Tummala v Tiger Property Group Pty Ltd (Civil Dispute)
[2016] ACAT 118
•31 October 2016
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
TUMMALA v TIGER PROPERTY GROUP PTY LTD (Civil Dispute) [2016] ACAT 118
XD 1181 of 2015
Catchwords: CIVIL DISPUTES – right to rescind contract for sale of unit sold prior to development approval – whether rescission clause was unfair – whether changes to building plans during the course of the approval process breached the sale contract – whether the seller engaged in misleading and deceptive conduct – whether the seller breached the sale contract by failing to endeavour to obtain all necessary approvals
Legislation cited: Civil Law (Sale of Residential Properties) Act 2003 ss 9, 15
Competition and Consumer Act 2010 (Cth), sch 2 ss 7, 18, 23, 24, 25, 30, 236
Cases cited:Agricultural and Rural Finance Pty Limited v Gardiner (2008) 251 ALR 322
Bisognin & Anor v Hera Project Pty Ltd [2016] VSC 75
Butcher v Lachlan Elder Realty Pty Ltd (2002) 2112 ALR 357
Campbell v Backoffice Investments (2009) HCA 25
Demogague Pty Ltd v Ramansky (1992) 39 FCR 31
Foote & Anor v Barton Property Partnership No 2 [2015] ACTCA 53
Hospital Products Ltd v United State Surgical Corporation (1984) 156 CLR 4
Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406
Miller & Associates Insurance Broking Pty Ltd v BMW Australian Finance Ltd (2010) 270 ALR 204
Mullens v Millermade (1882) 22 Ch D 194
Munro and Anor v Bodrex P/L [2002] NSWSC 122
O’Connor v SP Bray Ltd (1936) 36 SR (NSW) 248
Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191Printing and Numerical Registering Co v Sampson (1875) LR 19 Eq 462
Sargent v ASL Development Ltd (1974) 131 CLR 634; [1974] HCA 40
Stepping Stones Child Care Centre (ACT) Pty Ltd v Early Learning Services Ltd [2013] ACTSC 173
Transfield Proprietary Limited v Arlo International Limited (1980) 144 CLR 83
Wang v Kaymet Corporation Pty Ltd [2015] NSWSC 1459
Texts/ papers: Macquarie Dictionary, 5th edition
Tribunal: Senior Member H. Robinson
Date of Orders: 31 October 2016
Date of Reasons for Decision: 31 October 2016
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD1181/ 2015
BETWEEN:
SIVA TUMMALA
Applicant
AND:
TIGER PROPERTY GROUP PTY LTD
Respondent
TRIBUNAL: Senior Member H Robinson
DATE:31 October 2016
ORDER
.
The application is dismissed.
……….......……………..
Senior Member H Robinson
REASONS FOR DECISION
Introduction
The applicant in this case, Mr Tummala, feels very strongly that he has been wronged by the respondent’s actions. The strength of that feeling was acknowledged by the respondent’s solicitor.[1] The Tribunal shares many of the applicant’s concerns. On any view, the applicant has been dealt something of an injustice. While feelings of injustice are not sufficient to found a legal claim of the kind brought by the applicant, the facts of his case do give rise to broad issues of whether, and when, it is appropriate to sell units ‘off the plan’, and when it is sensible to purchase them. The facts of this case may warrant legislative review.
Brief introduction
[1] Transcript of Proceedings 24 February 2016, page 23 lines 10 - 11
On 17 April 2015 (contract date), the applicant entered into a contract (sale contract) to purchase a property in the Artego complex in Gungahlin (Artego).
The respondent was the builder/developer of Artego.
The sale contract included a right for the respondent to rescind the sale contract if it did not obtain relevant development approvals by 31 May 2015 (approval date).
