Stewart v Goldrange Pty Ltd
[2003] WASCA 131
•19 JUNE 2003
STEWART & ANOR -v- GOLDRANGE PTY LTD & ANOR [2003] WASCA 131
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASCA 131 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:56/2002 | 15 MAY 2003 | |
| Coram: | MALCOLM CJ PARKER J WHEELER J | 19/06/03 | |
| 20 | Judgment Part: | 1 of 1 | |
| Result: | Crossappeal dismissed | ||
| B | |||
| PDF Version |
| Parties: | PETER WILLIAM STEWART WENDY MARGARET STEWART GOLDRANGE PTY LTD LYON DAVEY PTY LTD trading as DAVEY REAL ESTATE |
Catchwords: | Contract for sale of land Representations by real estate agent Whether deceptive or misleading Reliance Contributory negligence by purchaser Turns on own facts |
Legislation: | Fair Trading Act 1987 (WA), s 10(1) and s 12(2)(b) |
Case References: | Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Henville v Walker (2001) 206 CLR 459 Phillis v Daly (1988) 15 NSWLR 65 Sierra v Anikin [2003] NSWCA 11 Bialkower v ACOHS Pty Ltd (1998) 154 ALR 534 Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 Eighth SRJ Pty Ltd v Merity (1997) NSW ConvR 55-813 General Newspapers Pty Ltd & Ors v Telstra Corporation (1993) 45 FCR 164 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Pty Ltd (1978) 140 CLR 216 Maybury v Constantinou (1983) NSW ConvR 55-171 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : STEWART & ANOR -v- GOLDRANGE PTY LTD & ANOR [2003] WASCA 131 CORAM : MALCOLM CJ
- PARKER J
WHEELER J
- WENDY MARGARET STEWART
Appellants (First Defendants)
AND
GOLDRANGE PTY LTD
First Respondent (Plaintiff)
LYON DAVEY PTY LTD trading as DAVEY REAL ESTATE
Second Respondent (Second Defendant)
Catchwords:
Contract for sale of land - Representations by real estate agent - Whether deceptive or misleading - Reliance - Contributory negligence by purchaser - Turns on own facts
(Page 2)
Legislation:
Fair Trading Act 1987 (WA), s 10(1) and s 12(2)(b)
Result:
Crossappeal dismissed
Category: B
Representation:
Counsel:
Appellants (First Defendants) : Mr D O D Price
First Respondent (Plaintiff) : Mr M H Zilko SC
Second Respondent (Second Defendant) : Mr G H Murphy
Solicitors:
Appellants (First Defendants) : DOD Price & Co
First Respondent (Plaintiff) : John Eller
Second Respondent (Second Defendant) : Minter Ellison
Case(s) referred to in judgment(s):
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Henville v Walker (2001) 206 CLR 459
Phillis v Daly (1988) 15 NSWLR 65
Sierra v Anikin [2003] NSWCA 11
Case(s) also cited:
Bialkower v ACOHS Pty Ltd (1998) 154 ALR 534
Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84
Eighth SRJ Pty Ltd v Merity (1997) NSW ConvR 55-813
General Newspapers Pty Ltd & Ors v Telstra Corporation (1993) 45 FCR 164
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83
(Page 3)
Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Pty Ltd (1978) 140 CLR 216
Maybury v Constantinou (1983) NSW ConvR 55-171
(Page 4)
1 MALCOLM CJ: This was an appeal by the appellants, Mr and Mrs Stewart, who were the first defendants in the District Court in which the first respondent, Goldrange Pty Ltd ("Goldrange"), was the plaintiff and the second respondent, Lyon Davey Pty Ltd trading as Davey Real Estate ("Davey") was the second defendant. The appeal was instituted by a notice of appeal dated 9 April 2002. By a letter dated 17 March 2003, the appellants' solicitors informed the Registrar that the second-named appellant, Mrs Stewart, was declared bankrupt in 2002 and that, notwithstanding attempts by the solicitors for the appellants to communicate with the Trustee in bankruptcy, there had been no reply. One result of the bankruptcy was the termination of the solicitor's instructions to act for Mrs Stewart. The solicitors for the appellants had now been informed by Mr Stewart that he never gave Mrs Stewart any authority to prosecute the appeal on his behalf. In the circumstances, upon the appeal being called on for hearing, counsel originally instructed by or on behalf of the appellants was given leave to withdraw and the appeal was dismissed for want of prosecution with an order that the respondents' cost of the appeal be taxed and paid by the first-named appellant, Mrs Stewart.
