Liggins v Park Trent Properties Group Pty Ltd

[2020] NSWSC 1113

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Liggins & Anor v Park Trent Properties Group Pty Ltd & Anor [2020] NSWSC 1113

Hearing dates:

31 October & 1 November 2019

Date of orders:

25 August 2020

Decision date:

25 August 2020

Jurisdiction:

Equity

Before:

Slattery J

Decision:

Plaintiff establishes contract against first defendant. Plaintiff fails against second defendant. Directions given for assessment of damages and determination of costs.

Catchwords:

CONTRACT – offer and acceptance – plaintiffs contemplating the purchase of two parcels of real estate from persons not parties to the proceedings – the first defendant company provides a letter to the plaintiffs signed by the second defendant – letter indicates that the first defendant was “prepared to” buy the properties “back” at the same purchase price at which they were being acquired by the plaintiffs – the plaintiffs then proceed to complete the purchase of one property and sign a contract to acquire the other property, which also later proceeds to completion – whether the letter constituted an offer by the first defendant to the plaintiffs for the first defendant to acquire the properties from the plaintiffs at the price the plaintiffs purchased the properties from the third parties – whether valid consideration existed to support any contract made by the letter – whether a contract was made in terms of the letter for the first defendant to acquire the properties from the plaintiffs at the stated price – whether the letter constituted a promise to keep open for later acceptance an offer by the first defendant to acquire the properties – whether by failing to acquire the properties the first defendant has breached any contract made between the plaintiffs and the first defendant – whether the plaintiffs have suffered any loss or damage by reason of any breach of contract by the first defendant.

SPECIFIC PERFORMANCE – whether the Court should grant a decree of specific performance of a contract requiring the first defendant to buy the two properties from the plaintiffs at the price at which they were originally acquired by the plaintiffs – discretionary defences – laches – contract made in 2009 – whether relief the nature of specific performance should be denied on account of the plaintiffs delay in commencing proceedings – the constitution of proceedings – whether two plaintiffs may be granted the remedy of specific performance requiring the sale of a property formerly jointly held, when one of them has since sold all that party’s interest in the property.

STATUTE OF LIMITATIONS – running of time – first defendant contends any contract based upon the letter was made in 2009 and was breached shortly thereafter – proceedings not commenced until 2017 – first defendant contends proceedings for breach of contract brought outside the six-year limitation period and are now barred by Limitation Act1969, s14 – plaintiffs contend the contract they rely upon was first breached in 2012 and these proceedings were brought within time – when was any contract made between the plaintiffs and the first defendant breached, so as to commence the running of time of the plaintiffs’ claim in contract – whether or not proceedings are statute barred.

MISLEADING AND DECEPTIVE CONDUCT – plaintiffs allege that by signing the letter and causing it to be issued to the plaintiffs the second defendant engaged in misleading and deceptive conduct inducing the plaintiffs to acquire the two properties – whether the second defendant engaged in misleading or deceptive conduct – whether the plaintiffs were induced by the second defendant’s misleading or deceptive conduct to acquire the two properties – second defendant first joined into the proceedings in 2019 – whether the plaintiffs’ claim for misleading and deceptive conduct is statute barred – if misleading and deceptive conduct were established whether the plaintiffs have suffered loss or damage.

Legislation Cited:

Domestic Building Contracts Act 2000 (Qld), s 72

Limitation Act 1969, ss 14, 23

Sale of Land Act1962 (Vic), ss 31, 32

Trade Practices Act 1974 (Cth), s 51AC

Competition and Consumer Act 2010 (Cth), Schedule 2, ss 18, 21, 22, 82(2)

Cases Cited:

Baloglow v Konstantinidis (2011) BPR 20, 721

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447

Gerace v Auzhair Supplies Pty Ltd(in liq) (2014) 87 NSWLR 435

King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204

New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd [1975] AC 154

Pao On v Lau Yiu Long [1980] AC 614

Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537

Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Aust) Pty Ltd (1978) 139 CLR 231

Scotson v Pegg (1861) 158 ER 121

United Dominions Trust (Commercial) Ltd vEagle Aircraft Services Ltd [1968] 1 All ER 104

Category:

Principal judgment

Parties:

First Plaintiff: Geoffrey Liggins
Second Plaintiff: Xiankun Wu
First Defendant: Park Trent Properties Group Pty Ltd
Second Defendant: Ronald Malcolm Cross

Representation:

Counsel:
Plaintiffs: A. Blank
Defendants: R. Glasson

Solicitors:
Plaintiffs: Kon Papanicolaou, KP Lawyers
Defendants: Tony Barber, Barber Lawyers

File Number(s):

2017/316458

Publication restriction:

No

Judgment

1. The first defendant, the ParkTrent Properties Group Pty Ltd (“ParkTrent”), packages, markets and sells real estate developments throughout Australia. In 2009, the plaintiffs, Mr Geoffrey Liggins and his then wife, Ms Xiankun (Julia) Wu, were interested in purchasing investment properties through real estate agents associated with ParkTrent. To further their investment interests, the plaintiffs discussed with ParkTrent’s Chief Executive Officer, the second defendant, Mr Ronald Cross, the possible purchase of two properties, one in Bundoora, Victoria (“the Bundoora property”) and the other in Kingaroy, Queensland (“the Kingaroy property”).

2. The plaintiffs signed contracts for the acquisition of these two properties from third party vendors, who had financial or corporate relationships with ParkTrent, on 1 August 2009. The plaintiffs claim that they were doubtful about proceeding to complete these contracts because of their concerns about the security of the rental returns from the two properties. So the plaintiffs verbally asked Mr Cross for a guarantee that, should they wish to sell the two properties at a future time, ParkTrent would buy them back at the same price at which the plaintiffs were then proposing to acquire them.

3. On 24 August 2009, Mr Cross signed a letter on behalf of ParkTrent stating that it was “prepared to, should you find yourselves in a position that you need to sell these properties, buy back the properties at the same purchase price for which you acquired them”. These words in this letter have been commonly referred to in these proceedings as “the buyback” or “the buyback offer” and the 24 August letter as the “buyback letter”. These reasons will continue to use those expressions.

4. Strictly speaking, ParkTrent was not the vendor of the properties to the plaintiffs, so by the offer ParkTrent was not itself buying them “back” but in a general sense the letter can be construed as meaning that the properties would be taken back from the plaintiffs if the 24 August letter were to be carried into effect. In due course, the plaintiffs proceeded to complete the contracts for sale of the two properties, the Kingaroy property on 15 October 2009 and the Bundoora property on 14 September 2010.

5. The rental returns on the two properties did not meet the plaintiffs’ expectations and they became disenchanted with the investment. So they decided to take advantage of the buyback offer. In 2012, they requested ParkTrent to repurchase both properties. But for various reasons, ParkTrent did not do so. In the meantime, Mr Liggins and Ms Wu separated and were later divorced. In their post-divorce property settlement, Ms Wu assigned to Mr Liggins her interest in the properties and any rights of action in relation to them. The properties were transferred into Mr Liggins’ sole name in July and August 2014.

6. The plaintiffs did not commence these proceedings until October 2017. The plaintiffs now seek specific performance against the first defendant of what they say is a contract constituted by the 24 August 2009 letter which they claim requires ParkTrent to repurchase the Kingaroy and Bundoora properties at their August 2009 acquisition prices. The plaintiffs contend that in 2012 ParkTrent breached this contract, when it in substance refused to repurchase the two properties and they seek damages in the alternative. Alternative claims are brought in unconscionable conduct in misleading and deceptive conduct based on the 24 August 2009 letter.

7. The plaintiffs joined the second defendant into the proceedings in June 2019. They also seek damages against the second defendant for alleged misleading and deceptive conduct, arising out of their claimed reliance upon the buyback offer.

8. ParkTrent denies that the 24 August 2009 letter made an offer that was capable of acceptance, so as to create a binding contract to acquire the properties. And Mr Cross denies he engaged in misleading and deceptive conduct. Both defendants contend: that the plaintiffs’ claims against them in contract and for misleading and deceptive conduct are barred by Limitation Act 1969, s 14; and, that the proceedings are not properly constituted because Ms Wu has disposed of her interests in the properties in the divorce property settlement. They further contend that, in any event, the plaintiffs have suffered no loss.

9. The proceedings were heard on 31 October 2019 and 1 November 2019. Mr A. Blank of counsel appeared for the plaintiff, instructed by Mr Kon Papanicolaou of KP Lawyers. Mr R. Glasson of counsel appeared for the defendant, instructed by Barber Lawyers.

Some Pleading Amendments

10. During oral submissions at the hearing, the parties more finely developed their respective cases about the way a contract may have been made arising out of ParkTrent’s 24 August 2009 letter. These developments were largely designed to try and circumvent the limitation defences. Mr Blank, on behalf of the plaintiffs, submitted that the 24 August 2009 letter was accepted by conduct and should be construed as a contract to keep the buyback offer open. He submits that the buyback offer was ultimately only accepted in March 2012.

11. Whether the 24 August 2009 letter was a standing offer that was kept open, what were the terms of any contract created on 1 March 2012 upon acceptance of such an offer, how the offer was accepted, how any contract made on 1 March 2012 was breached, and whether the plaintiffs brought their action within the relevant limitation period constituted by such acceptance, were important matters that needed to be better identified and pleaded.

