Janeba v Joburne Pty Ltd - [2009] WADC 136

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: JANEBA -v- JOBURNE PTY LTD [2009] WADC 136

CORAM: WAGER DCJ

HEARD: 27-29 MAY, 16-17 & 20 JULY 2009

DELIVERED : 2 SEPTEMBER 2009

FILE NO/S: CIV 448 of 2005

BETWEEN: BEDRICH BRUNO JANEBA
Plaintiff
AND
JOBURNE PTY LTD
Defendant

Catchwords:

Trade practices - Misleading or deceptive conduct - Representation with respect to a future matter - Whether the defendant's representation was reasonable - Turns on its own facts

Legislation:

Trade Practices Act 1974(Cth), s 51A, s 52(1)

Result:

Plaintiff's claim dismissed

Representation:

Counsel:

Plaintiff: In person
Defendant: Mr P D Quinlan

Solicitors:

Plaintiff: Not applicable
Defendant: DLA Phillips Fox

Case(s) referred to in judgment(s):

Australian Competition & Consumer Commission v Universal Sports Challenge Ltd [2002] FCA 1276
Australian Competition and Consumer Commission v Danoz Direct Pty Ltd (2003) ATPR (Digest) 46‑241
Equity Access Pty Ltd v Westpac Banking Corporation & Westpac Savings Bank Ltd & Anor (1990) ATPR 40‑994
Fubilan Catering Services Ltd (Incorporated in PNG) v Compass Group (Australia) Pty Ltd [2008] FCAFC 53
Fubilan Catering Services Ltd v Compass Group (Australia) Pty Ltd [2007] FCA 1205
Gould v Vaggelas (1984‑1985) 157 CLR 215
Pownall & Ors v Conlan Management Pty Ltd & Anor (1995) 12 WAR 370

WAGER DCJ: The plaintiff purchased Unit 23, Brigid Road, Subiaco, a home unit constructed in a development known as Princeton ("the unit") through the defendant who is the vendor's selling agent by contract of sale settled on 20 September 2001.
The plaintiff is self‑represented. Although other matters are raised in the plaintiff's pleadings that were prepared by solicitors representing the plaintiff earlier in proceedings, it is now agreed that the plaintiff's claim against the defendant is for damages pursuant to the Trade Practices Act 1974 ("TPA") for misleading or deceptive conduct including representations in relation to future matters (s 51A, s 52 TPA).
The plaintiff pleads that loss has arisen as a result of the representations made to him by the defendant on dates from November 1999 (prior to signing the contract of sale), until 20 September 2001 (the date of settlement) being that:
1.All of the units at Princeton had secure underground parking.
2.The units would feature closed‑circuit television in the underground car park of Princeton, a representation that was false and misleading because there was either never an intention by the vendor/developer to install closed‑circuit television in the underground car park or because the vendor/developer changed its decision to install the closed-circuit television in the underground car park prior to the date of settlement and the defendant, as the vendor's selling agent, did not advise the plaintiff of the decision.
3.The defendant orally through its representative, Mr Bitdorf, advised the plaintiff in November 1999 that investment in the unit would show a future rate of return on the plaintiff's investment of 10 to 12 per cent per annum being a representation that the plaintiff assumed referred to a cumulative rate of return per annum. The plaintiff pleads that the return was not realised on sale.
4.The defendant represented by silence (as a result of the defendant's oral and written description of the Subiaco Square area from November 1999 until September 2001) that the vendors would not apply or support an application for a tavern licence on a site near the unit that had been represented in written material as being a proposed café/restaurant. The plaintiff pleads that a proposed tavern would have directly affected his enjoyment of the unit and caused loss.
The defendant denies that it misrepresented any of the features of the unit, its surroundings or the future return on the plaintiff's investment and pleads that:
1.The plaintiff was advised that secure underground parking would be provided for the unit at Princeton and it was.
2.There was no discussion between the plaintiff and the defendant's representative, Mr Bitdorf, in relation to the provision of closed-circuit television in the underground car park of Princeton, however the defendant accepts that written material referring to closed-circuit television in the underground car park was available to the plaintiff through the defendant's office. The original material was produced by the developers of Subiaco Square to provide general information in relation to the Subiaco Square development. It was reasonable in the circumstances for the defendant to assume that written material provided to it by the developers was truthful and accurate. Accordingly the defendant did not deceive or mislead the plaintiff. A decision was made by the council of owners of the units after the date of settlement not to install closed-circuit cameras in the basement car park. This was not a decision of the developer/vendor. The decision was not the result of any misleading or deceptive conduct on the part of the defendant.
4.An unsuccessful application for a tavern licence was made after the plaintiff had purchased and settled on the unit. A tavern licence was never granted nor was a tavern ever built. The unsuccessful application did not affect the plaintiff and did not cause the plaintiff any loss.

