contract for the sale of land which has been entered into on the basis of information contained in the section 32 statement or attached to the section 32 statement at any time before the purchaser accepts title and becomes entitled to possession or to the receipt of rents and profits.
…
(4) Despite subsection (2) … the purchaser may not rescind a contract for the sale of land if the court is satisfied that—
(a)the vendor has acted honestly and reasonably and ought fairly to be excused for the contravention; and
(b)the purchaser is substantially in as good a position as if all the relevant provisions of this Division had been complied with.
The parties agree that the planning permit ought to have been be disclosed in the s32 statement, as it falls within the description of an approved proposal directly and currently affecting the land under s32D(a) of the Act: Bonacci v Ruyten [2000] VSC 138 and Overton v Baker [1997] 2 VR 297 at 315.
The consequence is that the purchaser was entitled to rescind the contract, unless the Court is satisfied of the matters in s32K(4): that the vendor acted honestly and reasonably and ought fairly be excused for failing to disclose the planning permit in the s32 statement, and that the purchaser is substantially in as good a position as if the planning permit had been disclosed.
For the reasons detailed below, I am satisfied of those matters. So the purchaser was not entitled to rescind the contract.
The vendor is entitled to recover the amount of the deposit, which was due before the contract came to an end, as a debt. She is entitled to interest on that lost deposit as provided in clause 26 of the contract from the date it was due to be paid to judgment.
She is not limited to a claim for breach of contract (a lesser amount in this case) as argued by the purchaser, for the reasons set out below.
TRIAL
Negligence claims were initially brought in this proceeding by the vendor against both her real estate agent, Kay & Burton, and the conveyancer. Both claims were settled by the time of trial. Only the case between the vendor and purchaser went to trial.
Later, consent orders were made regarding the claims against the estate agent and the conveyancer.
This case includes disputes about what was in issue at various stages in the trial, and what matters the purchaser may rely on by way of defence. So it is helpful to set out how the trial developed. It was unusual.
The trial initially ran for four days on 30 and 31 May, 1 and 2 June 2017. I will call these four days ‘Stage 1’ in these reasons, although at the time, it was thought they were the entirety of the trial.
During Stage 1, Mr Stirling of Counsel appeared for the vendor, and Ms Golding of Counsel appeared for the purchaser. Opening submissions were made. Evidence was given. Closing submissions were made in writing for the purchaser, and orally for both purchaser and vendor. At the end of the oral submissions on 2 June 2017, Mr Stirling, said he would file written submissions in line with his oral submissions by the close of the day. He did so.
At the end of the hearing on 2 June 2017, Ms Golding was granted leave to file written submissions for the purchaser after the trial to address matters raised by Mr Stirling in his closing submissions.
On 8 June 2017 the purchaser’s written submissions were filed. Since both sides had already made closing submissions, they were in the nature of reply submissions. They were signed by Mr Peter Cawthorn QC as well as Ms Golding. Mr Stirling objected to parts of these submissions on the basis that he said that they went beyond the issues that had been argued at trial. He was given leave to file further written submissions for the vendor, which were filed on 3 July 2017. Strictly, these were rejoinder submissions.
As there was significant further dispute, the matter was listed for further hearing. It was listed for one day on 28 July 2017, but took longer. The next time Counsel and the Court were available for a further hearing day was 1 September 2017. The final day of hearing occurred then.
Mr Peter Cawthorn QC appeared with Ms Golding for the purchaser on 28 July and 1 September 2017. Mr Stirling appeared for the vendor. I will call these two days of the trial ‘Stage 2’. During Stage 2, Mr Cawthorn QC, and Mr Stirling, made oral submissions addressing the matters raised in Stage 1, and in the reply and rejoinder submissions.
The evidence in the case was all given during Stage 1. The vendor, Mr Downing and Mr David Oster all gave evidence for the vendor. I found all of them careful in their approach to giving evidence, and truthful.
The purchaser, Mr King Ng (who was assisting with the purchase and proposed development of the property) and Mr Joe Cornetta (an architect) all gave evidence for the purchaser. I found Mr Ng and Mr Cornetta truthful witnesses.
Mr Lau gave evidence that he has lived in Australia for 28 years and had been involved in property development for some years. He gave evidence in English although it is not his first language, on the basis that any time he or his Counsel wanted to, he could use the interpreter who was in Court. On occasion, I sought to have questions on important issues put through the interpreter where I considered there might be room for some confusion. Even making allowance for difficulties Mr Lau may have had in understanding some questions put in English, his evidence was often non-responsive, vague and contradictory. I found Mr Lau an unsatisfactory witness. He frequently responded to questions of counsel for the vendor by restating what he clearly saw to be essential elements of his case rather than answering the question. Examples of this include his repeated evidence given on the first day of trial that he never entered the property before attending the auction, and in particular that he had not stepped foot in its garden. In cross-examination on the second day he clearly conceded that he had been into the garden and around the side of the house. I do not accept, as suggested by Counsel for the purchaser, that this confusion was caused by his language difficulties. Unfortunately, I was not satisfied of the truth of aspects of his evidence on key issues.
Where there is a difference in the evidence of what occurred at meetings between him and Mr Oster, I accept Mr Oster’s evidence.
I turn now to the issues in the case.
s32 SALE OF LAND ACT
The policy of s32 is discussed in Overton v Baker [1997] 2 VR 297. There, Ormiston, Charles and Callaway JJA considered the effect of s32(2) of the Act. They held that a map showing the extent of a road reservation was not required to be disclosed in a s32 statement. They referred to cases relating to s32 and stated at 312:
...those cases appear to accept, without elaboration, that the policy of s. 32 is to require disclosure for what are now a large number of matters which it was formally thought were unnecessary to disclose, at least for the purpose of making good title… Section 32 constitutes an effective statutory reversal of the principle of caveat emptor….
Nevertheless one should be careful not, by any extravagant interpretation of the legislation, to place such a burden on vendors and their solicitors and agents as to make impractical the ordinary day to day business of conveyancing.
THE s32K(4) TEST
As stated in Fifty-Eighth Highwire v Cohen & Anor [1996] 2 VR 64 (‘58th Highwire’) at 71-72 and 77, a vendor seeking to establish a case under s32K(4) of the Act must establish that:
(1) the vendor has been honest (a subjective inquiry);
(2) the vendor has been reasonable (an objective inquiry);
(3)in the exercise of judicial discretion, the vendor ought fairly be excused for the contravention; and
(4)the purchaser is substantially in as good a position as if all the relevant provisions of Division 2 of the Act (being s32) had been complied with.
The plaintiff bears the burden of establishing the s32K(4) factors.
It was not disputed that the vendor had been honest.
It was also not disputed that when a vendor is found to have acted honestly and reasonably, it follows that without more, he or she ought fairly be excused for the contravention: Curtain v Aparo (1988) V ConvR 54-316 per Gobbo J.
The issues before me were whether:
othe vendor was reasonable; and
othe purchaser was substantially in as good a position as if the details of the planning permit had been provided in the s32 statement.
VENDOR ACTED REASONABLY
The test to be applied in deciding if the vendor acted reasonably is an objective one. Did the vendor act with due care and attention and without negligence: Payne & Anor v Morrison (1992) V ConvR 54-428. This test has recently been applied by Digby J in McHutchison v Asli [2017] VSC 258 (‘McHutchison’) at [19].
I find that she did act reasonably.
On 11 February 2016, the vendor’s husband, who was assisting her with matters relating to the sale of the property, requested a quote from Rosemary Brady (‘the conveyancer’) for her to produce a s32 statement and a contract of sale to be used in selling the property.
The next day, the conveyancer sent an email to the vendor and her husband attaching a checklist of questions relevant to the preparation of the s32 (‘the checklist’). Mr Downing answered the questions and completed the checklist and sent it back to the conveyancer. The vendor then executed an Authority to Act for the conveyancer.
The conveyancer then prepared the draft s32 statement and sent it back. Mr Downing then checked the s32 statement to make sure it was right. The vendor skim read it, and signed it.
At Stage 1 of the trial, Counsel for the purchaser submitted that the vendor failed to act reasonably, in part because Mr Downing (in assisting her) made a decision not to mention the planning permit in answering the checklist. Ms Golding submitted that Mr Downing sought no clarification of the issue of disclosure of the planning permit when he read and completed the checklist on her behalf. She submitted that Mr Downing made a decision not to mention the planning permit, and said that this is shown by an exchange that took place between Mr Downing and me in the course of the trial.
The exchange relates to me asking of Mr Downing in relation to the checklist:
It then says ‘Any building approvals or permits in last seven years’? ---Yes.
And you’ve crossed out ‘No’? --- Yes.