12. The Court gave a short opportunity for the pleadings to be amended before post-hearing written submissions were ordered. The evidence had finished within the first hearing day. Directions were made that afternoon for amended pleadings to be served during the second day that had been reserved for the hearing. The matter was mentioned at the end of that day which was otherwise kept free, to reduce the parties’ costs. Then written submissions were ordered and were received in November 2019.

13. Before commencing the narrative of the Court’s findings of fact, something should be said about the credibility of the plaintiffs, who were the only witnesses giving oral evidence.

Credibility of the Parties

14. Mr Liggins was an excellent witness. He had a sound recollection of his encounters with the defendants’ witnesses. His explanations for delay in commencing proceedings were genuine and well explained. He spoke convincingly of the disruption to his affairs and financial stability caused by his divorce from Ms Wu. He was an honest, candid and highly believable witness. He had undertaken tertiary study in economics at the University of Sydney and had completed a Master of Business in Employment Relations at the University of Technology Sydney. He was employed by Age and Community Services NSW from August 1996 until February 2017. He has subsequently obtained employment with a company, Leana Street Consultants Pty Ltd and works in employee relations.

15. Ms Xiankun Wu is an accountant with the Australian subsidiary of the German company Duferco International Trading House (“DITH”), which specialises in trading in the raw materials for steel production. Ms Wu appeared to the Court to be commercially astute and conscious of the effect of her answers on her credibility. She carefully limited her answers. English was not her first language but she was well attuned to its nuances and her credibility did not suffer on that account. She was sufficiently confident in the witness box that she could and did correct cross-examining counsel at times. But the cross-examination did not damage her credibility and the Court regards her as a generally reliable narrator of the events that she had witnessed.

16. The following is a narrative of the relevant history. This narrative represents the Court’s findings on the matters covered, except to the extent that the context indicates that only the parties’ allegations are being recorded. For reasons of economy this narrative does not generally include reference to versions of the facts that have been rejected.

A Real Estate Investment, a Buyback Offer and an Alleged Misrepresentation

Early Negotiations – July August 2009

17. In July/August 2009, Mr Liggins and Ms Wu were exploring the possible acquisition together of residential investment property. Their research brought them in contact with the ParkTrent group of companies that represented itself as specialising in the provision of property investment services. The first defendant, ParkTrent, is the principal company within the group.

18. Mr Liggins and Ms Wu began negotiations with Mr Cross on behalf of ParkTrent. In these negotiations they also encountered Ms Jenny Placek, who appears to have been engaged as an independent contractor by the selling agents of the vendors of the properties being offered for sale to the plaintiffs. These negotiations ultimately centred upon the two properties the subject of these proceedings, the Bundoora property in Victoria and the Kingaroy property in Queensland.

19. The vendor of the Bundoora property was Jarrah Estate Pty Ltd (“Jarrah Estate”). The selling agent for the Bundoora property was Cross-Country Realty Victoria Pty Ltd ("Cross-Country Victoria"), a company within the ParkTrent group of companies. Cross-Country Victoria retained Ms Placek as a sales agent for the sale of the Bundoora property. The Bundoora property was part of a larger subdivision and development project known as the "Jarrah Estate". It was near the Royal Melbourne Institute of Technology (“RMIT”) and was planned for student accommodation.

20. The vendor of the Kingaroy property was Parallel Projects Pty Ltd (“Parallel Projects”). The selling agent for the Kingaroy property was Cross-Country Realty Pty Ltd ("Cross-Country"), another company within the ParkTrent group. Cross-Country retained Ms Placek as a sales agent for the sale of the Kingaroy property. At the time of its purchase, the Kingaroy property was vacant land, which was proposed to be developed for affordable housing under a scheme sponsored by the Commonwealth and Queensland governments.

The Kingaroy Contract – 1 August 2009

21. On 1 August 2009, Mr Liggins and Ms Wu took steps towards the purchase of both the Bundoora property and the Kingaroy property. ParkTrent gave them a property investment analysis for the Kingaroy property dated 1 August 2009.

22. The written property investment analysis for the Kingaroy property given to the plaintiffs showed that (based on various assumptions about borrowings, gross rent per week, rental expenses, depreciation, capital growth and inflation) the property was likely to substantially increase in value over the course of 10 years from its proposed purchase price of $369,300, to a market value of $661,360.

23. The plaintiffs do not claim in these proceedings that the property investment analysis for either the Kingaroy property or the Bundoora property were misleading or deceptive. But the plaintiffs’ case is that they had reservations about the accuracy of the representations in these two documents. As a result of those reservations they say that they requested the buyback letter, which they ultimately obtained on 24 August.

24. This investment analysis contained a disclaimer. At the foot of the document, a disclaimer note stated the assumptions contained within it “simply illustrate the outcome calculated from the input values and the assumptions contained in the model” and are “in no way intended to be a guarantee of future performance”. Accordingly, the assumptions in the Kingaroy property investment analysis do not purport to represent the actual equity contribution to be made by the plaintiffs. The assumptions made involved minimal upfront investment ($1,000) and substantial borrowings, gross rent per week of $240, capital growth of 6% per annum, inflation 3% per annum and an interest rate of 5.24% per annum. The gross and net rental yields from the property were assumed at 3.38% and 2.43% respectively. Although even after 10 years the plaintiffs’ predicted equity in the property was $286,704, which was less than half its predicted value at that time.

25. The plaintiffs also signed on 1 August a contract for the purchase of the Kingaroy property from Parallel Projects for $369,600. Ms Wu and Mr Liggins were not sure exactly what documents were signed on 1 August, so the best inference about the date of their signing comes from the documents themselves.

26. The plaintiffs signed composite documentation that day. First, they signed a "Purchase Application" on a ParkTrent form, anticipating the acquisition of the Kingaroy property and recording the payment of a holding deposit of $500. The same ParkTrent form, also separately dated 1 August 2009, congratulates the plaintiffs on their purchase of the Kingaroy property and offers them a complimentary flight to inspect the property in Kingaroy.

27. This application document also attaches a “Contract for Sale of House and Land”, a separate Finance clause, instructions for Grech Partners Solicitors to act on the purchase, and a “Selling Agents Disclosure to Buyer” signed on behalf of Cross-Country Realty. All these documents were dated 1 August 2009 and there can be no doubt that they were all signed that day, even though the plaintiffs’ recollection of the precise date of signature is uncertain.

28. The contract to acquire the Kingaroy property involved the acquisition of the land and the later construction of a dwelling upon the land under the Commonwealth Government’s National Rental Affordability Scheme (“NRAS”). This scheme, which commenced in 2008, apparently aims to increase the supply of new and affordable rental dwellings by providing an annual financial incentive to housing providers for a period of up to ten years. This incentive is issued to housing providers (“approved participants”) to promote the provision of affordable rental dwellings below prevailing market rental rates. The suite of documents signed by the plaintiff included an agreement with the Queensland Affordable Housing Consortium Ltd (“QAHC”), an entity apparently set up to administer the NRAS in Queensland, leasing the completed property to QAHC for use and occupation as affordable housing.

29. A little more should be said about the separate Finance clause and the “Selling Agents Disclosure to Buyer”. The Kingaroy contract was conditional on obtaining finance. This is recorded in a term of the Finance clause on its own separate page of the paper signed on 1 August, in the following terms:

“This contract is subject to the Purchaser obtaining finance approval, sufficient to complete the purchase, from a lending body or financial institution of the Purchasers’ choice within 28 days from the date of this contract. The purchaser covenants with the Vendor to make immediate application for finance and to do all things necessary to obtain prompt approval and not to withdraw the finance application at any time. Should the Purchaser be unable to secure a finance by the above said date this contract will be at an end and any deposit monies paid under the contract will be refundable to the Purchaser. The Purchaser agrees to provide the Vendor with a letter of decline from the relevant lender as proof of lodgement of the finance application. The Purchaser acknowledges that this contract will be deemed unconditional upon the date finance approval is granted and settlement must be effected by the due date contained herein.”

30. A similar obligation appears in the contract for sale itself (clause 5.1), which is also dated 1 August 2009.

31. The selling agent for the Kingaroy property, Cross-Country Realty, gave disclosure of information to the buyer at the time of the sale which shows Cross-Country Realty’s commission of $9,682.50 plus GST. ParkTrent is recorded on this document as earning what was described as "lead generation fees" of $7,450.50. ParkTrent also earned marketing fees of $6,500 plus GST, referral introduction fees of $5,450 and other fees of $3,450. The numbers are hard to read in the document in evidence but the total fees of this nature that were generated appear to be $32,533 plus GST.

32. In the selling agent’s disclosure form for the Kingaroy property, the buyer acknowledges in Part 6 that they have "not yet entered into a contract for the purchase of the property described in section 2 above", being the Kingaroy property. But the accompanying Contract for Sale for House and Land for the Kingaroy property is signed by Mr Liggins and Ms Wu and, although the copies in evidence are regrettably not very legible, it appears to be signed on 1 August 2009.

