Mehmet v Carter

[2020] NSWSC 413

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Mehmet v Carter [2020] NSWSC 413

Hearing dates:

8 - 10, 14 - 17 October 2019

Date of orders:

17 April 2020

Decision date:

17 April 2020

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

1.   Declare that the plaintiffs are entitled to the return of the funds representing the deposit paid by them on the contract for the sale of land dated 6 July 2015 for the purchase of the property the subject of the present proceeding.
2.   Order judgment for the plaintiffs for recovery of damages in the sum of $29,855.47.
3.   Dismiss the cross claim with costs.
4.   Order that the defendants pay the plaintiffs/cross-defendants’ costs of the proceeding, including (as per the orders of the Court of Appeal) the costs of the separate question determination the subject of the proceeding before Darke J in 2017.

Catchwords:

CONTRACTS — Termination — Repudiation of contract — where purchasers raised requisitions — where plausible contentions and vendors refused to address

 

LAND LAW — Conveyancing — Contract for sale — Breach — Error or misdescription — Requisitions — Vendors’ obligations — Notices to complete — Purchasers’ remedies

ENVIRONMENT AND PLANNING — Heritage conservation — Protection of Aboriginal heritage — meaning of “Aboriginal object” — National Parks and Wildlife Act 1974 (NSW)

Legislation Cited:

Aboriginal Land Rights Act 1983 (NSW), ss 41, 86
Competition and Consumer Act 2010 (Cth), Sch 2 (Australian Consumer Law), s 18
Conveyancing Act 1919 (NSW), ss 13, 55(1), 55(2A), 57
Electricity Supply Act 1995 (NSW), s 51
Evidence Act 1995 (NSW), ss 60, 69(2)(b), 72, 74, 78, 81, 135, 136
Evidence Amendment Act 2007 (NSW)
Fauna Conservation Act 1974 (Qld), s 7(1)
Law Reform (Law and Equity) Act 1972 (NSW), s 5
Local Government Act 1993 (NSW), s 59A
Mining Act 1992 (NSW), s 164
National Parks and Wildlife Act 1967 (NSW), ss 3(1), 33D
National Parks and Wildlife Act 1974 (NSW), ss 2A(1), 5(1), 83, 84, 85A, 86, 87, 89A, 90K(1)(b), 90Q(3)(d)
Racial Discrimination Act 1975 (Cth)
Real Property Act 1900 (NSW), s 42
Succession Act 2006 (NSW), Pt 4.4

Cases Cited:

Abraham v Mallon (1975) 1 BPR 9157
Akiba v Queensland (No 2) (2010) 204 FCR 1; [2010] FCA 643
All Options Pty Ltd v Flightdeck Geelong Pty Ltd [2019] FCA 588
Australian Competition and Consumer Commission v Woolworths Ltd [2019] FCA 1039
Batey v Gifford (1997) 42 NSWLR 710
Bell v Scott (1922) 30 CLR 387; [1922] HCA 13
Borda v Burgess [2003] NSWSC 1171
Byers v Dorotea (1986) 69 ALR 715
Carlish v Salt [1906] 1 Ch 335
Carpenter v McGrath (1996) 40 NSWLR 39
Carydis v Merrag Pty Ltd [2007] NSWSC 1220
Chambers v Borness [2014] NSWSC 890
City of Botany Bay Council v Jazabas Pty Ltd [2001] NSWCA 94
Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (1988) 21 NSWLR 160
Country Energy v Williams; Williams v Director-General of National Parks and Wildlife (2005) 63 NSWLR 699; [2005] NSWCA 318
Crowe v Rindock Pty Ltd [2005] NSWSC 375; (2005) 12 BPR 22,823
Dainford Ltd v Lam (1985) 3 NSWLR 255
Davies v Morgan (1831) 1 Cr & J 587; 148 ER 1557 (Ex)
DCT Projects Pty Ltd v Champion Homes Sales Pty Ltd [2016] NSWCA 117
De Rose v State of South Australia [2002] FCA 1342
Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317; [2003] HCA 51
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; [1978] HCA 12
Eighth SRJ Pty Ltd v Merity (1997) 7 BPR 15,189
Elwes v Briggs Gas Company (1886) 33 Ch D 562
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22
Festa Holdings Pty Limited v Adderton [2004] NSWCA 228
Fink v Robertson (1907) 4 CLR 864 [1907] HCA 7
Fligg v Owners Strata Plan 53457 [2012] NSWSC 230
Flight v Booth [1834] Eng R 1087; (1834) 131 ER 1160
Foran v Wight (1989) 168 CLR 385; [1989] HCA 51
Frankel v Paterson [2015] NSWSC 1307
Galafassi v Kelly (2014) 87 NSWLR 119; [2014] NSWCA 190
Gardiner v Orchard (1910) 10 CLR 722; [1910] HCA 18
Georgeski v Owners Corporation SP49833 (2004) 62 NSWLR 534
Godfrey Constructions Pty Ltd v Kanangra Park Pty Limited (1972) 128 CLR 529
Greek Orthodox Parish Community of St Marys and District Ltd v Denis Stanley Merrick [2014] NSWSC 1196
Gumana v Northern Territory (2005) 141 FCR 457; [2005] FCA 50
Gupta v Fordham Laboratories Pty Ltd [2018] NSWSC 551
Gustin v Taajamba Pty Ltd (1988) NSW Conv R 55-433
Halsey v Grant (1806) 13 Ves 73
Hamilton v Munro (1951) 51 SR (NSW) 250
Hasanovic v Polistena [1982] NSW Conv R 55-078
Henry v Director-General of the Department of Environment and Conservation (2007) 159 LGERA 17; [2007] NSWLEC 722
Heyman v Darwins Ltd [1942] AC 356
Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (2008) 167 FCR 314; [2008] FCA 369
Idoport Pty Limited v National Australia Bank Limited [2000] NSWSC 1215
Jarosz v State of New South Wales [2019] NSWSC 692
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61
Lahoud v Lahoud (No 2) [2005] NSWSC 1019
Lancaster v R (2014) 44 VR 820; [2014] VSCA 333
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; [1989] HCA 23
Lewis v Keene (1936) 36 SR (NSW) 493
Liberty Grove v Yeo [2006] NSWSC 1373; (2006) 12 BPR 23,709
Liverpool Holdings Ltd v Gordon Lynton Car Sales Pty Ltd [1978] Qd R 279; (1978) 43 LGRA 388
Lowndes v Lane (1789) 2 Cox, Eq Cas 363; 30 ER 16
Lustre Hosiery Ltd v York (1935) 54 CLR 134; [1935] HCA 71
Mabo v State of Queensland [1992] 1 Qd R 78
McKinnon v Bliss 21 NY 206 (1860)
McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79
Mehmet v Carter (2018) 98 NSWLR 977; [2018] NSWCA 305
Mehmet v Carter [2017] NSWSC 1067
Michael Realty Pty Ltd v Carr [1977] 1 NSWLR 553
Micos v Diamond [1970] 3 NSWR 407; (1970) SR (NSW) 392
Milirrpum v Nabalco Pty Ltd (Gove Land Rights Case) (1971) 17 FLR 141
Morris v Baron & Co [1918] AC 1
Moseley v Davies (1822) 11 Price 162
National Commercial Banking Corporation of Australia Limited v Cheung (1983) 1 ACLC 1326
NEC Information Systems Australia Pty Limited v Linton (Supreme Court (NSW), Wood J, 17 April 1985, unrep)
New South Wales Aboriginal Land Council v Jones (1998) 43 NSWLR 300
North Shore Gas Company Ltd v Commissioner of Stamp Duties (NSW) (1940) 63 CLR 52; [1940] HCA 7
Oldfield v Round (1800) 5 Ves 508; 31 ER 707
Pamamull v Albrizzi (Sales) Pty Ltd (No 2) [2011] VSCA 260
Pratt v Hawkins (1991) 32 NSWLR 319
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Re Brine and Davies’ Contract [1935] Ch 338
Re Estate of Jerrard, Deceased (2018) 97 NSWLR 1106; [2018] NSWSC 781
Re Ford & Hill (1879) 10 Ch D 365
Re Ridgeway and Smith’s Contract [1930] VLR 111; (1929) 36 ALR 79
Re Spollon and Long’s Contract [1936] Ch 713
Redapple and Howgate v Hely (1931) 45 CLR 452
Richards v Morgan (1863) 4 B & S 641
Sampi (on behalf of the Bardi and Jawi People) v Western Australia [2010] FCAFC 26; (2010) 266 ALR 537
Sandy (on behalf of the of Yugara People) v State of Queensland (No 2) [2015] FCA 15; (2015) 325 ALR 583
SAS Realty Developments Pty Ltd v Kerr [2013] NSWCA 56
Schulze v Williams [2006] SASC 330
Scottish Amicable Life Assurance Society v Reg Austin Insurance Pty Limited (1995) 9 ACLR 909
Shepherd v Croft [1911] 1 Ch 521
Smith v Joyce (1954) 89 CLR 529; [1954] HCA 15
South Eastern Drainage Board (South Australia) v Savings Bank of South Australia (1939) 62 CLR 603
Spooner v Brewster (1825) 3 Bing 136; 130 ER 465
Stockland (Constructors) Pty Ltd v Carriage (2003) 56 NSWLR 636; [2002] NSWSC 1179
Szanto v Bainton [2011] NSWSC 278
Tambel Pty Ltd v Field (1982) 2 BPR 9593; (1982) NSW ConvR ¶55-077
Thomas v Jenkins (1837) 6 Ad & El 525; 112 ER 201
Torr v Harpur (1940) 40 SR (NSW) 585
Traderight (NSW) Pty Ltd v Bank of Queensland Ltd (No 17) [2014] NSWSC 55
Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1
Walton v Stocks & Parkes Investments Pty Ltd (1975) 1 BPR 9660
Want v Stallibrass (1873) LR 8 Ex 175
Waugh Hotel Management Pty Ltd v Marrickville Council [2009] NSWCA 390
Williams v Williams (1882) 20 Ch D 659
Winchcombe Carson Trustee Company v Ball-Rand Pty Ltd [1974] 1 NSWLR 477
Wright v Tatham (1857) 5 Cl & F 670
Yandle and Sons v Sutton [1922] 2 Ch 199
Yanner v Eaton (1999) 201 CLR 351; [1999] HCA 53
Yarmirr v Northern Territory (No 2) (1998) 82 FCR 533

