Strzelecki Holdings Pty Ltd v Jorgensen [No 3] - [2015] WADC 115

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: STRZELECKI HOLDINGS PTY LTD -v- JORGENSEN [No 3] [2015] WADC 115

CORAM: EATON DCJ

HEARD: 11 AUGUST 2014, 24 - 26 NOVEMBER 2014, 30 MARCH - 1 APRIL 2015, 26 MAY & 18 JUNE 2015

DELIVERED : 30 SEPTEMBER 2015

FILE NO/S: CIV 1811 of 2011

BETWEEN: STRZELECKI HOLDINGS PTY LTD
Plaintiff
AND
STEPHEN LAURENCE JORGENSEN
ROBYN MIRIEL JORGENSEN
Defendants

Catchwords:

Contract - Sale of Land under Strata Title - 'off the plans' - Validity of termination - Compliance with Strata Titles Act 1985 - Misrepresentation - Collateral contract - Unconscionability - Repudiation - Whether acceptance of representation - Whether purported termination valid

Legislation:

Strata Titles Act 1985
Trade Practices Act 1974

Result:

Plaintiff's claim dismissed
Defendants' counterclaim allowed

Representation:

Counsel:

Plaintiff: Mr M M Solomon SC
Defendants: Mr N D C Dillon

Solicitors:

Plaintiff: Hotchkin Hanly Lawyers
Defendants: Murcia Pestell Hillard

Case(s) referred to in judgment(s):

Ampol Ltd v Lawson [1993] FCA 521; (1993) ATPR 41-275; (1993) 46 FCR 1
Associated Newspapers Ltd v Bancks [1951] HCA 24; (1951) 83 CLR 322
Attorney General of New South Wales v World Best Holdings Ltd [2005] NSWCA 261
Australian Competition and Consumer Commission (ACCC) v CG Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 197 ALR 153
Bankmist Holdings Pty Ltd v Azina Holdings Pty Ltd [2009] WASC 230
Bassingthwaite v Butt [1982] Qd R 670
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] UKPCHCA 1; (1977) 180 CLR 266
Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187
Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447
Deming No 456 Pty Ltd v Brisbane Unit Development Corp Pty Ltd [1983] HCA 44; (1983) 155 CLR 129
Elder's Trustee & Executor Co Ltd v Commonwealth Homes & Investment Co Ltd [1941] HCA 31; (1941) 65 CLR 603; [1941] ALR 302.
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471
Gold Coast Carlton Pty Ltd v Wilson [1985] 1 Qd R 182
Harman Nominees Pty Ltd v Leighton Shores Pty Ltd [2012] WASCA 189
Harvey Fields Private Estates Pty Ltd -v- 33 Malcolm Street Pty Ltd [2012] WASC 218
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) [1988] FCA 40; (1988) 79 ALR 83
Inntrepreneur Pub Co (GL) v East Crown Ltd [2000] 2 Lloyd's Rep 611
Jackson Nominees Pty Ltd v Hanson Building Products Pty Ltd [2006] QCA 126
Kakavas v Crown Melbourne Ltd [2013] HCA 25
Kendall v Hamilton (1879) 4 App Cas 504
Kosho Pty Ltd v Trilogy Funds Management Ltd [2013] QSC 135
Latitude Developments Pty Ltd v Haswell [2010] QSC 346
Mersey Steel & Iron Co Ltd v Naylor, Benzon & Co (1884) 9 App Cas 434
Mirvac Queensland Pty Ltd v Wilson [2010] QCA 322
Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537
Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 186 ALR 289; (2002) 76 ALJR 436
Specialist Diagnostic Services Pty Ltd (formerly Symbion Pathology Pty Ltd) v Healthscope Pty Ltd [2012] VSCA 175
Young v Bristol Aeroplane Co Ltd [1946] AC 163

EATON DCJ:

Introduction

The plaintiff, Strzelecki Holdings Pty Ltd, ('Strzelecki') is an Australian proprietary company limited by shares registered in Western Australia on 5 March 1991. It was, at all material times until 6 January 2011, the registered proprietor of land at Mandurah in Western Australia, being lot 313 on deposited plan 41764 the whole of the land comprised in Certificate of Title Volume 2586 Folio 350. That land had the street address: lot 313, The Lido, Mandurah. It is located in the southern harbour of the Mandurah Ocean Marina.
The land referred to was the site of a proposed residential development to be undertaken by Strzelecki to be known as 'Oceanic Retreat'. On 5 January 2007 Strzelecki entered into an agreement with Seachange (WA) Pty Ltd ('Seachange'), also an Australian proprietary company limited by shares registered in Western Australia on 31 January 1992. That company, in 2007, traded as Century 21 Coast Realty Mandurah. By that agreement Strzelecki appointed Seachange as exclusive agent for the sale of Oceanic Retreat.
The development had been approved by the City of Mandurah on 20 December 2005 on the basis that there would be 56 short‑stay apartments and commercial outlets such as restaurants, cafes and a micro‑brewery.
By an agreement in writing dated 7 May 2007 Stephen Laurence Jorgensen and Robyn Miriel Jorgensen ('the Jorgensens') agreed to purchase 'Apartment 14, the Oceanic Retreat, lot 313 The Lido, Mandurah' (hereinafter referred to as 'apartment 14') for $650,000. That agreement informed that the sales consultant involved was Greg Jardine of Century 21 Coast Realty Mandurah as agent for Strzelecki. It stipulated that a deposit of $65,000 was to be paid within 30 days by the Jorgensens to be held in the Century 21 Trust Account. The deposit was paid in accordance with the agreement.
The purchasers' offer was said to be a cash offer. The balance of the purchase price was to be paid on settlement. The terms of the contract stipulated that settlement would take place within 15 business day of the issue of a separate certificate of title for apartment 14.
On 6 January 2011 Certificate of Title Volume 2760 Folio 614 issued for apartment 14. On that certificate it was described as lot 14 on Strata Plan 58148 with the street address: 'Unit 14, The Palladio, Mandurah'. Strzelecki was the registered proprietor.
By letter of 17 January 2011 Strzelecki advised the Jorgensens of the issue of title. Settlement did not take place.
The Oceanic Retreat development comprises a four level building, there being a basement carpark, ground floor commercial tenancies and 56 apartments on the first and second floors. Apartment 14, purchased by the Jorgensens, is on the first floor.