33. Consistent with the NRAS scheme, the plaintiffs also signed a New Home Construction Contract with a builder, On the Level (Qld) Pty Ltd for the construction of a brick and tile dwelling on the land conveyed by the Kingaroy contract to the plaintiffs for a reconsideration of $244,300 (“the Kingaroy building contract”). The Kingaroy building contract provided for a cooling off period of five days under the Domestic Building Contracts Act 2000 (Qld), s 72.

34. The Purchase Application had indicated that $125,000 was the consideration payable for the purchase of the vacant Kingaroy property. With the cost to build under the Kingaroy building contract being $244,300, the total outlay required to acquire the Kingaroy property with the completed dwelling was $369,300.

The Bundoora Property Contract - 1 August 2009

35. On the same day that the Kingaroy contract was signed, 1 August 2009, Mr Liggins and Ms Wu signed (at least to acknowledge its receipt) a Vendor’s Statement to the Purchaser of Real Estate in respect of the Bundoora property (“the Vendor’s Statement”). This form was required to be given to prospective purchasers of property in that State before contract, under the Sale of Land Act 1962 (Vic), s 32. But the parties dispute exactly when the contract for sale for the Bundoora property, as distinct from the Vendor’s Statement for that property, was signed.

36. The date on which Mr Liggins and Ms Wu executed the contract for sale for the Bundoora property is not recorded on the contract for sale itself and is in dispute. According to their chronology of events, the plaintiffs say that they executed the contract on 18 August 2009. But the defendants contend it was on 1 August 2009 executed simultaneously with the Kingaroy contract, the Kingaroy building contract and associated documentation.

37. The Court concludes that the Bundoora contract was signed on 1 August 2009. Many factors point to this. The contract contains a “Resident – Foreign Investment Review Board Report” dated 1 August 2009 and signed by the plaintiffs on the same page as the date. The contract contains no other date. The plaintiffs met ParkTrent representatives on 1 August and 7 August, as the narrative below shows. The Kingaroy contract was certainly signed on 1 August. There is no suggestion the Bundoora contract was signed on 7 August. No other date before 24 August other than these two is suggested in the evidence as the date that the parties are likely to have met face-to-face with the Bundoora contract.

38. The contract for sale records the purchase by the plaintiffs of the Bundoora property from Jarrah Estate for a price of $396,500, inclusive of GST. The contract provided for a 10% deposit of $39,650, of which $1,000 was recorded as paid and a balance (of the deposit) of $38,650 was payable on or before 29 August 2009. The contract balance of $356,850 (being $396,500 minus $39,650) was payable upon the later of 14 days after the vendor gives notice in writing to the purchaser of the plan of subdivision has registered, and 14 days after the vendor gives notice in writing to the purchaser that the occupancy permit has issued for the property.

39. The contract for sale for the Bundoora property contained a whole contract clause to the following effect:

“WHOLE CONTRACT

The Purchaser acknowledges and agrees that:

2.1   the Vendor's Agent has acted as Agent of the Vendor,

2.2   no information representation or warranty of the Vendor, the Vendor's Lawyer or the Vendor's Agent was supplied or made with the intention or knowledge that it would be relied upon by the Purchaser,

2.3   no information representation or warranty has in fact been so relied upon, except such as are expressly included herein,

2.4   having been given a Vendor's Statement before signing this Contract,

2.5   the Purchaser having relied solely on its own judgement in purchasing the Property and the Chattels for the Price and upon the conditions set out in this Contract,

2.6   this Contract contains the entire understanding of the parties with reference to the subject matter of this Contract and is the sole and full repository of the agreement between the Vendor and the Vendor's Agent on the one hand and the Purchaser on the other hand,

2.7   there are no other understandings agreements warranties or representations whether express or implied or extending defining or otherwise relating to the provisions hereof or binding upon the parties hereto with respect to the matters to which this Contract relates except those (if any) expressly included in this Contract,

2.8   without limiting the generality of the foregoing, no promise, representation or warranty has been given that the Property is or will remain fit suitable or adequate for all or any of the purposes of the Purchaser;”

…”

40. The Bundoora contract provided for a cooling off period of three days under the Sale of Land Act 1962 (Vic), s 31. A notice in the contract pointed out that section 31 allows the purchasers to bring the contract to an end within three clear business days unless certain statutory exceptions applied. None of the exceptions applied. The plaintiffs allowed the cooling off period to expire without giving notice to the vendor ending the contract.

41. The Bundoora contract was conditional (clause 72) on the vendor terminating a prior contract and that it would become unconditional on 15 August 2009 upon the termination of the prior contract. Although the evidence is obscure on this issue, it does not appear to be contended that the contract did not become unconditional on 15 August 2009. The Bundoora contract contains a number of clauses that facilitate the vendor developing and subdividing an estate and constructing buildings on it and making financial and timing adjustments upon settlement to take account of that development. As it turned out, the Bundoora property transaction was not completed until September 2010.

Another Meeting with Mr Cross and Ms Placek – 7 August 2009

42. Mr Liggins and Ms Wu had their doubts about the investment analysis they had been given for both properties. They saw that similar properties, which had already been released for sale in the Jarrah Estate, were being rented for significantly lower rentals of the order of $200 to $300 per week rather than the $500 that ParkTrent had assumed in its investment analysis for the Bundoora property. They began to suspect that the potential rental returns on both properties may have been overstated and they become cautious about completing the two agreements they had signed.

43. Ms Wu had a 1% interest and Mr Liggins had a 99% interest in both properties. Despite her relatively small interest, Ms Wu had a practical outlook that as she was married to Mr Liggins, his interests in property and hers were shared and she therefore was committed to the financial success of his investment.

44. Ms Wu and Mr Liggins were cross-examined to show that they understood that once they had signed a contract to buy land and paid a deposit, as they had, that if they could not complete the sale that they might lose their deposit. In respect of both the Kingaroy property and the Bundoora property they had paid deposits and were conscious that they could be lost if the contracts did not proceed. But the Court accepts they were equally concerned about proceeding with a bad investment and that they were looking to take steps to try and extricate themselves from the contracts.

45. So they brought the issue of the expected rental returns up with Mr Cross and Ms Placek on 7 August 2009. They met them at ParkTrent’s offices in Fairy Meadow, north of Wollongong that day. Mr Liggins recalls that they spoke in the following terms:

“Mr Liggins:   The rent is not as it has been estimated. Despite the rental guarantee we do not wish to proceed with the purchase. Unless you are prepared to give us a guarantee to repurchase the properties we will not be proceeding.

Mr Cross:   That is fine. We will agree to repurchase properties for the same price."

46. The form of Mr Liggins’ and Ms Wu’s recollections of this conversation is slightly different. Her version was consistent with Mr Liggins’ version but was somewhat more adamant than Mr Liggins’ account. And her version speaks from her perspective, stating what she thought that she said and giving less emphasis to what Mr Liggins had said. Her version is as follows:

“Ms Wu:   We will not buy these properties until we see that we can get the rent as promised on the analysis and we can sell back any time we want at the purchase price.

Mr Cross:   That is fine. We will put it in writing and issue an official letter."

47. Having observed Ms Wu in the witness box, the Court is of the view that she is very likely to have said what she claims. It is likely that her version of what she said to Mr Cross is correct. But so is Mr Liggins’ version, which the Court accepts. They are consistent and can both be correct. And both their versions of what Mr Cross said back to them can be accepted. Mr Cross is likely to have said what they each attribute to him. And Ms Wu’s version in which Mr Cross foreshadows an “official letter” importantly accounts for Mr Cross later providing the letter of 24 August 2009 to the plaintiffs.

48. But the letter did not arrive immediately. Ms Wu says, and the Court accepts, that the letter Mr Cross promised did not arrive as expected. Ms Wu had to chase Ms Placek and Mr Cross’s personal assistant on a number of occasions before the letter was received. The fact that Ms Wu chased up the letter discussed on 7 August several times indicates its importance to her and to Mr Liggins. This conduct founds a firm inference that the plaintiffs relied upon the 24 August letter.

49. Mr Cross’ oral statement on 7 August provided reassurance to Mr Liggins and Ms Wu but they were still waiting for the written document that had been promised.

50. On 12 August 2009, Mr Liggins and Ms Wu received from ParkTrent another property investment analysis, this time for the Bundoora property. It was similar in structure to the investment analysis for the Kingaroy property.

51. The property investment analysis for the Bundoora property showed that (based on various assumptions about borrowings, gross rent per week, rental expenses, depreciation, capital growth and inflation) the property was likely to substantially increase in value from its proposed purchase price of $396,500 to $710,071 after 10 years.

52. The property investment analysis for the Bundoora property contained a similar disclaimer: that the assumptions contained within it “simply illustrate the outcomes calculated from input values and the assumptions contained in the model” and are “in no way intended to be a guarantee of future performance”. This investment analysis does not purport to represent the actual equity contribution to be made by the plaintiffs. The assumptions again involved minimal upfront investment ($1,000) and substantial borrowings, gross rent per week of $500, capital growth of 6% per annum, inflation 3% per annum and an interest rate of 5.24% per annum. The gross and net rental yields from the property were assumed at 6.56% and 5.03% respectively. Although, even after 10 years, the plaintiffs predicted equity in the property was $297,175, which was approximately 60% its predicted value at 10 years.

53. The rental assumptions for the Bundoora property of $500 per week turned out in fact to be too high. And they appeared to be more aggressive than those made for the Kingaroy property.