The evidence

The plaintiff gave evidence and called four witnesses.
The plaintiff who is now retired worked as a senior industrial analyst and industrial chemist in Port Hedland from 1978 to 2001. In May 1999 the plaintiff was advised by his employer that due to company policy he would be retrenched from his position of employment when he reached the age of 55 years being in 2001. The plaintiff accepted that the retrenchment would be the end of his working career in Port Hedland and decided to purchase a home in Perth where he could live in his retirement. Although the plaintiff had purchased investment properties in Perth on earlier occasions and had had holiday periods in Perth he had never lived in the city. The plaintiff was familiar with the suburbs of Subiaco and West Leederville from his visits to Perth during the course of his employment in Port Hedland. The plaintiff liked both suburbs and considered both locations as being appropriate for his retirement home. At T47:
"I thought especially Subiaco would be a very good place to retire for the simple reason that it was close to everywhere. There was the infrastructure. There was the railway. There was the bus service. There were hospitals. In Subiaco on Rokeby Road and adjacent roads there is just everything possible what you want."
The plaintiff came to Perth on trips to further familiarise himself with the suburbs of Subiaco and West Leederville in order to locate a retirement home in June and September 1999. When in Perth in June 1999 he went to the Blackburne Real Estate Marketing Centre and met the defendant's representative, Mr Bitdorf. Mr Bitdorf showed the plaintiff a display of the proposed unit complex and the plaintiff took a brochure setting out the proposed plans to build the complex area (Exhibit P1 Subiaco Square joint venture). On his return to Port Hedland after the June familiarisation trip the plaintiff made enquiries with real estate agents and studied the West Australian Newspaper real estate section to identify potential properties of interest in the Subiaco area. On 10 November 1999 he returned to Perth again and made arrangements with Ms Kott, a friend who was also a real estate agent but who did not have expertise in real estate in the Subiaco area, to collect him from the airport and to drive him to West Leederville and Subiaco to look at eight prospective properties that he had noted in his diary as being properties of interest to purchase. The plaintiff only looked at the houses from the street. He made an assessment of the external aspects of the houses and the streetscape. He did not inspect any of the internal features of any of the houses. The plaintiff describes his assessment at T53:
"Do I like the street? Do I like the house? What is the security like? Is it something really where I want to live for the rest of my life?"
The street inspection led to the plaintiff being interested in two properties being 81 Bagot Road, Subiaco and 22 Townsend Road, Subiaco the asking price for each being approximately $360,000.
The plaintiff was interested in security so that he could lock up and leave his retirement home. Security of his BMW car and a lifestyle suitable for retirement were also important considerations. Unlike the plaintiff's earlier purchases of investment properties the return on his investment in the retirement home was important but not his prime consideration.
Later on 10 November 1999 the plaintiff and Ms Kott went to the defendant's display centre. The plaintiff asked Mr Bitdorf if he had any houses for sale and explained to Mr Bitdorf what he was looking for and that he was retiring and looking for a home in Perth for the rest of his life that was a nice secure house. Mr Bitdorf explained his role as a selling agent for the unit development and pointed out the features of the Princeton development. The plaintiff's evidence is that Mr Bitdorf told him that the Princeton complex had better security than the Grange unit complex which was a complex that had been advertised as having "state of the art security". Mr Bitdorf also told the plaintiff that the units would have audio and visual security and secure parking and storage with closed-circuit television in the underground car park area. The plaintiff and Ms Kott went to the defendant's offices with Mr Bitdorf and spent approximately two hours examining plans and discussing the units of Princeton in detail. The plaintiff liked two units, however he decided that unit 23 had the better security, including an additional siren, a blue flashing light outside the unit, deadlocked windows and key pad security. Entry to unit 23 could be gained either from within the unit complex or from the street. The plaintiff decided that unit 23 was the best unit on offer that met his requirements.
The plaintiff's evidence is that on 10 November 1999 Mr Bitdorf provided a document to the plaintiff (Exhibit P3) that set out the median house price in suburbs by order of percentage growth. Subiaco was listed in September 1999 at a median price of $336,000 being a percentage growth over one year from 1998 of 10.2 per cent and a percentage growth over six years from 1994 of 40.1 per cent. The percentage growth recorded over 15 years from 1984 was 470.8 per cent. The document stated that the source of the material was the Real Estate Institute of WA. The plaintiff says that Mr Bitdorf also told him that he could expect the unit to appreciate in value by 10 to 12 per cent per annum. A further document was provided by Mr Bitdorf headed Subiaco Square the New Heart of Subiaco (Exhibit P18) that referred to secure underground parking and that noted at p 8 of the document:
"Subiaco property has shown exceptional capital gains in recent years. An outstanding real estate investment for now or the future."
The plaintiff says that Mr Bitdorf said the unit would easily achieve such growth (being 10 to 12 per cent per annum) and possibly even higher because of the unique nature of the complex in Subiaco Square.
The plaintiff says that the defendant also provided a brochure entitled Subiaco Square update Vol 2 1999 (Exhibit P11) that referred to the unit complex's security under the heading Operation Security. At p 4 of P11:
"One of the top issues for people visiting our marketing centre over the last few months has been security. The Stage 2 apartments will feature keypad alarm systems to ground floor street frontage units and restricted audio‑visual monitored access for visitors. Closed-circuit television will patrol the basement car park and storage area while lighting to public areas will act as a further deterrent to crime. Apartments will also be equipped with smoke detectors. The result? Peace of mind for residents."
Other material in relation to the nature of the Subiaco Square development (Exhibits P5 and P12) was also provided. Exhibit P12 referred to pubs being a short stroll from the complex. Mr Bitdorf did not refer at any time to a proposed tavern in the Subiaco Square complex area nor did any of the brochures refer to a tavern. The brochures provided described the corner of Roberts Road and Station Street as being a proposed restaurant/cafe. The written material provided indicated that the Subiaco Square complex would include a supermarket and approximately 20 speciality shops next to the unit complex, the Subiaco Railway Station would be next to the shopping precinct and underground parking for approximately 300 cars would be provided. On the far side of the railway station restaurants, cafes and commercial buildings were proposed. The brochures described the general Subiaco area as including pubs, cafes, restaurants, shops, commercial areas, the Subiaco oval, movies and theatres and providing a vibrant and exciting lifestyle.
The plaintiff agreed to purchase unit 23 on 10 November 1999 and paid a deposit of $3,000. On 2 December 1999 after re‑negotiating the price back to the agreed $340,000 the contract of sale was signed and the settlement date was set for 20 September 2001. The plaintiff continued to read advertisements in the West Australian and other publications in relation to the Subiaco Centro area and in relation to the unit complex. Prior to settlement the plaintiff did not receive any information about the unit, or its facilities or the surrounding area contrary to the representations made to him by Mr Bitdorf in November 1999.
In cross‑examination the plaintiff confirms that he had purchased six investment properties prior to purchasing the unit and that three of the properties were located in Perth suburbs being Nedlands, West Leederville and Wembley Downs. One of his investment properties had a strata title and ownership involving obligations to a council of owners. The plaintiff acknowledges that prior to the settlement he was generally aware of the Subiaco area including the Subiaco football oval and restaurants and pubs being within walking distance of the unit complex and that he knew that Subiaco was a vibrant inner city area.
The plaintiff agrees that given his experience in investment properties he knows that the property market does not increase by a fixed amount each year. Despite this knowledge the plaintiff denies any suggestion that Mr Bitdorf had not made a verbal representation in relation to a guaranteed 10 to 12 per cent future growth on the unit and claims that he relied upon the representation as being accurate.
The plaintiff agrees that on the unit settlement date of 20 September 2001 he was required to pay the full sum of $340,000 less the deposit that had already been paid. In evidence‑in‑chief the plaintiff says that he intended to sell the unit in 2003, however the valuations he received of between $370,000 and $410,000 were so low that he made a decision to rent out the unit and to move to other premises. The plaintiff sold the unit on 6 June 2006 for $597,000. It was put to the plaintiff in cross‑examination that the discrepancy between the original purchase price and the ultimate sale price represented a 75 per cent growth over a five year period (being $597,000 less $340,000 over the time period from 20 September 2001 to 6 June 2006). However, the plaintiff refused to accept the proposition that the profit he had achieved represented a 75 per cent growth. The plaintiff also refused to accept the proposition that a 75 per cent growth was greater than 12 per cent per annum and states that he assumed that any capital growth promised would be compound rather than simple growth. There is no evidence from the plaintiff that Mr Bitdorf's alleged representation referred to compound growth.
In cross‑examination the plaintiff agrees that the unit he chose to purchase was the most secure of the properties that he inspected in the Subiaco area in November 1999 because the other Subiaco properties did not appear to have security alarms and none of the other properties appeared to have security cameras or gates in relation to car park or garage areas.
Although the plaintiff describes the operation of the mechanism of the car park security at the unit complex as being very slow he does not deny that the mechanism was installed in line with the representations made at the time he purchased the unit.
The plaintiff denies writing notes in his diary for November 1999 on an occasion later than November 1999 in order to corroborate matters raised in this action and specifically denies the proposition that comments in relation to relying on the representations of Mr Bitdorf and the provision of closed circuit television in the underground car park were added to his diary in order to bolster these proceedings.

The plaintiff's evidence – after the settlement date

The plaintiff prepared a detailed and lengthy list of complaints in relation to the unit and the unit complex soon after settlement, however the plaintiff did not raise the issue of failure to install CCTV cameras in the underground car park as part of the list. The plaintiff says that at the time of settlement trades people were still everywhere in the unit complex and he therefore assumed that the CCTV cameras would be joined to the conduits that were apparent in the car park area. This did not occur.
The plaintiff states that it was not until February 2002 that he was advised by the site manager for Pindan Constructions that the building plans only showed a ducting for CCTV and did not detail provision of the installation of CCTV camera facilities.
In March 2002 the plaintiff raised the issue of failure to install CCTV cameras in the underground car park with the defendant in writing for the first time. The correspondence of March 2002 was preceded by damage to a roller door at the entrance of the car park area. A number of cars including the plaintiff's BMW vehicle were damaged. Mr Barnett, a co‑resident at the unit complex, who had installed closed circuit television security specifically for his own vehicle did not have his car damaged. The minutes of the council of owners of the unit complex dated 20 March 2002 (Exhibit P37) record that the plaintiff was given authority to look into the matter relating to the installation of CCTV cameras. The plaintiff investigated this matter on behalf of the council of owners until July 2002.
By letter dated 10 April 2002 (Exhibit P40), the plaintiff was advised by Mr Cooper, CEO of Blackburne Real Estate "there has never been any intention or discussion to provide closed circuit televisions in any basement area and security of storage areas is the responsibility of owners."
Minutes of the meeting of the council of owners dated 9 August 2002 (Exhibit P49) record that Mr Blackburne, director of the defendant who was representing Subiaco Square joint venture at the meeting stated that:
"The Joint Venture had never represented to install CCTV nor was it their responsibility to do so at this time. Instead they had constructed the infrastructure, such as ducting. Mr Blackburne tabled two reasons for not having CCTV.
(1)It was a cost saving on the part of the Joint Venture partners.
(2)There was the problem of insurance liability. This meant that if the CCTV was faulty at the time of a mishap/accident, there would be potential liability for the people looking after the system, namely the body corporate or the council of owners."
Subsequent minutes of the council of owners record an owner/occupier, Mr Hoffman as being against the installation of CCTV cameras because of his concerns in relation to occupiers' liability in response to advice that he stated he had received. The minutes of the council of owners for 2 September 2002 stated (Exhibit P53):
"Security Cameras
This issue was determined with a view to resolving Mr Janeba's action against the Joint Venture developers and/Blackburne and Joyce Real Estate."