As at the contract date, Artego did not have development approval from the ACT Planning and Land Authority (ACTPLA). Indeed, as at the contract date, ACTPLA had declined approval and new plans had already been drafted up and submitted to ACTPLA. These plans were different to those attached to the sale contract. The relevant approvals were not obtained until October 2015. The plans that were eventually approved were substantially different to those attached to the sale contract.
The respondent exercised the right to rescind the sale contract under clause 11.1(b) of that contract on 14 September 2015, three and a half months after the approval date. On the same day, the respondent sold a similarly described townhouse in the Artego complex to another party for $30,000 more than it had agreed to sell a townhouse to the applicant.
The applicant contends that, through this course of conduct, the respondent:
(a)engaged in misleading conduct in inducing him to enter into the sale contract in circumstances where it knew that the development could not proceed in accordance with the plans attached to the sale contract;
(b)lost the right of rescission when it did not exercise that right on, or shortly after, the approval date; and
(c)breached the sale contract by:
i.failing to endeavour to secure the relevant development approvals for the unit as sold; and
ii.rescinding the contract because it found another buyer who would pay more for it – not because the development approval was not granted.
The applicant seeks $10,000.00 on the basis that “similar properties in the vicinity from other sellers have been increased approximately $25,000.00 in comparison to the prices in April”, and he missed the opportunity to buy a property as a lower price.
The Hearing
The application was heard on 24 February 2016. The applicant appeared in person, supported by his wife. The respondent was represented by Mr Robens of Kamy Saeedi lawyers.
The only witness statements provided were that of Mr Farrelly, on behalf of the respondent, and Mr Venkat on behalf of Mr Tummalla. Mr Tummalla gave oral evidence and was subject to cross examination. Both parties filed documents, all of which I have reviewed and taken into account.
At the close of the hearing, I invited further submissions about whether the respondent had used its reasonable endeavours to comply with clause 11.1 of the sale contract. The decision was reserved.
The Facts
On 19 November 2014, DNA Architects lodged with ACTPLA a merit track development application for the Artego development (first DA) on behalf of the respondent. The plans submitted with the first DA were for a residential development of 97 dwellings and associated works (original plans).
Significantly, on the original plans:
(a)the Artego complex had 97 units;
(b)unit 93 was a centrally located unit categorised as a ‘Type E’ townhouse; and
(c)‘Type E’ townhouses had three bedrooms, two and a half bathrooms, and were terrace-style homes with double garages.
The first DA, with the original plans, was publically notified from 26 November 2014 to 17 December 2014. ACTPLA did not approve the first DA.
The uncontested evidence of Mr Farrelly[2], on behalf of the respondent, was that negotiations between the respondent and ACTPLA continued throughout late 2014, into 2015 and right up to the eventual approval of the project in October 2015. There is little detail before the Tribunal as to the extent of those negotiations. Unfortunately, neither party produced the ACTPLA file nor was anyone from ACTPLA called to give evidence. Even some dates were left unclear.
[2] Transcript of Proceedings 24 February 2016, page 4 lines 30 - 31
Sometime in early 2015, the respondent lodged an amended development application with ACTPLA, which included a revised external layout for the development (the first revised plans) showing:
(a)a reduction in the total number of units from 97 to 94 dwellings;
(b)an increase in the number of Type E units, from 7 to 10 units;
(c)a renumbering of units, with “Unit 93” becoming a type D1 unit; and
(d)in relation to the Type E units – a change in the floor plan, with the top floor redesigned and the third bedroom designated as a ‘study’.
The exact date upon which the first revised plans were lodged with ACTPLA is not clear, but the amended development application attaching those plans was publically notified from 15 April 2015 to 6 May 2015, so it may be assumed that the first revised plans were lodged with ACTPLA before those dates.
On 17 April 2015 the applicant, Mr Tummala, entered into the sale contract for the purchase of an off-the-plan three bedroom townhouse in the Artego complex for the sum of $429,000. The sale contract was stated to be a contract to purchase “Unit 93, Block 1, Section 167 Harrison”.