ParkTrent’s Buyback Letter – 24 August 2009

54. On 24 August 2009, ParkTrent sent a letter to the plaintiffs consistent with what Mr Cross had foreshadowed to them on 7 August 2009. The letter was headed up as referring to the purchase of both properties and said as follows:

“Dear Mr and Mrs Liggins

Re: [the Bundoora property and the Kingaroy property]

I refer to your recent intended purchase of two investment properties in Queensland and Victoria as detailed above.

As discussed in our meeting 7 August 2009, ParkTrent Properties Group Ltd are prepared to, should you find yourselves in a position that you need to sell these properties, buy back the properties at the same purchase price which you acquired them.

Should you need any further information or assistance please do not hesitate to contact my office.

Yours sincerely

[Ron Cross Signature] RON CROSS

C.EO. of the ParkTrent Properties Group Pty Ltd”

55. Despite the fact that the contracts for sale for both the Kingaroy property and the Bundoora property had already been signed, this letter refers to “your recent intended purchase of two investment properties” (emphasis added). The letter is couched in terms that seem to assume that the transactions will proceed after the promise recorded in the letter.

Completion and the Plaintiffs’ Attempt to Sell the Properties Back – 2010 to 2012

56. On 15 October 2009, Mr Liggins and Ms Wu completed the purchase of the Kingaroy property land. They obtained finance from the Commonwealth Bank of Australia (“CBA”) and paid a sum of just under $125,000 towards the purchase of the Kingaroy property. As earlier indicated, the Purchase Application showed that $125,000 was the land value portion of the purchase price with the house price of $244,300, making a total purchase price of $369,300. And the settlement sheet for the Kingaroy property indicates a purchase price of $125,000.

57. The evidence is somewhat deficient on the issue but the Court infers from the NRAS scheme documents and the fact rent was actually received from this property by the plaintiffs, that the dwelling was constructed on the Kingaroy property in accordance with the NRAS scheme and leased to the QAHC for affordable housing after 10 October 2009. It is not clear on the evidence exactly when the balance of the full contract purchase price of $369,600 was paid. But it is not in dispute between the parties that the Kingaroy property was settled and the full purchase price was paid.

58. By the first half of 2010, Mr Liggins and Ms Wu had decided to sell the Bundoora property to ParkTrent pursuant to the buyback letter. Ms Wu was strongly in favour of this course. She authored much of the correspondence that proposed taking advantage of the buyback letter. The issue of these investment properties appears to have been one of the areas of financial tension in the relationship between Mr Liggins and Ms Wu.

59. But in mid-2010 the couple were still undecided about whether to sell back the Kingaroy property. On 9 July 2010, Ms Wu emailed personnel at ParkTrent on behalf of herself and her husband in the following terms:

“Dear Jenny, Debbie

After Geoff and I gave careful consideration, we decided to sell the Melbourne Jarrah Property back to ParkTrent. I attach the letter signed by Ron Cross who has confirmed we are able to sell the property back to ParkTrent at purchase price. Please advise the procedure. Please prepare all the documents required. We are available to sign the document at your earliest convenient time. Please arrange the appointment ASAP. We are also considering to sell back the Kingaroy Property. We will advise the results once confirmed.

B Regards

Julia Liggins”

60. This email is strong contemporaneous evidence that the plaintiffs had relied upon the 24 August 2009 letter. They attached it to their very first buyback request for the Bundoora property. Without the apparent intervention of lawyers, they appear to regard it as binding upon ParkTrent. But it is quite clear at this point that the plaintiffs are not taking up any buyback offer in respect of the Kingaroy property.

61. There is no evidence of a formal response to Ms Wu’s 9 July 2010 email but the plaintiffs followed up that email with a further email to ParkTrent on 14 July 2010 to the following effect:

“Dear All

We received a letter attached regarding Melbourne Jarrah property pre-settlement inspection. Due to, we have informed ParkTrent we will sell the property back to ParkTrent. Please follow up for this issue. Please advise when you will sign the document.

Regards,

Julia Liggins”

62. This email appears to have been prompted by correspondence from ParkTrent giving notice that final settlement would soon be due for the Bundoora property. The request, “please advise when you will sign the document” should be interpreted as a request for ParkTrent to sign a repurchase agreement.

63. Once more, there does not seem to have been any response from ParkTrent to this email. So Mr Liggins and Ms Wu wrote again to ParkTrent on 19 July, forwarding their earlier emails and requesting that the various personnel at ParkTrent, “please advise”.

64. No response was apparently received by the following day. So on 20 July 2010, Ms Wu wrote to ParkTrent in more terse terms, indicating her irritation with the lack of communication from ParkTrent and reaffirming the plaintiffs’ desire to sell the Bundoora property back to ParkTrent. Ms Wu also expressed irritation that the building of the dwelling on the Kingaroy property had been completed by 21 June 2010 but they had not been contacted:

"Dear Ms Jenny Cross

I just called and was advised you are the best person to speak with for all issues we have.

Firstly we would like to sell back the Melbourne Jarrah ASAP. Secondly we are still waiting for property analysis for both properties, Mel Jarrah and Kingaroy, Further Kingaroy property was completed on 21/06 (Builders Advice) but still NO ONE from your organisation call us and advise us the status.

We are chasing above issues month long. It is very frustrated.

Please advise ASAP.

,

We can be contacted by emails, [emails and phone numbers not published]

Regards,

Julia Liggins."

65. This is a request to sell back the Bundoora property but still reserves the position with respect to the Kingaroy property. There had been an extended settlement period granted for the plaintiffs’ purchase of the Bundoora property. They ultimately completed their purchase of that property on 14 September 2010.

66. But by September/October 2010, the plaintiffs had formed the view that they wanted ParkTrent to take up the buyback offer for both properties. They arranged to meet Mr Cross and Ms Placek at their Homebush residential apartment to discuss the issue. The Court accepts Ms Wu’s account of what was said at this meeting:

“Ms Wu:   We want to sell the properties as you promised. The rent is much lower than you told us; it is nearly 40% lower.

Mr Cross:   Don’t sell back to us now. This property (referring to the Bundoora property) has a lot of potential. It is close to the university. Students will rent it. $150 per bed in each room is $300 per room; that is $600 a week. I will give you a rental guarantee of $500 per week for two years.”

67. This conversation was the first time that Ms Wu and Mr Liggins intimated that they might also want to sell the Kingaroy property back to ParkTrent under the buyback letter. But it was not a formal request with respect to the Kingaroy property; more of an expression of general intent. But the Court accepts that Mr Cross talked them out of pressing on with their request, deflecting them with a rental guarantee for the Bundoora property.

67. Both Mr Liggins and Ms Wu were keen to get a guaranteed return on their investment in the Bundoora property. So they accepted Mr Cross’s proposal and negotiated a rental guarantee in relation to the Bundoora property. They signed a deed with Cross-Country Victoria on 19 October 2010 to the following effect:

“RECITALS:

A.   Cross Country will upon receipt of this signed agreement, pay the amount of Fifteen Thousand Six Hundred Dollars ($15,600), less letting fees and Mgt fees. The $15,600 represents the difference between the $500 per week rental guarantee and expected rental of $350 per week for two years,

B.   For and in consideration of above amount, Liggins allows Cross Country to receive the full monthly rental proceeds from the managing agents.

C.   On a monthly basis, Cross Country shall disburse the proceeds between Cross Country and Liggins, in accordance with rental guarantee agreement, rental guarantee already paid and actual rentals received.”

69. The copy of the deed in evidence is not signed on behalf of Cross-Country Victoria but there is no reason to believe that it was not signed and came into effect. And they did not formerly press for ParkTrent to repurchase the Kingaroy property.

70. There the matter lay for about 18 months. In early 2012, Mr Liggins and Ms Wu decided to engage lawyers to advance the buyback of both the Bundoora and Kingaroy properties. They engaged Harris Freidman Lawyers, who wrote to ParkTrent on 1 March 2012. They addressed their letter to Mr Cross, as Chief Executive Officer of ParkTrent, requiring the buyback letter to be honoured:

"Dear Mr Cross,

Liggins purchase from Jarrah Estate: [the Bundoora property]

We act for Geoffrey Michael Liggins and Xiankun Liggins who completed the purchase of the above property on 14 September 2010. The purchase price for the properly was $396,500.

We refer to your letter of 24 August 2009 to Mr and Mrs Liggins (copy attached). Mr and Mrs Liggins now find themselves in a position where they need to sell the property and require you to purchase the property for the price for which it was acquired.

Please contact us within seven days of the date of this letter to discuss arrangements to effect the sale"

71. The Court infers from its text that the Harris Freidman letter enclosed a copy of the ParkTrent letter of 24 August 2009. This letter is not yet a demand under the repurchase agreement for ParkTrent to repurchase both properties. Although this letter uses words of demand “require you to repurchase the property”, those words are preceded by a statement that the plaintiffs “now find themselves in a position where”. This preamble is really rather politely describing what they will have to do, rather than actually doing it at that point. This is not a demand.

72. It is only a letter in respect of the Bundoora property. But the Court infers from the reply that ultimately came from ParkTrent that there was a separate letter sent by Harris Freidman Lawyers in identical terms about the Kingaroy property but which is not in evidence.