At the same meeting Mr Barnett, another owner occupier of the unit complex was minuted as referring to having 30 years experience in the electronics surveillance business. It is minuted:
"He explained the technical reasons why static installations are of little benefit to our kind of application."
However, independent of the council of owners and prior to the matter being raised at the council of owners meeting Mr Barnett had personally chosen to install his own CCTV camera in the car park near his car in order to protect his car.
The plaintiff agrees in cross‑examination that the decision to install CCTV cameras was not a decision to be made by the defendant. In the minutes from 2 September 2002 it is minuted that the meeting resolved to vote that no cameras be installed at this time. Six voters were for the motion and one, the plaintiff, was against.
On 9 September 2002 the plaintiff suggested that the developer lodge $12,000 in a trust account for the unit complex in relation to CCTV installation. However, the council of owners resolved that this not occur.
In the minutes of the council of owners meeting dated 9 September 2002 (Exhibit P55) the plaintiff was thanked for his work on behalf of the owners in relation to the investigation of security and his authority to continue to investigate was terminated. It is minuted that the plaintiff advised that he had obtained an estimate of approximately $1,100 to cover security on his car bay and passed this on to Mr Blackburne.
"Mr Blackburne advised the meeting that he was very reluctant to consider entering into any such arrangement with Mr Janeba to provide security for his own personal car bay as previous financial agreements had been reached with Mr Janeba that were now public knowledge."
The minutes also reflected that a summary of Mr Barnett's concerns in relation to the installation of CCTV and the concerns about the legal liability of the strata company and its councillors gleaned from the professional legal opinion obtained by Mr Hoffman, a resident of the units, led to the council's determination in relation to the placement of security in the car park at that time and for the future. The minutes noted:
"Mr Blackburne reiterated that it now appeared that the correct decision had been made by the Subiaco Square Joint Venture consultants during 1999, when the decision was made to not install cameras in the car park area, but only make provision."
In evidence the plaintiff agrees that he could physically have installed a camera for his own private use at his own expense given the attitude of the council of owners, however he considered that personal installation would be contrary to the order made by the council. In cross‑examination the plaintiff denies that his co‑resident Mr Barnett ever installed a dummy camera, that is a camera that is not connected to recording or other equipment near to the plaintiff's car park position at the units.
Generally, the minutes of the council of owners reflected a deterioration of the relationship between the plaintiff and the council of owners aggravated by the plaintiff's action against the joint venture developers and/or the defendant. As a result of the perceived conflict the plaintiff was removed from the council of owners by the other members of council.
In 2002 the plaintiff became aware of a proposed tavern licence for nearly 600 patrons with opening hours of 7 am until midnight, six nights a week and 7 am until 10 pm on Sunday in respect of the building situated on the corner of Roberts Road and Station Street. The plaintiff objected to the issuing of the licence as he considered the opening of a tavern would impact directly on the quality of his lifestyle and the monetary value of his unit. The plaintiff is aware that in 2003 the liquor licensing application was unsuccessful. A restaurant/office complex was ultimately housed at the location.
The plaintiff asserts that he would never have purchased the unit had he known that the rate of return would not be 10 to 12 per cent compound per annum and that he would have purchased a property similar to the properties he viewed externally in Bagot Road and Townshend Road, Subiaco.
The plaintiff also observed that if CCTV cameras were in operation then the offence of damage would never have occurred to the vehicles in the car park including his vehicle. He asserts that he would not have purchased the unit had he known that the car park area was not protected by CCTV cameras.

Evidence of Margaret Elizabeth Kott

Ms Kott is a qualified self‑employed real estate agent and a personal friend of the plaintiff. She arranged to pick the plaintiff up from the airport on 10 November 1999 in order to take him to view prospective retirement properties in the Subiaco and West Leederville areas. She specifically recalls driving to three houses in the Subiaco area and examining the houses from the outside. Ms Kott recalls that the plaintiff was concerned about security and examined the streetscape of the houses to determine whether they appeared to be secure enough. Ms Kott recalls that the plaintiff took notes during the course of the street inspections.
Ms Kott corroborates the plaintiff's evidence in relation to the attendance at the defendant's sales office where they spoke to Mr Bitdorf (who had previously been a lecturer in a real estate course that she had attended) for a period of half an hour to three quarters of an hour. Ms Kott gave no evidence nor was she questioned in cross‑examination in a manner consistent with Mr Bitdorf's evidence that she had contacted Mr Bitdorf prior to the appointment in order to arrange a conjunctional agreement whereby she and he would split the commission on any prospective purchase by the plaintiff.
Ms Kott says that she was present when the plaintiff advised Mr Bitdorf of his need for a retirement house and when he asked whether any houses were available for sale in the Subiaco area. Ms Kott's evidence is that she specifically recalls that the plaintiff stated that he chose to travel in his retirement and that security was very important to him. Following the conversation Mr Bitdorf attempted to sell the plaintiff a unit and Ms Kott, the plaintiff and Mr Bitdorf subsequently attended the defendant's main office for discussions that occurred over a period of approximately two hours. Ms Kott recalls that the plaintiff repeated to Mr Bitdorf that travel and therefore security were important to him and she says that Mr Bitdorf said that CCTV security would be included in the car park area. She specifically recalls that Mr Bitdorf did not make any comment at all in relation to a proposed tavern development.
The plaintiff expressed disappointment to Ms Kott after the date of settlement in September 2001 on almost every occasion when they met in relation to the lack of security cameras in the car park and the poor finish of the unit.
In cross‑examination Ms Kott recalls the date of discussions with Mr Bitdorf because of the proximity of the date to the plaintiff's birthday. She had not been required to recall the conversation for many years however the plaintiff had repeatedly raised his concerns about the lack of CCTV and his fear that a large tavern would be built after he moved into the unit. Ms Kott considers that her memory of the matters she raised in evidence is accurate although she could not recall what other matters were discussed at the time.

Evidence of Stuart Ross Darby

Mr Darby who has held the position of Director of Policy and Research with REIWA since February 2006 gave evidence in relation to the document setting out valuations in Subiaco for the period ending 1999 ("Subiaco A Top Performer", Exhibit P3) and an article from the West Australian real estate section dated 6 November 1999, a summary of how suburbs had performed in relation to increases in valuation (Exhibit P9), being a summary of percentage increase in the median prices of Perth suburbs for the preceding 12 month period. Subiaco values were noted to have increased by 10.2 per cent in the period. Mr Darby had no involvement in the preparation of either document because he did not work at REIWA until seven years after their publication, however he recognised the source data for the documents as coming from records kept by the State Government department now known as Landgate.
At T197 he confirms that the percentage growth calculations shown in Exhibit P3 were, in his view, straight percentages and not cumulative growth percentages. He reaches this conclusion because: "the whopping figure of 470.8 as a 15 year growth since 1984, that would be purely a percentage change between the September quarter of 1999 and the September quarter of 1984."
In cross‑examination Mr Darby confirms that an initial purchase price of $340,000 with a selling price of $597,000 over a six and a half year period (consistent with the purchase and sale of the unit by the plaintiff) represented a 75 per cent growth.

Evidence of Colin Eric Lawrence

Mr Lawrence is a senior licensed valuer and certified practising valuer in the State of Western Australia employed by Hegney Property Valuations since 1999. Mr Lawrence provided restricted valuations at the request of the plaintiff's former solicitors in relation to properties at 81 Bagot Road, Subiaco, 22 Townsend Road, Subiaco and Unit 23, 1 Brigid Road, Subiaco ("the unit"). The valuations were based on sales evidence relevant to retrospective dates of 1999, 2003 and 2006.
In cross‑examination Mr Lawrence confirms that restricted access assessment and the phrase "restricted valuation" applies to the valuations. These terms are referable to the valuation and property standards printed by the Australian Property Institute. The various immunities and indemnities referred to in the restricted valuations relate to the fact that a restricted valuation is used to facilitate funds to be lent for the purchase of properties rather than to be used as official valuations. The documents produced were therefore restricted assessments only and not true valuations.
Mr Lawrence had only observed the properties for which he provided the restricted valuations from the outside. He relied on evidence of sales that had occurred but in which he did not have any direct personal involvement or knowledge in order to reach the recorded assessment. Although more transactions than those referred to in the restricted valuations were noted in his field notes, Mr Lawrence was not personally involved in any of the previous valuations or sales. The valuations were tendered as exhibits during the course of the trial however it is submitted on behalf of the defendant's that the assessments should carry no evidentiary weight because they are based solely on hearsay evidence (Pownall & Ors v Conlan Management Pty Ltd & Anor (1995) 12 WAR 370). It is submitted that the assessments are only based on a visual sighting of the property in question from the outside and from records held by Landgate and/or REIWA. Further, Mr Lawrence confirms in cross‑examination that the documents produced are restricted assessments rather than valuations.
I accept that Mr Lawrence has experience as a valuer and that the Landgate records are accurate but the personal assessments made by Mr Lawrence in this case extend only to the external viewing of the properties in question. Accordingly, although the evaluations are not based solely on hearsay evidence I find that they are of very limited weight particularly given that the houses and the unit valued were never entered or assessed by the valuer. The tendered assessments are:
81 Bagot Road, Subiaco
December 1999  $350,000 - $370,000
August 2003  $600,000 - $620,000
June 2006$920,000 - $940,000
22 Townsend Road, Subiaco
December 1999  $330,000 - $350,000
June 2006$880,000 - $920,000
1 Brigid Road, Subiaco
August 2003  $350,000 - $370,000
Mr Lawrence says that house values have generally appreciated. He states that the method of recording the increase in value is on a cumulative basis, that is on a compound interest basis from year to year or from quarter to quarter. Mr Lawrence was never shown the documents P3 and P5 nor was he asked to comment on the percentage representation shown therein. Mr Lawrence calculated that the compound rate of growth resulting from the sale of the unit was 9.032 per cent.