The Action

By Writ of Summons filed in this court on 1 June 2011 Strzelecki sued the Jorgensens for breach of the contract to purchase apartment 14, asserting that Strzelecki had 'terminated' that contract by notice dated 21 April 2011.
In its statement of claim Strzelecki says that by a notice of default issued and dated 1 April 2011 it gave notice to the Jorgensens to the effect that they were in default under the contract and that, in the event of a failure to complete the purchase within 10 days, Strzelecki would forfeit the deposit, sue for damages and re-sell apartment 14.
By way of relief Strzelecki seeks a declaration that it is entitled to payment of the deposit and all interest accrued thereon, damages and interest thereon and costs on an indemnity basis pursuant to the contract including costs incurred prior to the commencement of the action.
In their defence the Jorgensens plead that there were initial meetings with agents of Strzelecki in March and April 2007 during which representations were made to them:
(a)that the 'entire residential portion' of Oceanic Retreat would be exclusively occupied by tourist/short-stay residents; and
(b)that Strzelecki would only enter into agreements for the sale of residential lots if the purchaser agreed that the lot to be purchased would only be occupied (by the purchaser or a tenant) on the basis of tourist or short‑stay accommodation and not as a permanent resident.
In addition, the Jorgensens plead that Century 21
stated that it was a term of any contract to purchase a lot within the Oceanic Retreat Development that the purchaser agree that the entire residential portion was to be strictly restricted to being occupied exclusively for tourist/short stay accommodation and not for permanent residence.
In summary the Jorgensens plead that the contract for the sale of apartment 14 comprised the following:
(a)the oral term to the effect that the entire residential portion was to be strictly restricted to being occupied exclusively for tourist/short‑stay accommodation and not for permanent residence,
(b)the document entitled 'Contract for Sale of Land or Strata Title by Offer and Acceptance' dated 7 May 2007; and
(c)various documents which accompanied (b) and listed in par 2.6 of the re‑amended defence and counterclaim;
(d)an implied term that Strzelecki would act in good faith in giving effect to the contract;
(e)an implied term that Strzelecki would not take any step or engage in any conduct that may deprive the Jorgensens of the benefit of the contract;
(f)an implied term that Strzelecki would not offer to sell or sell any of the residential lots without imposing a term requiring the purchaser to agree that the residential portion of Oceanic Retreat was to be restricted to being occupied exclusively for tourist/short‑stay accommodation and not for permanent residence; and
(g)an implied term that Strzelecki would not take any step or engage in any conduct that would allow, permit or facilitate the plaintiff or any purchaser not having to comply with the oral term.
The Jorgensens plead that Strzelecki, after contract, acted in breach of the representations made and in doing so, evidenced an intention to repudiate the contract, that the Jorgensens accepted that repudiation, thereby bringing the contract to an end and entitling the Jorgensens to a refund of their deposit.
In the event that the oral term pleaded is not a term of the contract, the Jorgensens plead that a collateral contract exists, arising from statements said to have been made on behalf of Strzelecki at the initial meetings that in consideration of Strzelecki agreeing to contract with any purchaser (including the Jorgensens) for the purchase of a lot within the residential portion of Oceanic Retreat it was necessary for the purchaser to agree that the entire residential portion of Oceanic Retreat was to be restricted to tourist/short‑stay accommodation, exclusively, and not for permanent residence.
It is further pleaded that, as part of the collateral contract, the Jorgensens, if they made an offer to purchase, their offer would be subject to that condition.
The Jorgensens plead that the conditions which they contend should be implied into the contract for the sale of apartment 14 should also be implied into the collateral contract.
The Jorgensens plead that Strzelecki was in breach of both the contract and the collateral contract in various ways, that those breaches evidenced an intention to repudiate the contract or the collateral contract, as the case may be, that they accepted the repudiation, thereby terminating either the contract or the collateral contract, entitling them to return of their deposit and any interest earned on it.
The Jorgensens also plead that Strzelecki's conduct, post-contract:
(a)was unconscionable; or
(b)was in breach of s 51AA, s 51AB and/or s 51AC of the Trade Practices Act 1974(TPA);
(c)gave rise to an estoppel against asserting a claim for damages;
(d)was contrary to the requirements of the Strata Titles Act 1985 (STA), in particular s 69C and s 69D; and
(e)was a failure to mitigate its loss.
In the course of closing oral submissions, counsel for the Jorgensens applied to amend par 19A.1 of their re-amended defence and counterclaim by adding to that paragraph the words: 'and/or in respect of common property'. The application was opposed.
By counterclaim the Jorgensens seek:
(a)a declaration that the contract is set aside or is void and unenforceable;
(b)that they are entitled to return of the deposit;
(c)damages for breach of contract;
(d)damages for breach of the collateral contract; and
(e)a permanent injunction restraining Strzelecki.
In its reply and defence to counterclaim Strzelecki joins issue with the Jorgensens in their various contentions and claims.

The Statutory Context

According to the special conditions to and forming part of the contract it was conditional on:
(a)the approval of the Western Australian Planning Commission (WAPC) to the proposed strata plan by the latest date;
(b)the City of Mandurah issuing a certificate under s 23 of the STA in respect of the proposed strata plan by the latest date;
(c)the proposed strata plan being duly registered at DLI by the latest date; and the Western Australian Land Authority lodging a registrable withdrawal of its caveat J286550 by the latest date.
Although 'DLI' is defined in the special conditions to mean the Department of Land Information, I take the abbreviation to be a reference to the Department of Land Administration.
At the relevant time s 5B(2) of the STA provided that a strata plan lodged for registration had to be accompanied by a certificate given by the relevant local government body in accordance with s 23 of that Act. The section required that the certificate had to be in a prescribed form and certify, in a case where a building is divided into lots on a strata plan, that the building is, in the opinion of the local government body, of sufficient standard to be brought under the STA. Section 23 further provided that an application for a certificate was to be granted and issued where the local government body is satisfied in respect of matters referred to in that subsection and that:
(a)separate occupation of the proposed lots would not contravene the provisions of any local planning scheme in force under the Planning and Development Act 2005 (PDA);
(b)any consent or approval required under any such local planning scheme or under the provisions of the PDA relating to any interim development order, has been given in relation to the separate occupation of the proposed lots; and
(c)the development of the parcel as a whole, the building and the proposed subdivision of the parcel into lots for separate occupation would not interfere with the existing or likely future amenity of the neighbourhood, having regard to the circumstances of the case and to the public interest.
Part V of the STA is entitled 'Protection of Purchasers'. Annexure 'A' to the contract is a disclosure statement providing notifiable information pursuant to s 69 of the STA. That section falls within pt V of the Act. The purchaser is informed that they have a right to terminate the contract if
certain changes occur in relation to the strata company, the strata/survey - strata plan to the common property (as set out in section 69C (3) of the Strata Titles Act 1985) before settlement and you have not been given notice in writing of those changes.
By s 69C(1) of that Act the vendor under a contract to sell a lot or proposed lot shall by notice in writing given to the purchaser inform the purchaser of full particulars of any notifiable variation. Notice is to be given as soon as the vendor becomes aware of the variation.
The section provides that a notifiable variation occurs if before the registration of the purchaser as proprietor of the lot or proposed lot the proposed strata plan is varied in a material particular or the registered strata plan differs in a material particular from the proposed strata plan.
Section 69C(3) of the Act provides that for the purposes of s 69C(1), a notifiable variation occurs if before the registration of the purchaser as proprietor of the lot or proposed lot or earlier avoidance of the contract the registered or proposed strata/survey-strata plan is varied in a material particular or the registered strata/survey-strata plan differs in a material particular from the proposed strata/survey-strata plan.
Section 69D of that Act provides that if a vendor fails to give to a purchaser information that substantially complies with s 69 or s 69C at the time required by that section, the purchaser has a right to avoid the contract by notice in writing given to the vendor before the settlement of the contract. For the purposes of that section 'settlement' is defined to mean the time at which the purchaser pays to the vendor the purchase price, or the balance of the purchase price, in exchange for the documents of title.
By s 69D(2) if:
(a)a vendor gives to a purchaser information that substantially complies with s 69C and at the time required by that section; and
(b)the purchaser has been materially prejudiced (proof of which shall lie on him) by any matter referred to in the notice and has not agreed to be bound by that matter,
the purchaser has a right to avoid the contract by notice in writing given to the vendor within 7 working days after that information is given.
By s 69D(3) if under s 69D(1) a purchaser has a right to avoid a contract but before notice of avoidance is given the vendor gives to the purchaser information that substantially complies with s 69 or s 69C, the purchaser's right under s 69D(1) must be exercised within 7 working days after that information is given.
By s 69D(4) if the vendor gives to the purchaser information that substantially or partially complies with s 69 or s 69C within 7 working days before the settlement date designated in the contract, the purchaser:
(a)may, despite the contract and without incurring any penalty under it, by notice in writing, postpone the time for settlement beyond that designated settlement date by not more than 7 working days after that information is given; and
(b)subject to subsection (5), has a right to avoid the contract by notice in writing given to the vendor at any time before the expiration of that period and before settlement is effected.
By s 69D(5) the right conferred on a purchaser by subsection (4) does not apply if the information was given under s 69C and at the time required by that section unless the purchaser has been materially prejudiced (proof of which shall lie on him) by any matter referred to in the notice and has not agreed to be bound by that matter.
Section 70A of the STA provides that a contract or arrangement was of no effect to the extent that it purported to exclude or restrict the operation of that part of the Act or the rights and remedies conferred on a purchaser by that part.