Notwithstanding that the first revised plans were finalised before 17 April 2015, the sale contract included the original plans and not the first revised plans.
The sale contract consisted of the standard terms form, the ACT Law Society Sale of Residential Property Contract (standard terms), and a set of special conditions (special conditions). The special conditions heavily modified the standard terms, as set out further below.
Clause 11 of the special conditions was particularly relevant to this proceeding. In summary, clause 11.1(a) of the special conditions required that the respondent ‘endeavour’ to obtain all approvals necessary to commence the building works by the ‘approval date’ of 31 May 2015 and clause 11.1(b) of the special conditions entitled the respondent to rescind the sale contract if the necessary approvals were not obtained by the approval date.
The applicant’s evidence to the Tribunal was that at the time he entered into the sale contract, he had no direct dealings with the respondent, having purchased his unit through a real estate agent. The applicant stated that he had asked the agent if he could speak with the builder “...about the inclusions and a few other things we would like to clarify, but the agent refused.”[3] He was not seriously challenged on this evidence.
[3] Transcript of Proceedings 24 February 2016, page 6 lines 16 - 18
The applicant stated that the real estate agent told him “...the plans were subject to approval and were waiting for approval, in the next two weeks we are going to get approval”, but that the agent did not tell him what would happen if the plans were not approved.[4] Again, he was not seriously challenged on this evidence.
[4] Transcript of Proceedings 24 February 2016, page 6 line 32
The real estate agent was not joined a party to this proceeding and was not called as a witness by either party and did not give evidence. It is unclear whether the agent knew about the first revised plans, but in any case I accept that those plans were known to the respondent, but were not shown to the applicant prior to him entering into the sale contract. The applicant executed the sale contract in the belief that the respondent was seeking ACTPLA’s approval for the original plans
The applicant’s further evidence was that he “went through the contract”[5] and then obtained legal advice prior to signing it. He submitted that the solicitor who advised him was recommended by the respondent, but he did not actually suggest any impropriety by that solicitor.[6] He did not deny that he was given a proper opportunity to obtain advice.
[5] Transcript of Proceedings 24 February 2016, page 6 line 37
[6] Transcript of Proceedings 24 February 2016, page 6 line 36
The DA attaching the first revised plans was refused approval on 29 May 2015. Mr Farrelly’s evidence is that this was unexpected, as his conversations with ACTPLA had led him to believe that the DA would be approved.[7]
[7] Statement of Jaime Farrelly at [11]
The applicant alleged, and the respondent did not deny, that the respondent did not advise the applicant of ACTPLA’s refusal to grant the development approval at this time. The applicant stated that:
...we send a lot of emails, what’s mean, when are you going to start construction? There were no replies from the agent for a while. Then after some time he replied saying we are still waiting for the plans. Then he dragged it, dragged it, dragged it, until September.[8]
[8] Transcript of Proceedings 24 February 2016, page 7 lines 40-42
The emails in question were not in evidence before the Tribunal.
During the months that the applicant was allegedly making enquiries, the respondent did not rescind the sale contract. Mr Farrelly’s evidence was that throughout this period, negotiations between the respondent and ACTPLA continued.
On about 1 June, Mr Farrelly instructed DNA architects to make further amendments to the plans in an attempt to comply with ACTPLA’s requirements.[9]
[9]Statement of Jaime Farrelly at [13]
On 13 August 2015, the respondent lodged an application for reconsideration with ACTPLA (second revised DA). This application attached amended plans that addressed concerns raised by ACTPLA during the lengthy negotiation process. The changes included:
(a)a reduction in the number of units from 94 to 90;
(b)a significant reduction in ‘Type E’ units, from ten on the first revised plans to only five; and
(c)consequential amendments to the layout of the Artego development, including a central communal open area, changed solar access and changed parking and traffic arrangements.
