Melegant and Sundrum Pty Ltd v Zhong
[2017] VCC 1868
•22 June 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-15-05487
| MELEGANT & SUNDRUM PTY LTD | Plaintiff |
| v | |
| SHAOPING ZHONG | Defendant |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 10, 11, 18, 19 May 2017 | |
DATE OF JUDGMENT: | 22 June 2017 | |
CASE MAY BE CITED AS: | Melegant & Sundrum Pty Ltd v Zhong | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 1868 | |
REASONS FOR JUDGMENT
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Subject: CONTRACT LAW
Catchwords: Contract for sale of land; purchaser not competent in written or spoken English; defence of non est factum; contract conditional on notice of intention to grant permit for redevelopment; whether in the events that occurred contract terminated by purchaser for failure of condition precedent; contract effective; whether purchaser entitled to rescind for misleading or deceptive conduct; counterclaim dismissed; purchaser liable to pay deposit despite vendor’s termination of contract for purchaser’s breach.
Legislation Cited: Penalty Interest Rates Act 1983; Australian Consumer Law; Planning & Environment Act 1987; Victorian Civil & Administrative Tribunal Act 1998; Trade Practices Act 1974; Property Law Act 1958
Cases Cited:Lee v Ah Gee [1920] VLR 278; Petelin v Cullen (1975) 132 CLR 355; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164; Bill Acceptance Corporation Limited v GWA Limited (1983) 50 ALR 242; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; Commercial Bank of Australia v Amadio (1983) 151 CLR 447; Chambers v Borness [2014] NSWSC 890; Bot v Ristevski [1981] VR 120; Lowe v Hope [1970] Ch 94; Johnson v James [1972] NZLR 313; Lyon v Magnet Nominees Pty Ltd [1978] VR 673; McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
Judgment: Judgment for the plaintiff on its claim. Defendant’s counterclaim dismissed. Costs reserved.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Muller | Claire Kenna |
| For the Defendant | Mr D Connell | Ian Robertson Legal |
HIS HONOUR:
Background
1 Ms Zhong was born in the People’s Republic of China. She describes her occupation as “home duties”. In her affidavit sworn and filed in the proceeding, 29 July 2016, she said that she was “58 years old”. Her principal language is Cantonese but she is fluent in Mandarin. Nevertheless she said:
“I cannot always express myself in Mandarin as well as I can express myself in Cantonese.” (Defendant’s Court Book (“DCB”) 61)
2 She said she had:
“very poor written and spoken English skills”. (Ibid)
3 She is the defendant in this proceeding and gave evidence with the assistance of an interpreter. According to her affidavit, in April 2015 by the use of an on-line messaging application called “WeChat” she made contact with a Ms Carol Li of Austrump Glen Pty Ltd (“Austrump”), an estate agency operating in the eastern suburbs of Melbourne. She did this via a “messaging group for Chinese investors interested in investing in Australian property.” (Ibid)
4 According to Ms Zhong, she communicated with Ms Li in spoken Mandarin and “written Chinese, which is largely the same for Cantonese and Mandarin speakers.” (DCB 62) Ms Li introduced her to two properties, the first at Malcolm Crescent, Doncaster (which is the subject of this proceeding) and the second at 48 Geyde Street, Doncaster East. Ms Li told Ms Zhong that:
“it was intended to develop the Malcom Crescent property by demolishing the house on the property and build four townhouses on it.” (Ibid)
5 On 2 May, escorted by Ms Li, Ms Zhong carried out an external inspection of the Malcolm Crescent property. No internal inspection could take place because the house was occupied.
6 According to Ms Zhong, she was told by Ms Li that the necessary permit for the redevelopment of Malcolm Crescent had not been obtained. Ms Zhong said that the she told Ms Li on a number of occasions that she would not buy the property if the permit had not been obtained.
7 Ms Zhong visited Austrump’s offices on two occasions, on 7 May 2015 and 8 May 2015, speaking with Ms Li and also a man whose name she could not recall. (DCB 62) This gentleman it seems was Mr John Jiang, who is the principal of Austrump Glen Pty Ltd, which was acting for the plaintiff company, Melegant & Sundrum Pty Ltd (“Melegant & Sundrum”). (Plaintiff’s Court Book (“PCB”) 17) He spoke to Ms Zhong in Mandarin. (PCB 18)
8 On her visit to Austrump on 7 May, Ms Zhong signed two documents. The first was a standard form Contract of Sale of Real Estate as approved by the Real Estate Institute of Victoria (“REIV”) and the Law Institute of Victoria. It identified the subject property as “1 Malcolm Crescent, Doncaster” and showed Austrump as the vendor’s agent and Ms Zhong as purchaser. The price was shown as $1.8 million with a deposit of $180,000 payable, of which $1,000 had been paid. The date for the payment of the balance of the deposit and settlement of the purchase was left blank. Under the head of “Special Conditions”, there were two handwritten lines in Mr Jiang’s handwriting as follows:
“* Subject to s32
* Subject to planning permit approved
9 The second document was styled ‘Reservation Agreement’ and pertained to the property at 48 Geyde Street, Doncaster East.”
10 The reservation agreement referred to a price of $1.25 million and a reservation fee of $1,000. The contract of sale form was not signed by Melegant & Sundrum but the reservation agreement was signed on behalf of Austrump. The operative words of the reservation agreement were as follows:
“In consideration of the Reservation Fee the Vendor hereby reserves the property for sale to the Purchaser until the end of the Reservation Period.”
11 This period was defined as “up to 5.00pm on the fifth day after receipt by the Purchaser of a contract of sale for the property.”
12 Ms Zhong was identified as the purchaser but no individual or company was identified in the document as the vendor.
13 Somewhat confusingly, according to Mr Jiang of Austrump, the sale contract form was described in his discussions with Ms Zhong as “a reservation agreement.” (Transcript (“T”) 66, L5) What is described in its printed form as the “Reservation Agreement” was referred to in the discussions as an expression of interest. (Ibid, L1 and 2) According to Mr Jiang:
“The reason why the form is different, one is the five pages [the sale form described as reservation agreement], one is to one page [the reservation agreement described as the expression of interest], because the five pages one is the property is on the market. We are ready to selling, but page only have the one. That one is the reservation page, that one is the property is not on the market, that’s off market.” (Ibid, L15-20)
14 The following day, that is 8 May 2015, a Vendor’s Statement under s32 of the Sale of Land Act 1962, which had been signed on behalf of Melegant & Sundrum on 7 May, was produced to and signed by Ms Zhong on 8 May 2015. (DCB 85-93) There was also a further document on the contract sale of real estate form approved by the REIV signed by Ms Zhong and by Mr Jun Wei, on behalf of Melegant & Sundrum Pty Ltd, both on 8 May 2015. (DCB 72-84) The purchaser was shown as Ms Zhong “and/or nominee”. Melegant & Sundrum was shown as the vendor. The subject property was 1 Malcolm Crescent, Doncaster East. The price was shown as $1.8 million with a deposit of $180,000 payable by 18 May 2015 with $1,000 having been paid, leaving a balance payable at settlement of $1,620,000. Settlement was due on 18 July 2015.