Texts Cited:

Australian Law Reform Commission, Uniform Evidence Law Report (ALRC Report 102, December 2005)
Christopher Rossiter, Principles of Land Contracts and Options in Australia (2003, LexisNexis Butterworths)
D Skapinker and P Lane, Sale of Land: Commentary and Cases (4th ed, 2009, LawBook Co)
FE Moss, Sale of Land in New South Wales (5th ed, 1973, Butterworths)
Hon Michael Black AC, “Developments in Practice and Procedure in Native Title Cases” (2002) 13 Public Law Review 16
ICF Spry, Equitable Remedies (8th ed, 2009, Sweet & Maxwell
J D Heydon, Cross on Evidence (6th ed, 2000, 11th ed, 2017, LexisNexis Butterworths)
James H Chadbourn, Evidence in Trials at Common Law (Chadbourn Revision, 1974) Bk 5
Maurice Ryan and Robert J Smith, Time and Tide Again: A History of Byron Bay (2001, Northern Rivers Press)
New South Wales Law Reform Commission, Uniform Evidence Law Report (NSWLRC Report 112, December 2005)
New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 17 October 2007
New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 4 November 1969
New South Wales Legislative Council, Parliamentary Debates (Hansard), 24 October 2007
PJ Butt, The Standard Contract for Sale of Land in New South Wales (2nd ed, 1998, Law Book Co)
Victorian Law Reform Commission, Uniform Evidence Law Report (VLRC Final Report, December 2005)

Category:

Principal judgment

Parties:

Ian Mehmet t/as ATF Ian G Mehmet Testamentary Trust (First Plaintiff/Cross-Defendant)
Cameron Mehmet t/as ATF Cameron Mehmet (Second Plaintiff/Cross-Defendant)
Errol Mehmet t/as ATF Errol J Mehmet Testamentary Trust (Third Plaintiff/Cross-Defendant)
Cheers Aviation Pty Ltd t/as ATF KMGC Investment Trust (Fourth Plaintiff/Cross-Defendant)
Murray John Carter (First Defendant/Cross-Claimant)
The Wheel Resort Pty Ltd (Second Defendant/Cross-Claimant)
Cathscompany Pty Ltd (Third Defendant/Cross-Claimant)
Matthews Cheers (Fourth Cross-Defendant)

Representation:

Counsel:
D Smallbone with YLR Chen (Plaintiffs/Cross-Defendants)
T Alexis SC with M Southwick (Defendants/Cross-Claimants)

  Solicitors:
Beswick Lynch Lawyers (Plaintiffs/Cross-Defendants)
Heydons Lawyers (Defendants/Cross-Claimants)

File Number(s):

2015/00360420

Publication restriction:

Nil

INDEX

JUDGMENT – WARD CJ in EQ					[1]
Summary of conclusions					[16]
Background					[25]
The subject land				[26]
Marketing of property for sale in 2015				[41]
The purchasers				[48]
Inspections of the property				[51]
Early June 2015				[52]
18 June 2015 – first inspection by Mr Cheers				[54]
1 July 2015 – meeting with Mr Cheers, Mr Adam Mehmet with Mr Lonergan				[57]
2 July 2015 – second inspection by Mr Cheers (first inspection by Mr Adam Mehmet)				[62]
3 and 4 July 2015 – offer of $3 million for property and business				[68]
6 July 2015 – contracts for sale of land/sale of business exchanged				[71]
Contract for sale of land				[78]
9 and 10 July 2015 – the Parker Report				[99]
13 July 2015 – meeting of Adam Mehmet and Mr Cheers with Mr Carter				[110]
14 July 2015 meeting with Adam Mehmet and Mr Cheers with Mr Garrett; conversations with Mr Lonergan/Mr Connelly				[117]
15 July 2015 – cancellation of meeting with Mr Connelly; Mr Garrett ceases to act				[122]
16 July 2015 – meeting in Mr Garrett’s boardroom				[123]
17 July 2015 – lodgement by Mr Garrett of transmission application				[131]
18 July 2015 – retainer of new solicitors for purchasers				[132]
AHIMS search result				[136]
AHIMS site card				[139]
Correspondence between solicitors as to the alleged defects in title				[144]
Re-sale of the property				[170]
Proceeding					[173]
Evidentiary rulings					[178]
Hearsay evidence subject of objection: ss 72 and 74 of the Evidence Act				[179]
Further observations as to the documentary evidence listed above		[180]
Further observations as to the oral (reputation) evidence		[187]
Ms Philippa Nichol (previous owner of the Rainforest Resort land)		[188]
Ms Annette Kelly and Ms Theresa Nicholls (Arakwal community members and descendants of Harry and Clara Bray)		[194]
Vendors’ evidentiary objections		[208]
Purchasers’ submissions		[221]
Determination		[229]
Consideration of Wigmore on Evidence	[230]
Land Boundaries and Customs	[236]
Events of general history	[241]
Admissibility under s 72 Aboriginal and Torres Strait Islander traditional laws and customs	[242]
Admissibility under s 74: public and general rights	[267]
Admissibility under s 69: business records	[284]
Further evidence subject of objection: “admissions”				[289]
Determination		[297]
The substantive issues in the proceedings					[312]
National Parks and Wildlife legislation				[314]
The cases for the plaintiffs and for the vendors				[331]
Purchasers’ principal repudiation case				[332]
Vendors’ obligation to prove and provide good title		[334]
Purchasers’ submissions	[335]
Vendors’ submissions	[356]
Purchasers’ response	[375]
Determination		[399]
Crowe v Rindock		[433]
Conclusion		[447]
Purchasers’ alternative case re Aboriginal objects as a defect in title and Flight v Booth				[450]
Credibility findings		[456]
Mr Cheers	[458]
Mr Adam Mehmet	[469]
Mr Ian Mehmet	[473]
Messrs Errol and Cameron Mehmet	[475]
Ms Annette Kelly and Ms Theresa Nicholls	[476]
Ms Phillippa Nichols	[478]
Mr Tim Lynch	[479]
Mr Tim Robins	[480]
Mr Carter	[494]
Ms Ruth Gotterson	[499]
Mr Stephen Connelly	[505]
Mr Chris Lonergan	[507]
Mr Stuart Garrett	[509]
The alleged Aboriginal objects		[512]
The memorial stone and plaque	[516]
The remains of Harry and Clara Bray (and possibly one or more of their children)	[521]
Remains/burials of other Aboriginal persons	[549]
Remains of a gunyah	[551]
A “mound” of significance to the Aboriginal people	[566]
Bunya pine	[570]
Determination		[577]
Purchasers’ alternative repudiation case				[614]
Purchasers’ submissions		[617]
Vendors’ submissions		[647]
Determination		[651]
Conveyancing Act s 55(1) and s 55(2A)				[667]
Misrepresentation case				[675]
Purchasers’ submissions		[676]
Vendors’ submissions		[688]
Determination		[692]
Mr Cheers’ denial of guarantee claim				[698]
Relief					[704]
Conclusion					[706]
Orders					[708]

