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Liao v LNG Properties Pty Ltd

Liao v LNG Properties Pty Ltd

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Case Copied 20 December 2019 40 min read

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Supreme Court

New South Wales

Medium Neutral Citation: Liao v LNG Properties Pty Ltd [2019] NSWSC 1846
Hearing dates: 25-27 November 2019
Date of orders: 20 December 2019
Decision date: 20 December 2019
Jurisdiction: Equity - Real Property List
Before: Rein J
Decision:
See [61]-[62].

Catchwords:
CONTRACTS – Construction – Interpretation – Background – Where a clause in a contract for sale of a unit off the plan permitted the second plaintiff (Ms Li) as purchaser to rescind if the unit’s actual internal area as built was five per cent less than what had been contracted for – The contract did not expressly state the expected internal area of the unit (i.e. the comparator for purposes of the clause); Ms Li contended that the comparator was 75 m² (as contained in marketing material provided to the first plaintiff, Mr Liao) and the defendants (LNG) contended that the comparator was 71.4 m², as derived from a plan known as the Revision E plan – Held: comparator was 75 m² on the basis that it was a fact known to both parties at the time of entering into the contract (in contrast to the Revision E plan, which was not known to both parties and which the parties had never agreed to use as the basis for determining the comparator), with the consequence that Ms Li could validly rescind the contract and have her deposit returned.

CONTRACTS – Principal and agent – Where Ms Li relied on Mr Liao’s knowledge as her “agent to know” in respect of 75 m² being the comparator for purposes of the rescission clause – LNG asserted that Ms Li could not rely on Mr Liao’s knowledge because the internal area was immaterial to her decision to buy the property (her having done so solely for the reason that Mr Liao, her romantic partner, had asked her to) and because Mr Liao, as her agent, did not have a duty to disclose to her his knowledge about the internal area (and nor did he disclose it) – Held: Ms Li was able to rely on Mr Liao’s knowledge as her “agent to know”.
CONTRACTS – Misleading conduct under statute – Misleading or deceptive conduct – Silence – Claim pursuant to s 18 of the Australian Consumer Law, pleaded in the alternative – Mr Liao contended that LNG should have disclosed to him the internal area as constructed at the time that he negotiated with LNG to arrange a new contract with Ms Li as the purchaser using his deposit, because had he known the true area at that point he would simply have rescinded his contract with LNG rather than arrange the contract with Ms Li – Held: LNG did not engage in misleading or deceptive conduct by remaining silent about the internal area as constructed, because the circumstances did not give rise to a reasonable expectation that LNG would physically measure the unit when the contract did not require them to do so, and when Mr…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] NSWSC 1846
Decision Date: 20 December 2019

CaseChat Overview and Summary

The case of Liao v LNG Properties Pty Ltd involved a dispute over the sale of an off-the-plan unit, where the purchaser, Ms Li, sought to rescind the contract on the basis that the actual internal area of the unit was significantly less than what was agreed upon. Ms Li argued that the comparator for the rescission clause was 75 m², as per marketing material provided to her by the first plaintiff, Mr Liao. LNG Properties Pty Ltd contended that the comparator was 71.4 m², as per a Revision E plan, which was not known to both parties at the time of the contract. The court had to determine the correct comparator for the rescission clause and whether Ms Li could validly rescind the contract and have her deposit returned.

The court found that the comparator was indeed 75 m², as it was a fact known to both parties at the time of entering into the contract. The Revision E plan was not known to both parties and had never been agreed upon as the basis for determining the comparator. Consequently, Ms Li could validly rescind the contract and have her deposit returned. The court also ruled that Ms Li could rely on Mr Liao's knowledge as her "agent to know" regarding the 75 m² being the comparator, despite LNG's argument that the internal area was immaterial to Ms Li's decision to buy the property.

Additionally, the court considered a claim under section 18 of the Australian Consumer Law for misleading or deceptive conduct by silence. Mr Liao argued that LNG should have disclosed the true internal area when he negotiated to arrange a new contract with Ms Li using his deposit. However, the court held that LNG did not engage in misleading or deceptive conduct because there was no reasonable expectation that LNG would physically measure the unit when the contract did not require them to do so, and because Mr Liao had specifically asked LNG to rescind his contract in favour of arranging the new contract with Ms Li.

The court's decision was that LNG did not engage in misleading or deceptive conduct and that Ms Li could validly rescind the contract. The final orders included that Ms Li was entitled to have her deposit returned and that LNG was not liable for misleading or deceptive conduct.

Orders