The Evidence

On 6 December 2013 orders were made that, inter alia, the evidence‑in‑chief of all witnesses at trial be given on affidavit. There was a timetable for the filing and service of affidavits which were to annex all documents to be tendered through the witness. Each party was granted leave to lead oral evidence at trial from a witness for whom an affidavit had been filed, such oral evidence to be purely responsive to material contained in an affidavit filed by any other party.
The plaintiff called evidence from David John Green whose affidavit was sworn on 17 July 2014, Jodi Nicole Taylor whose affidavit was sworn on 13 July 2014, Jay Daniel Poland whose affidavit was sworn on 28 July 2014 and Murray Colin Archibald whose affidavit was sworn 19 November 2014.

David John Green

At material times David Green was a licenced real estate agent and a director of Seachange which traded as Century 21 Coast Realty Mandurah from 1 July 2002 to 30 June 2007. He was a signatory to the exclusive selling agreement between Strzelecki and Seachange in respect of Oceanic Retreat. He was also a signatory to the agreement for the sale of apartment 14 to the Jorgensens, signing on 7 May 2007 as a witness to the signature of Greg Poland, a director of Strzelecki.
David Green's first contact with the Jorgensens must have been just prior to or on 16 April 2007 because he sent an email to Mr Jorgensen thanking him for his enquiry regarding Oceanic Retreat and forwarding to him a price list. He advised that 31 of the 56 apartments had been sold and that he expected the remainder to be sold by the end of that week.
David Green has no recollection of meeting the Jorgensens.
The vast bulk of his evidence-in-chief was in an affidavit sworn 17 July 2014. In cross-examination he was referred to the exclusive selling agreement between Strzelecki and Century 21 Coast Realty Mandurah. He said that he negotiated that agreement with Greg Poland, a director of Strzelecki. He also negotiated, at the same time, an agreement with Crest Hotels whereby it would provide management services to Oceanic Retreat. Greg Poland gave instructions on behalf of Strzelecki in relation to, inter alia, whether offers to purchase should be accepted.

David Green said that, at that time, he was the top selling real estate agent in the marina and that he had sold the majority of Oceanic Retreat apartments. He referred to Oceanic Retreat as a 'tourism development', meaning that apartments offered for sale in it were not for permanent residence. It was, he said, important to explain that to prospective purchasers. He said:
It needed to be explained to them thoroughly because it was important that they understood it. I myself had purchased an apartment, a short-stay in the marina and I knew what needed to be done and I was also wary of litigation if you didn't do it.
He did not, he explained, deviate from that practise.
David Green said that it was also his practise to provide prospective purchasers with a pro forma contract prior to meeting with them to explain matters.
David Green identified the contract made with the Jorgensens. He said that special conditions 7 and 8 were in his daughter's handwriting. Those conditions were added when would‑be purchasers came to his office. They, and the contract generally, were explained before execution. In particular, he said, he was careful to explain to a prospective purchaser the restricted use to which the apartment could be put. He explained that he did so and included the handwritten conditions because he had been advised by Strzelecki's solicitors, Lawton Gillon, that he should ensure that he pointed out that what was being purchased was a short-stay apartment and include a clause to that effect.
David Green confirmed that he had no recollection of meeting the Jorgensens or either of them at about the time they entered into their contract with Strzelecki but he agreed that it was possible that he did so.
While accepting that he would have told the Jorgensens that the apartment they were purchasing was restricted to short‑stay accommodation, he said that he would not have told them that there would be a similar condition inserted in every contract for the purchase of an apartment at Oceanic Retreat. His expectation was that every contract entered into by a purchaser would have a condition in similar terms to cl 8 in the Jorgensen's contract but, he said, it was not possible that he would have told Mr Jorgensen that special condition 8 was going to be in all contracts. He anticipated, at the time, that there would be one contract for each purchaser of an apartment and that it would contain the same terms. His anticipation was that every purchaser of an apartment was going to be subject to the same terms and conditions. The contract, he said, did not allow for permanent residents.
David Green seemed to be of the view that it would have been self‑evident to any purchaser of an apartment in Oceanic Retreat that permanent residents were not permitted. He said that he would have explained to a prospective purchaser that the short-stay restriction allowed an owner occupancy for a maximum of 90 days in a 12 month period.
David Green explained that he was, at the time of giving evidence, a manager of Crest Hotels. It managed about 44 apartments for owners at Oceanic Retreat. About 14 of those, he said, were owned by Strzelecki. Apartments under management by Crest are occupied on a nightly tariff basis, the tariff being from $169 per night to $399 per night during peak periods. All except two are two‑bedroom apartments but if the customer wants only a one‑bedroom apartment the second bedroom is locked and the tariff is cheaper. Apartments facing the marina are, generally, more expensive than those which do not. There are two one‑bedroom apartments for disabled guests.
David Green said that apartment 14 is a two-bedroom apartment on the first floor. Apartment 42 is directly above. Both were, he said, managed by Crest. Each has an average return of about $15,000 ‑ $21,000. Apartment 14, he said, would be sold for $199 per night to $399 per night depending upon the time of the year and whether it was being sold as a one‑bedroom or two‑bedroom apartment.
In re-examination David Green said that apartment 14 had been under management by Crest for about five months since October or November 2014.
He was giving oral evidence on 31 March 2015.

Jodi Nicole Taylor

Jodi Taylor was, at material times, a senior conveyancer and mortgage clerk in the employ of Derek Schapper, solicitor. In that capacity she acted for Strzelecki in respect of the settlement of the sale of apartment 14. On 6 December 2010 she wrote to Sheridans Settlement Agency in the understanding that that firm would be acting for the Jorgensens at settlement of the sale of that apartment. She confirmed that settlement was due 15 days from the issue of a certificate of title for apartment 14. By letter dated 17 January 2011, forwarded by facsimile transmission, she further advised that firm that the certificate of title for apartment 14 had issued. Sheridans Settlement Agency responded by letter of 18 January 2011 making certain routine requests, providing certain routine information, a copy of the relevant (unexecuted) transfer of land and anticipating that settlement would take place on 8 February 2011.
By letter dated 22 March 2011 sent by facsimile transmission Jodi Taylor advised that, in respect of apartment 14, her client was ready, willing and able to settle.
It is the case that Derek Schapper issued a notice of default dated 1 April 2011 directed to the Jorgensens, their solicitors and settlements agents. That notice required that the alleged default be remedied within 10 business days and that, failing that, Strzelecki would take certain steps, including forfeiting the deposit except so much as exceeded 10% of the purchase price.