Judgment

1. HER HONOUR: This matter involves a dispute as to the termination of a contract for the sale of land in Byron Bay. The land in question comprised an area of some 30 acres over two lots on which there was in operation at the time (on the smaller of the two lots) an ecological tourist resort then known as the Rainforest Resort (and formerly known as The Wheel Resort). The contract for sale of land was entered into on 6 July 2015 at the same time as, and interdependent with, a contract for the sale of the Rainforest Resort business conducted thereon (although the evidence of the purchasers is that they were not interested in running the business as such; rather, they were interested in the development potential of the land which they understood was confined to an area of about seven acres zoned for commercial use).

2. The plaintiffs are the purchasers and the defendants/cross-claimants are the vendors under the relevant contracts. Each party, in essence, contends that it validly terminated the relevant contracts. For ease of reference, I will refer to the parties collectively as the purchasers or the vendors, as the case may be.

3. The primary position of the purchasers, noting that they put various alternative cases, is that the vendors were not ready and willing to show and prove a good title to the land in question, in that they were not ready, willing and able to show that there were no “Aboriginal objects” (as that term is defined in the National Parks and Wildlife Act 1974 (NSW) (the National Parks and Wildlife Act)) in or on the land (or, if such objects were present, to remove or otherwise provide good title to them); and that this amounted to repudiatory conduct on the part of the vendors. The purchasers maintain that it is not necessary, for the purposes of the primary way in which they put their case, for it to be proven that there are, or were, in fact Aboriginal objects on the land, it being sufficient for them to establish that there was a plausible contention that there were (on the basis that it was then for the vendors either to establish that there were not or otherwise to make good the defect in title). That, of course, is itself predicated on the presence of Aboriginal objects on or in the land being capable of constituting a defect in title, which the purchasers maintain is the case.

4. The purchasers rely on the common law rule to the effect that any defect in title is a valid ground for objection to completion of the contract for sale of land. Alternatively, they rely on the rule in Flight v Booth [1834] Eng R 1087; (1834) 131 ER 1160 (Flight v Booth), where Tindal CJ said that where a misdescription, other than one proceeding from fraud, “is in a material and substantial point, so far affecting the subject matter of the contract that it may reasonably be supposed that, but for such misdescription, the purchaser might never have entered into the contract at all …”, the purchaser might avoid the contract without resorting to the compensation clause (which, the purchasers note, in that case was a non-annulment clause). The purchasers say that in the present case the subject matter of their objection (the presence of Aboriginal objects on the land) was a material and substantial matter affecting the contract in that it may reasonably be supposed that, but for the promise of a title free of interest in the Aboriginal objects, the purchasers might never have entered into the contract at all (using the terminology of Tindal CJ).

5. In the alternative to the primary way in which the purchasers put their case (i.e., that it is not necessary for them to establish the existence in fact of Aboriginal objects in or on the land), the purchasers say that they have established the existence of Aboriginal objects on the land and that the vendors did not in fact have a good title to the land (i.e., a title free of Aboriginal objects) because of the presence in or on the land of one or more Aboriginal objects (see below at [513]ff). As they do under the principal way in which their claim is put, the purchasers again rely on the common law rule as to defects in title or, in the alternative, the rule in Flight v Booth (though they accept that the application of the latter, on this alternative way in which their case is put, depends on what Aboriginal objects are found to have been on the land).

6. Irrespective of the determination of those first two ways in which their claim is put, the purchasers put a further alternative repudiation case. They say that the vendors’ insistence on what the purchasers maintain was an invalid notice to complete, and the vendors’ purported termination of the contract on that basis, amounted to a repudiation by the vendors of the contract thereby entitling the purchasers to accept that repudiation and to bring the contract to an end. The purchasers say, as to that notice to complete, that the notice was given in circumstances where the purchasers had not been in default of any valid appointment to complete; and where the vendors had insisted on an invalid demand for interest and had refused to comply with a notice requiring them to withdraw the demand for interest.

1. Finally, the purchasers complain (and they rely on this in their defence based on s 18 of the Competition and Consumer Act 2010 (Cth) sch 2 (Australian Consumer Law) to the vendors’ cross-claim, as to which see below) that the vendors made misleading representations as to the suitability of the land for development use. The misleading conduct allegations are also relied upon by the purchasers as justifying an order under s 55(2A) of the Conveyancing Act 1919 (NSW) (Conveyancing Act) for the return of the deposit.

2. For their part, the vendors: contend that the purchasers have not established that there were Aboriginal objects (within the meaning of the National Parks and Wildlife Act) on the land; maintain that even if there were Aboriginal objects on the land this did not amount to a defect in title entitling the purchasers not to complete the contract(s); and say that it was the purchasers who repudiated the contract for sale of the land and, therefore, that they (the vendors) validly terminated the contracts.

3. In their further amended defence, among other things: it is alleged by the vendors that the existence of Aboriginal remains or Aboriginal objects (which is denied) does not affect the vendors’ right to sell the land (see [43](b); [46]); reliance is placed on the content of printed cll 5.2 and 10.2 and special conditions 3(b), 4(a) and 5 of the contract (see further below) (see [44] and [45]); and reliance is placed on printed cl 6 and special condition 6 (see[12](f), [44], [53](e), (f)).

4. The vendors maintain that they are entitled to forfeit (and hence retain) the deposit paid under the contract and have cross-claimed for damages for breach of contract. In this regard, after the deposit of $300,000 is brought to account, the vendors claim a loss of bargain of $175,000 (plus costs and expenses associated with the resale of the land at auction in November 2015).

5. The procedural history of this matter has not been uncomplicated. At an earlier stage in the proceeding, orders were made by consent (on 16 December 2016) for the separate determination of a number of questions, including whether the existence of the alleged Aboriginal objects in or on the land was capable of constituting a defect in title to the land on which they are located (see Mehmet v Carter [2017] NSWSC 1067 at [5], to which I will refer as the Separate Question Decision). The matter was then heard by Darke J on the basis of a schedule of agreed facts and on the assumption that there were Aboriginal objects on the land; there being a number of agreed outcomes between the parties depending on the answers to the separate questions (see as set out at [16] per Beazley P, as Her Excellency then was, in the subsequent Court of Appeal decision in Mehmet v Carter (2018) 98 NSWLR 977; [2018] NSWCA 305, to which I will refer as the Appeal Decision).