2 By a notice of cross-appeal dated 22 April 2002, Goldrange seeks an order that the judgment of the learned trial Judge in the District Court be set aside. By that judgment, her Honour Judge Jenkins gave judgment in favour of Goldrange against the appellants in the sum of $58,567, together with interest at 6 per cent per annum from 16 August 1994 until judgment. A claim by Goldrange against the second respondent was dismissed. An order was made that the issue of final orders as to costs be adjourned sine die. Goldrange seeks judgment in its favour against Mr and Mrs Stewart and Davey for damages in the sum of $90,102 together with interest thereon at 6 per cent per annum from 16 August 1994. The form of order proposed seeks interest until "judgment" which is clearly an error and should have been until payment. An order is also sought that Mr and Mrs Stewart and Davey pay the costs of the cross-appeal to be taxed. In the circumstances, I consider that any relief against the appellants should be limited to Mrs Stewart only.
3 On 16 August 1994, Goldrange agreed to purchase a block of land at Wanneroo from Mr and Mrs Stewart for $480,000. Goldrange claimed that prior to completion, the respondents made representations to the effect that the entire property was above the adjoining Lake Joondalup and was available for development. Goldrange said that, after settlement, it was discovered that 5000 m² of the land was under water ("the submerged land") and unsuitable for development. It was also discovered
(Page 5)
- that the Department of Environmental Protection would require a 50 m² strip along the Lake's edge as a buffer, thus depriving Goldrange of a further part of the land for development.
4 Goldrange contended that there were four representations made to it. These were as follows:
(1) the land was an approved commercial development site, a prime location, 8½ acres in size and beautifully situated for entertainment/tourism purposes;
(2) if Goldrange purchased the land, it would be able to use the whole of the land for a commercial development;
(3) a dry area of land to which Mr Jackson, a director of Goldrange, was directed was the approximate rear boundary of the land; and
(4) if Goldrange purchased the land it would be able to use the whole of the land for a commercial development.
5 The first representation was alleged to have been made on various dates, including, in particular, 7, 14, 18 and 21 May 1994 in advertisements published in The West Australian newspaper on those dates.
6 The second representation was alleged to have been made on an inspection of the site in April 1994 by Mr Stewart. The third was also said to have been made on site in April 1994 by Mr Stewart and by Mr Brandenburg, an employee of Davey. The fourth representation was said to have been made by Mr Brandenburg on 23 May 1994 shortly before Goldrange executed the contract.
7 Goldrange alleges that, induced by the representations, it entered into a contract to purchase the land for $480,000. It was alleged that the representations were false in that:
(a) an area of approximately 5000 m² of the land was and remained under water and was therefore unusable for a commercial development;
(b) the rear boundary of the land was and remained under water; and
(c) the Department of Environmental Protection required and still requires any commercial development to be
(Page 6)
- constructed not less than 50 metres from the land under water.
8 Various other allegations were made in the statement of claim which were abandoned. There was, however, a plea left in pars 12 – 14 of the statement of claim that, by making the representations, Davey engaged in conduct in the course of trade and commerce which was misleading and deceptive or likely to mislead or deceive Goldrange contrary to s 10(1) and s 12(2)(b) of the Fair Trading Act 1987 ("the Act").
9 There was a further or alternative plea by which it was alleged against Mr and Mrs Stewart and Davey that they breached a common law duty of care owed to Goldrange to take reasonable care to ensure that the representations were correct. It was alleged in par 19 that the respondents were negligent and in breach of their duty, in that Mr and Mrs Stewart and Davey failed to make any reasonable inquiries regarding:
(a) the true boundaries of the land and whether any part of the land was under water; and
(b) any requirements of the Department of Environmental Protection or any other government department or local authority which might affect Goldrange's ability to use the whole of the land for a commercial development.
10 In respect of each of the claims made, Goldrange said that it suffered loss of $120,000 which was the difference between the amount paid as the purchase price for the land and its true value as at the date of purchase.