Jay Daniel Poland

Jay Poland's evidence‑in‑chief comprised his affidavit sworn 28 July 2014. At trial, when called, he identified the affidavit as being his. He was cross-examined. He confirmed that he was appointed as a director of Strzelecki in about 2007. Prior to his appointment he thought that his father, Greg Poland and his mother, now deceased, had been directors.
Jay Poland confirmed that there were, in 2008, a lot of apartments for sale in the Mandurah marina. Those confined to short-term stay were not selling readily. Strzelecki was considering a proposal to change Oceanic Retreat to a mix of short‑stay and permanent residence apartments. Jay Poland accepted the proposition that the existing purchasers at Oceanic Retreat were not consulted about or informed of that proposal. He accepted that on 8 October 2008 Strzelecki sought approval from the City of Mandurah and the WAPC to amend the Outline Development Plan covering Oceanic Retreat to allow for a ratio of 70/30, short-stay/permanent stay. The application, he said, was made in the context of rising interest rates and a flat property market at the time.
Jay Poland was reluctant to agree with the proposition that there was, in 2008, difficulty selling apartments in Oceanic Retreat but he did accept that, as at the time of giving evidence, Strzelecki still owned 19 of the 56 apartments. He did accept that Strzelecki recognised, in 2008, that there would be 'amenity issues' arising from having a mix of tourist and permanent stay accommodation at Oceanic Retreat. He agreed also that one of the reasons for seeking the change was to attract purchasers looking to buy and live in an apartment. Such purchasers could, in the changed financial circumstances, more readily borrow from banks. Purchasers seeking to invest in tourist stay accommodation were finding it harder to obtain bank finance.
Jay Poland did not accept that the situation for Strzelecki was urgent in 2008, notwithstanding that Benchmark Projects Australasia, the project managers appointed by Strzelecki for Oceanic Retreat wrote to the director of planning at the City of Mandurah on 8 October 2008 requesting consideration of their proposal for a change in the use restriction as a matter of urgency.
Jay Poland did not agree with the proposition that Strzelecki had made a decision to apply for a change in the approval for the development so far as the use restriction was concerned. He said:
We were looking at it. At all times we were looking at it though we – we hadn't made the final decision either way.
He also disagreed with the proposition that Benchmark acted on behalf of Strzelecki. He said in that regard:
They had no authority. Like, they're not directors. They can't sign anything. They can't do anything.
On 20 February 2009 Benchmark again wrote to the director of planning at the City of Mandurah. The letter advised:
The owners of the Oceanic Retreat are seeking formal approval from the City of Mandurah to amendment the approved Mandurah Ocean Marina Outline Development Plan to permit a 70/30 (currently 100% tourism) short stay/permanent residential accommodation mix (40 short stay and 16 permanent residential) within the subject development.
Jay Poland, when his attention was directed to that passage, denied that Strzelecki had made a decision to seek approval for a change to a mixture of short‑stay and permanent apartments. He said that no notice of any such proposal had been given to the existing purchasers.
On 27 March 2009 Benchmark wrote to the director of infrastructure and investment at Tourism Western Australia on the understanding that Tourism Western Australia would be providing formal comments to the City of Mandurah and WAPC on the proposed amendment to the Mandurah Marina Outline Development Plan to permit a 75/25 tourism and permanent residential accommodation ratio at Oceanic Retreat. In that letter Tourism Western Australia was formally asked to reconsider its then current policy position and support Strzelecki's proposal. When the content of that letter was put to Jay Poland he denied that the proposed change to the ratio was very important to Strzelecki.
Jay Poland agreed that on 5 May 2009 the relevant committee of the City of Mandurah rejected Strzelecki's proposal. The matter was put before a full council meeting on 19 May 2009. In the interim, Benchmark wrote to all elected members of council setting out its case for a change to the Outline Development Plan. An officer of Benchmark attended the meeting. Strzelecki's proposal was rejected. Consideration was given to an appeal from that rejection. A request for reconsideration was made and the proposal was again rejected by council at its meeting of 21 July 2009.
Strzelecki instructed Hardy Bowen, solicitors, and made application to the State Administrative Tribunal where the matter was listed for hearing on 10 and 11 November 2009. That hearing was adjourned while the parties negotiated. The tribunal then ordered that the hearing proceed on 16 and 17 February 2010 with certain documents filed and served in advance.
A meeting of the relevant committee of the City of Mandurah held on 12 January 2010 resolved again not to allow Strzelecki's application. On 25 January 2010 Strzelecki applied in writing to the City of Mandurah for permission to make a presentation to the ordinary council meeting to be held on 27 January 2010, the purpose being 'to convince to approve a 75/25 ratio for tourism/permanent accommodation' at Oceanic Retreat. At that meeting council adopted a motion to modify its Outline Development Plan to allow for 14 permanent residential units and 42 short‑stay units for the purpose of advertising. Not long after, Strzelecki withdrew its application to the State Administrative Tribunal.
Under cross-examination Jay Poland repeatedly rejected the proposition that Strzelecki had decided to seek to change Oceanic Retreat from being entirely short‑stay accommodation to a mixture of short‑stay and permanent accommodation, insisting, on each occasion, that Strzelecki was just 'looking at it'. He said: 'We decided to look at it and go through the - put the proposals in and look at the prospect but we never made a final decision on it'. He did agree that, as at 27 January 2010 no existing purchaser had been informed of the proposal or the acceptance of it by the City of Mandurah.
Following the decision by the City of Mandurah Strzelecki, in November 2010, lodged at Landgate a modified strata plan which included the change in the accommodation provision. When asked about that Jay Poland replied:
I believe we were trying to get it ready for processing. We were looking at it, yeah.
Of the 19 unsold apartments, the management of most, if not all, except, said Jay Poland, apartment 14, was placed in the hands of Crest Hotels for rent or lease. He explained that apartment 14 was kept vacant because Strzelecki did not want to damage the fittings in that apartment. All unsold apartments, including apartment 14, he said, were, at the time of giving evidence, for sale.

Murray Colin Archibald

Murray Archibald deposed to being a project manager in the employ, since March 2011, of Skycorp Investments Pty Ltd which, along with the plaintiff, he described as being a member of the Strzelecki group of companies. In that role he had been involved in the marketing of apartments at Oceanic Retreat. He had no recollection of receiving a telephone call from Mr Jorgensen on 9 October 2013 as to the sale of apartments at Oceanic Retreat. He added that since March 2011 he had received hundreds of telephone calls from people enquiring about the sale of apartments in that development.
He outlined his standard practice when fielding such enquiries which included, primarily, enquiring as to whether the prospective purchaser is looking to buy an apartment to live in. He said that he always explained 'to any prospective purchaser that the apartments are short‑stay accommodation and subject to a zoning restriction'. He said that he had not told any prospective purchaser that the owner could spend nine months of the year in occupation of their apartment.
Generally, he said, he would enquire as to the size of the apartment sought, the amount of money being contemplated, whether borrowing would be required, whether the prospective purchaser was seeking a furnished or unfurnished apartment and the location sought. He said that in dealing with potential purchasers he would give priority to those apartments still owned by Strzelecki as the result of terminated contracts, including apartment 14.
Murray Archibald said that, as at the date of his affidavit, apartment 14, which was not furnished, had not been under management by Crest. In additional evidence‑in‑chief he said that apartment 14 had been put into management by Crest in December 2014 and that it had been provided with a furniture package by Strzelecki in January 2015.
He did not specify a sale price for individual apartments but rather indicated a range and invited the prospective purchaser to make an offer. He said that, with respect to apartment 14 he did receive an enquiry from the O'Farrell property group regarding apartments for sale at Oceanic Retreat and in response, on 5 December 2013, advised Greg O'Farrell that apartment 14 was available for sale at a price of $440,000.
In cross-examination Murray Archibald said that, as at February 2012, apartment 14 remained unfurnished. He agreed that it could be possible that Strzelecki placed it in the hands of Crest in late November or early December 2014. Crest was requested by Greg or Jay Poland to move furniture from another apartment to apartment 14. Apartment 10 was taken out of the rental pool for residential use by Jay Poland and his partner because he had opened and was managing a tavern at Oceanic Retreat in mid to late November 2014. The furniture at apartment 10 was moved to apartment 14 under instruction to Crest. Jay Poland organised new furniture for apartment 10.
Murray Archibald thought that apartment 10 was one of the original unsold apartments. It had been under management by Crest since he joined Strzelecki in March 2011 as a commercial and project manager to assist in the settlement process of apartments sold. He later became involved in the receipt of funds from Crest on a monthly basis. He estimated that Strzelecki would receive on average between $10,000 and $15,000 per apartment after all levies and maintenance costs had been taken into account.
Murray Archibald said that in February 2012 Strzelecki had between 20 and 25 apartments for sale. It currently has about 18 for sale. He explained that Strzelecki had entered into a number of contracts for sale of apartments which were either terminated or defaulted on. Strzelecki, he said, had commenced litigation against defaulting purchasers in between 5 and 10 cases.
When asked what he would do if a prospective purchaser indicated a preference for permanent accommodation he replied that he would refer the enquiry to another agent handling other developments, very often Greg O'Farrell.
Murray Archibald said that he had represented Strzelecki at the Annual General Meeting of the Oceanic Retreat strata company. He had exercised a proxy for Strzelecki for about 19 apartments and for the commercial property it owned on the ground floor. He attended a meeting at which a resolution was put to change the by-laws of the strata company to allow permanent residents. He voted in favour of the resolution. He explained that the resolution enabled an application to the City of Mandurah to amend its zoning to allow for permanent residency. He thought that the strata company had taken that matter to the State Administrative Tribunal.
The Jorgensens provided affidavits and gave oral evidence. In addition they called evidence from Paul Anthony Timms, Paul James Asphar and Gregory Todd Jardine.

