Ripani v Century Legend Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Ripani v Century Legend Pty Ltd [2022] FCA 242

File number: VID 266 of 2020
Judgment of: ANASTASSIOU J
Date of judgment: 18 March 2022
Catchwords:

CONSUMER LAW – misleading or deceptive conduct – contract of sale for apartment sold ‘off-the-plan’ – representations conveyed by a computer generated image known as a render – render contained in marketing brochure, exhibited at display suite and on website for development – representations also made by real estate agent on behalf of developer – whether representations sufficiently precise to found contravention of s 18 of the Australian Consumer Law (ACL) – relevance of inscription ‘artist impression’ on render – relevance of disclaimers and exclusion clauses – whether representations were made as to a future matter without reasonable grounds – whether representations misleading or deceptive or likely to mislead or deceive – whether Applicants relied on representations in entering into contract of sale – whether misleading representation cured by statements made by architect prior to Applicants entering into contract of sale – relevance of objective circumstances to evidence of disinterested witness   

CONSUMER LAW – remedies – whether appropriate to grant relief in the nature of statutory rescission pursuant to s 237 and s 243(a) of ACL – whether Applicants suffered or were likely to suffer loss or damage because of contravening conduct of developer – loss in value of real estate property – loss or damage suffered by Applicants – whether entry into contract of sale constituted loss or damage in particular circumstances – discretionary considerations – alternative claim for rescission in equity – differences between rescission in equity and statutory relief in the nature of rescission – contract of sale rescinded

Legislation: Competition and Consumer Act 2010 (Cth), Sch 2, Australian Consumer Law, ss 4, 18, 236, 237, 243
Cases cited:

A H McDonald & Co Pty Ltd v Wells [1931] HCA 24; 45 CLR 506

Alati v Kruger [1955] HCA 64; 94 CLR 216

Australian Competition and Consumer Commission v GlaxoSmithKline Consumer Healthcare Australia Pty Ltd [2019] FCA 676; 371 ALR 396

Australian Competition and Consumer Commission v Productivity Partners Pty Ltd (trading as Captain Cook College) (No 3) [2021] FCA 737

Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640

Australian Securities and Investments Commission v La Trobe Financial Asset Management Ltd [2021] FCA 1417

Bonham as Trustee for the Aucham Super Fund v Iluka Resources Ltd [2022] FCA 71

Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592

Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304

Cargill Australia Ltd v Viterra Malt Pty Ltd (No 28) [2022] VSC 13

Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367

Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31

Harvard Nominees Pty Ltd v Tiller (No 4) [2022] FCA 105

Harvard Nominees Pty Ltd v Tiller [2020] FCAFC 229; 282 FCR…

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Details
Case
[2022] FCA 242
Decision Date

CaseChat Overview and Summary

The case of Ripani v Century Legend Pty Ltd involved a dispute between the Ripanis and the developer, Century Legend, concerning the sale of an apartment under a contract that was off-the-plan. The Ripanis alleged that Century Legend engaged in misleading and deceptive conduct by providing a computer-generated image, known as a render, in the marketing materials, which depicted the apartment with a flow-through design that was not ultimately delivered. The case raised several key legal issues, including whether the representations made by Century Legend were sufficiently precise to constitute a contravention of section 18 of the Australian Consumer Law (ACL), and whether the disclaimers and exclusion clauses negated any misleading or deceptive conduct. Additionally, the court had to determine if the Ripanis relied on these representations in entering into the contract and if the misleading representations were cured by subsequent statements made by the architect.

The court found that the representations made by Century Legend were misleading and deceptive, as they did not accurately reflect the actual design and features of the apartment. The court noted that the disclaimer stating the render was an ‘artist impression’ and the exclusion clauses were not specific enough to negate the misleading effect of the representations. The court also concluded that the Ripanis had relied on the representations in entering into the contract. Furthermore, the court determined that the misleading representations were not cured by subsequent statements made by the architect before the contract was signed. The court held that the representations were actionable under section 18 of the ACL and also constituted misrepresentation in equity.

In terms of remedies, the court found it appropriate to grant relief in the nature of statutory rescission pursuant to sections 237 and 243(a) of the ACL. The court rescinded the contract of sale for the apartment, ordered the return of the bank guarantee provided by the Ripanis, and directed that damages and pre-judgment interest be paid to the Ripanis. The court also ordered that the costs of the proceeding be paid by Century Legend. This comprehensive relief aimed to restore the Ripanis to their pre-contractual position and compensate them for the loss and damage suffered due to Century Legend's misleading conduct.

Orders

Orders of the court

1. The contract of sale for the purchase by the Applicants of apartment 14.01 at 20-21 Queens Road, Melbourne, made on or about 29 August 2017, be rescinded.

2. By no later than 4:00pm on 25 March 2022, the Respondent return to the Applicants the bank guarantee provided on behalf of the Applicants by the Bank of Melbourne on 29 August 2017 in lieu of a deposit.

3. The Respondent pay damages and pre‑judgment interest to the Applicants in an amount to be determined in accordance with paragraph 4 of these orders.

4. By no later than 4:00pm on 25 March 2022, the parties file:

(a) an agreed minute of the sums payable for damages and pre-judgment interest in accordance with these reasons for judgment; or

(b) failing agreement, the parties are to file separate minutes and submissions, limited to four pages, concerning their respective calculations of damages and pre-judgment interest payable in accordance with these reasons.