Why was that?--- Because a building permit is for a building permit. A planning permit is for something different. I was thinking of it from that point of view.
I consider that this exchange indicates no more than that Mr Downing thought he was answering a question directed to whether building approvals and building permits had been granted in the last seven years, and disclosing what he was required to disclose in answer to that question.
I am not satisfied that there was any intention by the vendor or Mr Downing to deliberately not disclose the planning permit to prospective purchasers. On the contrary, the vendor gave it to the estate agent before the sale. The estate agent referred to the planning permit at auction in his opening comments, before taking bids. Mr Downing sent it to the purchaser the day after the auction, together with other information about the property, in a Dropbox link. I accept the evidence of Mr Downing that he sent that additional information including the permit the day after the auction because he thought they might be of some help to the new purchaser of the property. These actions are inconsistent with an intention by the vendor deliberately to conceal the existence of the permit from purchasers.
I am satisfied the vendor personally acted reasonably.
More significantly, the purchaser submits that the vendor failed to act reasonably because the conveyancer failed to act reasonably. The purchaser says that the conveyancer was retained by the vendor to prepare the s32 statement, and failed to prepare it properly because the checklist the conveyancer gave the vendor was inadequate.
The evidence established that the vendor’s mistake in failing to include the planning permit details in the s32 statement was made because the conveyancer did not ask, in the checklist, whether there were any current planning permits over the property. The checklist asked about building permits, but not planning permits. The vendor (and her husband) did not realise she needed to disclose the planning permit in the s32 statement.
The issue is whether a want of care by someone engaged to prepare the s32 statement for a vendor can be visited on the vendor. Put another way, has a vendor failed to act reasonably under s32K(4) by not providing information that is required to be produced under the Act, in circumstances where the vendor has relied on a trained professional to advise of the necessary material to be included, and that trained professional has given the wrong advice which has then been relied on by the vendor?
The purchaser says that in preparing the s32 statement, the conveyancer was acting as the agent of the vendor, and the conveyancer’s reasonableness falls to be considered in deciding whether the vendor acted reasonably. Other than a brief discussion in closing submissions of Stage 1 about whether the purchaser was relying on ‘vicarious liability’, prompted by a question by me, this issue was not raised in the defence filed for the purchaser (‘the Defence’), or in Stage 1 of the trial.
From the filing of the rejoinder submissions, and during Stage 2 of the trial, Counsel for the vendor also relied on the definition of vendor in s30 of Part II of the Act:
In this Part unless inconsistent with the context or subject-matter … vendor includes any person acting as agent for the vendor.
Section 32 is within Part II of the Act.
The vendor says that the conveyancer was not her agent in preparing the s32. She says that the word agent is used in s30 in its ordinary legal sense. She says that the conveyancer was not her agent in this transaction in that sense. The conveyancer was a specialist conveyancer retained to prepare the contract and s32 statement for the vendor, but was not authorised to, and did not sign the contract or s32 statement on behalf of the vendor, and did not have any authority to act as her agent vis-a-vis third parties (including the purchaser). In advising the vendor on what needed to be included in the s32 statement, and preparing it, the conveyancer did not act in the capacity of an agent for the vendor.
The vendor says that the negligence of the conveyancer she retained should not be visited on her for the purposes of s32K(4).
AGENCY NOT PLEADED
Counsel for the vendor objects to the agency point being raised at all, given that it was not pleaded in the Defence either by reference to s30, or by reference to vicarious liability. The purchaser argued briefly, as discussed above, in final oral submissions during Stage 1 of the hearing that the vendor should be vicariously liable for the conveyancer’s conduct. The s30 point was first made after Stage 1 in the purchaser’s written reply submissions. This was after evidence had finished.
Counsel for the vendor says that this had the effect that the vendor did not put relevant matters in evidence, including the terms of the conveyancer’s retainer, and what occurred pursuant to that retainer, and that the vendor did not call the conveyancer as a witness. The vendor argues that in circumstances where the agency point was not pleaded, the vendor settled with the conveyancer where she otherwise would not have. She says she would be irreparably prejudiced if this issue was able to be raised after the evidence in the trial was completed, and the trial run on the basis that this issue was not pleaded.
The vendor submits further that although the purchaser argued in final oral submissions that the vendor should be vicariously liable for her agent’s conduct, the weight of prevailing authority contradicts that contention.
The negligence of the conveyancer was not pleaded. However, I will give leave for it to be relied on, exercising my discretion, since in my view all necessary facts are before the Court in any event and it is principally a matter of law as to whether the conveyancer’s actions affect the reasonableness of the vendor. I do not accept there was any irreparable prejudice.
I am satisfied on the evidence that the conveyancer sought information about matters she considered relevant to be included in the s32 statement from the vendor. She was retained to prepare the s32 statement. She did not enquire in the checklist she sent the vendor about planning permits. The parties agree that failure to ask this was not reasonable: the question the purchaser poses is whether that lack of reasonableness can be brought home against the vendor.
I do not consider that any further evidence of the details of the retainer or what occurred pursuant to it would have been relevant to the issues. I do not accept the suggestion that the vendor settled with the conveyancer on a different basis because the agency point was not pleaded. The case against the conveyancer was a claim for her negligence in preparing the s32. Given the clash in the legal authorities (discussed below) about whether work done by a conveyancer or estate agent or solicitor in preparing a s32 statement can be brought home to the vendor in terms of whether or not the vendor acted reasonably, I consider that the possibility the Court might be asked to take the conveyancer’s actions into account in deciding the vendor’s reasonableness ought to have been contemplated by the purchaser at the time of settlement in any event.
MEANING OF ‘AGENT’ GENERALLY
The purchaser says that the conveyancer was the vendor’s agent in preparing the contract and s32 statement. He submits that an agent is one who acts consensually on another’s behalf: Garnac Grain Company Incorporated v HMF Faure & Fairclough Ltd [1968] AC 1130 (‘Garnac’) at 1137, Colonial Mutual Life Assurance Society Limited v Producers and Citizens Co‑operative Assurance Company of Australia Limited (1931) 46 CLR 41 (‘Colonial’) at 50. He says that an agent is simply a person who has authority to act on behalf of a principal: Erikson v Carr (1945) 46 SR (NSW) 9 (‘Erikson’) at 12. He submits that solicitors are clearly agents, relying on Dal Pont, Law of Agency, 3rd edition, at [1.39]. He says a conveyancer is in a similar position to a solicitor. The conveyancer here was licensed under the Conveyancers Act 2006 (Vic), and in preparing the contractual documents, her role was indistinguishable from a solicitor; so she was the vendor’s agent in doing the work she did.
However, the principles cited by the purchaser on this aspect do not assist with the question at hand. All of them involved the question of whether a principal was liable for conduct of the agent in dealing with a third party.
Garnac involved the question of whether someone had entered into a contract with a third party as agent for an undisclosed principal. In considering that issue, Lord Pearson said at 1137:
As to the content of the relationship, the question to be asked is: What is it that the supposed agent is alleged to have done on behalf of the supposed principal? In this case Faure is alleged to have entered into contract C on behalf of Allied. That would mean that the rights acquired and obligations assumed by Faure as a party to the contract, though enforceable by and against Faure because they contracted in their own name without disclosing agency, would belong to Allied and would be enforceable by and against Allied, and moreover there would be other incidents of agency such as the duty of Faure to account and their right to be indemnified.
Colonial involved the question of whether a principal was liable for an agent’s tortious act. Mr Ridley was employed as a canvasser and agent under an agreement with an assurance company. He made defamatory comments concerning another assurance company while attempting to obtain insurance business. The question there was whether he was acting independently, or as a representative of the company which employed him, when he made those comments. It was held by a majority of the High Court that the company was liable for what was said by Mr Ridley, as its agent, during the negotiation which he carried out on its behalf. Dixon J (who was part of the majority) made the following salient comments:
In most cases in which a tort is committed in the course of the performance of work for the benefit of another person, he cannot be vicariously responsible if the actual tortfeasor is not his servant and he has not directly authorized the doing of the act which amounts to a tort. The work, although done at his request and for his benefit, is considered as the independent function of the person who undertakes it, and not as something which the person obtaining the benefit does by his representative standing in his place and, therefore, identified with him for the purpose of liability arising in the course of its performance. The independent contractor carries out his work, not as a representative but as a principal. But a difficulty arises when the function entrusted is that of representing the person who requests its performance in a transaction with others, so that the very service to be performed consists in standing in his place and assuming to act in his right and not in an independent capacity. [Emphasis added] [48-49]
…
Some of the difficulties of the subject arise from the many senses in which the word ‘agent’ is employed. ‘No word is more commonly and constantly abused than the word ‘agent’. A person may be spoken of as an ‘agent’ and no doubt in the popular sense of the word may properly be said to be an ‘agent’, although when it is attempted to suggest that he is an ‘agent’ under such circumstances as create the legal obligations attaching to agency that use of the word is only misleading’ (per Lord Herschell in Kennedy v De Trafford (1897) AC 180, at p. 188). Unfortunately, too, the expressions ‘for,’ ‘on behalf of,’ ‘for the benefit of’ and even ‘authorize’ are often used in relation to services which, although done for the advantage of a person who requests them, involve no representation. [Emphasis added] [50]
…
The wrong committed arose from the mistaken or erroneous manner in which the actual authority committed to him was exercised when acting as a true agent representing his principal in dealing with third persons. [Emphasis added] [50]
Gavin Duffy CJ and Starke J said in Colonial, by way of dicta, at 46:
…we apprehend that one is liable for another’s tortious act ‘if he expressly directs him to do it or if he employs that other person as his agent and the act complained of is within the scope of the agent’s authority.’