11 Mr and Mrs Stewart did not admit the first and fourth representations and denied the second and third representations. In relation to the latter, they denied that Mr Stewart accompanied Mr Jackson and Mr Brandenburg on the site inspection as alleged by Goldrange. Mr and Mrs Stewart also pleaded contributory negligence on the part of Goldrange by reason of:
(a) its failure to make any or any sufficient inquiries of the Department of Conservation and Land Management and any other government department or local authority whose requirements might affect the purchaser's ability to use the whole of the land for a commercial development of or for the particular commercial development proposed by Goldrange;
(b) if Goldrange was unaware of the true boundaries of the land as at 15 August 1994, it failed to instruct Automated
(Page 7)
- Surveys or some other surveying firm to report on the location of the boundaries before settlement, or alternatively, failed to ensure that Goldrange understood any such report received prior to the settlement before proceeding to settlement; and
- (c) failing to confirm during the period between 2 May 1994 and 23 May 1994, further or alternatively the period between 23 May 1994 and 15 August 1994 that the development which Goldrange planned to undertake on the property would be possible and permissible by reference to the boundaries and features of the land.
12 Davey admitted that it was engaged to act as the agent for Mr and Mrs Stewart for the promotion and sale of the land from 23 May 1994 to 15 August 1994 and that Mr Brandenburg was employed by it as a sales representative from November 1993 to May 1996. It also admitted the first representation, but denied the second, third and fourth representations. It pleaded that, if Mr Brandenburg made the fourth representation, he did so within the scope of his employment with Davey and on behalf of Mr and Mrs Stewart. Davey denied that Goldrange was induced by, or acted in reliance on, the representations in entering into the contract for the sale of the land. Davey also pleaded that Goldrange relied upon a survey conducted, on its instructions, by Automated Surveys in relation to the location of the boundaries of the land. Davey also pleaded in its defence that a commercial development of the type appropriate for the land might include areas under water as a feature of the development, such that the land under water could properly be considered part of the development site. Davey did not admit that the representations it made were made in trade or commerce, or in breach of any statutory duty. Alternatively, it pleaded that, if its conduct would otherwise have been misleading or deceptive, it was not in fact because:
(a) Mr Brandenburg told Mr Jackson that he did not know where the boundaries were and that Mr Jackson would have to ascertain that information from Mr and Mrs Stewart;
(b) at the same meeting, Davey provided a flyer which contained a disclaimer;
(c) at the same meeting, Mr Jackson was orally advised to make his own inquiries to verify the written information provided to him; and
(Page 8)
- (d) Mr Stewart told Mr Jackson during an April inspection of the land that one-half to three-quarters of an acre of the property was under water.
13 In relation to Goldrange's alleged loss, Davey pleaded that the land was purchased below market value. In relation to the claim in negligence, Davey set out in par 22 of its defence various inquiries it made in regard to the land and otherwise denied the allegations made by Goldrange. Davey also alleged that Goldrange contributed to any loss by its own failure to take reasonable care. The particulars of contributory negligence were identical to those alleged against Goldrange by Mr and Mrs Stewart.
14 In par 27 of its defence, Davey also claimed that Goldrange had failed to mitigate any loss by not making reasonable efforts to sell or develop the land and to carry out a conditional contract it had with another party for the sale of the land. In its reply, Goldrange said that this other party had failed to pay a deposit for the sale. Mr and Mrs Stewart and Davey also issued notices of indemnity and/or contribution against each other. This appeal, however, is concerned only with the position as between Goldrange and Davey.
15 By its notice of cross-appeal, Goldrange sought to have the judgment of the learned trial Judge dismissing its claim against Davey set aside and that in lieu thereof there be judgment for Goldrange against Mr and Mrs Stewart and Davey for damages in the sum of $90,102 and interest at 6 per cent per annum from 16 August 1994 until judgment and that Mr and Mrs Stewart and Davey pay Goldrange's costs of the action and of the cross-appeal to be taxed.
16 The cross-appeal was originally made on four grounds. Ground 1 contended that having found that the first representation was made by Mr and Mrs Stewart and Davey and was relied upon, the trial Judge erred in law in finding that the first representation was not false. This was abandoned at the hearing. That left grounds 2, 3 and 4 of the cross-appeal to be determined.
17 Ground 2 was that:
"Having found that the first representation was made by [Mr and Mrs Stewart] and [Davey] and that [Goldrange] relied upon it, the learned trial Judge erred in law in finding that [Davey] had not engaged in misleading and deceptive conduct contrary to the Fair Trading Act 1987 in making the first representation."
(Page 9)
18 The first representation was as I have already described.
19 Ground 3 was that, having found that the third representation was made by Davey and was misleading, the learned trial Judge erred in law in finding that Goldrange did not rely upon that representation. This was said to be so because the evidence, as found by the learned trial Judge, was that the first respondent did rely on that representation.
