Ripani v Century Legend Pty Ltd (No 4)

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FEDERAL COURT OF AUSTRALIA

Ripani v Century Legend Pty Ltd (No 4) [2024] FCA 1211

File number(s): VID 266 of 2020
VID 358 of 2023
Judgment of: NESKOVCIN J
Date of judgment: 18 October 2024
Catchwords:

CONSUMER LAW – misleading and deceptive conduct – contract of sale of apartment sold “off the plan” – reliance – whether Applicants continued to rely on representations that were misleading and deceptive – reliance established

CONSUMER LAW – remedies – what orders the Court should make under ss 237 and 243 of the Australian Consumer Law – orders for the recission of the contract of sale and return of a bank guarantee

CONTRACTS – breach of contract of sale – variation – whether the contract of sale was varied – whether vendor failed to construct the apartment substantially in accordance with the contract of sale – whether purchasers entitled to rescind under the rule in Flight v Booth – repudiation – whether vendor repudiated the contract of sale – whether vendor was ready, willing and able to perform the contract of sale – estoppel – whether vendor should be estopped – whether purchasers were obliged to settle the purchase under the contract of sale – purchasers entitled to rescind

DAMAGES – entitlement to forfeit of the deposit – loss and damage – deficiency in the resale price – expenses on the resale of the apartment – holding costs – borrowing costs – contractual interest – legal costs
Legislation: Competition and Consumer Act 2010 (Cth) Sch 2, Australian Consumer Law, ss 18, 237, 243
Cases cited:

Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540

Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1

Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153

Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424; [2001] FCA 1833

Butler v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60

Carpenter v McGrath (1996) 40 NSWLR 39

Carter v Mehmet (2021) 20 BPR 41,709; [2021] NSWCA 286

Century Legend Pty Ltd v Ripani [2022] FCAFC 191

D’Souza v Wedgewood Road Hallam No 1 Pty Ltd [2010] FCA 765

Eighth SRJ Pty Ltd v Merity (1997) 7 BPR 15,189

Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8

Flight v Booth (1834) 1 Bing NC 370; (1834) 131 ER 1160

Foran v Wight (1989) 168 CLR 385; [1989] HCA 51

Frankel v Paterson (2015) 18 BPR 35,391; [2015] NSWSC 1307

Galafassi v Kelly (2014) 87 NSWLR 119; [2014] NSWCA 190

GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1; [2003] FCA 50

Hadley v Baxendale (1854) 9 Ex 341; (1854) 156 ER 145

Henville v Walker (2001) 206 CLR 459; [2001] HCA 52

Higgins v Statewide Developments Pty Ltd (2010) 14 BPR 27,293; [2010] NSWSC 183

Jafari v 23 Developments Pty Ltd [2019] VSCA…

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Details
Case
[2024] FCA 1211
Decision Date

CaseChat Overview and Summary

In Ripani v Century Legend Pty Ltd (No 4), the applicants, Mr and Mrs Ripani, sought to rescind a contract for the sale of an apartment based on alleged misleading and deceptive conduct by the vendor, Century Legend. The court was tasked with determining whether the applicants continued to rely on the representations that were misleading and deceptive, whether the applicants were entitled to rescind the contract, and what orders should be made under sections 237 and 243 of the Australian Consumer Law. Additionally, the court examined whether the vendor breached the contract of sale, whether the contract was varied, and whether the vendor repudiated the contract of sale.

The court found that the applicants continued to rely on the misleading representations regarding the size and configuration of the opening between the interior and exterior areas of the apartment. The court held that the applicants were entitled to rescind the contract of sale under the rule in Flight v Booth, as the vendor failed to construct the apartment substantially in accordance with the contract of sale. The court also found that the vendor did not repudiate the contract of sale but was ready, willing, and able to perform it. However, the court rejected the vendor's estoppel argument and held that the applicants were not obliged to settle the purchase under the contract of sale. Regarding damages, the court determined that the applicants were not entitled to forfeit the deposit, but were entitled to compensation for the deficiency in the resale price, expenses on the resale, holding costs, borrowing costs, contractual interest, and legal costs.

The court ordered that the contract be rescinded and that the applicants return the bank guarantee. The proceeding was listed for a case management hearing to make orders to give effect to these reasons, make orders as to written submissions on costs, and fix a date for the hearing of submissions as to costs. The parties were required to provide a proposed minute of orders by a specified date.

Orders

Orders of the court

1. By 4:00pm on 28 October 2024, the parties are to provide to chambers a proposed minute of orders giving effect to these reasons.

2. The proceeding is listed for a case management hearing at 10:00am on 30 October 2024 for the purpose of:

(a) making orders to give effect to these reasons;

(b) making orders as to written submissions on costs; and

(c) fixing a date for the hearing of submissions as to costs.