The second revised DA portrayed a substantively different development to that first proposed by the respondent, and to the development that was set out in the original plans.
On 14 September 2015 – that is, a further month after the second revised DA was lodged – the respondent advised its solicitor to rescind the sale contract with the applicant pursuant to clause 11.1 of the special conditions. Rescission was effected by way of notice dated 15 September 2015.
The notice of rescission provided to the applicant was minimal, to say the least. The respondent’s solicitor simply stated:
The contract that you signed provided that if all necessary approvals were not obtained by a specified date, that the developer was entitled to rescind. The contract also stated that if this were to happen, no party has a claim against the other party. Those were the terms of the contract that you signed and unfortunately all the relevant approvals were not obtained by the specified date.
The applicant’s subsequent request for further information, imparted through his solicitor, was dealt with in a similarly dismissive manner, with no substantive explanation being given.
I reflect here that, having held the applicant’s deposit for five months, it would have been appropriate for the respondent, or the respondent’s agent, to offer him something more than a two sentence explanation for the sudden rescission of the sale contract. Perhaps some of the subsequent disputation between the parties may have been avoided had the respondent at least tried to explain its actions or position. Instead, its solicitor said the absolute minimum, and left the applicant very confused.
Further complicating the situation, on 14 September 2015, the respondent sold a three bedroom townhouse in Artego to another buyer (the third party buyer). The townhouse in issue was described on the contract as ‘Unit 93’. The third party buyer paid $459,000, which was $30,000 more than the applicant had contracted to pay for his apartment. Evidence before the Tribunal confirmed that the negotiations for the sale of this townhouse commenced well before 14 September 2015, and the deposit was paid on 10 September 2015. The applicant pointed out that his sale contract was not rescinded until this second sale was confirmed, and that this was suspicious timing.
On 16 September 2015, the respondent returned the applicant’s deposit to him. Although the deposited monies had earned $120.97 in interest, the respondent applied a $220.00 “investment fee” (in accordance with provisions in the sale contract). The applicant was refunded exactly what he had deposited with the respondent five months earlier.
The second revised DA was approved on 13 October 2015.
The key contractual provisions
The key clause in dispute was clause 11 of the special conditions, which provides that:
11. Conditional on Approvals
11.1Approvals
(a) The Seller must endeavour to obtain all Approvals necessary to commence the Building Works.
(b) In the event that:
(i) All necessary Approvals are not obtained and/or completed to the reasonable satisfaction of the Seller by the approval date; or
(ii) all necessary Approvals are obtained but contain conditions or impose requirements that are not satisfactory to the Seller (acting reasonably), the Seller may be written notice to the Buyer:
1. Extend the approval date;
2. Rescind this Contract by written notice to the Buyer and Clause 21 applies.
Clause 21 is a reference to clause 21 of the standard terms, which provides that:
21 Rescission
Unless s. 15 of the Sale of Residential Property Act applies, if the Contract is rescinded, it is rescinded from the beginning, and unless the parties otherwise agree:
21.1.1 The Deposit and all other money paid by the Buyer must be refunded to the Buyer immediately without any further authority being necessary; and
21.1.2 Neither party is liable to pay the other any amount for damages, costs or expenses.
It is noted that section 15 of the Civil Law (Sale of Residential Properties) Act 2003 (Sale of Property Act) relates to rescission during the cooling off period and does not apply here.
The ‘Building Works’ are defined as:
the construction on the Land of the Building and the Unit and the installation of the Inclusions in the Unit and the Building.
‘Building’ in turn is defined to mean:
... the building to be constructed on the Land in what he Unit will be located.
‘Unit’ is defined in the standard terms to mean “the Unit referred to in the schedule and which has the meaning in the Unit Titles Act”, but was described on the front page of the contract as ‘Unit 93’.
‘Approvals’ is defined to include authorisations needed to commence, undertake and complete the Building Works. There is no doubt that this included development approval from ACTPLA.