15 In contrast to the document signed by Ms Zhong on the previous day, the reference in the special conditions section to the s32 Statement was omitted. Presumably, this was because the statement under s32 had been provided to Ms Zhong. There was one special condition, only, in the handwriting of Mr Jiang:
“* Subject to notice of decision to grant a permit.”
16 The $1,000 being part of the $180,000 deposit had apparently been paid in cash on 7 May and was deposited to Austrump’s trust account. (T89, L22-30) As to the special condition in the agreements on 7 and 8 May, they were both in Mr Jiang’s handwriting. (T98, L8-10) The special conditions on the 7 May document were as stipulated by Ms Zhong. (Ibid, L27-28) The text of the special condition in the 8 May document was inserted by Mr Jiang following a telephone conversation with Mr Jun Wei of Melegant & Sundrum in words chosen by him. (T98, L29 – T99, L7)
17 The difference between the special conditions relative to the permit in the two documents was explained to Ms Zhong by Mr Jiang as follows:
“The difference from the explanation the vendor said the decision of the notice of the step before, that approved the planning permit. This is council’s decision to give you the planning permit. Only if without objections. So I transfer the whole sentence to the purchaser.” (T99, L16-21)
18 The defendant’s counsel, Mr Connell, cross-examining Mr Jiang, asked him which of the two special conditions relative to the grant of a permit would be more advantageous for a purchaser. He replied:
“If I'm the purchaser, if the vendor want (indistinct) the offer and if the subject, I will feel the – not confidence. I wouldn’t buy the property.” (T101, L15-18)
19 Mr Jiang said he would himself purchase only if the contract was unconditional, “nice and clean”. (T101, L19-23) Mr Jiang said that if he were a purchaser and were forced to choose between the two forms of condition, he would need professional guidance. (T101, L28 – T102, L2) Mr Jiang conceded that he knew nothing about appeals against the grant of planning permits to the Victorian Civil & Administrative Tribunal. (T102, L24-28). He said, based on Mr Jun Wei’s explanation as to the distinction between the two forms of special condition:
“…the difference is the subject to the notice of the decision from council is the step one. Subject to the planning permit approved is the step two.” (T103, 10-13)
20 This was the manner in which he explained the difference between the two forms of special condition to Ms Zhong. (Ibid, L14-16)
21 On 13 May, Ms Zhong’s son, Eddie Cui, sent an email to Ms Li. (DCB 97) Whilst it contains some words in English and Arabic figures, it is substantially in Mandarin. Mr Jiang translated it as:
“Hello, Carol. I do not the No. 1 Malcolm Crescent, Doncaster, the final drawings and contract of the sale.” (T83, L26-28)
22 The defendant’s counsel, Mr Connell, contended that the proper translation of the word rendered by Mr Jiang as “drawings” was “permit”. When pressed on this point, Mr Jiang said: (T84, L1-13)
“Yeah, because in the Chinese understanding you can understand it by both way … Just two things. Is the drawings and is a permit.”
23 Mr Jiang continued:
“Yeah, because in this paperwork it doesn’t show us the permit or the permits, so I understand is the drawings.” (T84, L15-17)
24 According to her affidavit, Ms Zhong says that the proper translation of the email from her son was:
“Hello Carole, I need the final permit and contract for the Malcolm Crescent property.” (DCB 64)
25 Ms Li sent an email to Mr Cui enclosing a copy of the contract and the Section 32 Statement and stating:
“Just kind remind that the 10 per cent deposit should transfer to following trust account before this weekend.”
referring to Austrump’s trust account.
26 The covering email states:
“The approval of development permit would not later than June.” (DCB 99)
27 On 18 May 2015, Ms Zhong sent voicemail and text messages indicating a desire not to proceed with the purchase of 1 Malcolm Crescent, Doncaster. (PCB 20) One of the communications was said to translate as:
“My business partner told me that I can’t buy the land because it has problems. She said it is very lucky the land hasn’t been transferred to me yet, otherwise it could have caused her a loss. I said, ‘I don’t understand, I just trusted them when they told me of the good aspects’. What can I do now?” (Ibid)
28 Ms Zhong said the description of her business partner as “she” should have read “he”. She said a more accurate translation of the communication was as follows:
“Good morning Carole. My business partner has told me that I couldn’t buy this land because there was a problem with it. She told me she was lucky that she had not transferred the money to me otherwise she would suffer a big loss. I said to her that I did not understand much and I just trusted whatever they had told me about the land. Carole, what can I do now? You have put me into big trouble. I was so happy when I told my partner that this was a good property. What can I do now???” (DCB 65)
29 The problem which Ms Zhong described to Ms Li was, according to her affidavit, the lack of a permit “at that time”. (Ibid) Then, according to Ms Zhong, she asked her son to transmit an email on her behalf. (DCB 66) The email transmitted 18 May 2015 stated:
“I claimed that the contract which dated on the 8th May 2015 was not a valid contract. It was not presented to be a contract but an expression of interest form when it was signed. The terms and conditions we talked about for signing the contract was also not fulfilled. Due diligence checklist was not presented before the document was signed, which was also breaching the law.
Due to the above reason, the contract was invalid and it will not be go ahead, please kindly arrange the $1,000 expression of interest fee refund.” (DCB 101)
30 On 28 May 2015, a conveyancing firm acting for Melegant & Sundrum served a default notice under the 8 May contract on Ms Zhong alleging default by her and failing to pay the balance of the deposit. The notice threatened that failure to remedy the default paying interest at the rate of 12.5% per annum and legal costs of $330 would see the contract “rescinded”. (PCB 68-69) No payment has been made and accordingly it would seem the contract is terminated either in accordance with the plaintiff’s notice of default or on the basis of some flaw in formation as Ms Zhong alleges.
31 The notice of decision to grant a permit was issued by Manningham City Council, the responsible authority under the Manningham Planning Scheme, on 2 July 2015. It noted that council had decided to grant a permit subject to some 16 conditions. The first condition required the provision of amended plans based upon revised plans dated 18 May 2015 but subject to some seven modification requirements. (PCB 71-74) Council’s planning register showed that some two submissions had been received relative to the permit application and that the permit ultimately issued on 25 August 2015.
This proceeding
32 By its Statement of Claim dated 16 December 2015, Melegant & Sundrum alleged that Ms Zhong agreed to buy the property at 1 Malcolm Crescent, Doncaster by agreement dated 8 May 2015 on terms that she would pay a deposit of $180,000 by 18 May 2015 and the balance of the purchase price being $1,620,000 at settlement on 18 July 2015. It was alleged that, by virtue of the agreement, time was of the essence and that a party in breach under the contract was liable to pay compensation for any reasonably foreseeable loss to the other party and any interest. It was said the rate of interest was set by General Condition 26 to be at a rate of 2% per annum above the rate fixed under s2 of the Penalty Interest Rates Act 1983. It was said that the contract would end if a default notice stated that the contract would be rescinded unless the relevant default was remedied and reasonable costs and interest were paid. Reference was made to Clause 28.2 of the contract. It was said that if the contract terminated in those circumstances, the deposit up to 10% would be forfeited, the vendor would be entitled to possession of the property and the vendor could retain the property and sue for damages or re-sell and recover any deficiency on resale. It was alleged that the deposit of $180,000, save for $1,000 thereof, was not paid by 18 May 2015 or at all. Accordingly, $179,000 was claimed based upon a notice of default served on 28 May 2015.