73. ParkTrent did not reply to this letter for a few weeks. On 23 March 2012, a company administrator, Ms Sandra Mangan from the corporate office of the ParkTrent group responded. Ms Mangan’s 23 March 2012 letter was headed up in respect of both the Bundoora property and the Kingaroy property and said as follows:

"We refer to your letters dated 1 March 2012 and apologise for our delay in responding.

Our CEO has just returned to Australia from an overseas business trip and this has delayed us obtaining his instructions. We should be in a position to respond to your correspondence within seven days.

In the meantime would you please provide us with details of why your clients ‘find themselves in the position that they need to sell these properties’.”

74. But ParkTrent did not reply within a further seven days. Nothing was heard from them until early May. Harris Freidman Lawyers sent a follow-up letter to ParkTrent on 2 May 2012 for the attention of Ms Mangan in the following terms:

“We refer to your letter of 23 March 2012. You indicated you would reply to our correspondence ‘within seven days’. You have not done so.

We do not consider it necessary for our client to provide reasons why they need to sell the properties. It is sufficient to say the reasons are both financial and personal including the breakdown of their relationship.

If we do not receive a meaningful response to our letter of 1 March 2012 within ten days, our clients will commence proceedings without further notice.”

75. Apart from being a somewhat terse follow-up letter, Harris Freidman Lawyers’ 2 May letter removed any polite ambiguity about the 1 March letter and recalibrated the earlier letter as a demand. But it was only a demand as at 2 May 2012. It did not place a time limit other than that proceedings would be commenced without further notice. Given that proceedings were being expressly threatened, the plaintiffs were already entitled to receive a clear indication by the end of that month whether ParkTrent was going to honour the repurchase agreement.

76. No response was received to this correspondence. Mr Liggins and Ms Wu did not commence proceedings in 2012. They were distracted by other more pressing matters: their relationship was failing.

Final Buyback Demands to ParkTrent and Divorce – 2013 and 2014

77. Mr Liggins and Ms Wu engaged a conveyancer, Vantage Paid Conveyancing Services, to prepare a contract for sale of the Bundoora property for $396,500 back to ParkTrent. The contract was signed by Mr Liggins and Ms Wu on 25 February 2013 and was forwarded to ParkTrent. The formal contract which was forwarded contained no name for the purchaser or the purchaser's legal representative. But it seems reasonably evident that Mr Liggins and Ms Wu were inviting ParkTrent to nominate a purchaser.

78. Mr Liggins and Ms Wu also engaged Warlow Scott Lawyers, Queensland solicitors, to prepare a contract for the sale to ParkTrent of the Kingaroy property. A contract dated 24 February 2013 in the form prescribed by the Queensland Law Society was prepared for the sale of the Kingaroy property for $369,300, signed by both Mr Liggins and Ms Wu, and was forwarded to ParkTrent. No signed copy was returned. The settlement date provided for in the Kingaroy property purchase agreement was “on or before 45 days from the contract date".

79. By this time, Mr Liggins and Ms Wu’s relationship had fully broken down and they were well on their way to divorce. They appear to have mutually understood that Mr Liggins would take over the two properties after their matrimonial property settlement, so he conducted the external correspondence from this time. He wrote to representatives of ParkTrent a few months later in 2013 to chase up ParkTrent’s response to the contracts that had been forwarded in February, to fulfil what he saw as its buyback commitment.

80. Mr Liggins sent his first follow-up email on Tuesday, 14 May 2013 at 9:46am to Ms Mangan. Its message was self-explanatory:

“Sandra,

Would you please do me the courtesy of replying to my now over half a dozen messages and an equal number of emails.

I understand that you have been receiving my messages and can only assume that you have been choosing to ignore them.

Xiankun and I have been waiting patiently for this process to conclude for over a year now and have been met with broken promises and delays at every turn.

We would like to give this one last chance of concluding before being forced to take legal action.

Please call me as a matter of urgency”

81. Ms Mangan replied to this email later the same morning at 11:56am as follows:

“Hi Geoff,

I apologise for not being in a position to take your calls. All efforts are still being taken by the company to achieve settlement on your matters. I will forward you emails confirming the same.

I have notified management that you intend to take further legal action and this has been recorded on your files.

Regards,

Sandra

Company Administrator”

82. This was the practised language of diplomacy. It was not a commitment to sign the contracts that have been forwarded. It was designed to give the impression that matters were moving forward. A few minutes later, Ms Mangan wrote again to Mr Liggins in the following terms:

“Hi Geoff,

Every effort is still being taken to formalise the arrangements to take over your properties by way of re-purchase. Please see below email trails regarding the transfer of your NRAS scheme to new owners. Could you please arrange to execute these documents and return same to myself.

Thank you.

Regards,

Sandra Mangan

Company Administrator “

83. Whatever were the email trails referred to in this last email, they are not included in the evidence. But the NRAS scheme had involved the lease of the Kingaroy property to QAHC. The Court infers that it would probably have been necessary to rewrite those lease arrangements to effect the transfer from Mr Liggins and Ms Wu to ParkTrent. But just what documents ParkTrent wanted executed is rather unclear.

84. Mr Liggins and Ms Wu were divorced and on 3 June 2014 they agreed to consent orders in the Family Court, settling disputes concerning their matrimonial property.

85. By those consent orders, Ms Wu agreed forthwith to transfer to Mr Liggins all her right title and interest in both the Bundoora property and the Kingaroy property (Order 3) simultaneously with the transfer by Ms Wu of her interest in the two properties. Mr Liggins agreed to arrange to refinance into his sole name the mortgage with the CBA over each of those properties and he promised to indemnify Ms Wu in respect of mortgage payments and outgoings for both properties thereafter.

86. The consent orders specifically covered, in Order 5, the possibility of legal proceedings to enforce the buyback agreement as follows:

“5(a)   The parties acknowledge that there was a guarantee to buy back the Bundaroo property and Kingaroy property provided by ParkTrent Properties Group Pty Limited ACN 101 494 507 to the parties;

(b)   The husband intends to commence legal proceedings in the name of both parties to seek specific performance and/or damages against ParkTrent Properties Group Pty Limited ACN 101 494 507 pursuant to that guarantee;

(c)   The husband shall pay the costs of the proceedings and keep the wife

the wife indemnified in relation to the costs of conducting the proceedings and/or any adverse costs order against the parties;

(d)   Subject to the husband complying with Order 4(c) herein, the husband shall be entitled to the proceeds of sale and/or any damages awarded to the parties from the Court proceedings against ParkTrent Properties Group Pty Limited ACN 101 494 507 for the Bundaroo property and Kingaroy property.”

87. Pursuant to these orders, Ms Wu transferred all her interest in the two properties to Mr Liggins in July and August 2014.

88. The plaintiffs say that ParkTrent’s failure to repurchase the Bundoora and Kingaroy properties has resulted in him continuing to incur significant losses each financial year. He claims to have been incurring gross rental loss of $20,794 for the Bundoora property for each of the 2016 and 2017 financial years and $28,007 in losses for the Kingaroy property for the 2015 and 2017 financial years.

89. Both plaintiffs say that they would not have proceeded with the purchase of either property but for receiving the buyback letter of 24 August 2009.

90. The plaintiffs commenced these proceedings against ParkTrent on 19 October 2017. Pursuant to leave granted by Darke J, on 14 June 2019 the statement of claim was amended and Mr Cross was joined as a second defendant to answer a claim of misleading deceptive conduct against him.

The Valuation Evidence

91. Issues concerning valuation of the two properties at various potentially relevant times were ultimately resolved by agreement. There is some evidence of the current market value of both the Bundoora property and the Kingaroy property at various times.

92. The plaintiffs adduced valuation reports valuing both properties as at 13 February 2018. They were directed by the Court to prepare valuations as at the date of the hearing. Although the valuations were not given precisely on the date of the hearing, they were treated as effectively having been done so for the purposes of the proceedings. They were obtained on 25 October 2019 and the hearing took place on 31 October 2019 and 1 November 2019. Set out below is a table of the valuations of both properties in 2018 and 2019 and those valuations are compared with their corresponding purchase prices in 2009:

Bundoora Property Values
Purchase of property Aug 09	$396,500
Valuation Report 13 Feb 18	$420,000
Valuation Report 25 Oct 19	$405,000
Kingaroy Property Values
Purchase of property Aug 09	$369,600
Valuation Report 13 Feb 18	$240,000
Valuation Report 25 Oct 19	$235,000

93. Thus it can be seen that the Bundoora property is now slightly more valuable than it was at the time of its purchase in 2009. The Kingaroy property has dropped substantially in value since 2009.

Analysis of the Claims for Relief and Defences

94. The plaintiffs’ pleadings raise claims in contract against ParkTrent and in misleading and deceptive conduct against Mr Cross. These claims raise some overlapping and some different considerations.

The Claim Against ParkTrent

95. The plaintiffs’ claim against ParkTrent in contract is pleaded in several ways, and alternatively for unconscionable conduct and misleading and deceptive conduct. The elements of these various claims for relief against ParkTrent are considered below.