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

Background

Background to the litigation

Further background to the dispute may also be gleaned from the findings of the initial trial judge and the Full Court. However, it must be noted that, after the initial trial, Century Legend provided further discovery and documents were tendered at the new trial that were not discovered, or otherwise tendered, at the time of the initial trial. Further, the transcript from the initial trial was not tendered in the new trial unless, and except so far as, the transcript was put to a witness.Agreed facts Apartment 1401 was one of the premium apartments to be located on the 14th floor on the western side of the Victoriana building: PJ [2]. In 2016, Century Legend:(a)prepared promotional materials to be used in marketing the Victoriana, including scale models and a hard-bound brochure containing various images, including computer generated ‘renders’, of the anticipated appearance of the Victoriana once constructed; and(b)engaged a firm of real estate agents, CBRE, to assist in the marketing of the Victoriana and to establish a display suite located at the proposed development site of the Victoriana: PJ [3]; FC [9]. The promotional materials included a “hero render” depicting the proposed western aspect of apartment 1401, specifically a large free span opening between the inside of the living areas and the outside terrace: PJ [5], [7], Annexure I; FC [10], [11]. The image of apartment 1401 in the render is at Annexure A at the conclusion of these reasons and is reproduced below: Though the render was specific to apartment 1401, Century Legend selected it as an image to be used more widely in promoting and marketing the Victoriana and it was displayed as a large exhibit on the wall of the display suite established at the proposed development site of the Victoriana: PJ [6]; FC [11]. Mr Kevin Tran was a CBRE employee engaged to sell apartments in the Victoriana to customers. Mr Tran’s usual practice was to sell off the plan apartments by reference to marketing materials, including any visual renders, building models, floor plans and other materials, which materials were available in the Victoriana’s display suite: PJ [19]. Mr and Mrs Ripani attended the display suite in mid to late January 2017, met with Mr Tran and expressed an interest in apartments with an outdoor area for entertaining guests: PJ [144]. On 22 March 2017, Mr Tran sent promotional material to Mr and Mrs Ripani giving them details of apartment 1401, including a copy of the render: PJ [145]. Upon reviewing the Carr Design floor plan that was attached to an email dated 22 March 2017 from Mr Tran to Mr Ripani, Mr and Mrs Ripani could not have appreciated that the large free span opening depicted in the render could not be achieved: PJ [153]. On or about 31 March 2017, Mr and Mrs Ripani visited the display suite for the Victoriana, and Mr Tran provided Mr and Mrs Ripani with a hard-bound brochure promoting the Victoriana. Mr and Mrs Ripani told Mr Tran they were interested in moving to an apartment with an outdoor pool and an area for entertaining, in which the internal and external areas could be seamlessly converted into one space: PJ [42], [44].

Evidence

Evidence Before The Court

Century Legend submitted that at the meeting on 26 May 2017, “[Ms Hart] told [Mr and Mrs Ripani] about the three openings on the western façade and made marks in red pen on the floor plan to show this.” Further, Century Legend submitted that Ms Hart “showed [Mr and Mrs Ripani] there was a division of four panels creating the central opening that were 1-1.2m in width, and that they were moveable to create an opening around 4m in width.”(i) Ms Hart’s evidence Without reference to the plans, Ms Hart gave evidence in chief about what was discussed at the meeting on 26 May 2017 as including, relevantly, to use her words “the connection between the internal and the external, between the pool deck area and the entertainment area”. This was the extent of Ms Hart’s evidence about the relevant discussion at the meeting on 26 May 2017 before Ms Hart was shown the floor plans. It is critical to understand the detail and nuances of Ms Hart’s evidence in relation to the relevant discussion at the meeting. As a result, it is set out in full. In my assessment of Ms Hart’s evidence, what she told Mr and Mrs Ripani at the meeting on 26 May 2017 was vague and inconclusive in purporting to explain the openings on the western façade. Ms Hart’s evidence about what was discussed at the meeting after being shown the Option A/B plan was as follows:…We spoke about fireplaces which is the – my handwritten note of “FP” stands for fireplace, and we also spoke about the break-up of the Western facade, so there’s my hand red notes showing. And again, as we move from north to south, there is an arrow pointing from the dining room out towards the barbecue area mentioning – meaning that was to be a point of access between the dining room and the barbecue area. That was a – a request that we then – so that is as far north on that plane before the facade then starts to curve around.What was the request?‑‑‑To have that opening as far north so that it’s closer between the dining room and the barbecue area, that access between the two, so it’s not further down towards the living room, but it’s further towards the barbecue and dining room access. There’s also, then, my hand red pen mark to show – so if we come to the fireplace, which is the culmination of the serpentine wall, north and south of that, there is some hand mark-ups from me, red pen notes, to show that the top pane – it was my explanation to show that that top panel is a fixed panel. You then have an opening where the panels have been removed, and there’s red pen mark there denoting the number of panels that have been removed, and then my red marks to the south which I remember denoting it’s a fixed panel. And then south of that, there’s two – there’s panels removed. It’s an opening. And then to the bottom of that, the last panel has also got my red hand mark to say this is a fixed panel.Okay. So what did you say in the meeting to the Ripanis when you were with them on the 26th?‑‑‑We discussed ‑ ‑ ‑Well, instead of “we discussed” ‑ ‑ ‑?‑‑‑Sorry.The question is what did you say?‑‑‑What did I say? I said that – that – I noted the appliances. I noted that they wanted a large pivot door that would need to be explored. I noted that they wanted fireplaces that would need to be explored as to – to be able to accommodate them. We spoke about – we spoke about the openings on that western facade which – and – and the location of these openings and the location of moving that entrance door between the dining and the barbecue area to which I noted that – that request. Yes.Okay. So after the 26th – just before I leave that, so this is a coloured copy, but can you tell her Honour what colour pens you – this is a colour copy, but could you tell her Honour what colour or kind of pens you used in relation to page 1601?‑‑‑I used a red pen and – and pencil. I – when I make notes, I just pick up whatever is within my vicinity to capture the conversations that we’re having or the requests that are being made. So in this, which is 1601, which is a colour copy, I can see my red notations and I can see – because it’s a copy – look – a pen – a pencil, rather.And similarly, at 6300, what colour is the writing in?‑‑‑6300.… THE WITNESS: So again here I’ve used red pen to mark up the plan.

