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Lloyd v Belconnen Lakeview Pty Ltd

Lloyd v Belconnen Lakeview Pty Ltd

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FEDERAL COURT OF AUSTRALIA
Lloyd v Belconnen Lakeview Pty Ltd [2019] FCA 2177

File numbers: NSD 1417 of 2017
NSD 1555 of 2018

Judge: LEE J

Date of judgment: 20 December 2019

Catchwords:
CONTRACT – money had and received – failure of consideration and mistake – contract between vendors and purchasers – price included an amount payable referable to GST – GST component a distinct part of consideration paid by purchasers – vendors not liable to pay GST – purchasers sought repayment of money as a result of failure of consideration and mistake – whether vendors had title to retain the money in whole or part – whether failure a distinct and severable part of the consideration
RESTITUTION – recovery – unjust enrichment – relevance of contract – whether vendors had a duty to make restitution to the purchasers in whole or part –whether defence applies to obligation to repay in whole or part

TAXATION AND REVENUE LAW – A NewTax System (Goods and Services Tax) Act 1999 (Cth) – consequences of decision in Federal Commissioner of Taxation v Gloxinia Investments Ltd [2010] FCAFC 46; (2010) 183 FCR 420 – operation of transitional arrangements and sale of residential premises by developers an input taxed supply

REPRESENTATIVE PROCEEDINGS – representative proceedings – complex class action – Merck orders concerning initial trial – adjudication of individual claims, common issues and ‘issues of commonality’
TRADE PRACTICES – consumer protection – misleading and deceptive conduct and unconscionable conduct –– whether respondents’ conduct towards applicants amounted to contravening conduct

TRADE PRACTICES – consumer protection – whether respondents’ conduct unconscionable

DAMAGES – measure of damages – respondent a willing vendor – if properly informed an applicant would have sought reduction in purchase price for unit – causation – loss of a chance – standard of proof – calculation of loss

Legislation:
Australian Consumer Law ss 18, 21

Australian Securities and Investments Commission Act 2001 (Cth) s 12CB

A New Tax System (Goods and Services Tax) Act 1999 (Cth) ss 9-5, 9-10, 9-70, 11-5, 19-10(1)(c), 29-70, 38-325, 75-5, 75-10, 75-20, 75-30

Civil Law (Sale of Residential Property) Act 2003 (ACT)

Competition and Consumer Act 2010 (Cth) Pt XI

Constitution s 90

Evidence Act 1995 (Cth) s 136

Federal Court of Australia Act 1976 (Cth) ss 33ZB

Land Titles Act 1925 (ACT) s 48

Tax Laws Amendment (2011 Measures No. 9) Act 2012 (Cth)

Trade Practices Act1974 (Cth)

Cases cited:

A & A Property Developers Pty Ltd v MCCA Asset Management Ltd [2017] VSCA 365
Abigroup Contractors Pty Ltd v Sydney Catchment Authority (No 3) [2006] NSWCA 282; (2006) 67 NSWLR 341
ABN AMRO Bank NV v Bathurst Regional Council [2014] FCAFC 65; (2014) 224 FCR 1
Australia and New Zealand Banking Group Limited v Westpac Banking Corporation (1988) 164 CLR 662
Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd [2001] FCA 1800; (2001) 115 FCR 442
Australian Financial Services and Leasing Pty Limited v Hills Industries Limited [2014]…

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] FCA 2177
Decision Date: 20 December 2019

CaseChat Overview and Summary

Lloyd v Belconnen Lakeview Pty Ltd is a case before the Australian court which involves a dispute between the parties over the inclusion of GST in the sale price of a residential property. The purchasers, Mrs Lloyd and Mr Lloyd, sought a refund of the GST component of the sale price, arguing that the vendors, Belconnen Lakeview Pty Ltd, were not entitled to retain the GST as the supply of the property was an input taxed supply under the A New Tax System (Goods and Services Tax) Act 1999 (Cth). The court was required to decide whether the vendors were liable to repay the GST component of the sale price to the purchasers and whether the purchasers were entitled to restitution in equity.