96. The Principal Contract Claim. The plaintiffs’ primary pleaded case in contract may be shortly summarised. They allege that at a meeting in early August 2009 Mr Cross gave a property analysis of the two properties to the plaintiffs (paragraph 4). At a further meeting on 7 August, ParkTrent revised their analysis of the rental return on the property, decreasing it by between $200-$300 per week (paragraph 5). As a result of the overstatement of rental returns and management fees to be charged by ParkTrent, the plaintiffs were “not prepared to continue with the purchase of the properties” (paragraph 6).

97. Then what is described as “the buyback agreement” is pleaded (in paragraph 7) as an agreement made in consideration “for the commissions and any other benefits that [ParkTrent] would derive if the plaintiffs completed the purchase of the properties, [Park Trent] agreed that in the event the plaintiffs acquired the properties and thereafter wished to sell them, [ParkTrent] would purchase them at the same purchase price for which the plaintiffs were to acquire them”. The agreement was said to be partly express and partly implied, the written part being the letter of 24 August 2009 and the implied part being the sale within a reasonable time and on substantially the same terms as the agreement between the plaintiffs and the vendors of each property.

98. The plaintiffs plead that they performed the agreement on their side by completing the purchase of the two properties.

99. Analysis. Although the letter of 24 August 2009 is couched in language of preparedness, of ParkTrent being “prepared to … buy back the properties”, a letter should be read not as a general indication of willingness to buy back but as an offer to buy back to induce the plaintiffs to complete the contract. The letter refers directly back to the meeting on 7 August in which the plaintiffs had indicated they were refusing to proceed with the contracts. On that occasion, Mr Cross had made clear that “we [ParkTrent] will agree to repurchase”, according to Mr Liggins. And according to Ms Wu, Mr Cross had said “fine” to her refusal to buy unless “we can sell back any time we want”. The firmness of the language that had passed between them on 7 August and the express reference in the 24 August letter to that earlier language indicates that “prepared to” should be read in context in the sense “will agree to”.

100. The structure of the 24 August letter is in the nature of a unilateral contract. And this is how the plaintiffs’ case is pleaded (Further Amended Statement of Claim, paragraph 7): that the promise would arise, “if the plaintiffs completed the purchase of the properties”. In a unilateral contract the promisee does not undertake to do or refrain from doing a particular act: United Dominions Trust (Commercial) Ltd vEagle Aircraft Services Ltd [1968] 1 All ER 104; (1968) 1 WLR 74 at 83. Here the plaintiffs are not required by the terms of the 24 August 2009 letter to complete the purchase of the two properties from the third party vendors.

101. The buyback offer in the 24 August letter does not clearly refer to the plaintiffs completing the two contracts with the third parties, but the idea of completing the contract is closely inferred in the offer. This is because the offer is to “buy back the properties at the same price which you acquired them” (emphasis added). The offer assumes that the buyback will operate once the plaintiffs have acquired the properties. And completing the third-party contracts as what is required also flows from the parties’ common understanding of what passed between them on 7 August, which discussed that the plaintiffs will “proceed with the purchase” and will be able to “see that we can get the rent as promised”.

102. This unilateral contract works on the basis that if the plaintiffs decide to complete the purchase of the Kingaroy and Bundoora properties they will get the benefit of the buyback offer. But they are not required to complete the purchase of the properties.

103. Consideration. ParkTrent contends that the agreement for which the plaintiffs contend is not supported by valid consideration. The plaintiffs contend that valid consideration exists and the contract is therefore enforceable.

104. ParkTrent points to the form of consideration pleaded in the plaintiffs’ case (Further Amended Statement of Claim, paragraph 7): “in consideration for the commissions and any other benefits the first defendant would derive if the plaintiffs completed the purchase of the properties”. It submits that the plaintiffs had not demonstrated that they have earned any commission or any “other benefits”.

105. That is not correct on several grounds. First, the Court’s earlier findings show that ParkTrent did earn commission and other benefits on the sale of the Kingaroy property.

106. Second, the pleaded “other benefits” included the plaintiffs proceeding to complete the existing contracts. As this is a unilateral contract, accepted by completing the purchases of the Kingaroy and the Bundoora properties from the two third party vendors, and not a bilateral contract, it is the conduct of the promisees (the plaintiffs) which not only constitutes acceptance of the offer but also constitutes the consideration supporting the contract.

107. ParkTrent next argues that, to the extent that the plaintiffs seek to establish consideration by relying upon their conduct in completing the purchases of the two properties, this is past consideration which does not support the contract. ParkTrent submits that the plaintiffs were already obliged to perform these two purchase contracts so completion of the contracts must be past consideration.

108. This argument raises an important distinction in contract law. Where a promisee offers to perform an existing contract the promisee has with the promisor, the promisee’s promise to do so is past consideration. But the position is otherwise where the pre-existing contract is with a third party, as it is here. The plaintiffs are buying from two third-party vendors. A promise to perform an existing contractual duty owed to another party (or the actual performance of that duty) can be good consideration for a promise. The principle is stated and applied in Scotson v Pegg (1861) 158 ER 121. It was restated by the Privy Council in New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd [1975] AC 154; [1974] 1 NZLR 505; [1974] 1 All ER 1015 and more recently in Pao On v Lau Yiu Long [1980] AC 614; [1979] 3 All ER 65; [1979] 3 WLR 435 (“Pao On”). The High Court has affirmed the principle in Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Aust) Pty Ltd (1978) 139 CLR 231; (1978) 18 ALR 333; (1978 ALJR 337 at 243 – 244. In argument, ParkTrent sought to distinguish Pao On but the distinctions drawn do not deny the application here of the general principle for which Pao On and these other cases is authority.

95. And it is not difficult to see why in this case the plaintiffs completing performance of the contract to purchase these two properties can be valid consideration supporting the plaintiffs’ contract with ParkTrent. On 7 August the plaintiffs were threatening not to perform their purchase contracts with the two vendors. Had they continued to take that position, they could well have conducted a dispute with those vendors rather than complete the contracts. It is to be inferred from the fact that ParkTrent made the offer in writing on 24 August that it regarded the plaintiffs’ completion of those contracts as in its interests.

96. Implied term. The next issue raised was whether the pleaded contract included an implied term that the buyback agreement would be invoked within a reasonable time and whether the agreement had been invoked within a reasonable time. The buyback 24 August 2009 letter does not contain any time limit within which the right to repurchase would be exercised. Ordinarily the Court will be prepared to imply a requirement that the obligations must be performed within a reasonable time, if the contract does not stipulate a date by which performance should occur: Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; (1982) 41 ALR 441; (1982) 56 ALJR 445; [1982] HCA 29 and Baloglow v Konstantinidis (2011) BPR 20, 721; [2001] NSWCA 451 at [90].

97. Here the defendants contend that the first attempt to invoke the buyback agreement was 11 months later in July 2010 and the second, two years and seven months later in March 2012. ParkTrent says that the latter period was beyond a reasonable time. The plaintiffs sent formal contracts seeking performance of the buyback agreement in February 2013, about 3 ½ years after the making of the buyback agreement.

98. But the wider circumstances must be examined. And when they are, the Court concludes that the plaintiffs did call for the agreement to be performed within a reasonable time. The two investment analyses given to the plaintiffs made detailed year by year projections over five years and further projections right out to 10 years. The issue that had led to the plaintiffs’ request for the buyback letter was their concern about prospective shortfall in the rent from the properties. This is in itself an issue that is only likely to have become apparent over a number of years.

99. But most importantly, ParkTrent’s own conduct reframes what is a reasonable time period for the plaintiffs to seek performance of the contract. As soon as the plaintiffs raised the issue of the rental shortfall with respect to the Bundoora property in July 2010, through Mr Cross, ParkTrent pleaded for the plaintiffs to delay: “do not sell back to us now. This property [the Bundoora property] has a lot of potential.” As a result, the rental guarantee was entered into, which was an inducement for the plaintiffs not to proceed quickly. In the Court’s view, there was good reason for the plaintiffs to take their time as a result of ParkTrent’s own conduct.

100. The Constitution of the Proceedings. The defendants plead as a defence to the claim for specific performance of the buyback agreement and for damages for breach of the agreement the fact that the Bundoora and Kingaroy properties, formerly owned in joint names, now vest only in Mr Liggins, as a result of the couple’s family law settlement. ParkTrent submits Ms Wu has no standing or any right to seek specific performance (or damages) in these proceedings given the Family Court orders. The defendants note that the Kingaroy property was transferred into Mr Liggins’ name in July 2014 and the Bundoora property in August 2014, both well before these proceedings were commenced.

101. The defendants advance their argument on his issue in the following way. The Family Court’s orders expressly contemplated that Ms Xu would transfer her entire “right, title and interest” in the properties (order 3) in return for the benefits to be conferred on her by those orders. The benefits that she received included sole ownership of an apartment property and the payment of $80,000 (orders 2 and 6). Moreover, the orders specifically contemplated Mr Liggins would commence proceedings such as the present proceedings, to seek “specific performance and/or damages” (order 5(b)) and the orders indemnified her for the costs of such proceedings on the basis that, if he did so, he was entitled to the “proceeds of sale and/or any damages awarded to the parties” (orders 5(c) and 5(d)).

102. The defendants further plead that any buyback agreement established between the parties provides a promise to the plaintiffs jointly and not severally, so that severance of the plaintiffs’ joint proprietorship of the properties now bars enforcement.