33 The plaintiff claimed $179,000 being the balance of the deposit, the costs of the conveyancer for the plaintiff for the demands arising from the defendant’s breach of the agreement of $330 and interest for the period 18 May to 22 September 2015 in the sum of $7,287.51, making a total of $186,617.51.
34 In her Amended Defence dated 20 April 2016, Ms Zhong admitted signing a document styled “Contract of Sale” but said “she believed she was signing only an expression of interest or reservation agreement in respect of the Property.” She said she had “very poor written and spoken English language skills” and signed the contract without negligence, “relying upon the explanation of the plaintiff’s agents, Carole Li and a male agent, both of Austrump Glen with whom [she] conversed entirely in Mandarin.”
35 These individuals were, it was said, acting as agents of Melegant & Sundrum Pty Ltd and by act and omission they represented to her that:
“…she would only be obliged to go ahead with any contract (including the payment of the deposit) if the requisite Planning Permit was obtained in respect of [the] proposed development of the Property.”
36 Further it was said, that Ms Zhong “never intended to execute a binding agreement…and never intended to execute an agreement whereby she would be required to pay any deposit if the requisite Planning Permit was not obtained”. Therefore, it was said she never became liable to the plaintiff alleged.
37 If, contrary to these allegations, there was a binding agreement between her and Melegant & Sundrum:
“then there was a term of that agreement that the performance of any obligations (including payment of the deposit) under the agreement was conditional upon a Planning Permit being obtained by the plaintiff for the Development.”
38 She said that she was not liable for any damages and in any event the plaintiff had resold the property in August 2015 for $2 million. If there were a binding agreement, the condition relative to the planning permit had not been fulfilled as at 18 May 2015 and any agreement which she had entered into was on the basis of misrepresentations. In the circumstances:
“the plaintiff procured the defendant’s entry into the agreement by unconscientiously taking advantage of her poor English skills.”
39 Therefore, she said, she was entitled to rescind the agreement as at 18 May 2015. She said the email transmitted on that day on her behalf by her son effected that rescission.
40 By way of Counterclaim, she said that Melegant & Sundrum had engaged in conduct that was misleading or deceptive which took place in trade and commerce and she was accordingly entitled to rescind the agreement, “in accordance with s243 of the Australian Consumer Law.” She said that in the circumstances she was entitled to repayment of the $1,000 which she paid as a reservation fee. Accordingly, by way of counterclaim, she sought an order for rescission under s243 of the Australian Consumer Law, repayment of $1,000, together with interest.
41 By way of Reply, Melegant & Sundrum said that its agent, Mr Jiang, explained the agreement to Ms Zhong, “in Mandarin, in detail … including the fact that it was binding.” It was said, further, that all communications with Ms Zhong were in Mandarin. Next, it was said that on 7 May 2015 Mr Jiang “gave the defendant a copy of the agreement which she took away for the purpose of discussing with her son” and at that time her son was “working in the real estate industry in Melbourne.” It was said that in the circumstances and on the true construction of the agreement, Ms Zhong was not entitled to rescind it on or before 18 May 2015 and became indebted to pay $179,000, being the remainder of the deposit on that day and her obligation to make that payment “crystallised on 18 May 2015”.
42 As to the Counterclaim, Melegant & Sundrum objected to pleading to it in the circumstances, saying it was filed “without leave and [was] irregular”. It said, in any event, it did not disclose a cause of action because Ms Zhong had “not identified any conduct in which the plaintiff is said to have engaged.”
Planning permits in Victoria
43 To elucidate the issues in this case, it is necessary to say something about the planning permit regime in Victoria. In established suburbs such as Doncaster, a change of use from a single dwelling to multi dwellings such as the four townhouses which were proposed for 1 Malcolm Crescent, typically requires a permit under the relevant planning scheme. The schemes are made pursuant to the terms of the Planning & Environment Act 1987 and the general rules as to applications for grant and the operation of permits are set out in that statute. Section 47 lays down the requirements for a permit application. Section 52 requires notice to be given to the owners and occupiers of adjacent allotments or lots, “unless the responsible authority is satisfied that the grant of the permit would not cause material detriment to any person.” The responsible authority has power to require notice of a permit application to be given to a wider class of person and also to require the permit application to be advertised by a sign erected on the land or by a notice published in a newspaper circulating in the relevant area. Notices are to be given either by a permit applicant which then bears responsibility for compliance with the notice requirements or by the responsible authority itself on terms that the applicant must pay its costs of giving the notices – s53. The permit applicant may be required to provide further information to the responsible authority and the permit application may be referred to other public authorities – s56. Third parties including neighbours of the proposed development may lodge objections to the grant of the permit – s57. Provisions governing the responsible authority’s determination of the application are to be found in s59 and s60 and the responsible authority may determine either to grant the permit, to grant the permit subject to conditions or to refuse the permit.
44 If there have been objections lodged under s57, then rather than simply issuing the permit, the responsible authority must give notice of its determination to grant the permit if it believes that a permit should be granted. The permit itself must not be granted until the time limit for an objector to seek a review of the determination from the Victorian Civil & Administrative Tribunal has expired – s64. An objector may apply to the Tribunal for review of a decision to grant a permit – s82.
45 In the present case, the fact that a notice of determination to grant a permit was issued by council rather than the permit itself, shows there must have been one or more objectors who lodged their objections with council. The planning register quoted above refers to “two submissions” (DCB 149-50) which are presumably two objections. Had there been no objections, then council would have proceeded directly to issue the permit – s63.
46 In this regime, where a permit has been applied for but no notice of determination has been granted, which was the situation on 8 May 2015 and at all times up to 2 July 2015, it remains a logical possibility that the permit might have been refused by council. Alternatively, it might have been granted subject to a series of conditions which destroyed the financial viability of the development proposal. In the present case, a number of conditions were imposed which extended to requirements for modification to the plans. council’s notice of determination required a number of modifications. The evidence did not disclose what the financial effect of those required modifications might have been to the profitability of the development proposal exemplified in the revised plans which were before council for consideration as at 8 May 2015. As a matter of logic, the required modifications might have been relatively inexpensive or might have imposed a serious financial burden significantly affecting the viability of the proposed development.
47 Even if, as eventually occurred, council did determine to issue a permit subject to conditions which were not materially disadvantageous, the logical possibility remained that one of the objectors might seek a review of council’s determination from the Victorian Civil & Administrative Tribunal, established under the Victorian Civil & Administrative Tribunal Act 1998. The Tribunal in planning permit reviews, carries out a rehearing de novo and full merits review of planning permit determinations by responsible authorities. Again, as a matter of logic, the Tribunal might determine to direct, as it would have the legal authority to do, that no permit issue at all or that a permit issue subject to materially disadvantageous conditions so far as the developer or landowner were concerned.