5. The Respondent pay the Applicants’ costs of and incidental to the proceeding, to be agreed and in default of agreement assessed on a standard basis.

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

Background

Background to the litigation

Accordingly, for the above reasons, I find that the representations referred to above in [92](a), (b) and (e) were made by Century Legend by providing the render to the Ripanis in the context I have described. Those representations were confirmed by the oral representations made by Mr Tran concerning the render and its correlation to apartment 14.01. Mr Tran’s representations also constitute separate actionable representations made on behalf of Century Legend. I also find that the representations made by, or on behalf of Century Legend were misleading and deceptive in contravention of s 18 of the ACL and that they were false representations actionable in equity for misrepresentation. RELEVANT CONTEXTUAL FACTS The narrative of events to follow is divided into two periods – the pre-contractual period and the post-contractual period. The first period (pre-contractual period) is between mid-late January 2017 and 29 August 2017. That period commences when the Ripanis first visited the display suite at 20 Queens Road, met Mr Tran and were told about apartment 14.01, and concludes after a series of meetings held for the purpose of settling the Ripanis’ desired floor plan, when the Bank of Melbourne issued a bank guarantee in the amount of $944,000 in lieu of the deposit of 10% payable under the contract. The second period (the post-contractual period) is between 29 August 2017 and June to July 2019. The 3rd of June 2019 is a significant date because it is when I find the Ripanis were informed for the first time that the opening on the western façade would be no more than 3.4 metres in width. The 3rd of July 2019 is similarly important because it is when Mr De Mooy told the Ripanis that it was “impossible” to build the free span opening depicted in the ‘hero render’. Although the Ripanis did not file this proceeding until April 2020, they sent a letter to Century Legend’s legal representatives on 8 July 2019 communicating their displeasure with the situation and foreshadowed their intention to commence proceedings to avoid the contract of sale, insist on specific performance and/or obtain an order for damages. I shall describe the relevant post-contractual events, before returning to the pre-contractual period in the context of the principal evidentiary contest in this proceeding; namely, whether Ms Hart disabused the Ripanis of any misleading impression created by the render. However, before turning to these events, it is necessary to say something about the date on which the contract of sale was entered into. Date of entry into contract of sale A preliminary matter to determine is the dispute between the parties as to the date upon which the contract of sale for apartment 14.01 was formed and became binding on the parties. The dispute occupied significant time during the hearing, both in evidence and submissions, and resulted in amendments to the pleadings. Having regard to the findings I have made concerning reliance by the Ripanis on the representations, the dispute is arid. However, in case it should be relevant hereafter, I find that the contract of sale was formed and became binding on or about 29 August 2017, when the Ripanis provided a bank guarantee from the Bank of Melbourne in the sum of $944,000 in lieu of the payment of the deposit. The reasons for this finding are as follows.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

If I am wrong to conclude that the exclusion clauses would need to be so specific and explicit to have a corrective effect in the present circumstances, the exclusion clauses as drafted would nevertheless fail a much lower threshold in relation to their curative effect. The exclusion clauses would appear to be boilerplate provisions. As such, they contain elements which are inapposite, the obvious example being an acknowledgment on the part of the purchasers, here the Ripanis, that they entered into the contract as a result of their own inspection and enquiry. I refer to what I have said above in relation to similar terms contained in the disclaimer. Had the exclusion clauses been negotiated between the parties, their effect would very likely have been different, going not to an ex post facto acknowledgement of non-reliance but rather to the characterisation of the conduct. Equally, if the exclusion clauses were negotiated they would not, rationally, contain an acknowledgement by the Ripanis of any inspection of the yet-to-be constructed apartment.Conclusions in relation to representations Though the ‘hero render’ speaks for itself for the purposes of the present claim for contravention of s 18 of the ACL, and/or misrepresentation actionable in equity, it is necessary to describe in language the meaning conveyed by the render. At [9] of the Further Amended Statement of Claim, the Ripanis plead that the render conveyed the following representations:(a)Apartment 1401 when constructed would accord with the Visual Representation and in particular would include the flow-through design; (b)as at March 2017 the Respondent intended to construct the development and Apartment 1401 so that it would accord with the Visual Representation and in particular intended to include the flow-through design; (c)the flow through design shown in the Visual Representation was in accordance with architectural designs prepared by Rothelowman;(d)the building design shown in the Visual Representation accorded with the design for the construction of the building prepared by a reasonably skilled and competent architect;(e)the building design shown in the Visual Representation was achievable given existing building methods. In order to understand the pleaded representations, it is also necessary to have regard to [6] of the Further Amended Statement of Claim:6.In order to show the Applicants what Apartment 1401 would look like when completed and thereby what they were invited to purchase, the Respondent by its agent provided to the Applicants:(a)a promotional volume produced by it or at its direction describing the development and containing computer generated pictures showing the completed development (“the Volume”); and(b)a computer generated image of a penthouse apartment (“the Visual Representation”) showing a large open plan space and a large rooftop terrace both at the same level with a raised concrete and glass swimming pool and a retracted glass three stack window panel system with the resultant effect that the outside and the inside formed a seamless single space (“flow-through design”).

Ratio Decidendi

Legal Principle Established

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