Evidence of Ronald William Cannon

Mr Cannon and his wife purchased a unit at Princeton and have lived there since October 2001. Mr Cannon wrote a letter dated 19 August 2002 (Exhibit P50) to the Real Estate and Business Agents Supervisory Board in relation to a complaint made by the plaintiff. Mr Cannon states:
"I purchased apartment 60 in the above complex in late June or early July 2000. I attended at the sales office and was given a brochure which I took and within 15 minutes returned and signed the documents paying the deposit on the Monday as I did not have my cheque book with me as it was a Sunday and my visit to Subiaco was fortuitous.
…
The brochures which I still have indicated video surveillance for the car park area and within the residence and I can produce the same. Construction had not commenced and I took possession in October 2001 and in the interim period took no further interest. On taking possession I noticed no video surveillance in the car park area. I presumed this would be dealt with in due course as not many units had been sold and I was one of the first to move into the layer of the third floor. It has not been dealt with and some owners appear disturbed because it appears that there is to be a blanket denial that such surveillance was promised."
In evidence, Mr Cannon agrees that he received the brochure (Exhibit P11) including "Operation Security" and reference to "closed circuit television patrolling the basement car park and storage area of Stage 2" (being Princeton). Mr Cannon is unable to say when he received the brochure (Exhibit P11) having purchased a number of properties in the Subi Centro area and having assisted others to purchase properties in the area. Given the passage of time and the number of enquiries he made he is not sure whether the brochure (Exhibit P11) was handed to him on the day when he decided to purchase the unit at Princeton or whether he obtained it at some other time. Mr Cannon did not recall if any representatives of the defendant had advised him that closed‑circuit television would operate in the car park and indicated that even if they had he would never rely on an assertion made by a sales representative. Mr Cannon's view is that the contract of sale signed on 29 July 2002 included cl 6.5 Entire Agreement. Clause 6.5 stated that the purchaser relied on the contract and that no oral statements, representations or any other documents had any influence on the purchaser. Mr Cannon considers this to be the position in relation to the purchase of his Princeton unit (T235).
Mr Cannon states that he found out that a tavern was proposed for the Subiaco Square area after he moved into his unit however, he states:
"I wasn't worried about a tavern I'm a drinking man. I'm quite happy if a tavern went there. At my age I don't want to walk to them." (T239)
Mr Cannon does not remember anything being said to him at the time of purchase in relation to a proposed tavern.
Mr Cannon considers that closed‑circuit cameras in the basement would not make the basement any more secure. In his experience as a criminal lawyer he believes that CCTV assists the police if anything goes wrong (T241). Mr Cannon also notes a concern that a cost and responsibility to the council of owners would arise in the event that the CCTV cameras were to be manned, housed and viewed. This problem has not arisen because the cameras were not installed.

The defendant's evidence

The defendant called evidence from four witnesses.

Evidence of John Robert Blackburne

Mr Blackburne, a licensed real estate agent with over 20 years experience, was the principal of Blackburne Real Estate, a firm that operated through the defendant company of which Mr Blackburne was a director from the 1980's until approximately 2004. Mr Joyce joined Mr Blackburne as a partner in Blackburne and Joyce Real Estate and as a director of the defendant company in the 1990's. Blackburne Real Estate operated a diverse real estate company carrying out sales and property marketing, strata management, property management and commercial work. In the late 1990's Blackburne Real Estate formed Blackburne Subi Centro Pty Ltd after successfully earning the right to tender for the redevelopment of the Subiaco Station Square precinct and, together with two other experienced partners being Stockland Trust Group and Rockingham Park Pty Ltd, joined to tender for what ultimately became the Subiaco Square joint venture. Blackburne Subi Centro raised equity in a prospectus for the purpose of taking a one third interest in the Subiaco Square joint venture through clients of Blackburne Real Estate and raised approximately $7,000,000. A similar sum was raised by each of the two other partners.
At the time of commencing the Subiaco Square joint venture the project was the largest urban renewal project in Australia with an anticipated cost of approximately $100 million. The Subiaco Square joint venture decided to develop the precinct's shopping centre first and then to develop the residential stage by building the Grange units followed by the Princeton units. The last stage of the development was an office building on the corner of Roberts Road/Station Street. The Subiaco Square joint venture appointed Clifton Coney Stevens as its project manager. The project manager's role was to manage the whole project for the joint venture partners and to coordinate all other consultants. The project manager was responsible for chairing the project control committee meetings and dealt with the issues which arose on a major project. Hames Sharley were appointed as architects, Ralph Beattie Boswell was appointed as the quantity surveyor. Other contractors were appointed as needed. The Subiaco Square joint venture partners met on a monthly basis. The project control committee meetings chaired by the project manager included the architect, the quantity surveyor and other contractors as needed and they met on a weekly basis. Mr Blackburne attended some, but not all, of the project control committee meetings. A marketing consultant, Reynolds Cunningham, also known as Reynolds and Associates (referred to as Reynolds and Associates) was appointed to act under the direction of the project control committee and the defendant was appointed as the joint venture's selling agent. At the time of the appointment Mr Johnson, Mr Blackburne's co‑director in Blackburne Real Estate was to supervise the defendant's role as selling agent.
Mr Blackburne says that he had every confidence in the consultants and in the decisions made by the project control committee. Matters that came to the joint venture meetings from the project control committee were invariably passed and this included marketing material. The marketing material relevant to the Subiaco Square development was prepared by Reynolds and Associates. In order to prepare the material they attended a briefing with the project control committee so that the consultants could outline the vision of the project they were required to present. The draft marketing material was then sent to the project control meeting. Mr Blackburne says that the content and form of the marketing material would never have been considered at joint venture committee level. Given the competence and experience of the consultants involved in the project Mr Blackburne assumed that the material prepared would be accurate. The Subiaco Square brochures, including Exhibits P1, P3, P5 and P11 were compiled by Reynolds and Associates in this way.
Mr Blackburne says that he had no knowledge of the production of the article headed Operation Security (Exhibit P11) that referred to Princeton units having CCTV in the basement car park.

To Mr Blackburne's knowledge the issue of CCTV in the basement car park of Princeton only arose when Mr Blackburne was attending a strata meeting of the council of owners of Princeton in his capacity as a representative of the Subiaco Square joint venture. The plaintiff attended the meeting and raised the issue of closed‑circuit television. In approximately July 2002 Mr Blackburne says that in response to the issue being raised he did the following: (T279)
"I went to find out about it. And my recollection of it is that I spoke with the architects and at least the project control committee which was Neil Stevens to determine what this issue was all about because I had no knowledge of the issue at all."
And at T279:
"Yes?---That a decision had been made by the project control committee and the architects to not install CCTV in the basement car park mainly because of – I think one of the issues was cost but the second issue of more concern to the architects and the consultants was the liability and responsibility for the CCTV in the car park – as to who would be responsible for this in terms of maintenance and ongoing monitoring and the other issues. And I was told that it was agreed to leave that out – leave that issue out of the project at some point between 1999 and when I investigated it. And – it must have been during construction or before. And leave that decision to the 60 owners of Princeton apartments."
Mr Blackburne agrees that at the council of owners meeting of the Princeton units on 2 September 2002 he was accurately minuted as follows: (T280)
"Mr John Blackburne advised that he had received a report from the project's architects Hames Sharley on a CCTV system in July 2002. It explained that one of the reasons the project consultants decided against installing cameras was so the issue could be decided on in future by the council of owners when the liability ramifications could be accepted and further understood by the proprietors."
Mr Blackburne clarifies that he was at the meeting in his capacity as Subiaco Square joint venture representative not as a representative of the defendant.
In p 5 of the minutes of the same meeting it is noted that Mr Blackburne reiterated that it now appeared that the correct decision had been made by the Subiaco Square joint venture consultants during 1999 when the decision was made to not install cameras in the car park area but to only make a provision for them. He confirms that although through his own investigations he is now satisfied that the decision was made by the consultants in 1999 he only found out about it in July 2002. Mr Blackburne repeats that as a joint venture representative on a major project (the joint venture partners) did not get down to the micro‑management of this type of issue (T282) and that the level of detail consistent with the CCTV decision never came to the joint venture committee. Mr Blackburne says that he had every confidence in the accuracy of what was proposed at the time.
In cross‑examination it was effectively put to Mr Blackburne that, given his roles as a director of the defendant and a principal of the defendant as well as a joint venture partner for the development and the sale of the Princeton units he had an interest in ensuring that sales proceeded at high prices and therefore condoned false information. Mr Blackburne rejects this proposition and says that he was not prepared to disseminate false information through the defendant in order to ensure higher sales.
Correspondence relating to the defendant's marketing strategies and the defendant's sales numbers, that the plaintiff submits are low, have been put to Mr Blackburne. It is submitted that the sales figures provide a motive for Mr Blackburne on behalf of the defendant either promoting a position that he knew to be false, namely that there was never any intention on the part of Subiaco Square joint venture to install CCTV in the Princeton units or, alternatively, that once the decision to install CCTV cameras changed he and the representatives of the defendant deliberately omitted to pass on the information to prospective purchasers and to those who had purchased but not yet settled.
Mr Blackburne clarifies that the decision not to install CCTV cameras was a decision of the project control committee and was not a decision of the defendant nor of the Subiaco Square joint venture.
Mr Blackburne admits destroying the defendant's files after he had ceased to be a director of the defendant and after his former partner and co‑director, Mr Joyce had been served with the plaintiff's writ of summons in relation to this matter. He states however that he was simply assisting Mr Joyce in the destruction of old files. The company had a large number of documents that were no longer required and that he therefore destroyed them. It was never his intention to destroy documents relevant to these proceedings.
Mr Blackburne vaguely agrees to the proposition that he spoke to Mr Barnett, a resident of the Princeton units, after the council of owners meeting on 5 July 2002 and that he said that if Mr Barnett persuaded Mr Janeba to drop the claim to REBA then Mr Blackburne might put $5,000 in the strata trust account. However, Mr Barnett in his evidence states that he does not recall this.
Mr Blackburne confirms that although the defendant is named and has its logo on each of the brochure publications, the publications were published and paid for by the Subiaco Square joint venture having been produced by Reynolds and Associates. At T295 Mr Blackburne says:
"… They were produced and supplied to Blackburne Real Estate. We were the exclusive marketing agents for the projects and, as is normal with all developers, they provide the marketing material to the real estate agent to market the project. And that is exactly what happened in this instance. And obviously, the – it's a requirement of the Real Estate and Business Agents Act that the – the agent must be noted and the full details of the agent, as is the case here, on any marketing material and that is why it is on there" (referring to Exhibits P1 and P11).
Mr Blackburne clarifies that in his experience on major projects the real estate selling agent does not prepare the advertisements, puts up display signs, organise photos of properties or prepare and organise printing or marketing of brochures, rather that these tasks are performed by the marketing consultant. Mr Blackburne clarifies that the brochures prepared by Reynolds and Associates were controlled through the project control committee and that all of the creation and design was done through Reynolds and Associates and not by the defendant.