48 The lead time to obtaining determinations from the Tribunal varies widely over property cycles; during property booms, waiting times blow out; during property downturns with a significant drop in the number of planning permit applications generally, and in particular review applications, hearing dates may be obtained relatively swiftly. In my experience as a long serving Member of VCAT and occasional visitor to its Planning jurisdiction, a lead time of six months would not be unexpected. Even after the completion of a hearing on a permit review application, the Tribunal would typically reserve its decision and perhaps another three to four weeks’ delay may be entailed in awaiting the publication of the Tribunal determination. As recorded above, Mr Jiang, the principal of Melegant & Sundrum’s selling agency, was not acquainted with these detailed issues in the planning appeals system. Nevertheless, his conclusion that a purchase or sale conditional upon a particular planning outcome creates uncertainty and nothing less than an unconditional contract which could be entered into after a permit had actually been granted could remove that uncertainty seems justified. Anything less would be undesirable for a purchaser.
Conclusion
Non est factum
49 The defendant’s major pleaded defence was non est factum. At the forefront of his submissions Mr Connell placed the decision of Cussen J in Lee v Ah Gee [1920] VLR 278. He submitted that in the same way that his Honour held that Mr Ah Gee was not liable upon what appeared to be a contract to let his premises at the corner of High Street and Kooyong Road, Malvern, which he had operated as a laundry, Ms Zhong was not bound by the terms of the contract of sale which she signed because of her ignorance of the English language which rendered her incapable of understanding it. Lee v Ah Gee was not decided on the basis of non est factum. Rather, his Honour found that, despite Mr Ah Gee’s apparent entry into a contract, in all the circumstances it should have been obvious to the apparent counter-party to the contract that he did not really understand what he was doing. Amongst the surrounding circumstances, apart from Mr Ah Gee’s substantial ignorance of English, was the fact that he had engaged a letting agent to deal with the matter of letting his premises.
50 In the present case, whilst the evidence established that Ms Zhong could not read the form of contract which she signed, and therefore was in the same situation as Mr Ah Gee, there was much in the circumstances which distinguished this case from Ah Gee’s case. In Ah Gee’s case, the negotiation was carried on in broken English with a counter-party, Mr Lee, who did not apparently speak or understand any Chinese language. In the present case, the negotiations took place between Ms Zhong and the plaintiff’s agent, Mr Jiang, in Mandarin, which I understand is the national language of the People’s Republic of China. It was the language of the Imperial Civil Servants – the Mandarins - who gave the language its name. Ms Zhong’s “maternal language” is Cantonese; that is a regional language spoken in the south of China, including the Special Administrative District of Hong Kong. Nevertheless, Ms Zhong, according to an affidavit filed in this proceeding, is “fluent in Mandarin”. (PCB 31 [2]; PCB 32 [10]) Ms Zhong said, when she signed the contract of sale dated 8 May 2015, she was “under the belief that this document was an expression of interest to buy the Malcolm Crescent property for $1,800,000.” (PCB 33 [18])
51 When asked in chief why she did not pay the balance of the $180,000 deposit referred to in this document, she said, “It is because two reasons. I talk to Yao Yao [that is Ms Carole Li]. I said if I did not get the permit and if I didn’t get the building plan, I would not pay the amount.” (T165, L29 – T166, L1) She nominated two reasons for not paying the deposit. Neither of them was that she had signed no more than a mere expression of interest.
52 During her cross-examination, I asked Ms Zhong why she signed the contract. Her reply was, “the real estate told me that I will be benefiting from it if I sign.” I asked her what benefit she would derive. She continued, “I was told that once you buy it, you can let it out and you can make profits.” Mr Muller, counsel for the plaintiff, then asked her, “So you knew by signing it that you were buying it, didn’t you?” She replied, “Yes”. (T182, L3-8)
53 This stands in stark contrast to Lee v Ah Gee, where Cussen J found that the defendant thought he was signing not a lease, but a letter or memorandum to his letting agent.
54 Mr Muller, on behalf of the plaintiff company, cross-examined Ms Zhong with a view to revealing that she had previously engaged in property transactions relative to a milk bar and her residence in Scoresby. This is also a significant circumstantial matter supporting the view that she was aware that the document which she signed was indeed a contract of sale. In itself it would scarcely be determinative. In Lee v Ah Gee, Cussen J made the final determination which I have just referred to, despite the fact that Mr Ah Gee had necessarily engaged in property transactions in Victoria previously because he was the owner of the Malvern premises which were said to be the subject of the lease.
55 The plaintiff also sought to make something of the involvement of Ms Zhong’s son, Mr Cui, on the basis that he was allegedly about to obtain a building qualification and was therefore experienced in property development matters in Australia. According to Mr Cui, he attended a TAFE course and lasted no more than two days. (T230, L24-27) Mr Cui did give some notable evidence which seemed to be strongly supportive of the plaintiff’s case on this point. In cross-examination, Mr Muller for the plaintiff suggested to Mr Cui that he had helped or assisted his mother by framing the special condition relative to a planning permit in the 7 May document. There was some debate about the meaning of the word “help” and there may have been a translation issue. (T257-8, passim).
56 Mr Muller put it to Mr Cui that he had helped or assisted his mother by framing the second special condition in the 7 May contract. He replied, “This is her own request, not mine.” I asked him to repeat the answer and he said, “That was my mother’s request, not mine.” Mr Muller then followed up with the question, “So she was aware of the significance of a planning permit; you didn’t have to tell her about that?” His reply was, “She told me.” (T258, L8‑13) This is supportive of the view that Ms Zhong understood far more than she was willing to admit. I reject any analogy with Lee v Ah Gee.
57 I now turn to the defence of non est factum proper. A leading authority on this subject is the decision of the High Court in Petelin v Cullen (1975) 132 CLR 355. A land owner who spoke little English and could not read the language at all granted an option to purchase his land for a term of six months. When that term was almost up, he signed a further document extending the option period in the belief that he was signing a receipt.
58 The defence of non est factum succeeded at trial, but the result was reversed by the New South Wales Court of Appeal which held that the defence was available only in circumstances where the person relying upon it could demonstrate an absence of carelessness. The High Court reinstated the decision of the trial judge upholding the defence of non est factum. Barwick CJ, McTiernan, Gibbs, Stephen and Mason JJ said that the requirement that there be a lack of carelessness on the part of a person asserting the defence was:
“… of fundamental importance when the defence is asserted against an innocent person, whether a third party to the transaction or not, who relies on the document and the signature which it bears and who is unaware of the circumstances in which it came to be executed. It is otherwise when the defence is asserted against the other party to the transaction who is aware of the circumstances in which it came to be executed and who knows (because the document was signed on his representation) or has reason to suspect that it was executed under some misapprehension as to its character. In such a case the law must give effect to the policy which requires that a person should not be held to a bargain to which he has not brought a consenting mind for there is no conflicting or countervailing consideration to be accommodated - no innocent person has placed reliance on the signature without reason to doubt its validity.” [(1975) 132 CLR 355, 360)
59 Earlier on the same page, their Honours speaking more generally said:
“To make out the defence a defendant must show that he signed the document in the belief that it was radically different from what it was in fact and that, at least as against innocent persons, his failure to read and understand it was not due to carelessness on his part. … it is accepted that there is a heavy onus on a defendant who seeks to establish the defence.”