6. Darke J held, relevantly, that question 1 of the questions posed for separate determination should be answered in the negative (see the Separate Question Decision at [137]). The parties’ agreed outcome following that determination was that the purchasers were to accept that they had no right to terminate the contract and no claim for damages arising from the existence or possible existence of the alleged Aboriginal objects; and it was to remain in issue as between the parties whether the purchasers should have relief under s 55(2A) of the Conveyancing Act, as well as the defendants’ claims pursuant to an amended cross-claim, which issues it was agreed would be determined at a later trial.

7. However, as is not uncommonly the case where the course of hearing questions for separate determination is pursued (see the observation by Einstein J in Idoport Pty Limited v National Australia Bank Limited [2000] NSWSC 1215 as to the experience of courts being that separation of proceedings often merely causes added delay and expense to the resolution of the litigation), as it transpired the agreement between the parties (no doubt for laudable reasons in terms of the perceived efficiency in terms of case management in so doing) to embark on a separate determination of the questions relating to the defect in title issues ultimately did not result in any saving of costs or time.

8. The purchasers sought and obtained leave to appeal from his Honour’s decision (the application for leave to appeal and appeal itself being heard concurrently). The appeal, as ultimately argued, involved only one issue (namely, whether the primary judge erred in concluding that the alleged Aboriginal objects were not capable of constituting a defect in title, that issue arising under question 1 of the separate questions (see Bathurst CJ at [1])). The Court of Appeal held that it was inappropriate to answer question 1 (and hence inappropriate to answer question 4) because: the question was vague and hypothetical; any utility in answering it might depend on the way in which the matter was conducted at trial; and the answer to the question would not finally determine the proceeding (see the Appeal Decision at [2]-[9] per Bathurst CJ; at [103] per Beazley P; McColl JA, agreeing with both at [107]). The whole of the proceeding was then remitted to the Equity Division (with costs of the hearing of the separate questions before Darke J to be costs in the cause) and the matter was heard by me over seven days in October last year. Having regard to the now significantly reduced quantum of the purchasers’ claim and the quantum of the vendors’ cross-claim, it seems likely that the overall costs of the proceedings in this Court and the Court of Appeal will now outweigh the amount in issue in the substantive dispute.

9. By way of further complication, I am informed that during the course of the proceeding the deposit (which had been held by the vendors’ agent as stakeholder in a trust account) was misappropriated by the then principal of the vendors’ agent (not, I hasten to add, the real estate agent who acted on the sale and who gave evidence in the proceeding before me); and hence, those funds are now represented by a claim against the statutory compensation fund applicable to real estate agents’ trust accounts (payment out of those funds awaiting the determination of the present proceeding).

Summary of conclusions

16. For the reasons set out below, I have concluded that the evidence, including reputation evidence (as to the admissibility of which, see below) establishes that there was a plausible contention at the time of the relevant events that there were Aboriginal objects on the land within the meaning of the National Parks and Wildlife Act, (in particular and relevantly, the remains of two Aboriginal elders, Harry and Clara Bray, known as the King and Queen of the Bundjalung tribe; and a memorial stone and plaque recording their burial near the site of the plaque); and that the presence of such Aboriginal objects was capable of constituting a defect in title.

17. I do not accept that the contract for sale of land should be construed as excluding any Crown property on the land (such as would be constituted by the presence of any Aboriginal objects falling within the relevant definition).

18. In those circumstances, I consider that the refusal of the vendors to address the purchasers’ objection as to the defect in title issue, coupled with the vendors’ insistence on an invalid notice to complete (there having been no valid appointment to settle and the vendors having insisted upon an invalid claim for default interest), amounted to a repudiation of the contract, entitling the purchasers to accept that repudiation and terminate the contract, which they did in September 2015. Thus, the principal way in which the purchasers make their claim is made good and the vendors’ cross-claim should be dismissed with costs.

19. Had it been necessary to determine the purchasers’ alternative case, I would have concluded that the memorial stone and plaque (the presence of which on the land is not denied) do constitute Aboriginal objects within the meaning of the National Parks and Wildlife Act having regard to the recognised breadth of the statutory definition; and that the constraint posed to development of Lot 1 by the presence of those objects, while small in area, might reasonably be regarded as a substantial matter for the purposes of the common law principles and the rule in Flight v Booth.

20. Otherwise, while I accept the reputation evidence as evidence of the belief of the Aboriginal community that Harry and Clara Bray were buried on the land (and most probably in the vicinity of the swimming pool constructed at the Rainforest Resort), I do not consider that the reputation evidence establishes the existence of the graves as a matter of fact on the land nor that they are in a location that would pose a substantial development constraint (since, by way of example, if the graves are, contrary to the belief of the Aboriginal elders, on Lot 10 rather than Lot 1, it is difficult to see that their presence would pose any substantial constraint on development of that area which is largely unavailable for development in any event). In the case of the other objects, again, I am not satisfied that the reputation evidence establishes as a matter of fact the existence of other graves on the land (and, in any event, what it does establish is a belief that any such graves would be on the swampy ground or area of Lot 10); I am not satisfied that the evidence establishes as a matter of fact the remains of a gunyah on the land (though I accept the reputation evidence that Harry Bray lived in a gunyah on the land) nor any extant “ceremonial mound” on the area of Lot 1; and I am not satisfied that the bunya pine (which it is admitted is on Lot 1) is an Aboriginal object within the meaning of the National Parks and Wildlife Act.

21. As to the further alternative repudiation claim based on the insistence by the vendors on completion based on an invalid notice to complete coupled with an invalid claim for default interest (which claim does not depend on the presence or otherwise of Aboriginal objects on the land), had it been necessary to determine the case on this contention, I would have concluded that it was made out.

22. Accordingly, the purchasers have succeeded in establishing that the vendors repudiated the contract and that they, the purchasers, have validly terminated the contract. They should recover the deposit (or, more precisely, the funds now representing the misappropriated deposit). Were it necessary for the purchasers to rely on s 55(2A) of the Conveyancing Act for relief against forfeiture of the deposit, I would have concluded that it would be unjust for the vendors to retain the deposit in circumstances where the vendors refused to address the objection to title in any meaningful way and insisted upon completion nonetheless. There should be an order for the reimbursement of the costs associated with the terminated contract (quantified by the purchasers in the order of about $30,000).

23. Finally, had it been necessary to determine the misleading or deceptive conduct claim (raised as a defence to the vendors’ cross-claim), I would have concluded that it was not made out because (quite apart from the fact that I consider that the statements relied upon were of the nature of mere puffery insofar as they went to the “unique opportunity to value add” or “huge potential” or to the characterisation of the property as a “diamond in the rough”) I do not accept that the purchasers relied upon those representations. Rather, they relied upon their own inspection of or enquiries as to the property, including, significantly, the enquiries made of the town planner from whom they sought advice before entry into the contract (Mr Chris Lonergan).

24. Thus, while I have some sympathy for the proposition that this was a contract hastily entered into by the purchasers about which they then suffered (as was clearly Mr Carter’s view) “cold feet”, so to speak; and that the discovery of the reputed existence of Aboriginal objects on the land may have provided a convenient basis (or excuse) for them to walk away from the contract, conveyancing is an area of the law in which technical points are not uncommonly taken and are open to be taken (see the comments of Windeyer J in Crowe v Rindock Pty Ltd [2005] NSWSC 375 at [33]; (2005) 12 BPR 22,823 (Crowe v Rindock) below) and, applying those principles, I consider the purchasers’ principal claim to be made good.