103. All of these arguments fail. The Court has found what has been called a buyback agreement was constituted by the 24 August 2009 letter followed by the plaintiffs conduct in performing the two land purchase contracts to completion. The parties to that buyback agreement were ParkTrent on the one side and both plaintiffs on the other. Both plaintiffs are proper parties to any proceedings brought to enforce the buyback agreement. The Family Court orders assign the benefit of Ms Wu’s entitlements under the buyback agreement to Mr Liggins as between themselves. But they both remain parties to the original buyback agreement and as a result of the assignment he is entitled to use her name as a party in the litigation. And at law she is a party with rights to call for enforcement of the buyback agreement and whose loss and damage will be assessed. How Mr Liggins and Ms Wu will then distribute any proceeds of litigation and will bear the costs of litigation as between themselves, is governed by their family law settlement.

104. The Applicable Limitation Period. ParkTrent contends that any breach of an agreement made as a result of the 24 August 2009 letter occurred in July 2010 and that the relevant limitation period expired in July 2016: Limitation Act, s 14. ParkTrent contends that as the proceedings were commenced in October 2017 they were brought outside the limitation period. ParkTrent accepts that if the limitation period runs from March 2012 that the proceedings were commenced within time.

105. The Court’s findings in the factual narrative resolve the limitation issue in the plaintiffs’ favour. The plaintiffs did request ParkTrent in July 2010 that they sell the Bundoora property to ParkTrent in accordance with a 24 August 2009 letter. But they were talked out of pressing that course at that time, so ParkTrent’s willingness to honour the buyback agreement was not tested at that time.

106. It was only when the plaintiffs returned to the issue in March 2012 and then escalated it into May 2012 that ParkTrent was pushed and tested to the point of breach. The plaintiffs could have expected an answer to their correspondence by the end of May 2012. The parties did not address submissions to the precise state of breach but it may not have occurred until shortly after February 2013 when ParkTrent failed to respond to the contracts for sale sent to it, formally seeking its performance of the buyback agreement. But for the purposes of the ParkTrent’s limitation defence a finding of breach no earlier than 1 June 2012 means these proceedings were brought against ParkTrent within time. ParkTrent’s limitation defence fails.

107. The Alternative Contract Case. In light of the success of the plaintiffs’ principal contract case it is not necessary to consider the plaintiffs’ alternative contract case in any detail. During the hearing the plaintiffs were given leave to amend the Statement of Claim. The Further Amended Statement of Claim (filed 4 November 2019) pleaded that the 24 August 2009 letter, if not a contract, was either an unaccepted offer or an option capable of acceptance or exercise. The plaintiffs argued that the terms of both these additional constructions of the document were much the same, save that for the construction of the document as an option the consideration was completion on the two property transactions.

108. But as the defendants have pointed out, the text of the 24 August 2009 letter is not really amenable to this kind of analysis. It does not, for example, provide for separate consideration to keep the offer open or to maintain the rights of option. Its proper analysis has been set out earlier in these reasons.

109. Specific Performance. The plaintiffs seek specific performance of any contract based on the buyback letter. ParkTrent resists such relief.

110. ParkTrent’s first answer to this claim is that it is statute barred. Limitation Act, s 14 does not apply directly to equitable relief such as that in the nature of specific performance: Limitation Act, s 23. But equity will apply the contract time bar by analogy to a claim for relief for the specific performance of the contract, unless reliance by the defendant on the limitation defence would in all circumstances be unconscionable: Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435; (2014) 310 ALR 85; [2014] NSWCA 181 at [170].

111. The six-year limitation period should be applied by analogy. But for the same reasons that the Court has decided that ParkTrent’s limitation defence to the action in contract fails, the limitation defence to the claim for a decree in specific performance does not succeed.

112. But in the exercise of its discretion, the Court would not grant a decree of specific performance of such a contract in any event. There are several reasons for this.

113. The Court accepts Mr Liggins’ explanation that the complications of his separation, divorce and property settlement from Ms Wu created great disruption in his life and was responsible for some delay in his commencing proceedings. This is followed by the death of his mother in 2016, after which he was involved in rather bitter family provision litigation in this Court, which was commenced by a sibling in 2017. The disruption that all this caused in his life is understandable.

114. But such an explanation only goes so far: the delay is lengthy and it comes after clear threat made on his behalf in May 2012 to commence proceedings. The plaintiffs’ delay in commencing these proceedings between the demand on ParkTrent made in May 2012 and the final transfer of these two properties to Mr Liggins pursuant to their matrimonial property settlement in August 2014 is understandable. But these proceedings were not commenced until October 2017, over three years later. He was dealing with the death of his elderly mother during part of this period and then dealing with the family provision litigation. But giving instructions to at least start these proceedings would not have taken very much time at all. And according to the May 2012 correspondence, he had made up his mind to commence action. The Court is not persuaded there was good reason for such a lengthy delay after that time.

115. But more importantly the delay during this period was financially significant to ParkTrent in at least two aspects. In the first aspect, valuation evidence shows that the delay was over a period of significant variation in the market value of the two properties. And in the other aspect, on the available evidence, ParkTrent’s financial position deteriorated significantly over the period of delay. ParkTrent’s financial accounts for the financial years FY15 to FY19 were in evidence. Although these accounts were not all signed and were incomplete (they did not, for example, include balance sheets for every financial year) they provide some evidence from which the Court can infer that ParkTrent’s financial position had significantly declined over these years.

116. The balance sheet in ParkTrent’s financial statements for FY15 and FY16 shows that it had negative equity of $1,711,954.87 and $1,668,068.92 respectively. Its financial position between 2010 and 2012 is unclear. But unless ParkTrent was recapitalised (and there is no evidence it was) in years after FY16 its financial position only got worse. Its balance sheet for FY17 shows negative equity of $2,498,874.20 and in the balance sheet for FY18, negative equity of $2,818,993.25. The profit and loss statement for FY18 shows a loss of $3,876,854.09 and for FY19 a loss of $1,154,393.46. As time has gone by, ParkTrent has fewer and fewer available funds to satisfy an order for specific performance, which would require ParkTrent to repurchase the two properties. Thus, the plaintiffs’ delay has prejudiced ParkTrent’s capacity to comply with a decree of specific performance.

117. And in order for specific performance to be granted, quite complex adjustments would be required to do justice as between these parties. The parties have as yet not gone very far in working out what those adjustments would be. Apart from changes in the market value of the properties and outgoings over ten years being required, a full accounting of the rent received on both properties has not been done.

118. Moreover, the investment analyses in respect of both properties assume substantial tax deductions would be available to persons such as the plaintiffs from the first year of investment. In the case of the Bundoora property, these tax deductions were projected to commence at $39,399 in the first year of investment on the assumptions made. And in the case of the Kingaroy property, such calculations are further complicated by the need to give credit for the benefits gained by the plaintiffs through the property’s participation in the NRAS affordable housing scheme. Full accounting of all these benefits would need to be undertaken upon the grant of a decree of specific performance. And the significant burden of trying to undertake that with accuracy over a ten-year period is itself a reason to decline equitable relief.

119. The Court will not grant specific performance of the contract arising out of the 24 August 2009 letter.

120. Unconscionable Conduct. The plaintiffs brought an alternative case in the event that the Court found the buyback agreement was unenforceable. The Court has not found that the buyback agreement was unenforceable. But it is nevertheless worthwhile to make findings concerning and to consider this alternative case. ParkTrent contended that unconscionable conduct would not have been established against it.

121. The plaintiffs’ pleaded case of unconscionable conduct is grounded in ParkTrent’s defence that the buyback agreement is unenforceable. The plaintiffs contend in their pleadings that in the event that the buyback agreement is unenforceable then by providing the plaintiffs with a letter of 24 August 2009 they engaged in unconscionable conduct both within the general law and statutory unconscionability within Trade Practices Act 1974 (Cth), s 51AC: Competition and Consumer Act 2010 (Cth), Schedule 2 (“Australian Consumer Law”), ss 21 and 22. The unconscionability alleged is that at the time of providing the buyback letter, ParkTrent knew it could not be enforced, had no intention of honouring its terms and acted in bad faith in providing it.

122. The Court concludes that the plaintiffs have not established that the contracts were entered into on the basis of any unconscionable conduct on ParkTrent’s part. To make out such a case it is necessary for the plaintiffs to show that they were in a position of special disability or disadvantage in relation to ParkTrent and ParkTrent took unconscientious advantage of them: Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; (1983) 46 ALR 402; (1983) 57 ALJR 358; [1983] HCA 14. Here the plaintiffs fail both in showing any special disability on their part. And they fail showing unconscionable conduct on ParkTrent’s part.

123. As to special disability, it is true that neither plaintiff was being advised by a lawyer before entering into the contract. In that sense, they were both in a position of some disadvantage in relation to ParkTrent. But Ms Wu had signed contracts “a few times” and struck the court as quite commercially astute. And Mr Liggins was an obviously competent and intelligent person.

124. They were told that the contracts they were being asked to sign were “standard” contracts, which they could take or leave. This was not a misrepresentation. There is nothing particularly onerous in the terms of the contracts. The Court infers that they made a judgment to proceed without waiting to obtain legal advice. They were not ignorant of the value of legal advice and chose on the day to proceed without it.