Stephen Laurence Jorgensen

Stephen Jorgensen confirmed the content of his affidavit sworn 5 August 2014. In it he said that he and his wife had been residents of Mandurah since November 1998 and that he had retired on 31 March 2007. At about that time he saw an advertisement in a Mandurah newspaper which, he thought, was the Mandurah Mail. The advertisement concerned a development at the Mandurah marina called Oceanic Retreat. Having read the advertisement, he contacted the selling agents, Century 21 Real Estate, by telephone. He was unable to recall to whom he spoke. He said that he was interested because the advertisement referred to the construction of 56 short-stay apartments. He and his wife were seeking to make an investment.
In consequence of his enquiry Stephen Jorgensen said he received an email from David Green on 16 April 2007 which informed him that 31 of the 56 apartments had been sold and that he expected that the development would 'sell out' within the week. David Green attached a floor plan and indicated which waterfront apartments, by reference to their numbers, were still available for purchase. Stephen Jorgensen said that he met with David Green at his office at the Mandurah marina in mid‑April 2007 following receipt of that email. He was not accompanied by his wife. He said that, at that meeting, he was told a number of things about the development including that permanent residence at Oceanic Retreat would not be permitted. He said that Mr Green explained that the entire development would be short-stay accommodation and that every contract for the sale of an apartment would contain a special condition to ensure that it remained so. Reference, he said, was made to the relevant zoning being 'tourism'.
David Green provided Stephen Jorgensen with a bundle of contractual documents for his perusal. They included the contract and all annexures. He took that bundle of documents home so that he might peruse them at home and discuss matters with his wife. He did so.
Within days the Jorgensens returned to the selling agent's offices at the marina where the two of them spoke with Greg Jardine. Stephen Jorgensen said that he was told that the development would take about four years to complete. He said that Greg Jardine repeated many of the things that David Green had said to him and that he made mention of the zoning being tourism. He also said that each contract for the sale of an apartment would contain a condition restricting the use of the property sold to short-stay only, meaning that a purchaser could only reside at the apartment for a maximum of 90 days per year.

Stephen Jorgensen said that Greg Jardine produced a contract with special conditions 7 and 8 handwritten on the reverse. He said that Greg Jardine completed the contract whereby he and his wife would purchase apartment 14 for $650,000. Greg Jardine retained the contract for execution, in due course, by the vendor and, following that, a copy of the contract was provided to the Jorgensens. On 29 June 2007 they paid a deposit of $65,000.
On about 16 November 2008 Stephen Jorgensen noticed an article in the Sunday Times newspaper referring to Oceanic Retreat and other properties in the Mandurah marina. In respect of Oceanic Retreat it informed 'Enjoy the freedom of ownership, live in your own resort apartment'. The advertisement mentioned Nik Varga as the selling agent and the 'Strzelecki Group'. He said that in response, he made contact with Nik Varga's office and spoke to someone there. He then, on 20 November 2008, sent an email to David Green in the following terms:
David, there is an advertisement in the Sunday Times 16 Nov from Nik Varga of various marina properties including Oceanic Retreat. His office says that now it is part permanent occupation for owners and part holiday apartments. Is this correct?
David Green replied on that day in the following terms:
The developer is chasing a change through council that would allow both, based on Seashells stage 2 having just been approved.
On 29 December 2008 the City of Mandurah issued approval to Strzelecki for a building licence for Oceanic Retreat to comprise retail outlets, short-stay residential and cafes and/or restaurants. Stephen Jorgensen said that on or about 29 December 2008 he saw a document evidencing the issue of a building licence for Oceanic Retreat in those terms by the City of Mandurah. He said that, in consequence, his fears about Strzelecki seeking to change the zoning were allayed.
Stephen Jorgensen said that on 12 January 2010 he received an email from David Green in the following terms:
There is the possibility of a change to residential that we are working on, but not approved as yet … will let you know …
Stephen Jorgensen said that on 12 December 2010 he saw another advertisement in The Sunday Times newspaper concerning Oceanic Retreat. It advertised 12 quality one or two bedroom, permanent or short‑stay apartments from $395,000, suggesting that interested persons might contact Jay Poland providing a mobile phone number and email address. He sent an email to Jay Poland on the following day in the following terms:
In your newspaper ad in the weekend you advertised the Oceanic Retreat as being a permanent stay apartment. Could you please confirm that you have received approval from the Planning Department for this and which apartments it applies to?
Jay Poland replied almost immediately asking whether Stephen Jorgensen was one of the purchasers. He responded that he was. Jay Poland then replied on 13 December 2010 as follows:
We only applied to have the remaining unsold apartments given an allowance for permanent stay. It doesn't apply to yours. Let me know if you have any further questions.
On17 January 2011 Derek Schapper, solicitor for Strzelecki, wrote to Sheridan Settlements, agents for the Jorgensens, advising that the certificate of title for apartment 14 at Oceanic Retreat had issued and reminding that firm that settlement was due 15 business days from the issue of title. Stephen Jorgensen said that, shortly after that advice, he and his wife consulted McDonald Pynt, solicitors in Fremantle. That firm, he said, on their instructions, wrote letters on a 'without prejudice' basis to Strzelecki and Century 21 Real Estate.
In March 2011 he made application to the City of Mandurah under the Freedom of Information Act 1992 for access to documents concerning Oceanic Retreat.
Settlement did not take place. On 1 April 2011 Strzelecki issued a Notice of Default to the Jorgensens requiring completion of the contract within 10 business days and reserving its rights in the event of non‑compliance. By letter of 7 April 2011 the Jorgensens responded through their solicitors referring, inter alia, to the matter of the change in occupancy restrictions and their application to the City of Mandurah for further information. By letter of 17 April 2011 Strzelecki, through its solicitors, gave the Jorgensens notice of termination of the contract, forfeiture of the deposit and of its intention to re‑sell apartment 14 and sue for damages, interest and costs. This action was commenced by writ of summons filed in this court on 1 June 2011.
In cross-examination Stephen Jorgensen agreed that he was wrong about there having been an advertisement in the Mandurah Mail which originally caught his attention. He and his wife, he agreed, made the same mistake. He explained: 'The paper that most comes into our house is the Mandurah Mail'. Having taken note of the advertisement, he contacted either David Green or someone at his office and made enquiry. On16 April 2007 David Green sent an email with a price list and some floor plans. The Jorgensens discussed the material. There followed a meeting with David Green during which there was a discussion. Stephen Jorgensen said that he was told that Oceanic Retreat was an apartment complex devoted to short-term tourism. He was unable to recall the precise terms of the conversation.
When pressed by counsel for Strzelecki to give the gist of his conversation with David Green on that occasion he said:
The complex was going to be devoted to short-term tourism. Purchasers could have the apartments rented out and it was - there - there would be assurances put in the contract to ensure that people understood that it was going to be short term tourism; every apartment, and that they wouldn't sell it to anybody without that clause going into the contract which would make sure that everybody who purchased the apartments understood it was short term tourism.
David Green provided Stephen Jorgensen with contract documents and associated materials. At home he and his wife discussed whether to proceed with an offer. He raised the possibility that they might consider purchasing two apartments. They decided to be cautious and consider just one. There were several discussions at home.
Counsel for Strzelecki put to Stephen Jorgensen par 15 of his affidavit to the effect that he could vividly recall certain references to short‑stay accommodation in the contract and materials provided to him by David Green. Counsel suggested that, by reason of having read those references he was not, in entering into the contract, relying on any statements made to him by Century 21 Real Estate, Mr Green or Mr Jardine and that what he was relying on was the content of the contract and materials provided. Counsel for Strzelecki suggested to Stephen Jorgensen that he had satisfied himself in reliance upon parts of the contract and materials to which the agents had directed his attention. He rejected those suggestions and when asked why, he said:
Because I was relying on what I was told prior to signing the contract.
Stephen Jorgensen's attention was drawn to the 'entire agreement' clause in the contract and was asked:
So did you enter into this contract, putting your signature on a document that says you did not rely on anything that had been said to you when in fact you were relying on things that were said to you?
He replied:
I was relying on what I was told.
He agreed that he had read the clause and understood it at the time. He said:
I signed the contract on the basis of all the information that I had been given.
Stephen Jorgensen agreed with counsel for Strzelecki that at the time that he was making his enquiry about Oceanic Retreat it was 'a hot market'. He referred to the advice from David Green to the effect that apartments were selling fast and that Oceanic Retreat might 'sell out' by the end of the week. He agreed with counsel for Strzelecki that he acted quickly but not that he did so without due diligence. He agreed that he and his wife signed the contract on the evening of Wednesday, 18 April 2007, around dusk, at the Century 21 Real Estate office. They attended expecting to meet David Green but instead met Greg Jardine. They intended to sign the contract documents if they were satisfied that it was appropriate to do so. They intended to pay cash rather than seek finance.
When asked by counsel for Strzelecki as to what was said by Greg Jardine Stephen Jorgensen replied:
The gist of what Mr Jardine told us, the entire complex was short-term tourism, all 56 apartments would be short-term tourism, the intention of clause 8 was to highlight that to prospective purchasers and that would be inserted in every contract so that no purchaser would be under any other illusion than that it was entirely short-term. And occupation was limited to 90 days out of 12 months.
Stephen Jorgensen agreed with counsel for Strzelecki that he had observed development in Mandurah over the period 2003 to 2007. He was aware of fluctuations in that market. He became aware of a decline in the market from about late 2007 or early 2008. He agreed that he was aware that the decline was particularly sharp in the luxury apartment category. He agreed that he was aware from early 2008 that the value of apartment 14 had fallen to a point where it was worth significantly less than the $650,000 contract price. He rejected the suggestion put to him by counsel for Strzelecki that by the second half of 2008 he wanted to get out of the contract. He agreed that he and his wife sought the advice of and attended upon their lawyers at the time, Denning Deane, on 25 November 2008. He agreed that they did so to see if there was a basis for avoiding the contract. He denied that their visit to the lawyers was the result of the plunge in real estate values at the Mandurah marina.
Stephen Jorgensen agreed that, following receipt of the letter from their lawyers of 25 November 2008, he replied by letter of 26 November 2008. He agreed that in doing so he pointed out that the problem with a mix of short-stay and permanent accommodation at Oceanic Retreat was that the mix was not conducive to long-term harmony. He agreed that he asked his lawyers to consider whether he and his wife might be able to avoid the contract on the basis of special condition 8 of the contract or any other basis. He agreed that neither the letter of 25 November 2008 from the lawyers nor his letter of the following day made any reference to representations made by Greg Jardine or David Green.
Counsel for Strzelecki put to Stephen Jorgensen that it was obvious that any purchaser of an apartment in Oceanic Retreat at that time might have been at liberty to on-sell their apartment without restrictions as to short‑stay accommodation. He replied:
It is obvious to me that people can buy and sell, but in April 2007 it wasn't obvious to me that people who buy - who bought one of those apartments could sell it without those conditions.
Counsel for Strzelecki put to Stephen Jorgensen that when, on a couple of occasions, he read in newspapers, advertisements for the sale of apartments at Oceanic retreat on a permanent or short-stay basis he was not concerned or bothered by that discovery. He disagreed. He said that, following email exchanges with David Green he decided to wait and see what, if anything happened. His concerns were allayed by a document obtained from the City of Mandurah which described Oceanic Retreat as 'short-stay residential'.
Stephen Jorgensen agreed with counsel for Strzelecki that, as the settlement date approached, he was given all documents for settlement including a copy of the registered strata plan. He agreed that it indicated that the short‑stay restriction was in place for all 56 apartments. He agreed that he later became aware that a number of the apartment owners, including Strzelecki, were seeking to change that restriction to allow for a mix of short-stay and permanent accommodation.
Stephen Jorgensen agreed that he wasn't being asked to settle on a contract with different terms from those which he had entered into. When asked why he had refused to settle he replied:
Because they had - the - the council had prior to the date on - on this settlement agreed to change the zoning from tourism short-stay to 75/25 mixed accommodation.
He agreed that the Outline Development Plan had changed from 100% short-stay to 75%/25%. He said that if he had settled in those circumstances he would been involved in a 'prolonged bun fight every time there was a strata management meeting'. Counsel for Strzelecki put to him that if he and his wife had settled they could have prevented the short-term restriction from being lifted or modified because the use restriction under the STA could only be modified by the unanimous consent of unit holders. He agreed.
In his affidavit Stephen Jorgensen gave evidence about a telephone conversation with Murray Archibald on 9 October 2013 inquiring about an apartment at Oceanic Retreat. In cross-examination he said that he made the call from the car park outside Oceanic Retreat to a telephone number that was on the advertising at the front of the building. He said that he was 'Larry' and asked Murray Archibald, who took the call, to describe what he had for sale. During the course of the conversation he told Murray Archibald that he had a son who was a fly in/fly out worker who might be an interested purchaser.
Answering questions put to him by counsel for Strzelecki he said that he did, indeed, at the time, have a son who was a fly in/fly out worker, adding that his son wasn't looking for accommodation at that time. Stephen Jorgensen agreed that his enquiry was not genuine. It was an inquiry for the purpose of furnishing evidence for the pending litigation. Specifically, he said that he wanted to find out if there was any allowance for permanent residency at Oceanic Retreat at that time and whether apartment 14 was for sale.
In re-examination Stephen Jorgensen was asked when he made the decision to purchase apartment 14. He replied that he and his wife did so during their meeting with Greg Jardine after he had reinforced what David Green had said earlier. They made the decision to buy one apartment at that meeting. He was asked as to his experience in purchasing strata titled properties and replied that he and his wife then owned two storage units on strata title. They were bought 'off the plans'.
He explained that all purchases of real estate had been, for he and his wife, long-term strategies.