Erikson involved a question of whether someone who contracted with a third party had been doing so as agent for another.
The Dal Pont reference at [1.39] begins, ‘In that the essence of agency is a person representing the interests of another to third parties, solicitors clearly fall into the realm of agency’ [Emphasis added; citation omitted].
The paragraph goes on to state, ‘For instance, therefore, a solicitor retained to conduct litigation has authority to do all things necessary and proper for the conduct of the litigation and need not refer questions arising in interlocutory matters to the client for specific instructions.’ (Citing Ex parte Maxwell (1955) 72 WN (NSW) 333 at 336 per Roper CJ in Equity).
Contrary to the submissions on behalf of the purchaser, it was not pleaded by the purchaser, nor conceded by the vendor, that the conveyancer acted as the agent of the vendor in the relevant sense. On the contrary, the vendor submitted that the conveyancer did not act as agent. She did not deal with the purchaser, or represent the interests of the vendor to the purchaser, in preparing the s32 statement for the vendor.
There are two Supreme Court decisions which provide some support for the purchaser’s submission that the conveyancer was the agent of the vendor in the relevant sense: Payne & Anor v Morrison (1992) 2 ConvR 54-428 (‘Payne’) and Deemcope Pty Ltd v Cantown Pty Ltd [1995] 2 VR 44 (‘Deemcope’). They involve circumstances where a vendor relied on someone employed by him to ensure his obligations were complied with, that person was held not to have acted reasonably, and that was carried home to the vendor on the basis that person was the vendor’s agent.
There are other Supreme Court decisions where the fact that the vendor relied on someone else to prepare the s32 statement was mentioned favourably as a reason the vendors might be held to have acted reasonably: 58th Highwire, and Paterson v Batrouney (2001) V ConvR 54-639 (‘Paterson’). I respectfully agree with the analysis in these cases.
None of these cases mention the s30 definition of vendor as including agent although it was incorporated into the Act in 1982.
In Deemcope, Coldrey J dealt with a case where a contract did not contain provisions required under the then s6(4) of the Act. The purchaser purported to avoid the contract under the then s6(3) of the Act, and the vendor invoked the then s14(1). The contract provided relevantly:
a terms contract shall not be voidable by the purchaser if a court is satisfied that the vendor has acted honestly and reasonably and ought fairly to be excused for the contravention and that the purchaser is substantially in as good a position as if all the relevant provisions of the Act had been complied with …
Coldrey J referred to the fact that the vendor in that case gave evidence that he relied on his solicitor in relation to the settlement of the matter ‘and all attendant obligations that may have been cast upon vendor’. The vendor said he was unaware of his obligations under the Act and never sought advice on them from his solicitor. Coldrey J commented [at 63]:
… it is clear that he never sought to inform himself upon these matters. Nor can he recall seeking the advice of his solicitor … about signing the deed of defeasance and, in particular, the reason for executing the deed of defeasance or its effect. In short, he relied entirely upon [his] solicitor … in the conduct of this whole transaction.
It is perhaps trite to say that, in such circumstances, [the solicitor] was his agent and, assuming that his reliance upon his solicitor was reasonable, the question of whether the vendor has discharged the onus of demonstrating that it acted reasonably requires the consideration of the conduct of the solicitor.
Coldrey J said at [66]:
On all of the material before me I am quite unable to conclude that the [vendor] has established that it acted reasonably as required by s. 14(1) of the Act. The obligation to discharge the mortgage lay squarely upon the [vendor]. The [vendor]’s solicitor, acting as its agent, failed….
In Payne, a vendor failed to disclose that a drain ran under the house. Contrary to the requirements of s32(2)(b) of the Act the vendor failed to attach to the contract a statement under s239G of the Metropolitan Board of Works Act 1958 (s239G Statement) showing the course of the drain. In that case, there was also uncontradicted evidence that the purchaser had specifically asked the real estate agent acting for the vendor whether the drain ran under any part of the house and the real estate agent had said that it ran down the side of the property (at 65,055). There was an additional claim for misleading and deceptive conduct under the Fair Trading Act 1985. The Court was satisfied that the purchaser would not have bought the house had she known the drain ran underneath (she had previously not bought another house for that very reason). In considering the question of whether the vendor had acted honestly and reasonably, O’Bryan J said at 65,056:
I am satisfied that the [vendor] acted honestly in the transaction … I am not satisfied that any person for whose words or actions the defendant is vicariously responsible acted deceitfully or dishonestly. The claim insofar as it is based in fraud must fail.
…
The next question is whether the [vendor] acted reasonably. … The requirement of s.s. (7) to act reasonably is one of acting with due care and attention or without negligence. I am not satisfied that [the agent] acted with due care and attention in the transaction and ought not be excused for the contravention of s. 32(2)(b). For the lack of care and attention displayed by [the estate agent] the [vendor] is vicariously liable.
His Honour said that a prudent estate agent would have checked that the s239G statement was included in the contract. He went on to say that the estate agent did not act with due care and attention when he misinformed the purchasers as to the location of the drain in relation to the house.
The contract was prepared by the solicitor and forwarded to the estate agent. The s239G statement was forwarded with it, but not attached, and the evidence showed that the section 239G statement was never attached to the contract of sale by the real estate agent. His Honour held that when those documents were received ‘someone should have attached the s. 239G statement to the contract of sale. A prudent estate agent would have checked that the s. 239G statement was included in the contract’: at [65,057].
I respectfully agree with O’Bryan J’s finding about the vendor being vicariously liable for the actions of the estate agent, to the extent that they relate to the oral statements made by the estate agent to the purchaser on the day of the auction about where the drain ran. Those are statements made to a third party (the purchaser) by the estate agent, acting in his dealings with that third party on behalf of the vendor.
However, I respectfully disagree with the finding in Payne that vicarious liability is relevant in considering s32 of the Act. His Honour found that the vendor was vicariously liable for the actions of the estate agent in failing to check that the s239G statement was included in the contract. However, the estate agent there was not himself making any representation to the purchaser in the contract. It would be different had he signed the contract on the vendor’s behalf. Then his honesty and reasonableness would also be called into consideration under s32K(4). Similiarly, I respectfuly disagree with the finding in Deemcope that the vendor’s solicitor was its agent there, and the solicitor’s conduct needs to be considered in deciding if the vendor discharged its onus to show it acted reasonably.
Danjeet Nominees Pty Ltd v Ellul (1995) V ConvR 54-521, has been cited as another example of a case where a vendor was vicariously liable for a s32 statement negligently prepared by an estate agent. However, a careful reading of that case establishes that the Court there was satisfied the vendor itself was unreasonable. No finding was made that the estate agent was negligent.
In other cases, the negligence of the solicitor or estate agent acting for the vendor was not brought home to the vendor.
In Pricom Pty Ltd v Sgarioto & Ors (1994) V ConvR 54-508 (‘Pricom’), vendors failed in their s32 statement to disclose two things: a mortgage and the fact that the property was encumbered by a drainage condition. Eames J said (at 65,856) that it would seem that their solicitor made a mistake in drafting a negative reply in relation to the existence of a mortgage on the property.
Eames J referred (at 65,857) to the extensive review of the scheme of the Act undertaken by Hedigan J in Australian Horizons (Vic) Pty Ltd v Ryan Land Co Pty Ltd & Ors (1993) V ConvR 54-470, which included a review of the report of the Statute Law Revision Committee at the time the Act, including when s14(1) of the Act, was introduced. Eames J said at [65,858]:
The Report of the Committee identified the intended operation of the section as being to prevent the avoidance of contracts which may be sought on account of ‘accidental or immaterial errors’ or ‘purely unintentional technical errors’. The Attorney-General, in introducing the Bill in 1962, spoke of the section excusing ‘honest error’ or preventing purchasers taking advantage of ‘technicalities’.