60 They said the defence was “available to those who are unable to read owing to blindness or illiteracy and who must rely on others for advice as to what they are signing”. [(1975) 132 CLR 355, 359]
61 Assuming for the moment, without deciding, that in the present case Melegant & Sundrum Pty Ltd is not to be regarded as an innocent party unaware or without reason to suspect that Ms Zhong was signing something which she did not understand, the defence cannot be made out here because in light of her admission quoted above, she knew that she was signing a document for the purpose of purchasing the Malcolm Crescent property.
62 Whether she was fully cognisant of the effect of the contract and, in particular, the special condition – a matter to which I will turn below – it cannot be said that she signed a document which was radically different from what she believed she was signing.
63 The defence of non est factum fails.
Condition precedent
64 The notice of determination to grant a permit, the matter referred to in the special condition as a condition precedent, was not satisfied before Ms Zhong with the assistance of her son, Mr Cui, terminated or purported to terminate the contract by email transmitted 18 May. [29]
65 Mr Connell submitted that this was a lawful termination for failure to satisfy the condition precedent.
66 The date of 18 May seems to have been chosen by Ms Zhong to give the notice of termination upon the basis, if she had in fact made a binding contract, that the condition precedent required to be satisfied on or before 18 May, which was the date on which the balance of the deposit was payable according to the terms of the contract. Textually, there was no provision in the contract which would have laid down 18 May as the date by which the notice of determination to grant needed to be obtained.
67 In Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537, the High Court considered the operation of a contract for the sale of land which included a condition precedent rendering the sale subject to the purchaser’s completing the sale of their own property. Mason J (as he then was) explained that a provision such as this might be of two types. His Honour said:
“There is an obvious difference between the condition which is precedent to the formation or existence of a contract and the condition which is precedent to the obligation of a party to perform his part of the contract and is subsequent in the sense that it entitles the party to terminate the contract on non-fulfilment. In the first category the transaction creates no rights enforceable by the parties unless and until the condition is fulfilled. In the second category there is a binding contract which creates rights capable of enforcement, though the obligation of a party, or perhaps of both parties, to perform depends on fulfilment of the condition and non-fulfilment entitles him to terminate.” [(1982) 149 CLR 537, 551]
68 His Honour said:
“Generally speaking the court will tend to favour that construction which leads to the conclusion that a particular stipulation is a condition precedent to performance as against that which leads to the conclusion that the stipulation is a condition precedent to the formation or existence of a contract.” [(1982) 149 CLR 537, 552]
69 In accordance with the predilection referred to by his Honour, I conclude that the special condition in the 8 May contract was a condition precedent to performance and not to liability.
70 As to the timing for the satisfaction of the condition precedent, his Honour said:
“The clause does not specify a time within which the Lilli Pilli property [that is, the purchaser’s property] is to be sold. Accordingly, it contemplates that there should be such a sale within a reasonable time.” [(1982) 149 CLR 537, 554]
71 In the present case, Mr Muller submitted that, given that the time for completion of the contract was 18 July, it could not be said that a reasonable time had elapsed as at 18 May. The notice of termination from Ms Zhong was therefore, he said, a repudiation which the plaintiff accepted.
72 According to the plaintiff’s Statement of Claim, the service of a rescission notice on 28 May 2015 demanding the payment of the balance of the deposit within 14 days with no such balance being paid, operated to terminate the contract.
73 It was submitted on behalf of Ms Zhong that satisfaction of the condition precedent should be required by 18 May upon the view that this could be seen as the proper construction of the clause where the surrounding circumstances known to the parties and the object of the transaction were considered.
74 Mr Connell referred to Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 [40]. He said that the condition was ambiguous and evidence of surrounding circumstances was admissible to construe it. He referred to Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 352. He said the evidence as to Ms Zhong’s desire not to buy the property except with the benefit of the permit were relevant circumstances which supported a construction of the special condition requiring satisfaction by 18 May.
75 I reject the submissions on behalf of the defendant.
76 First, they seem to offend against the principle stated by Sir Anthony Mason in his seminal analysis of these matters in Codelfa. They appear to be an appeal to the contract which Ms Zhong might have wished to make, as distinct from the contract which she did make. Secondly, there is no ambiguity in the special condition. It establishes a condition precedent without nominating any date by which the condition precedent to performance must necessarily be satisfied.
77 As reference to Perri’s case demonstrates, the law regards a condition precedent in those terms as requiring satisfaction within a reasonable time in all the circumstances. It is common enough for parties to insert deadlines for satisfaction of conditions precedent to limit the term of uncertainty which they create. Here, the parties refrained from doing so.
78 The defence based on the special condition as a condition precedent fails.
Misleading or deceptive conduct
79 The various species of misleading or deceptive conduct on which Ms Zhong relies are set out in paragraphs 2(a) to (f), including various particulars. Based upon those allegations in her counterclaim she sought rescission of the 8 May agreement pursuant to s243 of the Australian Consumer Law.
80 The first of those alleged pieces of misleading or deceptive conduct states that from April 2015 to 8 May 2015, Ms Carol Li and Mr Jiang represented to Ms Zhong “that she was only signing an expression of interest to purchase the property”. Mr Muller submitted that whilst Ms Zhong’s affidavit deposed to her believing that she was signing no more than an expression of interest to purchase the property when she signed the 8 May contract, her affidavit did not allege that either Ms Li or Mr Jiang led her to believe that this was the case. Nor did she give any such evidence in the course of her examination-in-chief or cross-examination at trial. These allegations were put to Mr Jiang in cross-examination, however, but not admitted by him.
81 Given that the evidence is constituted by the answers given by witnesses and not by the questions put to him, there is no evidence to support this alleged representation and alleged piece of misleading or deceptive conduct. Even if there were, since Ms Zhong admitted in the passage which I have quoted above that she knew that she signed the 8 May document for the purpose of buying the Malcolm Crescent property, she would not have been misled or deceived if in fact the two agents had engaged in the alleged misleading or deceptive conduct.
82 This counterclaim item therefore fails.
83 Clause 2(f) alleges that Ms Li and Mr Jiang represented to her that she would only be obliged to go ahead with the contract, including the payment of the deposit, if the relevant permit was obtained in respect of the proposed development of the property. If such a thing were represented to her, it would be misleading or deceptive conduct. The effect of the contract was to oblige Ms Zhong to purchase so long as a notice of determination to grant a permit for the proposed development was given. She would remain bound by the contract even if a review and appeal process at VCAT was undertaken by a third party and no permit ultimately issued or a permit issued only after a very lengthy delay. (T38, L9 – T39, L30)
84 Mr Muller observed, however, that neither in her affidavit and evidence-in-chief nor in cross-examination did Ms Zhong say that the two agents had led her to believe what was alleged.