The parties’ respective positions
The applicant’s position was that the respondent acted ‘unfairly’, in that it:
(a)knowingly and misleadingly sold him a townhouse with a plan that was different to that which was submitted (or would be) for approval;
(b)did not notify him straight away when approval was refused on 29 May 2015 and instead waited three and a half months before rescinding the contract after finding another buyer; and
(c)rescinded the contract because it found another buyer who would pay more for it – that is, the respondent did not rescind the contract because the development approval was not granted, but rather repudiated the contract on other grounds.
The applicant did not clearly identify the legal bases upon which his claims were made in this application, but at the hearing it became apparent that he was alleging that the respondent:
(a)repudiated the contract by seeking development approval for a development that was materially different to that which the applicant had contracted for;
(b)engaged in misleading and deceptive conduct, in that it sold the applicant a townhouse that it knew, or should have known, it could not build;
(c)elected to waive its right to rescind the sale contract by not exercising the right of the rescission on or shortly after the approval date; and
(d)breached the sale contract by:
i.failing to “endeavour to obtain all Approvals necessary to commence the Building Works”; and/or
ii.failing to rescind the contract when development approval was first denied.
Although not expressly submitted by the applicant, the facts and circumstances also give rise to a question as to whether the rescission clause in clause 11 of the sale contract was an ‘unfair term’ within the meaning of section 24 of the Australian Consumer Law.
The respondent’s response was straightforward. It argued that it acted in accordance with the terms of the sale contract, which clearly entitled it to rescind if development approval was not obtained by 31 May 2015. It further contended that clause 11 did not limit the time in which rescission was required to be undertaken, and that case law provides that a right of recession does not have to be exercised immediately. Additionally, it denied having engaged in any misleading or deceptive conduct.
Issue 1: Did the respondent repudiate the contract by seeking development approval for a development that was materially different to that which the applicant had contracted to buy?
It is not in dispute that the development that was approved in October 2015 was different to that which was proposed in April 2015, and that which was set out in the original plans attached to the sale contract.
The first question is whether the changes to the development during the course of the approval process breached the sale contract.
The starting point for any breach of contract action must be the contract in issue.
The sale contract is not an easy document to understand. It contains standard terms, being the Law Society’s standard terms, and a separate set of special conditions. Both are included in full. Reading the contract requires a considerable degree of cross-referencing between the standard terms and the special conditions. The Tribunal does not suggest that there is anything untoward about this. The standard terms have no statutory basis that limits modification[10], and amending them in the manner done in this case has the advantage of indicating what may be done differently to the norm. However, the cross-referencing inevitably means that the sale contract is challenging to read.
[10] Unlike, for example, the standard terms in a residential tenancy agreement
The applicant said that he read the sale contract. He also agreed that he had legal advice. It is to be expected that a reasonable legal practitioner would take the time to go through the sale contract and set out the salient points.
Those salient points should have included identifying amendments to the standard terms that are contrary to the applicant’s interests. There are many such amendments.
For example, clause 2.1(i) of the special conditions deletes clause 7.1.4 of the standard terms. Clause 7.1.4 of the standard terms in effect says that the seller warrants that the seller is not aware of any material change in the matters disclosed in the ‘required documents’. The ‘required documents’ are defined in section 9(1)(B)(ii) of the Sale of Property Act to include, where there is no registered units plan, “a plan showing the proposed location and dimensions of the unit in relation to other units and the common property (s9(1)(B)(ii))”. By this amendment the respondent removed its otherwise express obligation to warrant that there had been no material change to the draft unit plan.
The only reasonable implication that could be drawn from this amendment (assuming that one had trawled through the contract sufficiently to notice it) is that, at the time of the sale contract, the respondent may have been aware of a material change to the matters disclosed in the required documents as at the day of the sale contract. The Tribunal does not know whether the applicant’s solicitor brought this to his attention.