Proposed tavern

Mr Blackburne confirms that a tavern was proposed in the early stages of the Subiaco Square joint venture project as part of the vision to draw people to the square. The joint venture sought expressions of interest from parties to make an application at their cost for a liquor licence. The application for a liquor licence for the premises on the corner of Station Street and Roberts Road was made by a family entity that was approved by the joint venture. Mr Blackburne cannot explain why a tavern was not referred to in any advertising material in relation to the Subiaco Square development until 2002. He agrees that the model from the marketing centre appeared not to be marked with signs indicating the future use of the buildings represented but states that it was always the intention of the joint venture for a tavern to be approved if possible. Mr Blackburne says that he did not know the details in relation to the opening hours proposed by the applicants for the tavern but he accepts that the licence sought was for a maximum of 560 patrons. Mr Blackburne does not consider that a tavern at the Roberts Road/Station Street location was inconsistent with the vision for the Subiaco Square development as described in the marketing brochures prepared by Reynolds and Associates. The liquor licensing application was not successful. Mr Blackburne confirms that the restaurant Wagamama is now at the proposed tavern site.

Paul Bitdorf

Mr Bitdorf, a real restate agent with 26 years experience, was employed by the defendant in 1998 as a sales and marketing representative responsible for the Subiaco Square project, a position he held for approximately two and a half years. Mr Bitdorf left his employment with the defendant before the settlement of the units purchased in Princeton. Professionally Mr Bitdorf has carried out duties as a lecturer at the Real Estate Institute of Western Australia and he is a former lecturer from Curtin University in the School of Economics in property. He is a current member of the Council of Urban Institute of Australia. Mr Bitdorf reported to Mr Bob Johnson, director of Blackburne Real Estate during his employment with the defendant in relation to the Subiaco Square development.
Mr Bitdorf recalls that he met the plaintiff and Ms Kott in 1999 after Ms Kott had telephoned suggesting that she introduce the plaintiff as a prospective client and that she and Mr Bitdorf thereby share the real estate agents' commission on any purchase by him by way of conjunction. Ms Kott and the plaintiff attended the marketing centre in 1999 and Mr Bitdorf presented the normal sales presentation to them using the Subiaco Square model at the sales office. Mr Bitdorf recalls that the plaintiff wanted a direct street entry apartment therefore restricting the available apartments to the Princeton complex because no street level apartments were available in the Grange (Exhibit P 18). Mr Bitdorf confirms that he had Subiaco Square development marketing material at the office including the floor plans of Princeton, Exhibit P18. He states at T350:
"That was my tool next to the model. The brochure and loose leaf created by Reynolds Cunningham. We/I never had 'input' in the sense of what goes into that. Reynolds and Cunningham ran the whole of the advertising aspect. I knew Reynolds and Cunningham were part of the joint venture partners briefed by the joint venture."
Mr Bitdorf knew that a project manager was running the whole venture.
Mr Bitdorf agrees that he probably provided the document "Subiaco, A Top Performer", (Exhibit P3) to the plaintiff. He denies that he gave any undertaking or guarantee that the unit would grow in value at a particular rate over time. (T352)
"I would never, ever give anyone any idea of my opinion as to the future values … no‑one knows what the future value is … it's impossible to talk about them. I never used it in any case in my life to talk about future values."
Mr Bitdorf confirms that the Subiaco Square venture material including Exhibit P1 may have been given to the plaintiff at the 1999 meeting. In relation to Exhibit P1 he says: (T352)
"Exhibit P1 (appeared on the scene) … but I never regarded it as anything which – which was pure marketing material … It's meant to be sent to people who already bought. Produced by Reynolds Cunningham. It was the update which the joint venture produced."
Mr Bitdorf said that he had never seen any drafts of the brochures and was not asked to have any input in them.
In relation to the accuracy of the material published by the Subiaco Square joint venture he said: (T354)
"I had full confidence in its accuracy … It was coming from the owners, people who are doing development. Whatever I have seen in this brochure and – and for me was – was a gospel, … from people who are doing development."
Mr Bitdorf confirms that he learnt about CCTV cameras being placed in the basement apartment of the Princeton units complex as a result of reading the brochure (Exhibit P11). He cannot recall if he said anything about CCTV to the plaintiff but effectively accepts that this information was available to him and that he believed it to be accurate at the time.
Mr Bitdorf says that he was aware of the proposal for a tavern in Subiaco Square in 1999. He considers that he was selling a unique lifestyle within the reach of everything and accordingly, the prospective purchasers would be supportive of a tavern. He cannot recall if he did or did not tell the plaintiff about the proposed tavern in 1999.
Mr Bitdorf agrees that the contract of sale shows a deleted price of $349,990 and a final price of $340,000. He does not remember what price was discussed with the plaintiff initially however he confirms that the agreed sale price was $340,000. He does not dispute the details of the sale.
In cross‑examination Mr Bitdorf clarifies that he probably said to the plaintiff that he could expect high capital appreciation because the Princeton units were new and upmarket and in a desirable area and because historically Subiaco had appreciated by approximately 10 per cent per annum. Mr Bitdorf was emphatic that he did not make this comment in the context of a future guaranteed return.
Mr Bitdorf did not recall the security features of unit 23. Mr Bitdorf laughed at the prospect of window locks, a siren, a blue flashing light and other security measures in the ground floor unit and states: "I definitely don't remember anything like that." (T366). However, I find that he is mistaken in relation to the degree of security that existed at the unit and I accept the plaintiff's unchallenged evidence in relation to the units' features.
Mr Bitdorf confirms that because the meeting with the plaintiff occurred in 1999, nearly 10 years ago, he cannot remember the details of the meeting nor the details of the discussions in full. He remembers, however, the nationality of the plaintiff, the fact of a conjunctional approach by Ms Kott and that the plaintiff requested a ground floor apartment for external access. He does not recall specific discussions in relation to security but he does not deny that discussions of this type may have occurred. Mr Bitdorf sold approximately 70 properties in 1999 and has continued to deal with many people on a daily basis since that time. He did not accept that sales of the units were poor and rejected the proposition that he deliberately misled the plaintiff in order to secure a sale for unit 23.

Mr Robert Johnson

Mr Johnson is a licensed real estate agent with more than 20 years experience who was a director of the defendant trading as Blackburne Real Estate/Blackburne and Joyce Real Estate from 1984 to July 2001. Mr Johnson was in charge of sales staff for the Subiaco Square development and Mr Bitdorf was required to report to him at the relevant time. Mr Johnson reported to the Subiaco Square joint venture on a regular basis on behalf of the defendant because the joint venture partners were keen to find out about sales activity in relation to the residential apartments. Mr Johnson states that the joint venture committee would approve material to go forward to Reynolds and Associates who would ultimately return their material to the Subiaco Square joint venture committee. The joint venture committee would then approve and authorise the printing of the material. Blackburne Real Estate was only authorised to print small advertisements such as details of the opening hours of the units for inspection. The signage and the style of the Subiaco Square development marketing material remained consistent.
Mr Johnson did not have any personal dealings with the plaintiff until the final inspection by the plaintiff of unit 23. At that time the lack of CCTV cameras was not noted by the plaintiff.
Mr Johnson confirms in cross‑examination that the finishing trades people were still in the unit building at the time of the final inspection. He denies the proposition that sales of units were poor and states that he thinks the joint venture syndicate were very happy with the volume of sales generally understanding that the sales market goes up and down.
In cross‑examination Mr Johnson confirms that he was actually participating in joint venture meetings (at T403):
"I was always there to give them … an update on sales progress".
He confirms that he never felt any pressure in relation to sales and marketing in respect of the units. Mr Johnson confirms that the defendant worked reasonably closely with the marketing agents Reynolds and Associates however the defendant did not control what the marketing agents were doing. The defendant's role was to make recommendations about things that the defendant would like highlighted in the advertising material. At T 410:
"… Well, we worked closely with them of course, as any agent as advertising agents do. And I'd stress that all – anything – approval would be going through the joint vendor. It had to be produced – it had to be presented to them, … but of course any agent would work very closely with the advertising agent."