20 Ground 4 was that the learned trial Judge erred in law in finding that Goldrange was guilty of contributory negligence or, alternatively, of finding Goldrange guilty of contributory negligence to the extent of 35 per cent of its damages.
21 So far as ground 2 of the cross-appeal is concerned, I agree with Wheeler J that her Honour Jenkins DCJ was correct in finding that the agent had not engaged in misleading and deceptive conduct in making the first representation which was contained in the relevant newspaper advertisements.
22 As to ground 3, it was contended that, having found that the third representation relating to the position of the boundary was made by Mr Brandenburg as an employee of Davey, which was the agent of Mr and Mrs Stewart, the learned Judge should have found that it was misleading and that Goldrange relied on it. In the result, the learned Judge was not satisfied on the balance of probabilities that Goldrange relied upon Mr Brandenburg's agreement with Mr Stewart's identification of the position of the southern boundary of the land. Wheeler J has, in my opinion, rightly concluded that it would not have been reasonable for Mr Jackson to have relied upon Mr Brandenburg's agreement. I agree that there was a real question whether Goldrange discharged the onus of proof on it as plaintiff to prove reliance by Mr Jackson on Mr Brandenburg's agreement with, and apparent adoption of, Mr Brandenburg's agreement. As the learned Judge pointed out in her reasons at [206], while Mr Jackson gave evidence that he asked both the agent and Mr Stewart about the location of the boundary, he agrees that Mr Brandenburg said that it would be necessary to ask Mr Stewart.
23 It was on this basis that the learned trial Judge concluded that Mr Jackson relied on what Mr Stewart said rather than on anything said by Mr Brandenburg. This was the basis for her Honour's conclusion that any loss suffered by Goldrange was occasioned by the negligence of Mr and Mrs Stewart represented by the former and by Goldrange's own negligence rather than by any breach of statutory duty by Davey.
(Page 10)
24 In my opinion, given that the inspection took place against a background whereby Mr Brandenburg had declined any knowledge of the precise location of the boundary and had specifically arranged for a meeting to take place on site with Mr Stewart, it could not have been reasonable for Mr Jackson to rely upon any statement regarding the boundary at the relevant time, having regard to his earlier disclaimer of knowledge. No definitive statement of the location of the boundary was made by Mr Brandenburg. The evidence was that he did no more than indicate his "sort of agreeance" with what Mr Stewart said about the boundaries. Consequently, I agree with Wheeler J that the trial Judge was fully justified in finding that Mr Jackson could not have or, at the least, could not have reasonably relied upon the observation of Mr Brandenburg as a representation regarding the location of the boundary.
25 It was contended, however, that the finding of the learned trial Judge in this context was inconsistent with earlier findings which had been made. This point has been dealt with in some detail by Wheeler J. On this part of the case, I agree entirely with Wheeler J and have nothing further to add.
26 So far as ground 4 of the cross-appeal is concerned, I agree with Wheeler J that a finding against Goldrange of contributory negligence to the extent that it was 35 per cent responsible for its own harm was not outside the range of a sound exercise of judicial discretion, having regard to all the relevant circumstances.
27 For these reasons, I agree with Wheeler J that this appeal should be dismissed.
28 PARKER J: For the reasons published by Wheeler J I agree that the cross appeal of the first respondent should be dismissed.
29 WHEELER J: Although this matter was instituted as an appeal by the appellants, at the hearing of the appeal the appellants' solicitor advised that, due to the bankruptcy of the second-named appellant, and to the assertion of the first-named appellant that the appeal had been instituted without his authority, he was not in a position to prosecute the appeal. He was given leave to withdraw. That withdrawal left as a live issue the cross-appeal of the first respondent, which I hereafter refer to as "the appeal".
(Page 11)
Background to the appeal
30 The appellants Mr and Mrs Stewart were the vendors of certain property in Wanneroo adjoining Lake Joondalup ("the land"). The first respondent was the purchaser and the second respondent the estate agent who acted on the sale. It is convenient, in order to avoid confusion, to call the first appellants by their names, and the first respondent and second respondent the purchaser and agent respectively.
31 In July 1993 the Stewarts purchased the land, intending to develop it into a restaurant and tourist park, including a restaurant and bird park. Following an application made by them, in August 1993 the City of Wanneroo advised the Stewarts that it had resolved to support that development, although it required revised plans to address particular issues. None of the relevant issues required the setting aside of any of the land from development. Due however to a breakdown of the relationship between the Stewarts and their business partners, their consequent inability to develop the land by themselves, and a subsequent break-up of their marriage, the Stewarts decided to sell the land.