Robyn Miriel Jorgensen

Robyn Jorgensen affirmed the correctness of her affidavit sworn 5 August 2014. She said that she is a non-working director of three small inter‑related companies. Every three weeks she attends a meeting of about 3 hours duration.
In cross-examination Robyn Jorgensen was asked whether her attention was drawn to the Oceanic Retreat development by an advertisement in the Mandurah Mail newspaper. She replied that she believed that it was. When pressed she said that she recalled seeing the advertisement but not exactly which paper it came from. She was quite sure it was the Mandurah Mail.
She said that when her husband returned from his meeting with David Green he had with him the draft contract papers. The two of them went through them to ensure that the contract confirmed that the development was short-term stay apartments. That was very important to them. She said that she was satisfied that the contract did say that.
She recalled that her husband commented to her that there was more than one apartment for sale and that they might buy two. She replied that one would be sufficient. She explained that they had sufficient funds to buy one without extending their finances to go to two. She was being more cautious than he was.
She agreed that she and her husband discussed the contract papers that he had brought home. They had questions that they wanted to ask on their joint visit to the real estate agent's office. She agreed that she was relying on the contract. She agreed that she and her husband had purchased other property.
She said that she and her husband later saw newspaper advertisements for Oceanic Retreat which suggested that there might have been a change in the requirement that all apartments be short-stay only. She said that they sought legal advice because they wanted to protect their interests. They were concerned about the wording of the advertisements.
She accepted that they received a letter from their lawyers at the time providing advice on whether she and her husband had a right to terminate the contract. She did not agree that she and her husband were then looking for ways to terminate the contract because of the drop in the value of apartment 14.
She accepted that they had been called upon to settle and that when that occurred the short-term restriction was still on the strata plan for all residential units. She accepted that when they were called upon to settle the contract had not changed at all. She inferred, however, that Strzelecki wanted to make changes. She said that it was 'quite obvious'. She said that she did not know what stage Strzelecki had reached in that regard but her view was that they were certainly trying to change what she and her husband had agreed to.
Robyn Jorgensen was asked whether she would accept that if the strata plan had a short-term restriction for all residential apartments and the law was that the restriction couldn't change without the consent of all unitholders, in the event of her and her husband becoming a unitholder they could veto any change. She replied: 'I believe so'.
In re-examination she said that she and her husband were looking for an investment property long-term. Oceanic Retreat was in a good location. Mandurah needed up-to-date, self-contained accommodation. It seemed like a very good prospect. It was not to be a speculative investment.
When asked what she and her husband relied upon when entering into the contract she referred to the handwritten clauses and verification verbally by Greg Jardine of what they meant.
She was asked why she and her husband did not settle the contract she replied that they felt that Strzelecki were making moves to change those very specific clauses about use restrictions. She explained that they were concerned because their own home was near rental or short-stay accommodation. Their strong view was that short-stay residential and permanent residential did not or should not mix. Their belief was, she said, that all purchasers at Oceanic Retreat would be under the same conditions and have the same purpose in purchasing.