The court found that the GST component was a distinct part of the consideration paid by the purchasers and that the vendors were not liable to pay GST. The court held that the purchasers were not entitled to restitution in equity as the vendors had a contractual obligation to use the margin scheme, which they had breached, but the breach did not sound in restitution. The court also found that the respondents' conduct towards the applicants did not amount to contravening conduct under the Australian Consumer Law.

The court awarded Mrs Lloyd statutory compensation in an amount calculated as explained above together with interest from the date of settlement. The court found that Mrs Lloyd had established an entitlement to statutory compensation for the loss of opportunity to negotiate the sale price, but not for the loss of opportunity to walk away from the contract. The court also found that the vendors did not engage in unconscionable conduct in equity or in contravention of ss 20 or 21 of the ACL in relation to Mrs Lloyd.

The court ordered that by 3pm on 24 December 2019 the parties are to provide to the Associate to Justice Lee agreed or competing Short Minutes of Order which provide a timetable for the exchange of further evidence in relation to the case of the first and second applicants and further submissions and proposed orders, including orders pursuant to s 33ZB of the Federal Court of Australia Act 1976 (Cth).

Orders

Orders of the court

1. By 3pm on 24 December 2019 the parties are to provide to the Associate to Justice Lee agreed or competing Short Minutes of Order which provide a timetable for the exchange of further evidence in relation to the case of the first and second applicants and further submissions and proposed orders, including orders pursuant to s 33ZB of the Federal Court of Australia Act 1976 (Cth).

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Having regard to the circumstances proved in the evidence, and recognising that giving a percentage figure gives a patina of precision to a task which is no more than informed estimation, the degrees of probabilities or possibilities are such that if the true position had been revealed post-exchange and prior to completion, then I expect that Mrs Lloyd and Belconnen would have done a deal to secure settlement of the Lloyd Contract and that this would have involved Mrs Lloyd securing a benefit. But given the inherent uncertainties, I consider that having identified the maximum value of the opportunity at $46,759, it should be discounted and the sum awarded should reflect a 50% probability of realising the opportunity. Conclusion on the Loss of Opportunity to Negotiate Case In the circumstances, for the above reasons, Mrs Lloyd is entitled to an award of statutory compensation in an amount calculated as explained above together with interest from the date of settlement, being 7 April 2015. The so-called “Loss of Opportunity” to Walk Away Case As noted above, Mrs Lloyd now also contends she “lost the opportunity to walk away”, and as a consequence her loss is $64,000, being the difference between the Price ($554,900) and the $490,000 obtained at the later sale. I do not understand why this case has been framed in this way or in what way it is different to the Direct Loss Case, although framed curiously as a “loss of opportunity” – this capital loss was either sufficiently causally related to the contravening conduct or it was not. I have already explained that this is not the case. It follows from the above that Mrs Lloyd has established an entitlement to statutory compensation, but only for the Loss of Opportunity to Negotiate Case. H.4 Unconscionable Conduct For essentially the same reasons that I have explained in relation to the case against the Barton Developers, I do not consider Belconnen engaged in unconscionable conduct in equity or in contravention of ss 20 or 21 of the ACL in relation to Mrs Lloyd. Belconnen may have engaged in misleading and deceptive conduct, but its conduct did not offend notions of good conscience in such a way as to stigmatise it as unconscionable. Further, the involvement of Mr Ryan and Mr Hindmarsh in any conduct of Belconnen was not to further some “GST Scheme” which set out to prey on potential purchasers as was put in final submissions, but as I have explained, represented nothing more than Belconnen seeking to obtain the financial benefits proposed to them by Maxim.H.5 Restitution Again the starting point remains consideration of the Altitude Contract. Again, the Lloyd Contract exchanged on 10 March 2015 and settled on 7 April 2015 provided that the supply was taxable and the margin scheme was to apply but on completion the nature of the supply was input taxed. It necessarily follows that cl 24.5 applied. That is, there was an express agreement that Belconnen warranted that it could use the margin scheme and promised that it would. This contractual promise does not admit of any ambiguity. If the margin scheme was not able to be applied, for whatever reason, there was a clear breach of contract by Belconnen. The breach of warranty was one which would sound in common law damages and I do not consider, for reasons I have already explained in relation to Mr and Mrs Eppelstun that any restitutionary claim is able to be maintained in these circumstances. Mrs Lloyd has not sought nominal damages for breach of contract and her entitlement to compensatory relief lies elsewhere, as I have explained.I COMMON ISSUES AND SECTION 33ZB