32 A portion of the land was submerged, apparently forming part of Lake Joondalup. The non-submerged area was just under 3 hectares, while the submerged area was approximately half a hectare in area.
33 It was against that background that the purchaser alleged that certain representations which were either false or misleading were made. Her Honour found that two of the alleged representations had not been made. However, she did find two representations had been made and it is with these that the appeal is concerned.
34 First in time of those two representations was a representation to the effect that a dry area of the land pointed out to a director of the purchaser at a site inspection in April 1994, was the approximate rear boundary of the land. It was alleged that this representation known at trial as the "third representation" was made by Mr Stewart on behalf of the Stewarts and by an employee of the agent, one Mr Brandenburg. The second in time was a newspaper advertisement repeated in "The West Australian" newspaper on dates which included a number of days in May and which included statements to the effect that the land was an improved commercial development site, a prime location, 8-1/2 acres in size, and beautifully situated for entertainment/tourism purposes. That representation was alleged to have been made by the agent on behalf of the Stewarts and the agent. It was known at trial as the "first representation".
(Page 12)
35 Although there were some factual disputes, the way in which her Honour found that these representations had been made were broadly as follows. Mr Stewart contacted Mr Brandenburg to sell the property. Mr Stewart and Mr Brandenburg inspected the land and had a discussion of how much of the southern portion of it was submerged. It appears that Mr Stewart indicated roughly where he thought the boundary was and that Mr Brandenburg, drawing on some former experience as a farmer, estimated roughly what area of land would be under water based on that indication. It seems clear enough that neither man had anything other than their own or the other's estimate to rely on in forming those views. In April 1994 the Stewarts gave the agent an authority to auction the land. The auction date was set for 28 May 1994.
36 In April Mr Jackson, a local land developer, saw a sign on the land and contacted the agent about it. There was a discussion at Mr Jackson's office and it seems common ground that there was no mention at that time of any of the land being under water or of any limitations on use. Mr Jackson was shown the approval which had been obtained from the City of Wanneroo.
37 Mr Jackson was interested in purchasing the property for a commercial development but did not know where the southern boundary was. Mr Brandenburg told him he should visit the site and speak to Mr Stewart, and a site meeting was arranged for a Saturday in late April 1994. Her Honour found that the three men walked over the land and Mr Jackson asked where the boundary was or where the boundary pegs were. In response Mr Stewart said words to the effect that the boundary was "here", indicating with his hands either the point on which the man were standing or at the most a point some 10 to 15 metres in front of them, but in any event a point which was on dry land. Mr Brandenburg did not say anything to dispute what Mr Stewart had said and, indeed, expressed agreement with Mr Stewart.
38 As to the precise role of Mr Brandenburg, her Honour noted that Mr Jackson said during the course of his cross-examination, that in a telephone conversation with Mr Brandenburg concerning the whereabouts of the boundary, the latter replied "he would have to get advice from Mr Stewart about it" and that the meeting was organised thereafter. Her Honour noted that Mr Jackson's evidence of what was said on the land only went so far as to say that Mr Brandenburg was "sort of in agreeance with Mr Stewart".
(Page 13)
39 Mr Jackson then through the vehicle of a company known as "Chisholm" of which he was director, entered into a contract to purchase the land, subject to the carrying out of a feasibility study to investigate possible commercial developments to Chisholm's satisfaction.
40 While that feasibility study was being prepared, the advertisements constituting the first representation were published. Whilst her Honour nowhere set out the full text of the advertisement, a portion of it, which she quoted, advertised the land as:
"8-1/2 ACRES COUNCIL APPROVED COMMERCIAL DEVELOPMENT BEAUTIFULLY SITUATED FOR ENTERTAINMENT/TOURISM ENTERPRISE PRESENTS A RARE OPPORTUNITY TO ACQUIRE a SUBSTANTIAL LAND HOLDING in HEART OF RAPIDLY EXPANDING AREAS."
- The advertisements went on to advise that for "full details" the agent should be contacted.
41 For various reasons Mr Jackson then decided not to use Chisholm as the vehicle to purchase the land and on 23 May 1994 the purchaser entered into the contract to purchase the land. A couple of days later, the feasibility report which had been commissioned was delivered to Mr Jackson. It apparently did not disclose that any of the land was under water, despite describing itself as a "feasibility report and valuation".