I have no doubt that the case here would meet the description of those circumstances which both the Statute Law Revision Committee and the Attorney-General had in mind for the operation of s. 14(1).
He referred to the fact that the terms of the overriding subsections introduced by s32(7) and s33(4) of the Act by the Amendment Act in 1982, employed the same language as that in s14(1) (which dealt with terms contracts). He said at [65, 858] that:
it may have been thought necessary to ensure that the right to override an entitlement to rescission was given both for the terms contracts and for other contracts too, where specified.
Eames J accepted that the vendors acted reasonably in relation to the failure to disclose the mortgage. Applying s14(1), he said at 65,859:
They relied on their solicitors; they had no reason to conceal anything; they had limited understanding of property dealings; limited English language skill (in the case of Mr Sgarioto) and illiteracy (in the case of both).
In relation to the failure to disclose the drainage condition, applying the exculpatory provision, then at s32(7), he also held the vendors acted reasonably. He said at 65,860:
The vendors relied upon their solicitor to prepare the documents, they were illiterate and inexperienced in such matters. In all the circumstances I accept that they acted reasonably.
In 58th Highwire, a necessary notice disclosing the existence of a combined drain which sewered the property and two neighbouring properties and ran beneath the house on the property was not included in the s32 statement. The case did not deal with an argument that it was the solicitor’s negligence that caused the difficulties the vendor faced.
Charles and Callaway JJA said in obiter dictum that:
The complete protection that the fourth requirement affords the purchaser probably means that the first three requirements are concerned with the vendor personally, so that it will usually be inappropriate to visit the negligence of a solicitor on his or her client; but that need not be decided in the present case, where the alter ego of the [vendor] himself failed to act reasonably. [Emphasis added]
Brooking JA, discussed the fact that the question of the vendor’s liability for its solicitors’ actions did not need to be pursued on the facts of that case because the vendor did not contend its solicitor was responsible for the omission. Instead, the vendor there sought to explain why it did not give the necessary notice to the purchaser. The vendor’s director had learned of the existence of the drain before the vendor bought the property. Brooking JA noted at [72] that the vendor’s director did not say that he forgot about the drain’s existence, nor that he did not recall until after he located the statement after the sale that the drain had been included in the s32 statement given to his company when it purchased the property. Brooking JA commented about the vendor’s director at [72-73]:
He says nothing about what passed between him and his company’s solicitor; his statement that he did not cause notice to be given suggests that the vendor’s solicitor had sought instructions from the vendor for the purposes of the s32 statement. Neither the deponent nor the vendor’s solicitor says anything about what inquiries the solicitor himself made for the purposes of the s32 statement. It is conceded it is normal conveyancing practice in the metropolitan area for the vendor’s solicitor to obtain an encumbrance certificate from the board before providing the s32 statement. … There is no evidence of what happened in this regard in the present case.
I am far from satisfied that the vendor ‘acted reasonably’ in the present case. There was some brief discussion during the argument of whether a vendor could claim to have been acting reasonably in relying on a solicitor, and reference was made to Pricom Pty Ltd v Sgarioto at 65,860. But this question need not be pursued on the facts of this case, where the vendor does not contend that its solicitor was responsible for the omission but seeks to explain why it did not cause notice of the burden to be given to the purchasers. [citations omitted]
Paterson is another case where a vendor was not held liable where the negligence of its solicitor or real estate agent was the cause of the failure to disclose. Beach J there referred to the decision of the Court of Appeal in 58th Highwire.
The vendors in Paterson instructed their solicitor to act on their behalf in relation to the sale of the property. In the course of doing so, the solicitor prepared a s32 statement relying on a planning certificate that was nearly two years old, and failed to apply for a new certificate. He forwarded that to the estate agent employed by the vendors. His Honour held that it could not be said that the solicitor and estate agent engaged by the vendors acted reasonably, at [26]. Beach J said at [31]-[33]:
In my opinion the complete protection given to a purchaser by the fourth requirement of s.s.(7) does mean that so long as a vendor acts reasonably in relation to the preparation of an appropriate section 32 statement he or she will not be held vicariously liable for the negligence of his or her solicitor or real estate agent.
In the present case the defendants are aged in their eighties. To effect the sale of their home they placed the matter in the hands of [the solicitor] and [the estate agent]. In my opinion they acted quite reasonably in doing so and should not be vicariously liable for any negligence on its or his part.
In other words where one is dealing with the question as to whether a vendor has acted reasonably in relation to the preparation of a vendors statement one considers the conduct of the vendor personally.
The purchaser in the present case seeks to distinguish Paterson and Pricom. He refers to The Sale of Land Act Victoria, Law Book Co 2015, by Lloyd and Rimmer (‘Lloyd and Rimmer, Sale of Land Act Victoria’). There, the learned authors at (s32K.310) distinguish Paterson and Pricom on the basis that they concern vendors who effectively were not in a position to properly protect their own interests on account of age or language difficulties.
However, although in Paterson Beach J mentioned the age of the vendors in considering the question of their reasonableness, the salient part of his decision is that they placed the matter in the hands of their solicitor. Similarly, although the illiteracy and language difficulties of the vendors are referred to in Pricom, that is only as part of what is taken into account as to whether it was reasonable that the vendors themselves failed to notice that the s32 statement explicitly stated there was no mortgage, and gave misinformation about drains.
I reject the suggestion that it is implicit in either judgment that generally younger people or people with better language skills should somehow be second-guessing what is required to be disclosed under a s32 statement where they have employed a solicitor, conveyancer or estate agent to assist them and to prepare the s32 statement.
EFFECT OF DEFINITION OF VENDOR IN SECTION 30 OF THE ACT
The purchaser submits that the effect of s30 is one of identification of the conveyancer as the vendor in s32. He says its effect is that the vendor and her agent are to be treated as one and the same for the purposes of Part II of the Act.
As set out above, s30 of the Act includes the definition, for the purposes of Part II of the Act that ‘vendor includes any person acting as agent for the vendor’.
‘Agent’ is not defined in the Act. Elsewhere the Act makes reference to ‘estate agents’ and ‘licenced estate agents’, including in s31, which does not apply to a contract where the purchaser is an estate agent within the meaning of the Estate Agents Act 1980: see Lo v Russell [2016] VSCA [37].
None of the cases cited above in relation to reasonableness refer to this definition. The question is whether it adds anything to the analysis in relation to agency above. The purchaser submits that it does. The vendor says it does not.
The purchaser refers to Lloyd & Rimmer, Sale of Land Act Victoria, where the learned authors state (S.32K.320):
In none of the reported cases on the subject of the second element has reference been made to the definition of vendor in s 30, which includes a person acting as agent for the vendor. Plainly enough a solicitor, estate agent or conveyancer preparing a section 32 statement on instructions from the vendor can be said to be acting in the capacity of an agent of the vendor for the purposes of s 32. Taking the s 30 definition of vendor into account, it seems inevitable that for the purposes of the second element of s 32K(4) a vendor should not be entitled to escape the consequences of negligence on the part of an agent in terms of the drafting of the section 32 statement, as the negligence is by virtue of the s 30 definition effectively that of the vendor personally. In these circumstances, it should not be open for a court to find affirmatively that vendor has acted reasonably for the purposes of S43K(4) where the vendor’s agent has been guilty of negligence in relation to the drafting of the section 32 statement. [Emphasis added]
In footnote 388 to that section, the learned authors say that the statements in 58th Highwire are distinguishable as statements of obiter dictum on vicarious liability, and similiarly seek to distinguish Beach J’s statement in Paterson at [31] that:
So long as a vendor acts reasonably in relation to the preparation of an appropriate section 32 statement he or she will not be held vicariously liable for the negligence of his or her solicitor or real estate agent.
I respectfully disagree with this analysis. What was being referred to in 58th Highwire, and decided in Paterson, is precisely the same point as is for consideration here: do you take the negligence of a solicitor or estate agent in preparing the relevant documents into consideration in deciding if the vendor is negligent?
The conveyancer was not the agent of the vendor in the present case in preparing the s32 statement. She was a retained expert.
The purchaser says that the conveyancer is the vendor’s agent because she is named as conveyancer on the contract, and later she dealt on behalf of the vendor in relation to this transaction by sending a letter to the purchaser’s conveyancer.
However, being named conveyancer for the vendor on the contract does not mean she is an agent in the usual meaning of that term in relation to work she privately did for the vendor. In sending the letter to a third party on the vendor’s behalf she acted as agent for the vendor. But being an agent in one context does not make her an agent in another.
If the conveyancer was not the agent, the definition in s30 takes matters no further.