Background

25. It is necessary now to elucidate the background in some detail.

The subject land

26. As adverted to above, the subject land comprises two lots: Lot 1, which covers an area of approximately seven acres (of which a lesser area is zoned for commercial tourism use); and Lot 10, which covers an area of approximately 23 acres principally comprising rainforest land and is zoned for environmental protection. Lot 1 is the land on which the Rainforest Resort was operated at the relevant time (as to which see further below) and a re-development of Lot 1 would have required reliance on existing use rights (since, as I understand it, part of the existing resort encroached on a 50m buffer zone now required as part of the bushfire hazard constraints).

27. Lot 1 in DP is the parcel of land on which the purchasers contend that the burial site and remains of Harry and Clara Bray, known as the King and Queen of Bundjalung, are located. There is certainly no dispute that situated on Lot 1 there is a memorial stone and a plaque (said by the vendors to be “readily visible” and “is situated in a prominent place” but which the purchasers say they did not observe prior to entry into the contract for sale). The plaque records that “Harry and Clara Bray tribal elders of the Bundjalung tribe buried near this site circa late 1890” (a date which it is accepted is incorrect by some three decades). The memorial stone and plaque are situated on Lot 1 near the swimming pool fence and close to the walkway or entrance to what were referred to in the evidence as Cabins 5 and 6 (closest to Cabin 6).

28. The vendors admit the presence on the land of the plaque (and the words that are inscribed thereon) but not the accuracy of the plaque (see their Notice Disputing Facts and Authenticity of Documents dated 3 August 2018); nor do they admit that there are present on or within the land the remains of any Aboriginal persons (be those the remains of Harry and Clara Bray or others).

29. Both sides point in their submissions to the lack of any archaeological investigation or excavation of the site: the vendors in the context of their submissions that there is no evidence to support the proposition that, nearly 100 years after the death of Harry Bray, there are any Aboriginal remains in existence on or near the site at all; the purchasers emphasising that the presence of Aboriginal remains on the land has not been negatived by the vendors and decrying any suggestion that there should have been an archaeological examination of the site as being, amongst other things, inconsistent with the objectives of the National Parks and Wildlife Act, which include the preservation and conservation of Aboriginal objects (to which see further below).

30. The subject land has been held under Torrens title since 14 September 1953. In an affidavit sworn 22 June 2016, Mr Mark Henry Groll, a land title searcher, deposes to his title searches in respect of the land. I note that Mr Groll was not required for cross-examination and his evidence is not challenged.

31. Mr Groll prepared a schedule of the history of Lot 1 by searching the Crown Tenure Index and the General Register of Deeds in the period from 30 December 1916 to when the initial Certificate of Title issued on 14 September 1953; and then inspecting the Certificates of Title through to when the computer folio was created for Lot 1 on 29 July 1988. Prior to the creation of the computer folio, the land had been comprised in Vol. 12074, Fol. 50 (and before that in earlier folios of the register). Part of Lot 1 was formerly a road, which was closed. Before 1953, the land was held (initially by a Mr Davidson) under Crown Tenure Conditional Purchase and, before 1925, under Crown Lease.

32. Mr Groll has also deposed (see at [4]) that part of Lot 1 was formerly part of Crown Reserve No. R 43074 for use of the land by Aborigines (the Crown Aboriginal Reserve) prior to 30 December 1916; a matter to which the purchasers point as being of considerable significance as to the presence (or likely presence) of Aboriginal objects.

33. Pausing here, I note that on the Cadastral Records Enquiry Report annexed to Mr Groll’s affidavit (and marked Exhibit 7 in the proceeding), the area highlighted by Mr Groll as the location of the “10 acres parcel” the subject of the search enquiry (which I understand to be the area formerly part of the Crown Aboriginal Reserve) overlaps (albeit only to a minor extent) with part of the subject land. It is relevant here to note also that uncertainty as to the precise location of the reputed burial site of Harry and Clara Bray on the property is compounded by apparent uncertainty on the part of some of the witnesses as to the location of the former Crown Aboriginal Reserve (and, in particular, whether the Crown Aboriginal Reserve is synonymous with the Rainforest Resort land itself).

34. From 1916 (when it formed part of the Crown lease and then was later the subject of the Crown Tenure Conditional Purchase) until 1985, the Rainforest Resort land was held by the Davidson family. From 1985 to 1990, Lot 1 was held solely by Ms Phillippa Nichol (who gave evidence in the proceeding and under whose ownership The Wheel Resort was constructed). From 1990, Lot 1 land was held jointly by Ms Nichol and Mrs Catherine Carter (nee O’Reilly), the late wife of the first defendant (Mr Murray Carter). In late 1995, Ms Nichol sold her then half share in Lot 1 to Caths Company Pty Ltd (referred to inconsistently in some of the documents as Cathscompany Pty Ltd and in some as Caths Company Pty Ltd but in any event the third defendant in the present proceeding), a company which is now controlled by Mr Carter.

35. Meanwhile, Lot 10 (the larger of the two lots) was held in the name of The Wheel Resort Pty Ltd (the second defendant in the present proceeding), that also being a company associated with Mr Carter and/or his late wife.

36. In terms of a general description of its location, the subject land is located to the south of the town of Byron Bay. It is situated across Broken Head Road from the Byron Bay Golf Course, and is to the south of a caravan park. Tallow Creek runs through and alongside the east of the property. Tallow Beach is to the east of the property (and there was reference in the evidence to sand mining at some stage on the land – presumably in the area of sand dunes near the beach). To the east of the Rainforest Resort, the land was described in some of the evidence as swampy ground (see for example T 171 the reference to swampy ground closer to Tallow Creek).

37. Relevantly, there is in the vicinity of the Rainforest Resort another (apparently more upmarket) resort near Byron Bay (now known as the “Byron at Byron” resort but formerly known as “The Everglades”). This resort is to the south of the subject land. Also to the south of the property (and a narrow strip on the east of Tallow Creek) is an area known as Suffolk Park, to which reference was also made in the evidence.

38. Also relevant to note at this stage is that it is clear that there were at all times various constraints affecting the development potential of the property as a whole (including endangered flora and fauna; bushfire hazards; and potential traffic impact considerations) quite apart from any heritage or archaeological considerations posed by the existence or reputed existence of Aboriginal objects on the land (see for example the expert opinion provided by a town planner, Mr Stephen Connelly, dated 31 May 2019, in connection with the proceeding) (Exhibit 10) and the joint expert opinion of Mr Connelly, Mr Anderson, and Mr Robins, dated 13 September 2019, that was tendered in evidence in the proceeding (to which I will refer as the joint expert report) (Exhibit M)). An expert report prepared by one of the expert consultants, Mr Darryl Anderson of DAC Planning Pty Ltd (dated June 2016), for example, refers to the site containing high conservation value vegetation and two endangered ecological communities (littoral rainforest and coastal cypress woodlands together with a small area of SEPP 14 wetlands), the likely presence on the site or in the locality of 12 threatened species of fauna, and that the site is mapped as a bushfire prone area bushfire hazards.

26. There is a 50m buffer zone required for bushfire hazard purposes, at least part of which it seems not to be met by the existing “footprint” of the Rainforest Resort (hence for any re-development of the resort it would likely be necessary to rely on existing use rights).

27. In summary, it does not appear to be disputed that the commercial development potential of the land was largely, if not wholly, limited to the smaller lot (Lot 1) (the purchasers referring to this, seemingly not strictly accurately, as the “seven acres” of commercially useable land); and even then the joint expert report appears to acknowledge that there would have been some constraints on development (irrespective of the presence or otherwise of Aboriginal objects on the land).

Marketing of property for sale in 2015

41. As already noted, at the time of the events the subject of the present proceeding (in around July 2015), there was an existing “eco-tourist” resort, known as the Rainforest Resort (formerly known as The Wheel Resort) located substantially on the smaller of the two lots (Lot 1).