42 Mr Jackson also commissioned a survey to complete a "detailed/feature survey" of the land ("the contour survey"). It was received by the purchaser on about 3 June 1994. It consists of a single page survey showing the external boundaries and the physical features of the land, including large trees, buildings, fences etc. It contains contour lines running across the property from the northern boundary downwards. However, those lines finish about three quarters of the way down the plan of the land and thereafter the survey is blank save for the words "paperbark trees/dia .1 - .3/on edge of swamp". Her Honour accepted that paperbarks are commonly known as being trees that grow near water.
43 As to the contour survey, Mr Jackson's evidence was that although he received it, he did not appreciate that a portion of the land was submerged, nor apparently was he put on notice that there was anything unusual about the land. His evidence was to the effect that he thought merely that the survey was incomplete, and that the incompleteness was because the Stewarts did not want to grant surveyors permission to go onto the land
(Page 14)
- prior to completion of the sale. The purchase of the land was completed on 16 August 1994. Thereafter, the purchaser received the report of a further survey which it had commissioned in early August, which clearly revealed that a portion of the land was underwater. The purchaser has been unable to use the land for its intended development, which included a golf course extending over the submerged area.
44 Her Honour appears to have broadly accepted the evidence of Mr Jackson about the assumptions he made about the contour survey, but considered that the inference that he drew (that the survey was incomplete) was not the logical inference to draw from the contour survey. Her Honour considered that the purchaser was negligent in failing to make enquiries as to the location of the boundaries of the land with bodies such as the Department of Environmental Protection, the Ministry for Planning and the local authority. The reason for that was that the common boundary with the lake and parks reserve was a matter known to Mr Jackson, who was an experienced developer who had been living and working in the Wanneroo area for a long period. She further considered that the failure to obtain a survey prior to entering into the contract, and alternatively the failure to make the contract conditional upon the completion of such a survey was negligent, and that Mr Jackson's failing to make further enquiries once the contour survey was received by him was also an aspect of his negligence contributing to the purchaser's loss.
The grounds of appeal
45 There were originally four grounds of appeal, but the first of those was abandoned by the first respondent. Retaining the original numbering, a summary of the remaining grounds is as follows:
2. Having found that the first representation (the advertisement) was made by the Stewarts and the agent, her Honour erred in finding that the agent had not engaged in misleading and deceptive conduct contrary to the Fair Trading Act 1987 in making it. The aspect which is alleged to be misleading and deceptive was the fact that it failed to advise readers that part of the land offered for sale was under water and, as the purchaser alleged "could not be used for a commercial development".
3. Having found that the third representation (the boundary indication) was made by the agent and that it was misleading, her Honour erred in finding that the purchaser did not rely upon it.
(Page 15)
- 4. Her Honour erred in finding the purchaser guilty of contributory negligence, or alternatively, in finding that the extent of contributory negligence by the purchaser was 35 per cent of its damages. In particular, it is submitted that since her Honour found that the purchaser was "lulled into a false sense of complacency" about its need to take reasonable steps to assess the land prior to purchase, because of the conduct of the Stewarts, it was not reasonably open to her Honour to find that the purchaser was at fault (or at fault to that extent) by failing to make independent enquiries regarding the location of the boundary.
Ground 2 - the first representation
46 It is to be noted that the alleged misleading and deceptive conduct lies not in the giving of information, but in the failure to give information. While it is well established that silence may be considered to be misleading and deceptive, the silence must in all cases be considered in its context. The observation of a Black CJ in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 (at 32) is often cited in this context. His Honour said:
"Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive. To speak of 'mere silence' or of a duty of disclosure can divert attention from that primary question. Although 'mere silence' is a convenient way of describing some fact situations, there is in truth no such thing as 'mere silence' because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed".
47 The question then is whether in the circumstances of this advertisement recipients of the information would reasonably expect it to convey all relevant information concerning the quality and potential use of the land or, alternatively, if the recipient could reasonably expect it to convey information concerning any substantial matters which would affect the use of the land.