The Court of Appeal has made this distinction clear recently. Lo v Russell [2016] VSCA 323 (‘Lo’) involved a direct dealing between an estate agent and purchaser. The Court of Appeal considered the question of whether a notice of termination sent by the purchaser to the vendor’s estate agent was effective under s31(3) of the Act, which provides that such a notice:
shall be given to the vendor or his agent or left at the address for service of the vendor specified in the contract or the address of his agent within three clear business days after the purchaser has signed the contract. [20]
As Warren CJ, Tate JA and McLeish JA stated in Lo, at [45]-[46]:
Especially when ‘estate agent’ is used in s 31(5), it is more likely that ‘agent’ in s 31(3) has its ordinary meaning rather than the special meaning of ‘estate agent’. Secondly, s 15(1)(b) contemplates service of notices under the SLA on persons authorised by the person served to receive them. The better view is that, consistently with that provision, ‘agent’ in s 31(3) simply means a person authorised by the vendor to receive the notice for which s 31 provides. In other words, ‘agent’ in s 31(3) has its ordinary legal meaning.
Further, … the word ‘agent’ does not accurately describe the legal status of an estate agent in relation to a vendor. The suggested special meaning of ‘agent’ is therefore based on a non-technical usage rather than the legal meaning of the word. There is a presumption that where a statute uses a word with an established legal meaning, that is the meaning that the word will bear unless the context suggests otherwise. In the present case, there is no indication in the statute that it adopts any meaning for ‘agent’ other than its established legal meaning, and the presumption that this is the correct meaning is therefore not displaced. [Citations omitted and emphasis added]
In Lo, the Court of Appeal decided that a notice sent to the estate agent in that case did constitute notice to the vendor, but that was despite its construction of the word ‘agent’ in s31 of the statute. It was because of its construction of the sale contract (and it expressly noted that the outcome of that case depends on the operation of the contract there employed: at [62]). The contract referred to the ‘important notice’ and used the words ‘vendor or the vendor’s agent’ in describing whom the notice was to be given. At the top of the next page were found the details of the vendor’s estate agent. No other person was described in the contract using the term ‘agent’. The Court said:
a reasonable person in the position of the purchaser or the vendor reading the contract would infer that the ‘vendor’s agent’ to whom reference is made in the ‘important notice’ is the person with whom the purchaser has been dealing in place of the vendor and who is described immediately thereafter as the ‘vendor’s estate agent’. [55]
I disagree with the contentions put on behalf of the purchaser that someone who is engaged to do some work, which is then adopted and presented as their own by the vendor, falls within the definition of vendor’s agent under s30. The Court of Appeal in Lo answers the point regarding s31, and there is no relevant distinction in applying its logic to s32.
It follows that I find the vendor in this case acted reasonably.
PURCHASER IS IN SUBSTANTIALLY AS GOOD A POSITION
I have dealt with the first three matters I am required to be satisfied of under s32K(4), which all related to the vendor’s position.
The fourth matter I am required to be satisfied of relates to the purchaser. In order for the vendor to succeed, I need to be satisfied that the purchaser is substantially in as good a position as he would have been had the planning permit been disclosed in the s32 statement. He says he is not, for a number of reasons; one clearly pleaded and others that were put later.
CASE ON PLEADINGS
At [7] of the Statement of Claim, the vendor pleads that the purchaser purported to rescind the contract of sale by a letter from his solicitors dated 29 March 2016, relying on alleged non-compliance by the vendor with s32D of the Act.
The Statement of Claim at [8] pleads that the rescission notice constituted a repudiation of the contract and, by the letter from her solicitors of 7 April 2016, the vendor accepted the repudiation and terminated the contract of sale. The particulars say:
The rescission notice (which relied on the alleged non-disclosure by [the vendor] in the s.32 vendor’s statement of the existence of [the planning permit]) was invalid and had no legal effect because:
(i) …
(ii)further and alternatively, even if [the vendor] was obliged to disclose the planning permit and failed to comply with section 32D [the purchaser] is nonetheless prevented from rescinding the contract of sale by the terms of s32K(4) of the Sale of Land Act because:
(A)[the vendor] has acted honestly and reasonably and ought fairly be excused for the contravention;
(B)[the purchaser] is in substantially as good a position as if all of the relevant provisions of the Division had been complied with …
In the Defence, the purchaser denies [7]. He pleads that had the planning permit been disclosed in the s32 statement, he would not have entered into the contract of sale.
The purchaser denies [8] and states that the vendor was not entitled to rely on s32K(4) because he, the purchaser, was not substantially in as good a position as if all relevant provisions of Part II of the Act had been complied with. The reason given for this allegation is given in particulars at [8] as follows:
The [purchaser] purchased the property with the intention of constructing an eight unit development on it. Such a development was no longer feasible given the existence of the Planning Permit and the order of Member Nelthorp in VCAT proceedings P1901-2013 dated 8 August 2014.
At Stage 2 of the trial, on 28 July 2017, Senior Counsel for the purchaser sought leave to add an additional paragraph to the particulars to [8] of the Defence, if necessary. As discussed below, he says it was not necessary for this to be added in order for the argument regarding value to be advanced. The further paragraph is:
ii. The [vendor] sold the property on 25 June 2016 for only $2,875,000 in the same market with disclosure of the planning permit.
CASE PUT AT TRIAL
In closing submissions at Stage 1, Counsel for the purchaser submitted that he was not in substantially as good a position because:
(1) The planning permit affected the proposed development that the purchaser intended to undertake the property.
(2)The purchaser would not have purchased the property for the same price had he known of the planning permit. (This point was developed to argue that had he known of the planning permit, the purchaser would have engaged on a train of enquiry that would have led him to discover that three years earlier the Council had rejected an application for five units, and the matter had gone to VCAT. This would have made him offer less for the property).
These points were not pleaded, but Counsel for the vendor did not object to them being raised. He conceded that they may have been contemplated by the pleading that it was ‘no longer feasible’ to develop the property for an eight unit development and in any event said that the evidence was there to refute them.
In written submissions filed after Stage 1, Counsel for the purchaser argued a further point.
(3) The value of the property was adversely affected by the planning permit.
This third allegation, that the property was adversely affected by the permit, was not part of the case as pleaded. No mention was made in the Defence of the value of the property. Although the fact it was sold for less was mentioned in the opening oral submissions of the purchaser, that appeared to be background information and relevant only to the quantum of damages. Only when written reply submissions were filed for the purchaser after Stage 1 of the trial was it argued that the property was in fact worth less due to the planning permit.
Senior Counsel for the purchaser said this point did not need to be pleaded. Alternatively, he sought leave to amend the Defence if necessary to add the further paragraph detailed above as a particular of why the purchaser is not in substantially as good a position as if the permit had been disclosed:
ii. The [vendor] sold the property on 25 June 2016 for only $2,875,000 in the same market with disclosure of the planning permit.
Counsel for the vendor objected to this point being sought to be relied on after evidence had closed. He said he lost the opportunity to call evidence against the proposition. He said too that there was no evidence that the value was adversely affected by the planning permit, and in those circumstances any such pleading would be futile.
The purchaser did not call a valuer to seek to establish that property in general decreases in value because a permit gives permission to build according to certain plans for a period of time. Nor did he call a valuer to seek to establish that this particular property had diminished in value because of the planning permit, or how much it had diminished if so. Rather, the purchaser submitted that the evidence of the fall in value as a result of the permit is to be found in the fact that property was sold a few months later to a new purchaser for $185,000 less than Mr Lau had agreed to pay. The later sale involved a s32 with disclosure of the planning permit. He submits this amounts to it being sold ‘in the same market’, and says it is proof of the diminishment in value caused by the permit.
In Lloyd & Rimmer, Sale of Land Act Victoria, at (s32K.410) the learned authors refer to the general desirability of having:
independent valuation evidence to the effect that the property is not worth what the purchaser agreed to pay for it, taking into account the correct information which the section 32 statement should have contained’
However, the purchaser relies on the final sentence of that paragraph which states:
Valuation evidence may not be necessary if the vendor has by the time of trial already resold the property on the basis of a section 32 statement containing the correct information.
In my view, however, valuation evidence would have been necessary here. The fall in value three months later could have been for a number of reasons including the colder weather at that time of the second sale, what other comparable properties were then available, and who attended the auction.
Because the point was not pleaded or notified at an earlier stage of the trial, the vendor lost the opportunity to call the underbidder at the auction Mr Lau successfully bid at. That underbidder bid just $500 less than Mr Lau bid, in circumstances where I accept the evidence of Mr Oster that Mr Oster disclosed the fact of the permit when the property was open for inspection, and at the auction before putting the property on the market. The underbidder (unlike Mr Lau and Mr Ng) may have been told about the planning permit by the auctioneer and bid to that level based on knowing about it. The vendor also lost the opportunity to ask Mr Oster more about this, and to call expert evidence if so advised on whether the fact of the permit in fact lessened the value of the property and to cross examine about it.