Paul Anthony Timms

Paul Timms was, in July 2014, a licensed valuer with LMW Hegney, valuers and consultants. On 12 June 2014 he was instructed to prepare a valuation of apartment 14 at Oceanic Retreat. He did so and attached his valuation, in writing, to a letter dated 2 July 2014 addressed to the Jorgensens' solicitors at the time.
In cross-examination he agreed that he was aware of market fluctuations in the Mandurah marina region from its heights in 2006 and 2007. He was also aware that in the residential developments at the marina there was a mix of uses although he was not aware there had been changes made.
Referring to Oceanic Retreat, he said that it was not a typical residential real estate investment. Purchasers were not buying an apartment to occupy. He described that development as being 'more of a commercial transaction, involving an investment'. In that regard, his opinion was that an educated and prudent buyer would look at a mix of uses, both short-stay and permanent residential as less preferable. A mix, he said, would be potentially problematic.

Paul James Asphar

At the time of giving evidence Paul Asphar was a principal consultant in the new titles section at the Department of Land Administration. He was also an assistant Registrar of Titles, having been appointed on 8 February 2006. His work involved dealing with issues arising with respect to new titles.

Carter, Peden & Tolhurst in Contract Law in Australia, Fifth Ed, at [31.04] state under the heading Requirements of election to terminate:
Basically, the requirements of election depend on the source of the right to terminate:
if the right to terminate is conferred by the common law the common law requirements apply;
if the right is conferred by the terms of the contract the requirements stated in the contract apply; and
if the right is conferred by statute the requirements are those stated in the legislation.
Where the right is conferred by an express term, or by statute, and no specific requirements are stated, the common law rules apply.
In the matter before me the right in question is undoubtedly conferred by statute but the requirements are very briefly stated in the legislation to the effect that the notice be in writing to the vendor and before settlement. The right conferred by statute is also part of what is agreed between the parties in that they agree that the provisions of the STA apply to their bargain. Their bargain does incorporate a mechanism by which contractual rights may be exercised. That mechanism is found in the parts of the Joint Form of General Conditions of Sale not specifically excluded by their bargain.
I am of the view that parliament intended that the right which it conferred under s 69D(1) of the STA to avoid the contract might serve to engender compliance with Pt V of the STA. It contemplated that the right would be exercised in a contractual context.
On one view what was required was a written notice by or on behalf of the Jorgensens expressly informing Strzelecki in compliance with condition 23 of the Joint Form of General Conditions of Sale. There was no such notice. On that view the Jorgensens did not avoid the contract.
On the other hand, the right to avoid the contract conferred by s 69D(1) is unfettered. The right is only qualified in s 69D(2) in circumstances where there has been substantial compliance by the vendor with s 69C and at the time required by that section. The right to avoid the contract in that context only arises if the purchaser is materially prejudiced by any matter referred to in the notice and has not agreed to be bound by that matter. The onus of proving material prejudice rests upon the purchaser. The right to avoid is by notice in writing given to the vendor within seven working days after the information is given. In the matter before me there was no substantial compliance with s 69C by the vendor so the right to avoid is not qualified.
I reiterate that cl 17 of the special conditions forming part of the contract provides that the STA applies to the contract and that, in the event that a provision of the STA conflicts with a provision of the contract, the STA prevails. Any conflicting provision of the contract is deemed 'to the extent permitted by law' to be amended or deleted, as the case may be, to the extent necessary to enable the contract to comply with the STA.
Clause 23 of the Joint Form of General Conditions of Sale provides that neither party may terminate the contract as a result of the other party's default unless the non-default party gives a default notice to the default party and default party fails to remedy the default within the time required under the default notice. If I were to hold that the Jorgensens were bound by that clause I would be imposing upon them the fetters of the contract in circumstances where the STA provides for an unfettered right to avoid. To that extent, there is an inconsistency between the provisions of the contract and those of the STA. The parties agree that, in such circumstances the provisions of the STA must prevail.
The remaining question is whether the Jorgensens avoided the contract by notice in writing to Strzelecki by, as they plead in the alternative, filing and serving their amended defence and counterclaim on 6 September 2011.
In Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537 (11 May 1982) Mr and Mrs Perri, the appellants, owned a property at Lilli Pilli in New South Wales. They wished to sell it and to buy another at 4 Coolangatta Avenue, Cronulla, also in New South Wales. The Cronulla property was owned by Coolangatta Investments Pty Ltd, the respondent. On 7 April 1978 Mr and Mrs Perri, the purchasers, and Coolangatta Investments Pty Ltd, the vendor, exchanged contracts for the purchase and sale of the Cronulla property for the price of $220,000. They used the printed form of contract approved by the Law Society of New South Wales and the Real Estate Institute of New South Wales to which they added an annexure containing terms designated 'Special Conditions'. Special Condition 6 provided:
This Contract is entered into subject to Purchasers completing a sale of their property No. 9 Korokan Road, Lilli Pilli.
Coolangatta Investments Pty Ltd had pressed for completion of the sale of the Cronulla property from May 1978, and ultimately served a notice dated 17 July 1978 requiring the purchasers to complete the contract on or before 8 August 1978. The purchasers declined to complete the contract in accordance with the notice. The vendor served a notice of rescission dated 10 August 1978.
On 29 September 1978, the vendor filed a summons seeking a declaration that on or about 10 August 1978 it had effectively terminated the contract for the sale of the Cronulla property. After the vendor had commenced proceedings, but before they had sold the Lilli Pilli property, the purchasers approached their bank and made arrangements for finance to complete the purchase of the Cronulla property.
On 27 February 1979, the purchasers' solicitors, purportedly waiving the condition for the sale of their property, wrote to the vendor's solicitors seeking completion of the sale 'at 3.00 p.m. on the 15th March next or at such other time as shall mutually be agreeable'. The vendor's solicitors replied that the vendor had terminated the contract by the notice of rescission of 10 August 1978.
On 21 March 1980, the purchasers cross-claimed for specific performance of the contract.
The purchasers did not enter into a contract to sell their Lilli Pilli property until 9 March 1979. That sale was not completed until 13 June 1979. In proceedings in the Supreme Court of New South Wales Needham J found that a reasonable time for the completion of a sale of the Lilli Pilli property had expired by September 1978, finding that the failure by Mr and Mrs Perri to complete the sale of their Lilli Pilli property within a reasonable time was caused by their listing of the property for sale at an unreasonably high price and by their continued seeking of an unreasonably high price until January 1979.
In the High Court the purchasers submitted that the contract was not avoided before they waived the benefit of the condition and that, upon waiving the condition, they were entitled to insist upon performance of the contract.
Brennan J in the High Court, in the penultimate paragraph of his judgment, concluded that it could not be argued that it was inequitable for the vendor to avoid the contract without giving a further notice of its intention to do so. He said:
By its notice of 10 August 1978, it purported to avoid the contract on the ground that the time for fulfilment of the stipulation had expired. It did not resile from that position at any time. The purchasers had adequate notice that the vendor intended to avoid the contract if the stipulation were not fulfilled within a reasonable time. By September 1978 it had become inequitable to hold the vendor to the contract, and it elected to avoid it. It is not necessary to determine whether the notice of 10 August 1978 had a continuing operation, so that when the reasonable time for fulfilment of the stipulation expired the vendor's entitlement to avoid the contract was exercised. On 29 September 1978, after that time expired, the vendor issued and served its summons. That was clear notice of its election to avoid the contract if the election had not been made earlier. A summons does not in itself affect the rights of the parties, but its issue and service may involve an election which affects those rights (Ogle v Comboyuro Investments Pty Ltd [1976] HCA 21; (1976) 136 CLR 444, at p 460) (at p 570).
The authors of Cheshire & Fifoot Law of Contract, 10th Australian Ed at [21.23] state:
The commencement of an action claiming relief on the basis of termination for breach normally amounts to an election to terminate the contract, if such an election has not already been made.
It is true that the original defence and counterclaim filed by the Jorgensens made no mention of the STA and the right to avoid the contract but their first amendment of that pleading, filed within weeks, did so. Given that they had, months earlier, made application under the Freedom of Information Act 1994 seeking information that should have been provided to them, at least immediately following the lodgement of the proposed strata plan on 12 November 2010 or very soon thereafter I am of the view that they were not guilty of inaction or equivocation such as might constitute an election to affirm the contract.
I find that the Jorgensens did, by their amended defence and counterclaim filed 6 September 2011, give notice in writing to Strzelecki of their election to avoid the contract pursuant to s 69D(1) of the STA.
It follows from the foregoing that Strzelecki is not entitled to the relief sought in its statement of claim. It also follows that the Jorgensens are entitled to the relief sought in their amended defence and counterclaim.