(Page 16)
48 In my view, merely to pose the question is to demonstrate that it must be answered in the negative. The purpose of a newspaper advertisement of the kind in question here is to attract attention to the fact that land is available for sale, and to pique the interest of prospective purchasers. It is part of the ordinary experience of persons in the community, and a fortiori part of the experience of those experienced in property development, that an advertisement of this kind will mention selectively only those features of the land most likely to attract the interest and attention of prospective purchasers. None of the statements made in the advertisement was itself untrue, nor were the statements in my view misleading, either singly or all together in the context in which they occurred. Even the statement that the land was "beautifully situated for entertainment/tourism purposes" could not in my view indicate to a reasonable purchaser that it was represented that all of the land would be able to be used for those purposes.
49 Further it is not necessarily the case that it could be said that the whole of that part of the land under water "could not be used for a commercial development". Her Honour noted at [172] of her reasons for decision, that there had been some evidence suggesting that "low key type access" such as walkways could be developed in the wetlands. Her Honour also noted that one of the valuers who gave expert evidence suggested that there may be a value placed on the wetland in the sense that it may add to development planned for the adjacent land, such as the bird park contemplated by the Stewarts. The value and use of the submerged land was significantly reduced, but I do not think that the purchaser can assert that the submerged land was wholly unusable and of no value. In my view, her Honour was entirely correct in finding that the agent had not engaged in misleading and deceptive conduct in making the first representation in the advertisements.
Ground 3 - indication of the boundary
50 It is to be noted this ground of appeal relates only to the role of the agent. Her Honour found that the representation as to the boundary was made by Mr Stewart, that it was misleading and that the purchaser relied upon it. As to the agent however, the findings complained of are at [206] of her Honour's reasons, which I set out here:
"The plaintiff has failed to satisfy me that it has suffered any loss 'by' the second defendant's breach of the Act. This is because I am not satisfied that the plaintiff relied upon Mr Brandenburg's agreement with Mr Stewart's identification of
(Page 17)
- the location of the southern boundary of the land. For the reasons I have given in relation to the issue of negligence I am satisfied that it would not have been reasonable for Mr Jackson to have relied upon Mr Brandenburg's agreement. I have also looked at Mr Jackson's evidence to ascertain whether he did in fact rely upon Mr Brandenburg's agreement. Although Mr Jackson refers to having asked both the agent and the vendor, he acknowledges that the answer he got from Mr Brandenburg was that they would have to in turn ask Mr Stewart. Mr Jackson relied upon the information supplied by Mr Stewart not that relied upon [sic: supplied?] by Mr Brandenburg. Any loss suffered by the plaintiff was occasioned by the negligence of the first defendants and by the plaintiff's own negligence and not by any breach of statutory duty on behalf of the second defendant. …"
51 There are two submissions made about this paragraph.
52 The first, it is submitted that the question of reasonableness was not a matter which would preclude the purchaser from recovering damages, once her Honour had satisfied herself that the purchaser relied upon the third representation: Henville v Walker (2001) 206 CLR 459. In my view, that submission raises a false issue in this context. I think her Honour's reference to reasonableness in [206] is a factor which, together with the evidence of Mr Jackson himself, leads her to the conclusion that Mr Jackson relied upon the information supplied by Mr Stewart and not that supplied by the agent.
53 In essence, the reasoning in [206] appears to me to have two steps. The first, expressed in shorthand, is that it would be hardly to be expected that an experienced developer such as Mr Jackson could reasonably have expected that he could rely upon a representation by an agent who did not claim any personal knowledge of the matter. That is the question to which I think the observation about "reasonableness" is directed. The next and more important step is that, when one turns to the evidence, one finds Mr Jackson himself acknowledging that the agent disclosed that it was the vendor, rather than the agent, who was able to supply information concerning the boundaries. It was in that context that Mr Brandenburg indicated his "sort of agreeance" with what Mr Stewart had said about the boundaries, and was in that context that her Honour found that there was no reliance upon whatever observation Mr Brandenburg made on behalf of the agent. In my view, it was open to her Honour to reason in that way.
(Page 18)
54 The second issue in relation to this ground of appeal is that it is asserted that her Honour's finding in the paragraph from which I have quoted was inconsistent with findings which her Honour made earlier in her reasons. The purchaser points to two paragraphs here. At [137] her Honour said: "I am satisfied for the reasons given earlier … that the plaintiff did rely upon the first and third representations". At [195] her Honour said: "I have found that the plaintiff did rely upon the third representation". That reference at [195] is apparently a reference back to [137]. It was argued that in the face of those findings, it was not open to her Honour at [206] to find that there was no reliance upon the third representation as made by the agent. In my view, that submission overlooks the structure of her Honour's reasons. Paragraph [137] falls under the third of a series of four headings with which her Honour conveniently introduced certain findings. They were:
"1. Did the first defendants [the Stewarts] make the representations as alleged?