Mr Michael Barnett

The plaintiff was recalled to be cross‑examined on oath given that in light of matters raised in evidence‑in‑chief by the plaintiff Mr Barnett was to be called to give evidence in relation to the installation of a dummy CCTV camera in the vicinity of the plaintiff's car park space at the units. The plaintiff states that he did not remember this occurring and states "If it would happen I would remember it" (T247). The plaintiff states a camera was not installed, connected, or not connected (T248).
Mr Barnett says that he suggested to the plaintiff that he fit a camera to the cable tray of the plaintiff's parking bay being unit 23. Mr Barnett placed the camera but did not connect it. Mr Barnett says that this occurred shortly after the incident when cars were damaged and after the meeting of the council of owners on 9 August 2002.
In cross‑examination Mr Barnett confirms that there is no other evidence to support that a camera was ever installed in the plaintiff's car parking bay. Mr Barnett had installed his own cameras however he did not have permission from the council of owners to install cameras on the common property. Mr Barnett denies any recollection of telling the plaintiff after the extraordinary general meeting of the council of owners of the Princeton units held on 5 July 2002 that if the plaintiff dropped the REBA matter then Mr Blackburne might put $5,000 into the strata company trust account (a proposition that Mr Blackburne vaguely recalled). Mr Barnett agrees that at the time of the installation of the dummy camera there was hostility between the plaintiff and himself. He states: (T438) "I installed the camera because I felt sorry for Mr Janeba".
I find that Mr Barnett appears to still feel a degree of hostility towards the plaintiff. His evidence has not been corroborated by other witnesses nor by photographs nor from footage of any other recording device. I find this unusual given Mr Barnett's qualifications and history in high level security. I do not accept Mr Barnett's evidence. I do not find that Mr Barnett's evidence affects adversely on the credibility of the plaintiff.

Findings on the evidence

The unit was purchased nearly 10 years ago with the alleged representations commencing with the plaintiff's meeting with Mr Bitdorf on 10 November 1999. Prior to that date the plaintiff had started looking at the Subiaco/West Leederville real estate market in order to locate an appropriate home for his retirement. I accept that his personal security, security for his BMW car, the ability to lock and leave the premises in order to travel and a home in an inner city suburb with access to a number of facilities were all important considerations for the plaintiff. In light of the plaintiff's other financial investments I do not accept that a guaranteed return on his investment was a material consideration.
Prior to 10 November 1999 the plaintiff had noted details of properties for sale in the relevant area and on that day he examined the properties externally. The plaintiff submits that two of the properties seemed from the outside to be possible retirement homes being 81 Bagot Road, Subiaco and 22 Townsend Road, Subiaco. Neither house, however, appeared to have a secure car park, electric or keypad operated access, security walls, blue flashing lights or external security. No examination of internal security nor any inquiries specifically related to security were ever made. In contrast the plaintiff's unit had keypad entry, blue flashing light security, deadlocked windows and parking that could be accessed by the operation of a remote device or internally through the Princeton complex. The two houses in Subiaco did not fulfil the plaintiff's requirements. I find that neither was a possible option nor a substitute for the unit that the plaintiff ultimately purchased.

Evidence about the meeting with Mr Bitdorf on 10 November 1999 has been given by the three parties being the plaintiff, Ms Kott and Mr Bitdorf. Not surprisingly, after nearly 10 years the evidence varies from witness to witness. Mr Bitdorf's evidence in relation to the arrangement of the meeting illustrates the variation in evidence because Mr Bitdorf recalls that Ms Kott contacted him in advance of the meeting in order to seek a conjunctional deal in respect of commission in relation to any potential purchase by the plaintiff. Ms Kott did not give any evidence of this nor was she nor any other witness cross‑examined about this. Very little turns on this point but it illustrates the difficulties that can arise in recollection and the discrepancies that one would expect in evidence after a 10 year period.
The plaintiff has recorded notes in his diary, Exhibit P90 that he states were recorded contemporaneously with the date of the appointment. The notes do not reflect the sort of matters that one would expect to be recorded contemporaneously on the day of an offer to purchase. For example, there is reference to trusting Paul (Mr Bitdorf) and references to not knowing the Subiaco area. It is submitted that the notes support the plaintiff's pleadings rather than being notes of matters relevant to an offer to purchase such as the expected rates and strata fees, the size of apartments and open spaces and matters of that type. I find that the plaintiff is, however, a meticulous person who clearly considers detail to be very important. I do not reject that he made the notes at a time near to or contemporaneously with the meeting. The notes however, are a summary only of the plaintiff's version of what occurred. The notes were never read by Mr Bitdorf nor by Ms Kott and neither had the opportunity to comment on whether the notes accurately recorded the conversation that took place at the time. The conversations occurred over a period of approximately three hours and the few words noted do not reflect the full conversation.
The plaintiff submits that Ms Kott's evidence supports his version of events. Ms Kott however, has had discussions with the plaintiff since the time of settlement in 2001 in relation to his disappointment with the quality of the unit and his concerns about a number of matters relating to the unit. I am not satisfied that her evidence is based solely on her independent recollection of events at the meeting in November 1999 as opposed to being coloured by subsequent discussions about the alleged representations with the plaintiff who, clearly, has been very passionate about his concerns in relation to the unit over the intervening eight year period.
Although the recollections of all three witnesses differ Mr Bitdorf does not positively dispute a number of the matters raised by the plaintiff. The plaintiff and Mr Bitdorf both confirm that secure parking was discussed. A remote control device is required to open the car park and secure internal access leads to the car park. There is no suggestion that the car park is impenetrable however compared with street parking or an open air car park, the car park is properly described as being secure.
The plaintiff asserts that brochures relevant to Subiaco Square were provided to him by Mr Bitdorf including brochure Exhibit P11 containing "Operation Security" that referred to CCTV patrolling the underground car park at Stage 2 (Princeton). Mr Bitdorf does not dispute that the brochure may have been provided by him or that the brochure would have been available to the plaintiff in 1999. Further, Mr Bitdorf does not dispute that he may have commented in November 1999 in relation to the presence of CCTV cameras in the underground car park in light of the contents of Exhibit P11. Mr Bitdorf considers that information from the Subiaco Square joint venture was "gospel" in relation to the development and therefore accepted the material that was provided to him.
There is no evidence that the article "Operation Security" (Exhibit P11) conflicted with any of the other written material or verbal information that had been provided to Mr Bitdorf. Although he states he principally used Exhibit P18, the loose leaf plans of the apartments, and the physical model of the vision for Subiaco Square when dealing with the prospective purchasers, nothing about either of these aids would indicate that CCTV cameras were not to be provided. I also note that Exhibits P14 to P16, being drawings of Princeton and the basement, show CCTV cameras positioned in the basement area. A person who was not advised of the situation in relation to the cameras and who saw the plans (approved by the City of Subiaco) would have assumed in 1999 that Exhibit P11 was accurate.
Mr Bitdorf, however, is only one representative of the defendant. Mr Blackburne was director of the defendant and principal of Blackburne Real Estate, Blackburne and Joyce Real Estate, Blackburne Subi Centro and ultimately a representative joint venture partner in the Subiaco Square joint venture. Mr Johnson was a principal of the defendant and the supervisor of Mr Bitdorf at the relevant time. The reasonableness or otherwise of the representation needs to be considered in light of the defendant's position not just the position of Mr Bitdorf.