85 A variation on this theme was the allegation that Ms Li represented that Ms Zhong would not need to go ahead with any contract if the relevant planning permit was not obtained by the vendor company. Again, there was no evidence to this effect given in Ms Zhong’s affidavit or in cross-examination.
86 Next, it was alleged that Ms Li said on 8 May, asked whether the planning permit had been obtained, replied “it will be ok, the permit will be approved very quickly”. This appears in paragraph 22 of Ms Zhong’s affidavit. (DCB 64, PCB 34).
87 Mr Muller submitted, correctly, that this was not canvassed in evidence-in-chief or cross-examination by Ms Zhong nor was it put to Mr Jiang in cross-examination, though the statement is attributed to him as well as Ms Li in paragraph 22 of Ms Zhong’s affidavit.
88 Accepting that such a thing was said by Ms Li, it does not seem to me to give the defendant a basis for relief for misleading or deceptive conduct under s18 of the Australian Consumer Law or the right to rescind the contract under s243.
89 First, with the issue of the notice of determination to grant on 2 July and the permit itself before the end of August, it might be said that the prediction alleged to have been made by Ms Li came true, in fact. In any event, the statement that something like this was going to happen very quickly or not should not to be taken too literally.
90 In commercial matters, an element of puffery or exaggeration is often to be expected (see General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164; Miller’s Australian Competition & Consumer Law Annotated (2017) [ACL 18.220].
91 More fundamentally, the alleged misleading or deceptive conduct goes, subject to what I say below, to a prediction of the future rather than a statement as to present, existing facts. Merely to prove that a statement was made as to future matters in trade and commerce, which did not occur as predicted, does not, in itself, demonstrate that, in the primary sense, the person who made the representation has engaged in misleading or deceptive conduct: Bill Acceptance Corporation Limited v GWA Limited (1983) 50 ALR 242. Following the Bill Acceptance case, the former Trade Practices Act 1974 was amended to make provision to deal with misleading or deceptive conduct with respect to future matters. Those provisions are now contained in s4 of the Australian Consumer Law, which states:
“Misleading representations with respect to future matters
(1)If:
(a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and
(b) the person does not have reasonable grounds for making the representation;
the representation is taken, for the purposes of this Schedule, to be misleading.
(2)For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by:
(a) a party to the proceeding; or
(b) any other person;
the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary.
(3)To avoid doubt, subsection (2) does not:
(a) have the effect that, merely because such evidence to the contrary is adduced, the person who made the representation is taken to have had reasonable grounds for making the representation; or
(b) have the effect of placing on any person an onus of proving that the person who made the representation had reasonable grounds for making the representation.
(4)Subsection (1) does not limit by implication the meaning of a reference in this Schedule to:
(a) a misleading representation; or
(b) a representation that is misleading in a material particular; or
(c) conduct that is misleading or is likely or liable to mislead;
and, in particular, does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation.”
92 The pleadings and the evidence at trial did not seem to be adapted to accommodate the provisions of s4. In fact, the notice of determination and permit did issue fairly promptly. The application for permit had been filed as long ago as 17 October 2014. (DCB 180) It is difficult to say that there were not reasonable grounds for this representation.
93 Another alleged representation and piece of misleading or deceptive conduct is the alleged statement by Ms Li to Ms Zhong on 7 May that, if she paid the deposit on 18 May 2015, the building permit and the building plan would be ready. Presumably, this is an erroneous reference to the planning permit. Mr Muller noted that there was nothing in the affidavit of Ms Zhong to this effect. In her evidence-in-chief, Ms Zhong said that Ms Li told her, “If you pay the amount on that day [18 May] they will be ready”. (T166, L12-13) In her affidavit, while she said at paragraph 25 (DCB 64) that she would not have to go ahead with the purchase if the permit had not been obtained on 18 May 2015, she did not there allege that this was something which Ms Li had told her.
94 Given that Ms Zhong’s affidavit was initially prepared to resist an application for summary judgment against her, it is difficult to believe that she would not have included evidence as to Ms Li’s alleged statement if it had, in fact, occurred. Again, when her son at her direction sent a notice of termination of contract by email on 18 May 2015, he made no reference to this alleged promise or representation; nor was it mentioned in the voicemail which he left for Ms Li on the same day. I reject Ms Zhong’s evidence on this point. I note that it is not even pleaded.
95 Another unpleaded alleged representation was a statement attributed to Ms Li, “This is a good piece of land. You better come quickly to sign it. We help you to apply for the permits.” This emerged only in cross-examination. (T200, L14-16) Given that this is neither pleaded nor to be found in Ms Zhong’s affidavit or evidence-in-chief, one has to be somewhat sceptical about it. Even if it were said, the consideration pointed to and relied on by Ms Zhong that the land was resold shortly after the end of her dealings with the plaintiff for some $200,000 more, is supportive of the view that the land is or was “good”. Again, it proved to be saleable, so the suggestion that a prospective purchaser should sign up for it would seem sensible. If Ms Zhong had proceeded, on one view, she would have got a bargain at $200,000 under what the market ultimately paid for it.
96 The linguistic complications in the trial indicated that there may be little distinction between the singular permit and the plural permits. The evidence disclosed the permit at the heart of this dispute, namely the planning permit for the development of four townhouses on the Malcolm Crescent property, had in fact been applied for by the plaintiff in October the previous year. All-in-all, it is difficult to see that this statement or representation, if made, was either misleading or deceptive.
97 Finally, there was an alleged statement that Mr Jiang made to Ms Zhong, that if she signed the contract on 8 May, she would be getting all permits, demolition permits, building permits, everything, on 18 May 2015. This alleged statement did not emerge in evidence-in-chief, in her affidavit, nor is it pleaded. Further, since the statement is attributed to Mr Jiang, it was not put to him in cross-examination. For similar reasons, I conclude that the making of this statement was not proven.
98 In written submissions handed up at the conclusion of the trial, counsel for Ms Zhong submitted:
“There are two misrepresentations relied upon by the defendant both of which were by silence:
(a)first not informing her that in signing the Purported Contract, she was making an offer, acceptance of which would form a binding agreement; and
(b)second not informing her that she would be required to pay the balance of the deposit even if there was no permit for the development obtained as at 18 May 2015.”
99 I can deal with the first alleged misrepresentation immediately. Whether or not the plaintiff’s agents in fact made the first alleged misrepresentation by silence, it was not causative of any loss or damage for the defendant. I have already quoted her admission that she knew that by signing the 8 May contract, she was buying the property. I should add the differential interpretation of the defendant’s signature of the 8 May document as merely an expression of interest would be illogical. She had already signed what she alleged was an expression of interest to buy the property for $1.8 million the previous day. What would have been the logic in merely signing a second expression of interest?
100 Turning to the second alleged misrepresentation by silence, counsel for the defendant referred to the leading case on misleading or deceptive conduct by silence under the Trade Practices Act s52 and now the Australian Consumer Law s18; namely Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31. There, the Full Court of the Federal Court held that there was no distinct doctrine as to misrepresentations and therefore misleading or deceptive conduct by silence. Rather, it was a question in every case to determine whether silence in that particular context constituted misleading or deceptive conduct. The 8 May contract was a document of some complexity including a large number of legal boilerplate provisions. There is much that might appropriately demand or profit from an explanation. It is difficult to see why the circumstances attending the execution of the 8 May contract demanded a particular explanation of the special condition or that it was misleading or deceptive conduct to fail to provide one.