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

File numbers:	NSD 1417 of 2017 NSD 1555 of 2018
Judge:	LEE J
Date of judgment:	20 December 2019
Catchwords:	CONTRACT – money had and received – failure of consideration and mistake – contract between vendors and purchasers – price included an amount payable referable to GST – GST component a distinct part of consideration paid by purchasers – vendors not liable to pay GST – purchasers sought repayment of money as a result of failure of consideration and mistake – whether vendors had title to retain the money in whole or part – whether failure a distinct and severable part of the consideration RESTITUTION – recovery – unjust enrichment – relevance of contract – whether vendors had a duty to make restitution to the purchasers in whole or part –whether defence applies to obligation to repay in whole or part TAXATION AND REVENUE LAW – A NewTax System (Goods and Services Tax) Act 1999 (Cth) – consequences of decision in Federal Commissioner of Taxation v Gloxinia Investments Ltd [2010] FCAFC 46; (2010) 183 FCR 420 – operation of transitional arrangements and sale of residential premises by developers an input taxed supply REPRESENTATIVE PROCEEDINGS – representative proceedings – complex class action – Merck orders concerning initial trial – adjudication of individual claims, common issues and ‘issues of commonality’ TRADE PRACTICES – consumer protection – misleading and deceptive conduct and unconscionable conduct –– whether respondents’ conduct towards applicants amounted to contravening conduct TRADE PRACTICES – consumer protection – whether respondents’ conduct unconscionable DAMAGES – measure of damages – respondent a willing vendor – if properly informed an applicant would have sought reduction in purchase price for unit – causation – loss of a chance – standard of proof – calculation of loss
Legislation:	Australian Consumer Law ss 18, 21 Australian Securities and Investments Commission Act 2001 (Cth) s 12CB A New Tax System (Goods and Services Tax) Act 1999 (Cth) ss 9-5, 9-10, 9-70, 11-5, 19-10(1)(c), 29-70, 38-325, 75-5, 75-10, 75-20, 75-30 Civil Law (Sale of Residential Property) Act 2003 (ACT) Competition and Consumer Act 2010 (Cth) Pt XI Constitution s 90 Evidence Act 1995 (Cth) s 136 Federal Court of Australia Act 1976 (Cth) ss 33ZB Land Titles Act 1925 (ACT) s 48 Tax Laws Amendment (2011 Measures No. 9) Act 2012 (Cth) Trade Practices Act1974 (Cth)
Cases cited:	A & A Property Developers Pty Ltd v MCCA Asset Management Ltd [2017] VSCA 365 Abigroup Contractors Pty Ltd v Sydney Catchment Authority (No 3) [2006] NSWCA 282; (2006) 67 NSWLR 341 ABN AMRO Bank NV v Bathurst Regional Council [2014] FCAFC 65; (2014) 224 FCR 1 Australia and New Zealand Banking Group Limited v Westpac Banking Corporation (1988) 164 CLR 662 Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd [2001] FCA 1800; (2001) 115 FCR 442 Australian Financial Services and Leasing Pty Limited v Hills Industries Limited [2014]…