It was argued that for the purchaser, as a matter of pleading practice, the purchaser was not required to plead to particulars of the Statement of Claim. The allegation about the vendor’s position was in the particulars to [8] of the Statement of Claim. However, the parties are entitled to understand what case they have to meet. That is the purpose of pleadings, including particulars.
The vendor did not know that the purchaser was planning to run a defence that the property decreased in value due to the planning permit, until after evidence had concluded. It is an important point, and ought to have been notified in the pleadings.
The purchaser said that the vendor should have proven the property had not decreased in value as part of its case. I disagree. The basis on which the purchaser pleaded that it was in a substantially worse position was set out in the Defence. It did not include diminishment in value.
This important point ought to have been pleaded to be part of the Defence, and I will not give leave to amend after the close of evidence. Granting leave to amend would be futile too, in the absence of evidence that the property was worth less because of the permit. And in any event it would have been unfair to the vendor, who lost the opportunity to call evidence to answer the point or to cross examine about it.
So the relevant issues are whether the purchaser was not in substantially as good a position due to failure to disclose the planning permit in the s32 statement because:
(1)The planning permit affected the proposed development that the purchaser intended to undertake the property.
(2)The purchaser would not have purchased the property for the same price had he known of the planning permit.
LEGAL PRINCIPLES
The Court of Appeal in 58th Highwire at [77] stated that the consideration as to whether the purchaser is not in substantially as good a position ‘involves asking whether the difference between the purchaser’s actual and hypothetical positions is ‘real or of substance as distinct from ephemeral or nominal.’’
In Curtain, Gobbo J commented that the word ‘substantially’ was there to avoid the situation where, because of some non-disclosure, ‘every purchaser would be able to say he is in a less advantageous position than it would have been if he had been given the full information’.
In 58th Highwire, Brooking JA considered the effect of a combined drain which sewered the property and two neighbouring properties, and ran under the land. He said at [76] that:
Some burdens are of such a nature that their adverse and depreciatory effect will be more doubtful. If a significant number of potential purchasers might regard the burden as having a significant adverse effect on the property, then it seems to me impossible to find affirmatively, where the existence of the burden is not disclosed to the purchaser, that the purchaser is substantially in as good as a position as if its existence had been disclosed.
…
In the absence of cross-examination it is, in my opinion not possible to say, on the whole of the lay and expert evidence, and exercising one’s own judgment as a matter of common sense and common experience in the evaluation of the expert evidence, that the vendor here had shown that the purchasers were substantially in as good a position as if s. 32 had been complied with. I would not myself find, and I consider that it was not open to a judge to find, that the undisclosed burden had been shown not to have any significant adverse effect on the value of the property, and in the absence of such a finding one could not conclude that those who had bought the property in ignorance of the burden were in substantially as good a position as if its existence had been disclosed to them. [emphasis added]
The Court of Appeal in 58th Highwire at [77] said relevantly:
It will usually be sufficient to consider [whether the purchaser is substantially in as good a position] objectively. The market value of the land is one, but only one, of the factors that will be taken into account. We leave for consideration in an appropriate case whether subjective factors may not sometimes be relevant too, for example where the purchaser wishes to put the land to a particular use. In some cases such factors will not be affected by opportunism or hindsight. They may have mentioned earlier to the vendor or to third parties. Where they surface for the first time after the non-compliance with s. 32 is discovered, it will be a matter for the tribunal of fact whether or not it accepts the purchaser’s assertions. (emphasis added)
In Nicolacopoulos v Khoury [2010] VCC 1576 (‘Nicolacopoulos’), Judge Ginnane (as he then was) held that he was bound by 58th Highwire to determine the issue objectively: see at [34], [35]. In that case the omitted information was the existence of an owners corporation affecting the property. Judge Ginnane said at [35]:
The existence of the owners corporation is a significant matter affecting the property, which might ultimately affect each member, e.g. if financial contributions had to be made to the owners corporation in the future. Viewing the matter objectively, a purchaser would be better informed about matters that may affect her decision whether to enter into the contract, if he or she received the information required under s.32(3A). Without that information, the purchaser is not in substantially as good a position to make an informed choice about whether to enter into the contract, as she would have been if the information had been provided.
In McHutchison, Digby J stated at [83] that he rejected the vendor’s submission that the purchaser was in substantially as good a position ‘assessed on an objective basis’.
The possibility of a purchaser’s subjective position being a relevant matter to take into account in the objective enquiry under s32K(4)(b) does not appear to have been taken up or addressed in authorities subsequent to 58th Highwire.
It is clear that the fundamental enquiry remains objective. There may be appropriate cases where subjective matters may be relevant to that objective enquiry. This does not mean the enquiry becomes a subjective enquiry.
Timing is relevant. In 58th Highwire, Brooking JA said at [74] that in considering whether the purchaser is in substantially as good a position, ‘[t]he court may consider events occurring down to the time when the matter comes before it’. In Pricom the relevant burden affecting the land was able to be removed before the matter came on in court. In Curtain the effect of the burden was partly ameliorated by the vendor by the time the matter came on in court.
ANALYSIS
On an objective analysis, I am satisfied that the purchaser (who hoped to build seven or eight units on the property) is in substantially as good a position as if the information about the planning permit had been provided in the s32 statement. The planning permit by its terms gave permission to develop a certain way for a limited period of time. The fact that a planning permit existed for the development of 4 dwellings does not mean a development proposal for a greater number of dwellings is not feasible. The purchaser’s position in relation to being able to apply for a 7 or 8 unit development was the same before auction as after. Any proposal he wanted to put to Council remained regulated by the Boorondara planning scheme and all relevant controls and regulations.
The purchaser was not due to settle until 18 days after the permit had expired in any event. By then the permit would not affect the property.
In the event the purchaser had wanted to apply for a different permit for different plans before he settled on the property, and had not wanted to apply to amend the planning permit, at most there may have been a minor delay in making a new application. No evidence was given to establish how quickly Mr Lau would have been in a position to make a new application. Bearing in mind that the relevant difference in position must be real or substantial, I am not satisfied that relevant difference in position arises on the facts of this case.
Mr Lau’s real concern appears not to have been with the planning permit, but with the fact that three years before the auction the Council had rejected a proposed five unit development and it was appealed to VCAT. However, the non disclosure of the documents relating to these matters was not actionable. S32K does not require disclosure of applications for permits to develop properties that were rejected, nor of any non current planning permits.
To the extent that it is argued that Mr Lau did not know about the permit and this knowledge would have affected his personal decision to buy at the price he bought, I do not accept that proposition. I find that Mr Lau knew about the existence of the permit allowing four units to be built on the property before he bought the property even though it had not been disclosed in the s32 statement.
Both Mr Lau and Mr Oster gave evidence that on 17 March 2017, two days before auction, Mr Lau met with Mr Oster at the Kay & Burton offices. Mr Lau said in his evidence that his colleague Irene came as well. Mr Oster did not say Irene came, and was not cross examined to the effect that she came. Irene was not called to give evidence. I assume from this that her evidence would not have assisted Mr Lau: Jones v Dunkell (1959) 101 CLR 298.
Mr Oster gave evidence that at that meeting with Mr Lau, Mr Oster talked about the planning permit. He said that he told him that in his opinion the existing planning permit might not be commercially viable, and they discussed other options for the land. The purchaser conceded in cross-examination that he did discuss with Mr Oster various development proposals for the property, including a two home development and a four unit development at that time.
I accept the evidence of Mr Oster that the permit was mentioned in his discussion with the purchaser on 17 March 2016.
Mr Oster was the auctioneer at the auction on 19 March 2016. He gave evidence he referred to the planning permit in his opening spiel. However, the purchaser said that he was not listening, and that he attends so many auctions he does not bother listening to the opening comments. Mr Ng, who had attended with Mr Lau, said he also was not listening at that time but was on the phone querying something with the tree specialist. I find that the planning permit was mentioned at auction. It is noted in Mr Oster’s running sheet. Counsel for the vendor properly conceded that, given that the purchaser (and Mr Ng) denied listening to what Mr Oster said at the auction, the vendor could not establish on the evidence that Mr Lau was informed of the existence of the planning permit on that occasion. I am not satisfied on the balance of probabilities that either Mr Lau or Mr Ng heard the reference to the permit at the auction. However, as indicated above, I find Mr Lau already knew about it.