42. In 2015, having previously, in 2014, placed the Rainforest Resort on the market for sale through a different real estate agent, Mr Carter retained Ms Ruth Gotterson of Unique Estates Australia Pty Ltd (Unique Estates) to market the resort for sale. As I understand it, Ms Gotterson had not been involved in the marketing of the resort in 2014.

43. At some point, according to Mr Carter’s oral evidence, the financier in respect of the property (Mayne Finance) decided it wanted to close its books; and Mr Carter said he had a choice whether to refinance or sell the property and decided to take the latter course (see from T 262.36). However, nothing turns on why the decision was made to sell the property. It simply explains one of the entries in a note made by the solicitor acting on the transaction at the time (see below at [119]).

44. The land was marketed with reference to its development potential: the Unique Estates marketing brochure and advertisements referred to the area of the property as being “30 acres across two titles” and referred to the “unique opportunity to value add”, including the statement that the property represented “an iconic tourism or redevelopment opportunity (stca)” (which the purchasers understood to mean “subject to Council approval”). The asking price for the property and business (as specified in the marketing material) was $3.8 million.

45. There is a dispute in the evidence (to which I will come in due course) as to whether Ms Gotterson advised Mr Carter not to disclose the Aboriginal or cultural heritage aspects of the resort in the marketing for the sale. Ms Gotterson denies that she did so (see T 326), though it appears that she accepts that there was some conversation as to whether there should be reference to the cultural heritage in the marketing material (see below). In particular, Ms Gotterson denies that she was instructed to conceal or otherwise minimise the existence of the memorial plaque in relation to Harry and Clara Bray (see her affidavit sworn 30 May 2019 at [7]). Ms Gotterson’s evidence is that, in or about 8 June 2015, Mr Carter asked her if she thought something should be put in the brochure about the cultural heritage and that her answer was that she did not think that buyers would be particularly interested and that, anyway, it was all set out on the Rainforest Resort webpage (see her affidavit at [12]). (The reference to the webpage is a reference to a web page that was accessible via a link that contained Mr Carter’s “Nature Notes” for the site and to which I subsequently refer as the Nature Notes – see below at [301].)

46. Ms Gotterson deposes that Mr Carter informed her that there was “an old approval for the house” (see at [7]); which I understand to be what was referred to in the evidence as the “second house site”. There was some dispute in the evidence as to what the purchasers were told as to an existing approval for a second house on the site (the evidence of the town planner, Mr Lonergan, being that it had lapsed by 2015) but nothing turns on this.

47. As noted, the land and business were marketed for sale in 2015 as an eco-tourist resort with opportunity for redevelopment opportunity. It seems not to be disputed that at the time the infrastructure at the Rainforest Resort was (in advertising parlance) “tired”. Where there was dispute is as to whether the grounds around the pool (where the memorial stone and plaque are located) were overgrown (it being the evidence of one of the witnesses that the resort had become a “jungle” – a description not supported by the relatively contemporaneous photographs of the area). In any event, it was Ms Gotterson’s view (which I accept was genuinely held by her) that there was “huge potential” for a purchaser to re-develop the Rainforest Resort; and it seems probable that she conveyed that opinion when marketing the property.

The purchasers

48. The purchasers, who entered into the contract dated 6 July 2015 for the sale of the land, were a group or consortium associated with: various members of the Mehmet family (three brothers, Ian, Cameron and Errol Mehmet, each of whom entered into the contract as trustee for a named testamentary trust or partnership) as to a 70/100 share of the property; together with Cheers Aviation Pty Ltd, a company controlled by Mr Matthew Cheers, as trustee for another investment trust, as to a 30/100 share of the property. Mr Cheers is a friend of Mr Ian Mehmet’s son, Mr Adam Mehmet.

49. Mr Cheers and Mr Adam Mehmet were the two persons who inspected the Rainforest Resort and first indicated an interest on the part of the purchasers in acquiring the property. It seems that there was some idea at one stage that Mr Adam Mehmet would manage the tourist resort (and hence that the acquisition would present an employment opportunity for him) (see, for example, Mr Ian Mehmet’s affidavit sworn 9 June 2016 at [21]).

50. The purchasers’ evidence, which I have no reason not to accept, is that they had experience in tourism and resort operations (as well as other businesses) and that they entered into the contract for the purpose of re-developing the resort to an intensified standard of operation within the existing footprint (which, again, was principally situated on Lot 1). It is noted by the purchasers that their intention to develop the land was communicated to the vendors before entering into the contract (reference is made to [16] of Mr Carter’s affidavit sworn 9 February 2016 in this regard). There is some dispute as to precisely what was said as to the purchasers’ plans but nothing ultimately turns on this, particularly where no claim is now pressed by the purchasers for damages by reference to the loss of opportunity to develop the resort.

Inspections of the property

51. There is some divergence in the accounts of the lay witnesses over certain of the details as to the times at which discussion took place in relation to the potential purchase of the property (for example, Mr Adam Mehmet recalls meeting Ms Gotterson at a time in late June 2015 at a café whereas Ms Gotterson denies any meeting at the café on 29 or 30 June 2015; and there is some discrepancy as to where the offer to purchase the property was made: whether in Ms Gotterson’s office or at a café – the Cool Katz café in Byron Bay). Broadly, however, the chronology of the various inspections of the property and entry into the contract, as given by the respective witnesses, was consistent and is outlined below.

Early June 2015

52. Mr Cheers has deposed that, in or about early June 2015, he noticed a billboard advertisement marketing the Rainforest Resort for sale (see [20] of his 27 June 2016 affidavit); that he then further read about the property on the internet (though not the Nature Notes on the website for the Rainforest Resort to which I refer later in these reasons); and that he sent a text message on or about 11 June 2015 to Mr Adam Mehmet forwarding an advertisement for the property (see [21] of his 27 June 2016 affidavit). Consistently with this, Mr Ian Mehmet’s evidence is that he received a telephone call in mid-June 2015 from Mr Adam Mehmet, in which Adam told him that there was a property called the Rainforest Resort for sale that had seven acres zoned for commercial/tourism (see Mr Ian Mehmet’s affidavit sworn 9 June 2016 at [15]). As adverted to above, the real estate brochure in evidence referred to a site “30 acres across 2 titles with beach access and just 3 flat kilometres from Byron Bay CBD”; specified a price of $3.8 million; and included the words “unique opportunity to value add”.

53. Pausing here, one of the disparities in the witnesses’ accounts of the various conversations is as to the area of Lot 1 (or the lot zoned for commercial/tourism) being “7 acres”. Various of the purchasers referred to an area of seven acres zoned for commercial or tourism use (and referred to statements made as to it being rare for a property of this size being zoned for commercial use to be so close to Byron Bay). However, the advertising material does not refer to this as the area of Lot 1 (simply referring to the land being 30 acres across two titles); and Mr Lonergan denies having referred to an area of seven acres and says that he had no idea at the time of the area of the property (see T 300). Mr Adam Mehmet’s recollection was that Mr Cheers had told him the area was seven acres (see T 147). The most likely explanation is, it seems to me, that the source of the purchasers’ belief as to “7 acres” being the area zoned for commercial use was Ms Gotterson, as she quite candidly said in the witness box that the smaller parcel was seven acres and this was the convenient way of referring to it (see T 330). Nothing turns on this other than that it may otherwise have pointed to some unreliability in the purchasers’ recollections of conversations as to the property.