Decision

Reasons for decision

I am not satisfied that Century Legend has established that the legal costs which Century Legend says it has incurred were caused by the alleged failure to comply with the Contract. I am therefore not satisfied that Century Legend is entitled to recover the legal costs claimed in the amount of $1,729,000 pursuant to Special Condition 29 or by way of damages for repudiation of the Contract.CONCLUSION For the above reasons, I have concluded that Mr and Mrs Ripani’s claim in the first proceeding should succeed and I would order that the Contract be rescinded. In light of Mr and Mrs Ripani’s entitlement to rescission of the Contract, Century Legend’s claim in the second proceeding must fail. I will hear the parties in relation to orders to give effect to these reasons and as to costs.

Ratio Decidendi

Legal Principle Established

In cross examination, Mr Hu was asked to confirm the evidence he gave at the initial trial that there was no discussion about the width of the door at the meeting on 9 June 2017. Mr Hu answered by saying the location of the door between the interior and exterior of the apartment was discussed at the meeting. Mr Hu’s evidence was that there was a discussion about the opening that centred on the fireplace. Mr Hu explained that the discussion was about the location of the opening, not the opening itself, because Ms Hart had suggested an opening centred on the fireplace so that Mr and Mrs Ripani could enjoy the fireplace while sitting on the outside balcony: T779.37–T780.10.Consideration Century Legend submitted that the evidence showed that by August 2017, Mr and Mrs Ripani were no longer misled by the depiction of the opening in the render because Ms Hart had explained where the doors were in meetings on 26 May 2017 and 9 June 2017 with reference to the floor plans (the Options A/B, B and C plans). Century Legend submitted that at the meeting on 26 May 2017, “[Ms Hart] told [Mr and Mrs Ripani] about the three openings on the western façade and made marks in red pen on the floor plan to show this” and Ms Hart “showed [Mr and Mrs Ripani] there was a division of four panels creating the central opening that were 1-1.2m in width, and that they were moveable to create an opening around 4m in width.” Century Legend submitted that Ms Hart again discussed the western façade with Mr and Mrs Ripani on 9 June 2017 and she told them about the glazing panels and the sliding and stacking doors. Ms Hart’s evidence about the meetings was given largely by reference to the plans. After being asked about, and giving her general recollection of, the meetings on 26 May 2017 and 9 June 2017, which was limited, Ms Hart was taken to the plans which she said she had at the meetings. Ms Hart proceeded to give evidence by reference to the plans and markings on them. Mr and Mrs Ripani disputed Ms Hart’s evidence that all of the plans were at the meetings and that she wrote on the plans. I find on the balance of probabilities that the Option A/B and B plans and the Option C plan were at the meetings on 26 May 2017 and 9 June 2017 respectively and that Ms Hart wrote on the plans at the meetings. As set out above in paragraphs 57–61, after being shown the plans, Ms Hart was asked three times to explain what she actually said to Mr and Mrs Ripani at the meeting on 26 May 2017. Her initial evidence was to explain, by reference to the marks on the plans, that there was to be “a point of access” between the dining room and the barbeque area, the top panel was “fixed” and “[y]ou then have an opening where the panels have been removed” and then, south of that, “there’s panels removed. It’s an opening.” The second time that Ms Hart was asked to explain what she actually said, Ms Hart instead spoke in conclusory terms using expressions such as “I noted” and “we spoke about”. On the third occasion, in cross-examination, Ms Hart’s evidence was that she said the “façade is broken up into glazing panels of roughly a metre – just over a metre – 1.2 in width, and the – it has to be because of wind loadings against the western façade [and] the opening – the openings in the façade are a division of those two – or a sum of those window panels”. Further, she “pointed to the – the main opening, which was centred on the fireplace, and counted and showed the number of panels that were being removed to create the opening on the fireplace and also the openings within the entertainment area”.