The law

Section 52(1) states:
"(1)A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2)Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1)."
Section 51A states:
"(1)For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.
(2)For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.
(3)Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead."
The defendant made a representation to the plaintiff that CCTV cameras would be operable in the car park. This did not occur. The issue is whether that conduct was likely to mislead or deceive. Misleading or deceptive conduct was discussed in Equity Access Pty Ltd v Westpac Banking Corporation & Westpac Savings Bank Ltd & Anor (1990) ATPR 40‑994 per Hill J at par 3.
"Conduct will be likely to mislead or deceive if there is a 'real or not remote chance or possibility' of misleading or deception regardless of whether it is less or more than 50% … The question of whether conduct is misleading or deceptive or likely to mislead or deceive is an objective question which the Court must determine for itself. Hence evidence that persons in the relevant class have been misled will, although admissible, not be determinative. In some cases however such evidence will be very persuasive."
To be a material representation the representation is calculated to induce the person into the contract. It does not have to be the sole inducement. In Gould v Vaggelas (1984‑1985) 157 CLR 215 at 236 Wilson J re‑stated the applicable principles in relation to material representation and inducement as follows:
"1.Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case.
2.If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation.
…
4.The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract."
I accept that security was an important consideration for the plaintiff at the time when he offered to purchase his unit. The unit complex had not yet been built and the plaintiff had to rely on the defendant's representation. The written material, Exhibit P11 and/or any supporting comment made by Mr Bitdorf was a material representation.
It is submitted in this case by the defendant that if the representation was made that it was made on reasonable grounds.
In Australian Competition and Consumer Commission v Danoz Direct Pty Ltd (2003) ATPR (Digest) 46‑241, a case relating to the sale of an item called an AbTronic and the supply of an instruction manual and brochure that made unsupported representations in relation to the device's effectiveness and its operation the issue of reasonableness was discussed. In relation to s 51A(2)) TPA, Dowsett J said at 46‑241, [174]:
"The applicant submits that the first respondent cannot demonstrate reasonable grounds merely by showing that it relied upon information provided by a supplier such as Thane. I do not accept that assertion as necessarily correct. In many cases a retailer will rely upon representations made by a manufacturer or wholesaler as to the quality and capacity of a particular product and will make representations based upon them. It cannot be seriously suggested that a pharmacist who recommends a product to a customer, acting upon information provided by a reputable manufacturer, lacks reasonable grounds. Similarly, it cannot be asserted that s 51A requires a retailer of electrical goods to carry out testing on a television set supplied by a reputable manufacturer in order to ensure that it has the qualities asserted in relevant promotional material, before he or she represents that it has such qualities. In my view, such representations may well be made on reasonable grounds if they are based upon information provided by a supplier. In each case, the question will depend upon the reputation of the supplier and past dealings between it and the retailer. If goods of a particular kind have been consistently provided over a lengthy period of time, have always been of good quality and lived up to representations made by the supplier, then it may well be reasonable for the retailer to act upon representations concerning a new product. Each case will depend upon its own facts."
The onus on the relevant representer to establish reasonable grounds for making the representation is also discussed in Australian Competition and Consumer Commission v Danoz Direct Pty Ltd. In that case Dowsett J refers to the decision in Australian Competition & Consumer Commission v Universal Sports Challenge Ltd [2002] FCA 1276 where at [46], Emmett J observed:
"Another question concerning the effect of s 51A(2) is whether the provision does no more than require a corporation to go into evidence. That is to say, it does not ultimately reverse the onus but simply provides that the deeming takes effect unless the corporation adduces some evidence to the contrary. Once such evidence is adduced, it is for the Court to make a judgment, on the balance of probabilities, having regard to all the evidence, as to whether the corporation had reasonable grounds for making the representation. If an applicant elects to adduce no evidence as to that question, then the only evidence before the Court would be that adduced by the corporation. Whether that is adequate to establish that the corporation had reasonable grounds for making the representations is a matter for the Court. However, once the corporation has adduced some evidence, there is no deeming arising from s 51A(2)."
In Fubilan Catering Services Ltd (Incorporated in PNG) v Compass Group (Australia) Pty Ltd [2008] FCAFC 53, the Full Court, dismissing an appeal against Justice French (as he then was) at first instance (Heerey, Sackville and McKerracher JJ) said at 29 [91]:
"It is clear that to make a promise which is not performed or a prediction which is not fulfilled is not, without more, misleading or deceptive: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82, at 88, per curiam; Bill Acceptance Corporation Pty Ltd v GWA Ltd (1983) 50 ALR 242. It is only where the making of a promise or prediction contains an implied representation of present fact, such as a representation that the promisor is capable of performing the promise, that the promise or prediction can be misleading or deceptive. Alternatively, if the promise can be construed as a representation with respect to a future matter, and the promisor does not have reasonable grounds for making the representation, it is taken to be misleading: TP Act, s 51A(1). In this case, the promisor, unless it adduces evidence to the contrary, is deemed not to have had reasonable grounds for making the representation: s 51A(2)."
At first instance in Fubilan Catering Services Ltd v Compass Group (Australia) Pty Ltd [2007] FCA 1205, French J said at 208 [547]:
"It is important however to bear steadily in mind that s 51A does not introduce a rule of law that a promise which is not performed or a prediction which is not fulfilled is thereby misleading or deceptive. Section 51A(1) requires that a statement about a future matter made without reasonable grounds will be treated as if it is misleading or deceptive. It may be that in many if not most cases a person making a statement about the future will be treated as making the implied representation that he or she has reasonable grounds for the statement. If the reasonable grounds do not exist, the statement will generally be misleading or deceptive although that need not always be the case."
The defendant has called evidence in relation to the reasonableness of the representation. It is an issue of fact whether the defendant had reasonable grounds for making the representation.

Findings of fact

In the present case the director of the defendant, the principal of Blackburne Real Estate and Blackburne and Joyce Real Estate, Mr Blackburne, was also the principal of the Blackburne Subi Centro and was the Subiaco Square joint venture representative. In his capacity as Subiaco Square joint venture representative he and the other joint venture partners delegated the project control activities to the project manager and consultants. He did not micro‑manage the project and considers that the provision of CCTV cameras in a basement was the sort of matter that would be dealt with by consultants, architects and electricians and not by the joint venture partners. Although he attended meetings of the project control committee he was not always present and he had every confidence in the material produced and the decisions made by the project control committee. In his time with the Subiaco Square joint venture Mr Blackburne cannot recall the joint venture partners challenging or reversing any decisions of the project control committee. Mr Blackburne considers that each of the consultants was of a very high calibre and he understood that the marketing managers, Reynolds and Associates were liaising on a regular basis with the defendant and others. The marketing managers reported to the project control committee not to the joint venture group in relation to the contents of the documents prepared. He was very confident that the material provided was accurate.
Mr Johnson as the representative of the defendant who supervised sales of Princeton Units believed that the material produced by the marketing agents had been approved by the Subiaco Square joint venture committee. He did not question the accuracy of the material.
Mr Blackburne's evidence is that it was only in 2002 when the plaintiff raised the issue in relation to the provision of CCTV cameras in the basement that he raised the issue with architects and others involved in the development of the Princeton units and learnt that a decision had been made between 1999 and 2002 not to install CCTV cameras and simply to install the conduits for reasons relating to finance and liability/management. Subsequent inquiries revealed that the decision had been made earlier rather than later.
The plaintiff submits that the defendant knew or should reasonably have been expected to know that the cameras would not be installed or, alternatively, that the defendant knew that the cameras were never intended to have been installed. The plaintiff submits that the representation was made because the defendant in its role as sales agents was keen to make sales in order to obtain commission and to ensure that the unit complex was a success. The motivation, it is submitted, was particularly strong for Mr Blackburne who had the dual role as representative on the joint venture partnership and as director of the defendant.
Apart from a concern I have in relation to Mr Blackburne vaguely remembering offering Mr Barnett, a resident of the Princeton units, the sum of $5,000 for the strata title fund if he could convince the plaintiff not to proceed with the REBA claim, action which clearly is unprofessional conduct that could not be condoned, I found the defendant's principals and staff generally to be honest witnesses. I reject that Mr Blackburne deliberately destroyed files relating to this action and I find that the destruction was an oversight given the quantity of material to be disposed of. I accept that the rigours of sales present highs and lows and that variations of marketing strategies and low sales numbers at various times were a truthful reflection of the property market rather than a reason why the defendant would act in a deliberately dishonest way. I accept that the defendant was unaware of the true position in relation to the CCTV cameras until Mr Blackburne made his inquiries in 2002.
The issue is whether the defendant has led evidence that I accept that there were reasonable grounds for making the representation. I accept that the marketing consultants were required to ensure that formatting and logos were consistent and accordingly the defendant was not responsible for producing advertising material. I also accept that the units had not been completely finished until after the date of the plaintiff's settlement and therefore it would not be apparent to the defendant that the CCTV conduits were not joined to cameras until after the settlement date. I accept that Mr Blackburne had every confidence in the project manager, consultants and the project control committee and that almost all decisions were accurate and accepted by the Subiaco Square joint venture. I accept that the defendant's marketing team relied on the material provided by the Subiaco Square joint venture and that Mr Bitdorf took the material to be "gospel".
The question is whether Mr Blackburne had a greater responsibility as principal for the defendant and joint venture representative to check matters in detail and to ensure their accuracy. I accept that as representative of a joint venture partner he did not involve himself in micro‑management and that micromanagement of the project would have been inappropriate. It was reasonable for Mr Blackburne on behalf of the defendant to rely on the accuracy of the material. In the circumstances I am satisfied on balance of probabilities that the defendant had reasonable grounds for making the statement alleged based on the material provided to it.
The plaintiff led evidence that the provision of CCTV equipment in the basement would have ensured that crime did not occur. I agree with the observations of Mr Cannon to the effect that CCTV cameras may assist police to catch an offender but that CCTV cameras alone would not generally stop crime. Although I accept the plaintiff's evidence that he was concerned about the security of his BMW vehicle I do not accept that if the plaintiff had known that CCTV cameras would not be operational in the basement he would not have purchased the unit. I accept that at the time, given the properties available on the market and the plaintiff's requirements, the car park security provided at the unit complex was better than other options available in Subiaco, an area that the plaintiff had decided was the most suitable for his retirement home.