101 Mr Muller, for the plaintiff, submitted that in Ramensky’s case the silence which was held to be misleading or deceptive was as to a feature of a piece of real estate offered for sale which was unusual and not evidence from an ordinary inspection; viz that an arrangement for access would have to be made across public land, which would entail particular complexity in the case of the multi-unit development in question. There was no evidence of any established practice in the real estate business that a condition precedent as to performance ought necessarily be required to be satisfied before the due date for the payment of the balance of the deposit for the sale of the relevant land. There was no context which demanded that a purchaser, whether, having command of the English language in written form or not, ought to be warned of a lack of concurrence between the final date for satisfaction of the condition precedent and the date for payment of the deposit.
102 I reject the contention that there has been any misleading or deceptive conduct by silence of the type alleged.
103 The matters which Mr Connell, on behalf of the defendant, said created a context requiring explanation were as follows:
(a)Ms Zhong’s lack of a command of English;
(b)the number and complexity of the documents entailed in the transaction including a document signed on 7 May pertaining to a different property at Geyde Street, Doncaster;
(c)Ms Zhong’s insistence that she would only buy the property if the permit for the development had been obtained;
(d)the defendant’s questions as to the status of the permit;
(e)the defendant’s questions as to what would happen if things “went wrong”; and
(f)Ms Li’s insistence that the defendant need not worry and should just sign where instructed.
104 None of these matters, whilst they might form the basis of an allegation that the context required some explanation of the special condition, would raise any issue calling for explanation or otherwise relative to the date of satisfaction of the condition precedent to performance versus the date for the payment of the balance of the deposit money.
Unconscionable conduct
105 Mr Connell submitted that in the circumstances, the plaintiff had been guilty of unconscionable conduct, he relied on Commercial Bank of Australia v Amadio (1983) 151 CLR 447. The written submission on behalf of Ms Zhong handed up at the end of the hearing correctly stated that Mr and Mrs Amadio were elderly and had limited command of English and “they signed a bank guarantee in respect of the overdraft of their son’s business account. They understood that they had believed that they had signed a guarantee for six months in respect of $50,000. In fact, the guarantee was unlimited in time and amount.” The majority of the High Court held that the bank had taken unconscientious advantage of Mr and Mrs Amadio in the circumstances. There was no finding that any bank officer had misrepresented the situation to the Amadios. Rather, the unconscionable conduct on its part derived from a failure to ascertain that the parents had not been misled by their son, given the particular circumstances.
106 The majority of the High Court held that unconscionable dealing could occur where a person or persons was under a special disability and it was not essential that there be an inadequacy of consideration moving from the stronger party for the court to grant relief against the unconscionable dealing. This was not, according to Deane J, an inflexible rule. One plain exception to it was where adequate consideration moved from the stronger party but to somebody other than the person under a special disadvantage, typically a guarantor.
107 In the present case, there is no suggestion that the Malcolm Crescent house was being sold for an excessive price. On the contrary, following the termination of the contract, the subject of this proceeding, it was sold shortly afterwards for $200,000 more. The putative stronger party, namely Melegant & Sundrum, was under this transaction selling the piece of real estate at no more than its market value to Ms Zhong. In contrast, in Amadio’s case, the bank obtained a guarantee mortgage from the elder Mr and Mrs Amadio to cover the debts of their son’s company which was in financial difficulty and failed shortly afterwards. The only advantage that accrued to the elder Amadios was a short stay of execution for their son’s enterprise and a small additional advance to that enterprise. The whole of the pre-existing debt was undertaken by them and their house property mortgaged to support that debt.
108 Ms Zhong’s amended defence and counterclaim said that the unconscionable dealing derived from the misrepresentations or misleading or deceptive conduct pleaded at clauses 2(e) and 2(f) of her defence, which I have dealt with above. Again, based on that treatment, it is difficult to see that there was any unconscionable dealing on the part of Melegant & Sundrum.
109 A final twist on these matters which was perhaps not advanced in a downright and unambiguous form, either in oral submission or in writing, but which in the circumstances I regard as legitimately open upon the pleadings and the primary facts proven, is the view that it was unconscientious for Melegant & Sundrum and their agent to sign Ms Zhong up on the 8 May contract without explanation to her of the effect of the special condition in that contract in contradistinction to the operation of the second special condition in the 7 May document which, according to Mr Cui (the defendant’s son) and Mr Jiang, was inserted at her request. The distinction resides in the difference between the grant of a permit and the issue of a notice of determination to grant a permit, which I have explained above. Rendering a purchaser committed to buy merely upon the giving of the notice of determination to grant a permit, exposes that purchaser to a potentially lengthy period of uncertainty or, at worst, the ultimate denial of a permit for the contemplated development.
110 Mr Jiang said that on 8 May, he told Ms Zhong that he could not entertain a further negotiation relative to the Malcolm Crescent property for a price of $1.8 million. He then sought instructions from Mr Jun Wei who stated the vendor company was willing to sell subject to the modification of the planning permit special condition. (T58, L18 – T59, L17) Mr Jiang told Ms Zhong that, at that stage, the contract was only an offer because the vendor had not signed it. (T59, L20-23) As to any explanation of the distinction between the second special condition in the 7 May document and the single special condition in the 8 May contract, Mr Jiang said that he explained that the notice of determination to grant was the first step in the permit process and the issue of the permit was the second stage. (T103, L10‑16, T140, L25-31) Given that Mr Jiang said that if he, himself, were required as a potential purchaser to choose between the two forms of special condition, he would require professional guidance and he had no knowledge about the permit review jurisdiction of the Victorian Civil & Administrative Tribunal. It is clear that Mr Jiang gave the best explanation of the distinction between the two forms of special condition which he was capable of giving. Whilst the author of the text of the single special condition in the 8 May contract, Mr Jun Wei, was not asked as to his understanding of the distinction between it and the second special condition in the 7 May document, the choice of words by him and his presentation in the witness box indicated that he was well alive to the implications of using the one form of special condition in preference to the other. The version in the 8 May contract transferred the risks inherent in the Tribunal permit review process from the plaintiff company to the defendant. Did this consideration render what the plaintiff company and its agents did unconscientious?
111 Viewed from the standpoint either of Mr Jun Wei or Mr Jiang, there could be, upon the evidence, no suggestion of either individual having acted unconscientiously. Mr Jun Wei had no direct dealings with Ms Zhong. He selected his preferred form of special condition and left the negotiation to Mr Jiang, which was plainly a reasonable and proper thing to do. Mr Jiang, acting on his principal’s instructions, inserted the plaintiff’s preferred form of special condition and furnished the best explanation of it which he could. With some hesitation, I conclude that in the case of a corporate party, the good conscience of what it does ought to be informed in a situation like this by an aggregation of what was known by both of its agents, the director, Mr Jun Wei and the real estate agent, Mr Jiang. The director knew that he had selected the form of special condition which, by relatively subtle change in meaning, transferred the uncertainty of the Tribunal permit review system from his company to Ms Zhong. Mr Jiang had reason to believe that Ms Zhong did not understand the distinction between the two forms of special condition and, doing his best, gave an explanation which was the truth, but not the whole truth, but given apparently to the best of his knowledge. I have found this issue the most perplexing in the proceeding.