The evidence before the Tribunal clearly shows that the respondent was aware of a material change in the ‘required documents’ at the date of the sale contract. Whether the respondent was required to disclose this, notwithstanding the lack of any requirement to do so in the contract, is considered below.
Clause 2.1(o) of the special conditions deletes clause 12.1.5 of the standard terms. Clause 12.1.5 of the standard terms imposes an obligation upon a seller to give the buyer notice of any material change the seller becomes aware of in the matters disclosed in the required documents, since the date of each of the relevant required documents (cl. 12.1.5). Again, any analysis of this amendment should have led to the conclusion that there had been changes to the plans since the time the sale contract had been prepared, and that the builder did not want to be subject to an obligation to disclose them.
Clause 2.1(hh) of the special conditions deletes clause 37.2 of the standard terms. Clause 37.2 of the standard terms requires the seller to “attach a copy of the proposed Units Plan or a sketch plan showing the location and dimensions of the Unit sufficient to enable the Buyer to determine the location and dimensions of the Unit in relation to other units and the Common Property in the proposed development”. This too, should have put the applicant, or his solicitor, on notice that there may be concerns with the attached plans. Again, the applicant was either unaware of this clause in the special conditions, or did not appreciate its consequences.
The outcome of these amendments is that the sale contract did not include any express assurance that the plans attached to it were the most recent plans, or that those plans would be the ones ultimately submitted for development approval.
Further, the provisions of the sale contract make it clear that the respondent was entitled to change the development plans, in certain circumstances, so as to facilitate gaining development approval. Most relevantly:
(a)Clause 15.3 of the special conditions expressly provides that the unit number shown in the plans may vary from the unit number following registration of the unit plan.
(b)Clause 13.2 of the special conditions allows variation of the plans, provided those variations meet certain requirements, including that they were required by the authority, or do not vary the layout of the building, or its location in the complex.
The sale contract allowed for the plans to be varied, including to obtain development approval. I accept that the changes between the various versions of the plans are consistent with the provisions of the sale contract. In particular, I accept the (uncontested) evidence of the respondent that the changes made to the first revised plans, prior to the approval date, were consistent with the scope permitted by these changes. The changes made by the respondent to the plans between the first revised DA and the second revised DA may go beyond the changes permissible under the sale contract, but the respondent cited these changes as a reason why it was necessary to exercise the right to rescission.
Accordingly, I am not satisfied that respondent repudiated the contract by seeking development approval for a development that was materially different to that which the applicant had contracted to buy.
Issue 2: Was selling the unit in circumstances where the ‘plans’ had changed misleading and deceptive conduct?
Under the classical approach to contract law, because the respondent made no promises about disclosure, there would be minimal capacity for the applicant to argue that it has breached the contract, no matter how unfair the respondent’s actions in this regard.[11]
[11] Jessel MR in Printing and Numerical Registering Co v Sampson (1875) LR 19 Eq 462, 465
That classical approach has been heavily modified by statute law, including most relevantly the Australian Competition and Consumer Law (ACL).[12] The ACL allows a range of causes of action for unfair or unreasonable conduct.
[12] Competition and Consumer Act 2010 (Cth), schedule 2 applied in the ACT by operation of section 7 of the Fair Trading Act 1992 (ACT)
Section 18(1) of the ACL[13] provides that:
[a] person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
[13] previously section 52 of the Trade Practices Act 1974 (Cth)
The ‘conduct’ in issue in this case could variously be categorised as:
(a)attaching to the sale contract the ‘out of date’ original plan that no longer represented the development to be built; or
(b)remaining silent when aware that the plans that attached to the sale contract would not gain ACTPLA approval and were already being revised.