18 June 2015 – first inspection by Mr Cheers

54. Mr Cheers has deposed that he visited the property for the first time on or about 18 June 2015 with a business colleague (Mr Paul Harris, who I interpose to note did not give evidence in the proceeding – a matter to which the vendors have pointed in their submissions though without directly seeking a Jones v Dunkel inference at T 411 (see Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298)) and Ms Gotterson (see [23] of his 27 June 2016 affidavit); and that he spent approximately one hour at the property, during which time Ms Gotterson showed him (and Mr Harris) around the property and that Ms Gotterson did not say anything to him about the Aboriginal heritage significance of the property. Mr Cheers recalls that Ms Gotterson said words to the effect “This is a diamond in the rough”; that “this has limitless potential”; and that “properties of this size in town with this type of zoning are rare” (see [23] of his 27 June 2016 affidavit). He says that he observed the property was run down and in need of an upgrade.

55. Mr Cheers has also deposed that, at the meeting on 18 June 2015, Ms Gotterson said words to the effect that a site had been approved for a second house on Lot 10 allowed by a boundary adjustment; and that Mr Lonergan did the work for that approval for Mr Carter and would be the person to ask about it. Mr Cheers describes the second house site as being within the “7 acres of commercially usable land” and points out that this was referred to in the real estate advertisements for the property (see [24] of his 27 June 2016 affidavit).

56. Ms Gotterson’s evidence is that on the 18 June 2015 inspection Mr Cheers and she (with another person whose name she does not recall) walked around the property for about an hour and that they walked on the path which passed by the memorial plaque. Ms Gotterson’s evidence in this regard (which was read only as to her lay opinion subject to weight) was that the plaque was “clearly visible”. Relevantly, her evidence is that the plaque was not covered by plants or undergrowth (see her affidavit sworn 30 May 2019 at [15]). I interpose here to observe that the visibility of the plaque goes largely to the issue as to whether, if it amounted to a defect, it was patent; but also as to the credibility of the relevant witnesses (as to which, see below). Ms Gotterson denies that she told Mr Cheers that the development consent (for the second house site) was active; and she denies that she said the property was a “diamond in the rough” (see her affidavit at [17]).

1 July 2015 – meeting with Mr Cheers, Mr Adam Mehmet with Mr Lonergan

57. Mr Cheers has deposed that, on around 1 July 2015, he and Mr Adam Mehmet had a meeting with Mr Lonergan at his office (see [38]ff of Mr Cheers’ 27 June 2016 affidavit), at which time he says that Mr Lonergan said various things, including that there was a seven acre area zoned commercial/tourism; that the rest of the land was “habitat protected and would be difficult … to do much with”; that, as to the potential for development of the seven acres, they could “build Club Med” if they wanted to; that his recommendation would be to use electric chain saws and clear as much as they could before getting anyone to assess it; that he could see no reason why they could not build up to 100 units on the property; and that he was fairly certain that the DA approval for a second house site on the second title had never been activated and had lapsed (see [39] of Mr Cheers’ 27 June 2016 affidavit).

58. Mr Lonergan confirms that he had a meeting at about 3.00pm on 1 July 2015 with Mr Cheers and Mr Adam Mehmet (see his affidavit sworn 31 May 2019 at [12]) and has annexed his diary note of the appointment. He denies that he said many of the things attributed to him by Mr Cheers and Mr Adam Mehmet (including the references to building “Club Med” if they wanted to, the use of electric chain saws to clear the site; and building up to 100 units) (see Mr Lonergan’s affidavit at [16]). He also denies referring to the tourist zone as the “7 acre area”, deposing (as adverted to above) that he has no recollection of knowing the size of the area of the tourist zone at the time of the meeting. Mr Lonergan does, however, agree that there was a reference to “Club Med” in the meeting but what he says is that he said words to the effect “Of course, if it was as simple as that you could build Club Med”. He says it is a standing joke in Byron Bay to talk about building a Club Med, which he says the locals understand would never happen (see his affidavit at [17]).

59. Exhibited to Mr Cheers’ affidavit is a copy of a zoning map that he says he was given by Mr Lonergan during the meeting. Mr Lonergan denies providing Mr Cheers with the so-called “zoning map” which he says appears to be a draft Byron Local Environment Plan 2013, noting that at the time of the meeting he knew that the Byron Local Environment Plan 2014 had been gazetted (see Mr Lonergan’s affidavit at [16](e)).

60. Mr Cheers’ evidence is that following this meeting he and Mr Adam Mehmet had a telephone conversation with Mr Ian Mehmet about the property (see [42] of his 27 June 2016 affidavit). This is consistent with Mr Ian Mehmet’s recollection that some days after the initial telephone conversation with Mr Adam Mehmet he received a further call from him about the meeting that Adam and Mr Cheers had had with Mr Lonergan (see Mr Ian Mehmet’s affidavit sworn 9 June 2016 at [16]).

61. By email at 5.15pm on 1 July 2015, Mr Adam Mehmet forwarded to Mr Ian Mehmet a link to the property, adding “notice the golf course across the road in the picture!”

2 July 2015 – second inspection by Mr Cheers (first inspection by Mr Adam Mehmet)

62. Mr Cheers says that, on or about 2 July 2015, he visited the property again, this time with Mr Adam Mehmet and Ms Gotterson; that, among other things, Ms Gotterson said she would “walk out” what she understood to be the borders of the seven acres of commercially usable land; that she showed them the cleared area for the second house site (Mr Cheers says he told her that Mr Lonergan said the approval had lapsed); that Ms Gotterson (in response to a query) said that there were other interested purchasers; and, again, that Ms Gotterson said that it was a “diamond in the rough” (see [55]-[56] of his 27 June 2016 affidavit).

63. Ms Gotterson confirms that, on 2 July 2015, Mr Cheers and Mr Adam Mehmet visited the resort with her. She says that she was present for approximately 40 minutes while they were inspecting the property and she observed that they walked along the footpath beside the plaque on a number of occasions (see her affidavit at [22]; [25]). As already noted, Ms Gotterson denies that she described the property as a “diamond in the rough”.

64. Mr Cheers says that after he and Mr Adam Mehmet had walked around the property they went into the main house to see Mr Carter; and that they had a conversation with Mr Carter, including as to what their plans were for the property (whether they were planning to develop this as a resort for backpackers) and as to the financials for 2004 (see [57]-[58] of Cheers’ 27 June 2016 affidavit). Mr Cheers says that in this conversation he told Mr Carter that they had been told that the second house site approval had lapsed; and that they were not planning to run the resort as a backpackers and would need to create more beds and cabins.

65. Mr Cheers says that he and Mr Adam Mehmet spent a further two hours or so walking around most of the 30 acre property before leaving and that he did not see any burial plaque (see [59] of his 27 June 2016 affidavit).

66. In his reply affidavit sworn 23 July 2019, Mr Cheers described the area in relation to the memorial plaque and stone in the following terms (at [9]):

… I did not see lilies, native ginger, a plaque or a stone. I saw a jungle. The forest had come back and taken over the resort. The path [Mr Carter] refers to was a brick or stone path. It was full of tree roots and mould which lifted the paving, so that you had to be careful with your footing. Even the cabins were affected by tree roots. There was a tree that had fallen over and crushed part of the roof of one of the cabins. This tree was still alive. The white ants were so bad you could put your fingers through the walls. I could not even see the stone, let alone the plaque.

67. In his reply affidavit, Mr Cheers also maintained his evidence that Mr Carter had said that there were Aboriginal remains “all over the property”, but not until a post-exchange meeting (see at [12]; and at [73] of Mr Cheers’ 27 June 2016 affidavit).

3 and 4 July 2015 – offer of $3 million for property and business

68. Mr Cheers has deposed that on about 3 July 2015 he had a meeting with Mr Adam Mehmet and Ms Gotterson; that after some discussion either he or Mr Adam Mehmet made an “unconditional” offer of $3 million for the land and the business with a 14 day settlement; and that the following day (4 July 2015), Ms Gotterson telephoned him and said words to the effect that an extra $100,000 for Mr Carter “would get it over the line” (see [60]-[61] of Cheers’ 27 June 2016 affidavit).