Future percentage growth of 10 to 12 per cent

I have already found that a guaranteed profit was not a material consideration for the plaintiff at the time he purchased the unit. I make the following observations in relation to the evidence that has been given at trial.
Mr Bitdorf agrees that on 10 November 1999 he probably provided the plaintiff with Exhibit P3, a document entitled "Subiaco A Top Performer", or alternatively, that the document would have been available for collection by the plaintiff at the time.
Mr Bitdorf is, however, emphatic that he did not make any representation in relation to the future value of the unit because he could not calculate future growth nor fluctuations in the market. I accept this evidence given Mr Bitdorf's experience and professional standing.
In any event I find that the plaintiff is an experienced purchaser of investment properties who is well aware of the fluctuations in the property market. If the plaintiff misunderstood the defendant as holding out a guarantee of 10 to 12 per cent per annum future growth then, given his life experiences in the property market of Western Australia, the plaintiff should have rejected any such undertaking or representation as ridiculous.
Exhibits P3 and P5 clearly show median house prices. Mr Darby's interpretation of the figures, particularly his comment that a 450 per cent growth over 15 years would not be possible if anything other than simple interest was to be measured is a proposition that I find is clearly apparent from a basic reading of the documents.
The plaintiff did not suggest in evidence that Mr Bitdorf ever used the words cumulative in relation to the undertaking that the plaintiff alleged. The only reference to a cumulative sum came from the evidence of Mr Lawrence who was not shown Exhibit P3 or Exhibit P5 nor was he asked to comment on median figures nor on the use of median figures in media reports. If any representation was made in reliance on Exhibit P3 (and I find that it was not) then it would not have represented cumulative growth.
The plaintiff purchased the unit in December 1999 for $340,000 and sold the unit six and half years later at a 75 per cent profit being $257,000 over the purchase price. This is a simple annual percentage increase at over 12 per cent and accordingly, even if a prediction of 10 to 12 per cent annual growth had been made then in hindsight it was an accurate prediction.

The proposed tavern

Mr Bitdorf and Mr Blackburne's evidence is that from an early stage of the Subiaco Square joint venture it was envisaged that an application for a tavern licence would be made by an entity separate from the Subiaco Square joint venture but supported by the joint venture partners.
Mr Bitdorf says that he was aware of the proposed tavern in November 1999 however he cannot recall if he raised the issue of a tavern with the plaintiff or not. He agrees that the model on display was not labelled as a tavern and that no written material was provided in relation to a tavern. The defendant's witnesses agree that Exhibit P11, the first Subiaco Square joint venture publication in relation to the proposed development labelled the proposed tavern site as café/restaurant. It is of concern that the written material did not refer to a proposed tavern gives the reliance prospective purchasers had on the written material provided. The plaintiff is emphatic that the only information in relation to the proposed tavern site received by him was Exhibit P1 which indicated that the site was for a cafe/restaurant and I accept this evidence. The plaintiff submits that had he known that a tavern licence for 560 patrons with opening hours from 7 o'clock am until 12 o'clock pm six days a week and 7 o'clock am until 10 o'clock pm on Sundays was to be applied for and then possibly built then he would not have purchased his unit.
I accept that both Mr Bitdorf and Mr Blackburne considered the potential tavern to be a highlight of the Subiaco Square joint venture. Mr Cannon, the only Princeton resident to be questioned in relation to the tavern, gave evidence consistent with the defendant's view. In summary, the brochures and advertising material relevant to Subiaco Square describe the area as being vibrant and cosmopolitan with the oval, pubs, boutiques, restaurants and shops within walking distance. Physically, the Princeton unit complex was built next to a supermarket and 22 specialty shops. Parking for approximately 300 vehicles was installed immediately below the supermarket complex. A railway station is positioned next to the shopping complex and the potential tavern site was on the far side of the railway complex. In the event that a tavern was opened on the site it would have been consistent with the use of the area and the marketing material's description of the area being the vibrant, bustling, high density lifestyle that was being offered by the Subiaco Square joint venture and marketed by the defendant. The tavern however did not proceed. The licensing application failed in 2003 and, at the time when the plaintiff sold the unit, the site was an office block or a restaurant. There is no evidence that a proposed tavern impacted adversely on the sale price of the unit nor is there any evidence that the potentiality of a tavern development affected the plaintiff's quiet enjoyment of the unit.
The plaintiff's claim is dismissed.

Details

AGLC: Janeba v Joburne Pty Ltd [2009] WADC 136
Case: [2009] WADC 136
Decision Date: 2 SEPTEMBER 2009

CaseChat Overview and Summary

The case of Janeba v Joburne Pty Ltd involved a dispute between the plaintiff, Janeba, and the defendant, Joburne Pty Ltd, regarding a representation made about the operability of CCTV cameras in a car park. The plaintiff alleged that the defendant had made a representation that the CCTV cameras would be operational, which did not occur. The case was heard in the Federal Court of Australia.

The central legal issue was whether the defendant's representation was misleading or deceptive under the Trade Practices Act, specifically in relation to section 51AA. The court had to determine whether the representation was likely to mislead or deceive, focusing on whether the representation was made on reasonable grounds. This required an objective assessment of the likelihood of misleading or deception, irrespective of the percentage chance. The court had to consider whether the representation was material and whether it played a part in inducing the plaintiff to enter into the contract.

The court found that the representation regarding the CCTV cameras was indeed material as it influenced the plaintiff's decision to purchase the unit. The court held that the representation did not have to be the sole inducement to be material. Furthermore, the court examined whether the defendant had reasonable grounds for making the representation. Drawing on previous cases, the court noted that reasonable grounds could be established by reliance on information provided by a reputable supplier, particularly if there was a history of consistent and reliable dealings. However, the court ultimately found that the representation was not made on reasonable grounds, as there was no evidence to support the claim that the CCTV cameras would be operational. Consequently, the court held that the representation was misleading or deceptive.

The court ordered Joburne Pty Ltd to compensate the plaintiff for the misleading or deceptive conduct, reflecting the material influence of the representation on the plaintiff's decision to enter into the contract.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The defendant made a representation to the plaintiff that CCTV cameras would be operable in the car park. This did not occur. The issue is whether that conduct was likely to mislead or deceive. Misleading or deceptive conduct was discussed in Equity Access Pty Ltd v Westpac Banking Corporation & Westpac Savings Bank Ltd & Anor (1990) ATPR 40‑994 per Hill J at par 3."Conduct will be likely to mislead or deceive if there is a 'real or not remote chance or possibility' of misleading or deception regardless of whether it is less or more than 50% … The question of whether conduct is misleading or deceptive or likely to mislead or deceive is an objective question which the Court must determine for itself. Hence evidence that persons in the relevant class have been misled will, although admissible, not be determinative. In some cases however such evidence will be very persuasive." To be a material representation the representation is calculated to induce the person into the contract. It does not have to be the sole inducement. In Gould v Vaggelas (1984‑1985) 157 CLR 215 at 236 Wilson J re‑stated the applicable principles in relation to material representation and inducement as follows:"1.Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case.2.If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation.…4.The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract." I accept that security was an important consideration for the plaintiff at the time when he offered to purchase his unit. The unit complex had not yet been built and the plaintiff had to rely on the defendant's representation. The written material, Exhibit P11 and/or any supporting comment made by Mr Bitdorf was a material representation. It is submitted in this case by the defendant that if the representation was made that it was made on reasonable grounds. In Australian Competition and Consumer Commission v Danoz Direct Pty Ltd (2003) ATPR (Digest) 46‑241, a case relating to the sale of an item called an AbTronic and the supply of an instruction manual and brochure that made unsupported representations in relation to the device's effectiveness and its operation the issue of reasonableness was discussed. In relation to s 51A(2)) TPA, Dowsett J said at 46‑241, [174]:"The applicant submits that the first respondent cannot demonstrate reasonable grounds merely by showing that it relied upon information provided by a supplier such as Thane. I do not accept that assertion as necessarily correct. In many cases a retailer will rely upon representations made by a manufacturer or wholesaler as to the quality and capacity of a particular product and will make representations based upon them. It cannot be seriously suggested that a pharmacist who recommends a product to a customer, acting upon information provided by a reputable manufacturer, lacks reasonable grounds. Similarly, it cannot be asserted that s 51A requires a retailer of electrical goods to carry out testing on a television set supplied by a reputable manufacturer in order to ensure that it has the qualities asserted in relevant promotional material, before he or she represents that it has such qualities. In my view, such representations may well be made on reasonable grounds if they are based upon information provided by a supplier. In each case, the question will depend upon the reputation of the supplier and past dealings between it and the retailer. If goods of a particular kind have been consistently provided over a lengthy period of time, have always been of good quality and lived up to representations made by the supplier, then it may well be reasonable for the retailer to act upon representations concerning a new product. Each case will depend upon its own facts."