On 20 March 2016 Mr Downing sent Mr Ng by email the shared folder in Dropbox containing the planning permit and VCAT order. That day, Mr Ng emailed Mr Lau saying ‘it seems like they have done some planning permit’. Counsel for the purchaser submits that this shows the purchaser did not already know about it. However, at its highest it might show that Mr Ng did not know about it till the day after the auction. It does not show what Mr Lau knew.
Of course, being told a permit exists is not the same as being provided with a copy of it, as is required by the Act. However, since Mr Lau’s complaints as to how his position has changed stem from his allegation that he did not know about the planning permit at all before bidding on the property, my finding that he did know about it means that the development he proposed to make was not affected by it not being included in the s32 statement. He was in substantially as good a position as if its existence had been disclosed in the s32 statement.
Even if I had not found that Mr Lau knew about the planning permit before the auction, I would have found that he was not substantially in a different position as a result of the failure to disclose the planning permit in the section 32.
Counsel for the purchaser argued that Mr Lau thought it was no longer feasible to develop the property as planned, and that he would not have paid the same amount had he known about the planning permit before bidding at auction.
I am not satisfied on the balance of probabilities that this was the case. Mr Lau’s evidence about how he calculated how much to pay, based on 7 or 8 units at $350,000 to $400,000 each, was very vague. No detail was given as to how he arrived at those figures such as by reference to specific sized units, or comparable sales. No documents were produced to establish how this amount was supposedly calculated. Mr Lau said he is a director and 50% shareholder of Wyndham Development Consulting Pty Ltd, a company which makes money by procuring, developing and project managing developments on its own behalf and on behalf of other companies. The cheque for the deposit was provided by Wyndham Development Ltd, another company in what appeared to be a consortium involved in developments. He gave evidence of there being more companies involved, and other people involved in who make decisions about what properties to purchase and what amount to bid for those properties.
Although the purchaser gave evidence about ‘the team’ making a decision as to price in relation to the Earl Street property, his evidence as to who was in ‘the team’ was extremely confusing. After many questions it remained unclear who ‘the team’ were There was no detail given of any actual discussions had when and where they occurred and who they involved. No-one else supposedly involved in these indeterminate discussions was called to give evidence. Having observed Mr Lau give evidence, I do not accept that he gave such careful consideration to how much to bid for the property that not knowing about the planning permit would have affected that.
It is significant that after the planning permit was provided to him in the Dropbox link, and before the contract was rescinded by the letter from his solicitor, he and Mr Ng spent time over the next eight days seeking advice from the architect and town planner as to whether the planning permit would affect their development plans. There is no evidence at all that they were told it would.
On the contrary, Mr Cornetta told them it would not from his perspective. They then continued to look into the possibility of developing 7 units on the site and potentially again seeking to buy the property till May.
On 22 March 2016, Mr Ng emailed Mr Cornetta, copying in Mr Lau as well as Peter Dowdell, ‘Irene’ and ‘Rebecca’:
would you please advise us how likely the previous planning permit would affect our development from the regulation, planning scheme or guidelines perspectives.
The emailed response from Mr Cornetta on 22 March 2016 was:
as discussed this question is best answered by your town planning consultant. From my point of view, our application is ‘new’ and will not reference the previous application at all.
The evidence given by Mr Cornetta at trial did not support the proposition that the existence of the planning permit altered the feasibility of developing the property as planned. Whilst he gave evidence that if he had been aware a particular tree was to be retained he would have shown it in his initial drawing of eight units prior to auction, the fact is that the tree was always on the property, and was discussed in the tree management plan which had been provided to Mr Lau before auction. Mr Ng gave evidence that on the day of the auction he was on the phone to the architect and the arborist, and there was discussion about the impact the tree, if it had to remain, would have on the proposed development. The fact that a later drawing for seven units allowed for the tree had nothing to do with the planning permit and its conditions.
Mr Ng said that he knew from a previous project at 1289 Burke Road that Booroondara Council might require a physical break between the units of the proposed development (thus reducing the proposed units from eight to seven). He said that Mr Lau was informed by the town planner prior to auction that he might have to include a physical break in the development. He did not give any evidence that the planning permit adversely affected the plans Mr Lau and his associates had to develop the property.
Mr Ng’s evidence was that after the auction date he raised with the consultants whether the existence of the planning permit was a problem for the proposed development. He said that both the architect and the town planner said it was not and he told Mr Lau this. He then co-ordinated ongoing design development between the consultants from 22 March to 20 May 2016, based on a seven unit proposed development.
There is no evidence as to what the town planner said at the time about how the planning permit might affect the project. She was not called to give evidence on this point. As her evidence would clearly have been relevant, I draw a Jones v Dunkell inference that it would not have assisted Mr Lau.
Senior Counsel for the purchaser argued that the Court should infer Mr Lau was given advice that his proposed development was no longer feasible from the fact that in a letter of 11 April 2016 sent by solicitors acting for the purchaser a statement was made that:
our client entered into the contract of sale on the basis of incomplete information as to the use to which the property could be put.
However, the fact this is asserted does not amount to evidence. Mr Lau had the opportunity to give evidence that his proposed development was not feasible, and he had the opportunity to call evidence from his own advisers to that effect. No such evidence was given.
For these reasons, I find that the purchaser was not entitled to rescind the contract.
I now turn to the issue of the relief sought by the vendor.
WHY DEPOSIT IS DUE
The deposit of $305,050 is stated in the schedule of the contract to be 'payable on the signing hereof'. The balance of the purchase price was due at settlement.
The vendor wants the purchaser to be ordered to pay the amount of the deposit, which was supposed to be paid when the contract was signed. Instead, the cheque which was provided on that day was cancelled two days later.
The purchaser says that the vendor is not entitled to payment of the deposit. It can only sue for damages.
General conditions 25, 27 and 28 of the contract state:
BREACH
25. A party who breaches this contract must pay to the other party on demand:
(a)compensation for any reasonably foreseeable loss to the other party resulting from the breach; and
(b) any interest due under this contract as a result of the breach.
DEFAULT NOTICE
27.1 A party is not entitled to exercise any rights arising from the other party's default, other than the right to receive interest and the right to sue for money owing, until the other party is given and fails to comply with a default notice.
27.2The default notice must:
(a) Specify the particulars of the default; and
(b) State that it is the offended party's intention to exercise the rights arising from the default unless, within 14 days of the notice being given –
(i) The default is remedied; and
(ii) The reasonable costs incurred as a result of the default and any interest payable are paid. Clause 28 deals with the consequences of a default not being remedied.
28. DEFAULT NOT REMEDIED
28.1 All unpaid money under the contract becomes immediately payable to the vendor or if the default has been made by the purchaser and is not remedied and the costs and interest are not paid.
28.2. The contract immediately ends if:
(a)the default notice also states that unless the default is remedied and the reasonable costs and interest are paid, the contract will be ended in accordance with this general condition; and
(b) the default is not remedied and the reasonable costs and interest are not paid by the end of the period of the default notice.
28.3 If the contract ends by a default notice given by the purchaser:
(a) the purchaser must be repaid any money under the contract and be paid any interest and reasonable costs payable under the contract; and
(b) all those amounts are a charge on the land until payment; and
(c) the purchaser may also recover any loss otherwise recoverable
28.4 If the contract ends by a default notice given by the vendor:
(a)the deposit up to 10% of the price is forfeited to the vendor as the vendor's absolute property, whether the deposit has been paid or not; and
(b) the vendor is entitled to possession of the property; and
(c)in addition to any other remedy, the vendor will may within one year of the contract ending either:
(i)retain the property and sue for damages for breach of contract; or
(ii)resell the property in any manner and recover any deficiency in the price on the resale and any resulting expenses by way of liquidated damages. …
28.5 The ending of the contract does not affect the rights of the offended party as a consequence of the default.
In Holland v Wiltshire (1954) 90 CLR 409 at 411, Dixon CJ drew a distinction between the rights which flow from rescission ab initio and rescission de futuro and stated that, where a vendor rescinded the contract for the purchaser’s breach, the contract was not rescinded ab initio but was rescinded de futuro, so as to preserve the vendor's right to damages. The House of Lords approved this in Johnson v Agnew [1980] AC 367 at 397.
In McDonald v Denys Lascelles (1933) 48 CLR 457 at 476-477 , Dixon J stated:
When a party to a simple contract, upon a breach by the other contracting party of the condition of the contract, elects to treat the contract is no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected.
The vendor relies on Bot v Ristevski [1981] VR 120, where Brooking J held that if a purchaser contracts to pay a deposit but fails to do so and then repudiates the contract, the vendor is entitled to recover judgment for the amount of the deposit even if it exceeds the amount of the actual damage suffered by him due to the repudiation.