The Car Bays and the Area of Apartment 14

As mentioned earlier, the Jorgensens plead that, without notice in writing, Strzelecki varied the preliminary strata plan 'by removing or deleting from the common area 13 car bays (an area of 231 square metres) and an area adjacent to the parking lots numbered PT 13 and PT 56 (being an area of 35 square metres)'. In short, the claim in the pleading is that there was a reduction of car bays by the transfer of that part of common area to Strzelecki. The Jorgensens allege that on the strata plan that was eventually registered those car bays had been taken from common property and became part of lot 57, being the commercial premises on the ground floor held to this day by Strzelecki. They assert that those car bays, which were originally common property for the benefit of the various purchasers, were then taken without notice.
They also plead that Strzelecki, without notice in writing 'varied the preliminary strata plan by varying the size of the area of Apartment 14'. In the original pleading which raised this claim the Jorgensens specified the claim to the effect that the size of apartment 14 was increased by 17.69%. In subsequent particulars they advised that there had been a typographical error and that the actual claim was as to an increase of 7.69%. They asserted that in the preliminary strata plan the area of apartment 14 was 91 sqm and that in the strata plan registered on 6 January 2011 its area was 98 sqm, an increase of 7.69%.
Both variations (as to the car bays and the area of apartment 14) plead the Jorgensens, are notifiable variations and that there was in each case, no compliance with s 69C of the STA.
In response Strzelecki denies that each of those two matters amounted to a 'notifiable variation'. It is important to note that, in its pleading, Strzelecki does not deny the variation in each case but rather pleads that the variation was not notifiable.
In respect of the car bays Strzelecki pleads that by-law 15 of the Sch 2 by-laws prohibited a proprietor, occupier, other resident or a visitor to a lot from parking a motor vehicle either temporarily or permanently on the common property. It is true, as one would expect in such a development, that there will be restrictions on the use of common property and that those restrictions might be revisited from time to time and varied by resolution of the strata company. Counsel for the Jorgensens submitted that common property is to be owned by the proprietors in general and could be the subject of variations in use from time to time.
In respect of the area of apartment 14 Strzelecki pleads that it was increased by 'only 7.7%' and refers to special condition 7.2 of the contract. That condition, says Strzelecki, precludes the Jorgensens from making any objection, requisition or claim for compensation or terminating the contract in respect of any variation in the actual floor plan of the property between the proposed strata plan and the registered strata plan of less than 10%.
The first question to address is whether the two variations were notifiable having regard to s 69C of the STA. As stated, a notifiable variation occurs if, before the registration of the purchaser as proprietor of the lot or proposed lot, certain events occur. They include a circumstance where the proposed strata plan is varied in a material particular or differs in a material particular or the registered strata plan differs in a material particular from the proposed strata plan and a circumstance where a 'lease, licence, right or privilege in relation to the common property is granted or varied'.
The special conditions to and forming part of the contract provide in cl 7 that the seller may make minor alterations to the plans and specifications as it considers reasonably necessary. Counsel for Strzelecki submitted that changes to proposed strata plans were commonplace. He asked Paul Asphar of Landgate:
Indeed, it's not uncommon for there to be many changes, that's right, isn't it?
Mr Asphar replied:
Especially with these larger developments now there's a lot to depict on the plans so the chances are, I guess, that there's going to be a few queries and, yeah.
The foregoing is unsurprising. Not all changes to a proposed strata plan will amount to a notifiable variation under s 69C of the STA.
In closing submissions counsel for Strzelecki contended that the Jorgensens were given a copy of the registered strata plan early in 2011 and that these two claims did not form part of their original pleading. He submitted that Mr Jorgensen accepted that the eventual claim was formulated by his lawyers. With respect, the latter is hardly surprising.
Counsel for Strzelecki submitted that Mr Jorgensen had given no evidence that these matters were material to him and that when the Jorgensens filed their defence and counterclaim those variations to the strata plan 'did not feature'. He suggested that the Jorgensens had been 'looking through the strata plan and looking for defences'.
I reiterate my earlier observation that the provisions of Pt V of the STA do not provide purchasers with 'defences' to claims against them by vendors, they cast obligations on vendors for the protection of purchasers and confer certain rights upon purchasers in the event of non-compliance by vendors with those obligations.
The submissions made by counsel for Strzelecki as to the conduct of the Jorgensens are not apposite because, depending upon the nature of the variation, the materiality of a particular in the context of a variation in a proposed strata plan generally cannot be judged by reference to its impact upon an individual purchaser in one development. At Oceanic Retreat there were, potentially, 56 purchasers.
Of the three matters referred to by the Jorgensens, only one, that relating to the area of apartment 14, was specific to them. In that case, there would have been, had the variation been notifiable, no obligation on Strzelecki to give notice to other purchasers. Apart from matters specific to individual purchasers, it is my view that the obligations cast upon Strzelecki under Pt V of the STA must be judged objectively and in context. In my view the absence of any evidence, if that were the case, from Mr Jorgensen as to whether the variation relating to car bays was material to him is irrelevant.
As to the issue of the size of apartment 14, had there been a 7.69% decrease in its size, there could be no argument that it was a notifiable variation. In my view a variation, being an increase in area of the same magnitude, must also be regarded as a variation in the proposed strata plan in a material particular. Given that most purchasers might welcome such an increase in area, in the absence of any suggestion of a variation in the purchase price, it is perhaps incomprehensible that no notice in writing was given. Had there been compliance with s 69C in that regard, there would be no question of the purchaser seeking to avoid the contract on that basis by reason of an alleged breach of contract.
In summary, I am of the view that the Jorgensens' claims with respect to the car bays, having regard to s 69C(3)(e), and with respect to the area of apartment 14, having regard to s 69C(3)(c), should also succeed. Each arises from a failure of Strzelecki to comply with its obligations under s 69C of the STA. There was no substantial compliance by Strzelecki under s 69D(2)(a) or even an attempt at substantial compliance prior to it purporting to terminate the contract.
In closing written submissions the Jorgensens seek the following orders:
1.the plaintiff's action be dismissed;
2.the defendants' counterclaim be allowed;
3.there be a declaration that the contract was avoided by the defendants by notice in writing as at 6 September 2011 and thereby terminated;
4.that the defendants' deposit be refunded to them together with all interest earned thereon;
5.the plaintiff pay the defendants' costs of the proceedings to be taxed and allowed without regard to the limit imposed by item 17 of the Scale and with an allowance for transcript, such costs to be taxed if not agreed.
Having regard to my findings I am prepared to make orders in terms of 1, 2, 3 and 4 above and will hear the parties as to the issue of costs.