125. The investment analyses for the properties undoubtedly presented a very attractive and favourable picture of a proposed investment in each property. But the plaintiffs quickly saw that the rental returns were a key variable that might affect the value of their investment and that is why they asked for the buyback letter. Property legislation giving “cooling off” periods was available both in Queensland and in Victoria and they were given notice of their “cooling off” rights in the contract documentation they were given. These rights existed for several business days after 1 August 2009. They were given the name of a law firm, Grech Partners Lawyers, the day they signed the contracts and before the respective cooling off periods expired. Both Ms Wu and Mr Liggins appeared well capable of consulting lawyers to seek advice on whether or not they should proceed. Indeed, they consulted lawyers when seeking to enforce the buyback letter.

126. The plaintiffs’ case does not identify any other particular disability under which the plaintiffs laboured that would be a basis to infer that ParkTrent took unconscientious advantage of them. Finding such a disability would be difficult in the case of these plaintiffs. They appeared to the Court to be individuals with some commercial experience who were used to deciding what was in their own commercial best interests and they had an understanding of risk. For example, they both appreciated that the property investment analysis for each property was not a guarantee of an outcome for them.

127. As to the contentions of unconscientious conduct on ParkTrent’s part, there is no basis to infer that ParkTrent’s state of mind when it provided the 24 August 2009 letter was that it knew it could not be enforced, or that it had no intention of honouring its terms and was acting in bad faith. Mr Cross was not called. The letter itself does not provide a basis for such an inference. Nor does the subsequent correspondence when the plaintiffs sought to enforce the letter. And it is drawing a long bow to infer that ParkTrent was aware of the doctrines of past consideration on which contract has been found unenforceable and suspected that the plaintiffs were unaware of such doctrines.

128. The Court would not have set aside the buyback agreement on the grounds of ParkTrent’s alleged unconscionable conduct if it were otherwise found to be unenforceable.

The Claim against Mr Cross

143. The misleading and deceptive conduct case against Mr Cross is based on the buyback letter itself. Such a case was not made concerning, for example, the expected rental receipts from investment in each of the two properties and the viability of the investment based on those rental receipts. That may in any event have been a very difficult case based upon the clear disclaimers on the face of the two investment analyses.

144. The misleading and deceptive conduct case pleaded was that in providing the buyback letter ParkTrent represented to the plaintiffs that “if the plaintiffs found themselves in a position to need to sell the properties, [ParkTrent would] purchase the properties for the same price at which the plaintiffs purchased them”. This representation was said to be misleading and deceptive under the Australian Consumer Law, s 18 on much the same grounds that unconscionable conduct was pleaded against ParkTrent: that ParkTrent knew the buyback letter could not be enforced; that it had no intention of honouring its terms; and that it did not intend to buy back the properties.

143. But the principal difficulty with this claim against Mr Cross is the applicable limitation period of six years: Competition and Consumer Act, s 82(2). Here the Bundoora and Kingaroy property contracts were made before the 24 August 2009 letter. Notwithstanding the plaintiffs’ existing obligations under those contracts to complete the purchases, the plaintiffs plead that they “relied upon the representation in electing to purchase the properties”. That pleaded conduct was complete on settlement in the case of the Kingaroy property by 15 October 2009 and in the case of the Bundoora property by 14 September 2010. The pleaded cause of action must have accrued no later than September 2010.

144. But these proceedings were not amended to plead this misleading and deceptive conduct case until just under nine years later, in June 2019, well outside the limitation period which expired in September 2016. This is a complete answer to the plaintiffs’ case against the second defendant, Mr Cross.

145. The plaintiffs seek to answer this case by saying that they were not aware of the alleged unenforceability of the buyback agreement until it was pleaded in ParkTrent’s defence in 2018 and that the limitation period should only run from then. But there are two answers to this. The plaintiffs were well aware that there was a probable contest about the enforceability of the buyback agreement by the time their solicitors wrote to ParkTrent on 2 May 2012. Moreover, in the absence of fraudulent conduct on the part of ParkTrent, keeping the plaintiffs in the dark about their cause of action against ParkTrent (and none is suggested), the running the limitation period is not suspended by the plaintiffs’ lack of knowledge.

146. The plaintiffs also seek to argue that so long as the buyback agreement is thought to be an enforceable contract, no loss is suffered. They submit that the buyback agreement should be analysed as a kind of insurance policy and that the losses only suffered when it is found that the insurance does not respond.

147. But this kind of analysis does not respond to the facts in this case. The plaintiffs were very cautious about proceeding with the Bundoora contract and the Kingaroy contract and were ready to pull out of them but for the 24 August 2009 letter. But by completing those contracts, they committed themselves at that point to the acquisition of property and the substantial actual liabilities associated with its acquisition. That is when their loss first occurred.

Conclusions and Orders

150. In the result, the plaintiffs have been successful against the first defendant on issues of liability but not the second defendant. Damages still have to be assessed. After that costs will need to be determined. A word on both those matters is appropriate at this point.

151. As to damages, the Court foreshadowed at the hearing that it was likely to determine the liability issues in this case first and the damages questions at a subsequent hearing. There are some complexities in the assessment of damages in this case that will need to be approached carefully and thoroughly on both sides.

152. The Court is yet to hear full submissions on the matter of damages but a possible analysis of how damages should be assessed may assist the parties. The parties’ submissions can now focus on an assessment based upon the Court’s actual findings in this judgment.

153. Prima facie the measure of the plaintiffs’ loss for ParkTrent’s breach of its promise made in the buyback agreement starts with the loss of the money consideration the plaintiffs would have received if the agreement had been performed, less the value (at that time) of the two properties that would have been conveyed to ParkTrent, if it had performed the buyback agreement. If damages are to be assessed at the time of the breach of this contract, that exchange of value and assessment should probably take place when the properties would have been conveyed back to ParkTrent sometime after May 2012. It may be that as events occurred that would have been shortly after February 2013, not long after the plaintiffs had provided formal side contracts to ParkTrent.

154. Even if the buyback agreement had been performed, Mr Liggins and Ms Wu would have held the two properties themselves until sometime after May 2012, and indeed probably after February 2013. Expenses and income from the properties up until then should probably be to their account. But their income and expenses received and incurred in relation to the properties after February 2013 can be said to flow from ParkTrent’s breach of contract. Detailed adjustments are required to take account of all the taxation benefits they have in fact received from holding the properties during the period after the breach. The Court may appoint an accounting expert to undertake this exercise if the issues are complex and beyond the parties’ easy calculations.

155. The transfer of the properties between the plaintiffs does not extinguish or diminish the plaintiffs’ loss of the consideration promised to them both. It will probably only slightly affect (if at all) the calculation of the collateral benefits received by them from holding the properties since ParkTrent’s breach. The plaintiffs’ case in damages is not significantly affected by the Family Court orders. And the terms of buyback agreement as reflected in the 24 August 2009 letter say nothing about Mr Liggins and Ms Wu’s relative interests in the two properties. The buyback agreement requires ParkTrent to take the whole of both properties back. Although it is to be remembered that Ms Wu only had a 1% interest in these properties.

156. As to costs, the determination may have to wait until the outcome of the damages hearing but that can be a matter for argument. But the position of Mr Cross is known already. And prima facie Mr Liggins is entitled to an order for costs against ParkTrent.

157. The applicable rules of practice are clear for a situation such as this, where a solicitor acts for more than one defendant in a proceeding and one of the defendants is successful but the other is not. Normally, each successful defendant is only entitled to that party’s proportion of the costs incurred on behalf of all defendants, plus any extra costs incurred exclusively on behalf of that party; and this rule is said to be convenient for the “ordinary case” but is not to be automatically applied in every case: King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204, at [25] – [35]), (per Young JA, Hodgson and Campbell JJA agreeing) (“King Network Group”). This should be kept in mind when costs submissions are made.

158. For these reasons, the Court makes the following orders and directions:

1. Direct the parties to consult with a view to preparing agreed directions for a short relief hearing based on documents, not further oral testimony, to deal with issues of damages and to submit to the Court by 7 September 2020 agreed directions (or competing directions) for that purpose.

2. Direct the parties to file their submissions in relation to costs by 7 September 2020 (unless the parties agree between themselves to make costs submissions after damages are determined); and

3. Grant liberty to apply.

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Amendments

27 August 2020 - [34] – line 3, delete “house’ after ‘contract’

[43] – line 1, delete ‘in’ and add ‘and’ before ‘Mr Liggins’

[44] – line 4, delete ‘in’ and add ‘and’ before ‘the Bundoora’

[97] – third last line, ‘reasonable’ corrected.

[101] fourth line, ‘plaintiff’ to ‘plaintiffs have’

[109] second last line, delete ‘because’ add ‘that’

[110] fourth last line, add ‘a’ between’ stipulate date’

[117] last line, add ‘is’ before ‘governed’, lower case for ‘Family Law’

[120] third line, delete ‘plane’ replace with ‘plaintiffs’

[121], seventh line, ‘the’ before ‘terms’, lower case for ‘Contract’ in fifth line.

[122] first line ‘2000’ to ‘2009’

[124] fourth line, ‘a’ before ‘claim’

[139] fourth last line, ‘lawyer’ to ‘firm’

Decision last updated: 27 August 2020