The purchaser distinguishes Bot v Ristevski. He says that there, Brooking JA focused on the terms of the contract in question in considering whether an unconditional right to recover and retain the deposit arose before the contract was discharged. He stated, at 124:
If such a right did arise, it will survive the determination of the contract, and if the money has been paid before discharge the purchaser will not get it back, while if the money has not been paid before discharge the purchaser will be compelled to pay it.
In Howe v Smith (1884) 27 Ch D 89 (also cited in Bot v Ristevski ) Bowen LJ stated at 98:
The question as to the right of the purchaser to the return of the deposit money must, in each case, be a question of the conditions of the contract. In principle it ought to be so, because of course persons may make exactly what bargain they please as to what is to be done with the money deposited.
In Commissioner of Taxation v Reliance Carpet Pty Ltd [2008] 236 CLR 342 (‘Commissioner of Taxation v Reliance’) the High Court said:
In the absence of an express contractual stipulation to the contrary, a vendor terminating a contract for default by the purchaser in completion is entitled to retain the deposit, as an implied term upon which the deposit was provided: … [Emphasis added]
The purchaser submits that clause 28 of the contract in the present case outlines the rights each party may exercise where a party's default is not remedied, and says that those rights only apply where a default notice has been given. No default notice was given here.
He submits that clause 25 of the contract operates independently of clauses 26 to 28. It supplants clause 28.4(a) (which relates to forfeiture of the deposit), and the principle in Bot v Ristevski. He says that the parties have expressly provided for the consequences of breach.
Houlahan & Ors v Trentham Investment Management Pty Ltd & Ors (‘Houlahan’) [2016] VSC 240 involved a contract with relevantly identical terms to the one in this case. There, unlike here, the vendors' solicitors served a default notice on the purchaser, giving 14 days within which to remedy its default in not paying the deposit. Fourteen days later they served a rescission notice, listing the default relied on as being the failure to pay the deposit. In that case, the vendors succeeded in obtaining the return of the unpaid deposit. The purchaser says it was necessary for that chain of events to occur here in order for the vendor to recover the deposit.
Bot v Ristevski makes it clear that the deposit is recoverable where a purchaser has defaulted. I do not agree that the analysis was limited to the specific contract before Brooking J. Rather, Brooking J considered general principles in detail regarding when contracts come to an end and how that question affects obligations which have already arisen in the context of recoverability of deposits.
In Commissioner of Taxation v Reliance the High Court discussed the point of principle which applies where a deposit is provided, saying that in the absence of an express term to the contrary, the vendors are entitled to retain the deposit as an implied term on which it was provided.
In the case before me, it is not a question of the vendor retaining the deposit, but of the vendor being entitled to sue for it. That is because the purchaser cancelled the cheque by which he paid the deposit, the day after providing it when he signed the contract. As a matter of principle, providing the deposit and then taking it back, as it were, cannot put the purchaser in a better position than he would have been in had he provided payment by another method which he was not able to cancel. I find that the parties agreed to the provision of the deposit on the basis of an implied term that if the vendor terminated the contract for default by the purchaser she would be entitled to the deposit.
There is no express contractual stipulation 'to the contrary' of this implied term in this case.
Clause 25 of the General Conditions provides for a defaulting party to pay 'compensation for any reasonably foreseeable loss' and interest due under the contract. It has nothing to do with a vendor's entitlement to recover a deposit, which is a specified and liquidated sum payable on a certain date (the day of signing).
The default provisions in clause 27 of the General Conditions deal with a different situation. Clause 27.1 specifically excludes a party's 'right to sue for money owing' from the category of claims under which a party is required to serve a default notice. Here, the deposit is sued for as money owing.
The purchaser's analysis of clause 28.4 amounts to saying that because the contract expressly provides that if it is terminated by the sending of a default notice the deposit may be retained, it is implicit that otherwise the deposit cannot be retained.
In circumstances where a purchaser repudiates a sale of land contract, the innocent vendor is not required to serve a default notice as a prerequisite to recovering an unpaid deposit: see Nund v McWaters [1982] VR 575, and Walters v Cooper [1967] VR 583. As stated in Walters, it would be hard to know how to word a default notice in circumstances where the contract has already been repudiated, and that repudiation accepted. These authorities are consistent with the operation of clause 27.1. That clause does not require the vendor to serve a default notice when suing for monies owing, as is the case here.
Houlahan did involve a similar contract to the one in question here, and the vendors there sent a default notice and then sued for the deposit. That does not mean they needed to send a default notice to sue for the deposit. The judgment does not say anything about what would have happened if a default notice had not been sent.
I find that the vendor has a right to the deposit under the contract as a debt due to it. $305,050 was payable by the purchaser on the signing of the contract of sale. The right to recover the deposit is not affected by discharge of the contract: Bot v Ristevski at 122-4 and McDonald v Dennys Lascelles Ltd at 476-7.
INTEREST DUE ON DEPOSIT
Clause 26 provides:
Interest at a rate 2% above the Penalty Interest Rates Act 1983 rate is payable on any money owing under the contract during the period of default, without affecting any other rights of the offended party.
The vendor says that interest is payable on the deposit from the day when it was due to be paid (19 March 2016), until the deposit is finally paid. So it seeks interest at 2% over the Penalty Interest Rates Act 1983 (Vic) rate from 19 March 2016 until the date of judgment.
The purchaser says that in the event the deposit is forfeited to the vendor, interest only accrues 'during the period of default'. He says that is until the date of effective rescission of the contract. The interest on the deposit accrued between 19 March (when the alleged default occurred) until 7 April 2016 (when the vendor sent the rescission notice) using the interest rate outlined by the contract is $1,754.04.
The purchaser refers to Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd [2014] VSC 57 (‘Portbury’) at [469], which he submits involves an identical clause in a contract of sale. In that case, Garde J allowed interest under general condition 26 of the relevant sale contract from the date the deposit was due until the date the contract was rescinded as a result of a default notice given by a vendor.
No discussion of principle is set out in Portbury. The issue of when the default period ran does not appear to have been an issue in the trial. In my view, that case does not assist with the issue at hand.
Clause 26 sets out out the parties’ agreement to interest running at a particular rate on money due under the contract until the default in payment is rectified. The deposit is due under the contract. As discussed above, that obligation arose before the contract was rescinded. The default in paying it continues and the obligation to pay interest at the higher rate as agreed under the contract continues until it is paid. I will award interest at the rate set out in clause 26 until the date of judgment.
THE ALTERNATIVE DAMAGES CLAIM
If I were wrong about the right to recover the deposit being a debt, then the vendor would be entitled to recover damages, its alternative claim. Since some time was spent on this at trial, I deal briefly with this issue.
The vendor purported to accept the purchaser's alleged repudiation and terminated the contract. As I have found he was not entitled to rescind, then it follows that he breached the contract.
Clause 25 provides that the purchaser must pay 'compensation for any foreseeable loss to the other party resulting from the breach'.
The parties agree that the starting point regarding compensation is $175,000 - the difference between the price at which the vendor sold to the purchaser for, and the price at which she sold later to a new buyer.
The parties also agree that the fact the vendor was paid money in the settlement with the conveyancer should be taken into account in reducing the amount of damages she suffered.
They disagree as to how much of the settlement payment should be deducted.
The purchaser says the full amount of the settlement should be deducted: $130,000. This would leave damages of $45,000 due.
The vendor says only $90,000 of the settlement sum should be deducted. Counsel for the vendor says this allows for $40,000 of the settlement sum to be kept by her, representing Counsel’s estimate of the costs of obtaining the settlement sum. The vendor submits that it is obvious costs must have been spent in litigating against the conveyancer and that $40,000 is a reasonable amount to claim.
In my view, if damages were awarded the whole of the settlement sum ought to be deducted from the shortfall in the purchase price. The vendor could have allocated an allowance for costs in the settlement agreement but did not do so. She could have produced evidence at trial to establish what costs she spent in the action against the conveyancer, in obtaining settlement against the conveyancer. Those costs would of course have needed to be distinct from the costs incurred in running the case against the purchaser, and the case against the estate agent. It is not appropriate for the Court be left to guess the appropriate amount of costs when this matter could have been addressed by the vendor.
Had I awarded judgment for damages, rather than giving judgment for a debt, the damages would have been $45,000 ($175,000 less $130,000).
JUDGMENT
I will give judgment for the plaintiff in the sum of $305,050.
I will hear the parties on the question of interest and costs, unless they submit consent orders.
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Certificate
I certify that these 44 pages are a true copy of the reasons for decision of her Honour Judge Marks, delivered on 20 February 2018.
Dated: 20 February 2018
Sam Marinic
Associate to Her Honour Judge Marks
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