2. Were the first and third representations false?
3. Did the plaintiff rely upon the representations?
4. Were the first defendants [the Stewarts] negligent in making such false representations?"
55 It is clear that, although certain general findings of fact were made by her Honour, the focus in that portion of her Honour's reasons was upon the representations as made by the first defendants (ie the Stewarts). It was in that context that her Honour found that the representation was relied upon. Paragraph [195] falls under the third of a series of six headings which are concerned primarily with the second defendant, ie with the agent. They are:
"1. Did the second defendant make the representations as alleged?
2. Were the first and third representations false?
3. Did the plaintiff rely upon the representations?
4. Was the second defendant in breach of a statutory duty not to make such a representation?
5. Was the second defendant negligent in making such a false representation?
(Page 19)
- 6. What is the measure of damages for the second defendant's breach of statutory duty?"
56 In relation to the second and third of those headings, her Honour simply referred back to findings which she had earlier made in relation to the first defendants. So far as reliance upon the representation made by the agent was concerned, in my view her Honour considers that issue at [206] under the sixth of her Honour's headings, rather than under the third heading at [195], where her Honour simply records the earlier finding. Although there is an apparent ambiguity, in my view the terms of [206] make the resolution of any ambiguity plain.
57 While one might regard the indication of the boundary as a single "representation" there was here no joint representation (as might occur where two people individually sign one document containing a representation). Rather there were two distinct statements, one by Mr Stewart and one by the agent's employee Mr Brandenburg. Although the purchaser pleaded the two statements as in effect a single "representation" there were always factual issues for her Honour to resolve as to whether either or both statements had been made, as to the content of each of those statements, and as to the effect of each of those statements, if made, upon Mr Jackson. Her Honour's finding was to the effect that a statement similar to the statement made by Mr Stewart was made by Mr Brandenburg but that, by reason of the different position of the agent, which was known to Mr Jackson, Mr Jackson did not rely upon that statement. That is the view of her Honour's findings which emerges on a fair reading of her reasons as a whole, and it was a view which she was entitled to reach having regard to the facts to which I have referred.
Ground 4
58 The general principle is that an appellate court will not interfere with a trial Judge's apportionment of responsibility unless it can be shown that the Judge erred in principle or misapprehended the facts or the apportionment was manifestly erroneous: Sierra v Anikin [2003] NSWCA 11; Phillis v Daly (1988) 15 NSWLR 65 at 78. The principle is accepted by the appellant. However, what it says in relation to this issue is summarised in its written submissions as follows:
"Having made a finding that Goldrange was lulled into a false sense of complacency by the third representation which was directly related to the position of the rear boundary, a reduction of Goldrange's damages by 35 per cent was manifestly
(Page 20)
- erroneous. The concept of contributory negligence imports within it a failure on Goldrange's part to take reasonable care for its own safety. In circumstances where that failure was due to false representations on the part of Mr and Mrs Stewart … any failure by Goldrange to take reasonable care for its own safety was explicable and excusable."
59 In my respectful view, that submission overlooks an important element of the purchaser's own action. Had it not relied upon the statements in relation to the rear boundary made by Mr Stewart, it must have failed on the issue of causation of the damage which it suffered. It was necessary for there to be a finding of reliance by her Honour before the purchaser was entitled to any damages, and thus before the question of contributory negligence arose. It therefore cannot be the case that a finding of reliance, on its own, is sufficient to rule out any question of contributory negligence in cases of this kind.
60 In my view, her Honour's reference to the purchaser being "lulled into a false sense of complacency" is no more than a colourful way of expressing the finding which she had already made, which was that Goldrange had relied upon the statements made by Mr Stewart. The question which she had to consider at the time of dealing with contributory negligence, was whether in allowing itself to be so "lulled" the purchaser had acted with reasonable care for its own interest. She found that it did not do so.
61 In circumstances where an experienced developer with some knowledge of the area, purchasing land abutting a lake with a view to developing the whole of the land, apparently fails to make any enquiries of any relevant planning or environmental authority, and fails to ascertain the boundaries of the land prior to purchase (or alternatively fails to make it a condition of the contract that these matters be dealt with to its satisfaction), I am unable to see that a finding of 35 per cent contributory negligence was outside the range of a sound exercise of discretion.
Conclusion
62 In my view this cross appeal should be dismissed.
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