69. It appears that the solicitor who drafted the contract and who acted, at first, for both parties in respect of the sale (Mr Stuart Garrett) understood that the purchasers were to take the property “as is” (see Mr Garrett’s file note dated 3 July 2015 which records “[p]urchaser to inspect property “as is” without pest, building, council or financial advice”).

70. Certainly, Mr Garrett’s understanding of the status of the offer (which followed a conversation with Ms Gotterson and therefore had presumably been conveyed to him by Ms Gotterson) was conveyed to Mr Carter in an email sent on 5 July 2015 as being that:

… the offer is ABSOLUTELY unconditional – and that the Purchasers will take the properties and business “as is” without any conditions (with all and any problems that may exist).

That is also without any finance condition or due diligence …

688. Second, that none of the purchasers seriously relied on the real estate agent and that, to the extent that Mr Cheers argued to the contrary, his evidence should be rejected.

689. Third, that Ms Gotterson recommended that the purchasers seek town planning advice from Mr Lonergan (which they did on 1 July 2015). It is submitted that any inducement caused by the “diamond in the rough” could hardly retain any meaningful currency after Mr Lonergan had provided his advice (as to which there is a controversy that it is said is unnecessary to resolve, because he was not the agent of the vendor).

690. Thus, it is argued that there was no reliance on the representations that are said to have been made by the agent.

Determination

692. I am not persuaded that there was a relevant misrepresentation (as opposed to mere puffery) nor that a representation as to the development potential of a property is necessarily a representation as to a future matter (rather it is the development potential as at today’s date for the property in the future).

693. As to the latter, a representation concerning the future development or potential for development of a property could conceivably be either a future representation or a representation of a present state of affairs, depending on the words used and their context (see Traderight (NSW) Pty Ltd v Bank of Queensland Ltd (No 17) [2014] NSWSC 55 at [1125]; [1128] per Ball J, for example). I see, however, a difference between a statement as to the likelihood of receiving development approval, subject to zoning and other requirements (held to be a future representation in City of Botany Bay Council v Jazabas Pty Ltd [2001] NSWCA 94) or as to the future profitability of a site (held to be a representation as to a future matter and not a representation of present belief in All Options Pty Ltd v Flightdeck Geelong Pty Ltd [2019] FCA 588) on the one hand, and a statement that the property has development potential or even huge development potential (noting that a representation as to the value of a property was held not to be a future representation as it was a statement of the property’s present day value in Schulze v Williams [2006] SASC 330), on the other hand. In this regard, I have considered the recent decision of Mortimer J in Australian Competition and Consumer Commission v Woolworths Ltd [2019] FCA 1039 (which, I understand, is now subject of appeal to the Full Court of the Federal Court), concerning representations as to allegedly biodegradable food packaging, in which the future representation issue was squarely raised.

694. It is not, however, necessary to delve into these issues (of puffery or as to future representation versus present belief) in any detail because I do not accept that the purchasers entered into the sale contract in reliance on any representation by the vendors (or their agent) as to the development potential of the property.

695. I am prepared to accept that Ms Gotterson made statements as to the property having development potential (perhaps even “huge” development potential) and that she conveyed the impression (even if not in these words) that the property was a “diamond in the rough”. It is also the case that the development potential of the property (confined in essence to Lot 1) was limited by the various constraints identified by the various town planning experts (even apart from any cultural or heritage issues).

696. However, I do not see the reference to this being an “unique opportunity to value add”, or the marketing of the property as a re-development opportunity, as being misleading (particularly when the marketing brochure included the qualification “stca”).

697. Moreover, it is abundantly clear that the purchasers were acting in reliance on their own enquiries and inspection of the property; not least because of the consultation with and advice sought from Mr Lonergan. Therefore, I do not consider that the misleading and deceptive conduct claim has been made good.

Mr Cheers’ denial of guarantee claim

698. Special condition 22 of the contract made provision for Mr Cheers to join as a guarantor party by signing in the prescribed execution clause at the foot of the page. Mr Cheers denies that he did so. His evidence is that this matter was not specifically drawn to his attention.

699. The purchasers say that the terms of the contract prescribed the manner and form for adoption of that obligation by Mr Cheers as a party and, that form not being fulfilled, the correct construction is that Mr Cheers did not become a party to the contract.

700. This issue does not arise given the determination of the other issues in the proceedings. Had it arisen then, in the absence of a warranty of authority or misrepresentation claim, I would have concluded that the defence should succeed.

701. The capacity in which a person who is a director of a company signs a contract (whether in a personal capacity or as director) was considered in Clark Equipment Credit of Australia Ltd v Kiyose Holdings Pty Ltd (1988) 21 NSWLR 160. There, Giles J, as his Honour then was, (having considered what was said in National Commercial Banking Corporation of Australia Limited v Cheung (1983) 1 ACLC 1326; NEC Information Systems Australia Pty Limited v Linton (Supreme Court (NSW), Wood J, 17 April 1985, unrep) and Scottish Amicable Life Assurance Society v Reg Austin Insurance Pty Limited (1995) 9 ACLR 909) concluded (at 174-175), that the proper approach in determining whether a signatory has assented to be personally bound is to ascertain the objective (not subjective) intention as to that issue, having regard to the construction of the document as a whole and the surrounding circumstances (to the extent to which evidence of the latter is permissible); the inquiry not being limited to consideration of the signature and its qualification, if any. In that case, his Honour declined to find an intention that the directors were personally bound having regard to the form of the signing clause (which stated that one was signing for and on behalf of the company and the other as witness) in circumstances where: the same form of words had been used for a person who no one contended was personally bound; the addition of the common seal pointed to them having signed simply in their capacity as directors; and that the same form of words were used in a separate document where there was no provision for personal responsibility.

702. The above considerations were applied in SAS Realty Developments Pty Ltd v Kerr [2013] NSWCA 56, where I considered that the most compelling indication that both the individual director and the company were to be bound by the contractual obligation in question was that the director had signed the document twice (once above his name and once below the title of managing director of the appellant entity).

703. In the present case, the indication from the terms of the document was that it was intended that Mr Cheers’ company be bound as purchaser and that Mr Cheers would guarantee the performance of those obligations. That can be seen from the text of the contract and from the fact that there was provision for Mr Cheers to sign separately. He did not do so. On ordinary contract principles, therefore, he is not bound as a guarantor.

Relief

704. The purchasers claim by way of damages the costs incurred and expenses thrown away, as set out in the affidavit of their solicitor, Mr Lynch, sworn 9 June 2016 (relying on McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79).

705. Those costs and expenses are itemised as: legal costs charged by Mr Stuart Garrett ($2,301.08); solicitor’s costs ($16,902.52); Counsel’s costs ($10,651.87); totalling the sum of $29,855.47. The purchasers do not pursue expectation damages as a head of loss.

Conclusion

706. For the reasons set out above, I find for the purchasers on their principal claim and for them as cross-defendants on the cross-claim. On the basis that costs generally follow the event, there will be a costs order in their favour.

707. Further, pursuant to the Court of Appeal’s decision that the costs of the separate question for determination be costs in the cause, there will also be an order for the vendors to bear the costs of that hearing.

Orders

708. For the above reasons, I make the following orders:

1. Declare that the plaintiffs are entitled to the return of the funds representing the deposit paid by them on the contract for the sale of land dated 6 July 2015 for the purchase of the property the subject of the present proceeding.

2. Order judgment for the plaintiffs for recovery of damages in the sum of $29,855.47.

3. Dismiss the cross claim with costs.

4. Order that the defendants pay the plaintiffs/cross-defendants’ costs of the proceeding, including (as per the orders of the Court of Appeal) the costs of the separate question determination the subject of the proceeding before Darke J in 2017.

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Decision last updated: 17 April 2020