112 Relative to this issue, I believe the linguistic difficulties of Ms Zhong are a red herring. First, she was dealing with an agent who spoke to her in Mandarin, a language in which she was, according to her own affidavit, “fluent”. Secondly, in requesting the permit special condition in the 7 May contract, she showed herself in a general sense alive to the significance of planning permits for any person looking to acquire a single dwelling in a suburban area and redevelop for multi-residential use. Again, she could have obtained legal advice and had previously retained the services of law firm Henley Legal in connection with her acquisition of an apartment in Burwood. (T182, L14-21) This firm, it seems, caters to people of Chinese ethnicity; its principal was or is Mr Henry Wong. (T288, L16-22) According to Mr Jiang, on 9 May Ms Zhong provided his agency with the details of Henley Legal as the law firm which would be acting for her in the purchase. (T78, L4-12, T79, L19-20)
113 Ultimately, on this point Ms Zhong should not be viewed as a person doing business in a language she could not understand and therefore under a special disadvantage and deserving of particular explanations and support from the agents representing the counterparty in the transaction and therefore owing duties to it, rather than to her. She was negotiating in a language in which she was fluent; she well knew the vital importance in this situation of a planning permit. She should be seen in the same position as an English speaking person entering into a transaction touching upon the world of property development with which he or she has some acquaintance but not full knowledge. If such a person signed a contract with a special condition such as the one in the contract dated 8 May without availing of legal advice which he or she could have sought, the law’s response would be to regard that person as being as much bound by the contract as if he or she fully understood it. With some hesitation, therefore, I conclude that there is no unconscionable dealing on this score either.
Other matters
114 Mr Connell, both in oral and written submissions, made some references to alleged uncertainties in the Special Condition and the 8 May contract as a whole. As previously indicated, I reject the view that either was ambiguous, and therefore the plain words of the contract, as a whole, or the special condition, in particular, cannot be modified or read down by reference to any sort of extraneous material, Ms Zhong’s aspirations relative to the development which she hoped might ensue or the contract which she might have made, nor was there any occasion to resort to the contra proferentem rule, since the relevant provisions are unambiguous.
115 Mr Connell referred to clause 17 of the General Conditions of the 8 May contract which deals in three sub-clauses with the transmissions of “any document”. Clause 17.2 provides for the service of “any demand, notice or document required to be served” and clause 17.3 states the general condition applies to any provisions in the contract where there is reference to the giving or serving of any notice or document. He said, that insofar as the evidence disclosed that a copy of the signed contract had been transmitted to Henley Legal, this did not constitute compliance with General Condition 17. Assuming, without deciding, that the email transmission would not have counted as “serving” or “giving” under General Condition 17, he was unable to point to any provision in the contract which required that it be served on Ms Zhong other than clause 17. This clause establishes rules for service of documents where another provision of the contract requires it. In itself, it does not require any particular notice or document to be served. In any event, no reliance was placed in the defendant’s pleadings on any such argument. It should be rejected.
Refund of deposit
116 Ms Zhong, by way of counterclaim, seeks return of the $1,000 part-payment of the deposit which she made “by reason of the rescission of the [8 May] agreement …” Presumably this money was said to have been paid upon a consideration which has totally failed and therefore ought to be refunded. The premise of this pleaded counterclaim, namely that the 8 May contract was lawfully rescinded by the defendant or ought, by the court’s determination now, be rescinded at the suit of the defendant, has been rejected. Mr Connell relied on a decision of Pembroke J sitting in the Equity Division of the Supreme Court of New South Wales, Chambers v Borness [2014] NSWSC 890. In that case, her Honour was acting under s55(2A) of the Conveyancing Act 1919 in the State of New South Wales. The equivalent provision is s49(2) of the Victorian Property Law Act 1958. The plaintiff conceded that the contract had been validly determined by the vendor. In that case, the plaintiff had expended $105,000:
“in carrying out supposed improvements to the kitchen, the study/office, the laundry, painting, master bedroom and wardrobe, lounge/TV room, garage and doors.” [11]
and paid licence fees of $70,332. Her Honour also thought it appropriate to allow for rates, taxes and outgoings paid by the plaintiff before termination of the contract and interest earned by the vendor on the deposit. Her Honour ultimately provided for the refund of the deposit minus amounts which she found were recoverable by the vendor by way of counterclaim.
117 Mr Connell, as I understood his submission, contended that the $1,000 should be refunded because, since the resale of the property was for a profit, there were no damages which were recoverable by the plaintiff company.
118 Mr Muller for the plaintiff company conceded that his client had no entitlement to damages.
119 In my view, there is no analogy between this case and Chambers v Borness. Here, there have been no outlays by the defendant such as payments of rates and taxes, payment of licence fees and so forth. It is not evident to me that it is just and equitable to order the refund of the $1,000.
The plaintiff’s claim
120 Mr Muller relied in support of the plaintiff’s claim for the payment of the balance of the deposit on the decision of Brooking J, as he then was, in Bot v Ristevski [1981] VR 120, where his Honour accepted that a vendor who accepted his purchaser’s repudiation of a sale contract by reason of the failure to pay the balance of the deposit could, in those circumstances, sue for and recover the deposit as a debt. His Honour reached this conclusion following an exhaustive review of the authorities which were on this point somewhat divided. In reaching the conclusion which his Honour did, he declined to follow a decision of Pennycuick J in Lowe v Hope [1970] Ch 94, a New Zealand decision, Johnson v James [1972] NZLR 313 and a decision of the Supreme Court of New South Wales in Lyon v Magnet Nominees Pty Ltd [1978] VR 673. His Honour concluded that the deposit could be recovered as a debt even in the absence of any proof of damage by the vendor. This was so despite the well-known analysis of the discharge of contracts for the sale of land by Sir Owen Dixon in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, 477-8, where his Honour determined that once a vendor had terminated a contract of sale for breach before conveyance, he had no entitlement to recover instalments of purchase price, the entitlement to recover which had accrued only conditionally upon a conveyance ultimately being made. Brooking J remarked:
“True it is that a deposit wears two aspects: if the purchase is carried out, it goes against the purchase money, but its primary purpose is that it is a guarantee that the purchaser means business [authorities omitted]. There is no failure of consideration if the land is not conveyed or transferred, for the purchaser has had the benefit of the entry into the contract of sale by the vendor. [1981] VR 120, 123
121 In my view, Bot v Ristevski covers the present situation. Here the vendor terminated the contract pursuant to a contractual right to do so, rather than simply accepting repudiation. There is no reason to think that anything should turn upon this distinction.
Disposition
122 The plaintiff’s claim succeeds. The defendant’s counterclaim is dismissed. I direct the parties to bring in short minutes to give effect to these reasons.
123 The costs will be reserved.
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