The ‘conduct’ in issue was the conduct of the respondent’s agent, rather than an officer of the respondent, but this does not alleviate the responsibility of the respondent, as it has long been recognised that a principal will be responsible for the actions of an agent acting within authority.[14]
[14] See for example, Mullens v Millermade (1882) 22 Ch D 194 at 199 per Bacon VC
For completeness, I note that section 30 of the ACL, also provides, relevantly, that:
30 False or misleading representations about sale etc. of land
(1) A person must not, in trade or commerce, in connection with the sale or grant, or the possible sale or grant, of an interest in land or in connection with the promotion by any means of the sale or grant of an interest in land:
...
(b) make a false or misleading representation concerning the nature of the interest in the land; or
(c) make a false or misleading representation concerning the price payable for the land; or
...
(e) make a false or misleading representation concerning the characteristics of the land; or
...
(g) make a false or misleading representation concerning the existence or availability of facilities associated with the land.
The difference between these provisions is the emphasis on ‘conduct’ in section 18, as opposed to a ‘representation’ in section 30. ‘Conduct’ is likely a much broader concept, and extends to remaining silent[15], and to circumstances in which there is no representational communication between the parties. Due to the allegation of silence, section 18 would appear to be more relevant in this case.
[15] Demogague Pty Ltd v Ramansky (1992) 39 FCR 31; Miller & Associates Insurance Broking Pty Ltd v BMW Australian Finance Ltd (2010) 270 ALR 204
Conduct that is ‘misleading or deceptive’ is conduct that ‘leads into error’.[16] As the applicant was alleging that he was mislead, he was required to establish a causal link between the respondent’s conduct (or the conduct of its representatives) and the loss that he claimed to have suffered – in other words, he had to show that he was misled by the conduct of the respondent, and not by something else.[17]
[16] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, 198
[17] Butcher v Lachlan Elder Realty Pty Ltd (2002) 2112 ALR 357
The first issue for determination is whether the sale contract was misleading because it attached the original plan. In Campbell v Backoffice Investments,[18] French CJ observed that:
Whether the proffering of a contractual document containing a false statement amounts to a misrepresentation or to misleading or deceptive conduct, is a matter of fact to be determined by reference to all the circumstances. [19]
[18] [2009] HCA 25
[19] Ibid at [35]
Much of the applicant’s evidence and submissions centred around the fact that ‘his unit’ – the so-called ‘Unit 93’ – had been ‘cancelled’ or altered before it was sold to him. He alleged that he was misled into purchasing a townhouse that did not and could not exist.
In support of this proposition, the applicant referred to evidence tendered at the hearing that clearly showed that in the first revised plans (drafted 25 March 2015), unit 93 is a completely different style of unit to that in the original plans.
The respondent’s response to this contention was that the only relevant change to the plans between the original plan and the first revised plans was a change to the numbering of the units. The respondent’s solicitor contended that “...what was to be delivered as part of this contract is as attached to the special conditions and the plan which is town house Type E ...”,[20] and “at all times [ie. on 17 April 2015] there was a unit Type E” available to sell to the applicant.[21]
[20] Transcript of Proceedings 24 February 2016, page 24 lines 40-43
[21] Transcript of Proceedings 24 February 2016, page 25 lines 9-10
I accept that the first revised plans included a centrally located, three bedroom Type E townhouse that met the description of what the applicant had contracted to buy.
That the contractual provisions allowed the respondent to change the unit number and some aspects of its layout is not in dispute – and, as set out above, none of the changes between the original plan and the first revised plan breached those provisions. The difficultly I have with the respondent’s reliance on those provisions in this case is that the changes were made before the applicant entered into the sale contract.
The uncontested fact is that the plans attached to the sale contract were not the latest version of the development. The plans attached to the sale contract reflected a version of the development that the respondent already knew it could not build. Notwithstanding that the respondent gave no express warranty as to the accuracy of those plans, and was entitled to change the plans at a later date, to attach those plans to the sale contract, in the knowledge that they must be changed, and without some form of disclaimer or information, was misleading. I will consider the consequences of this shortly.
Also in issue is whether the respondent’s agent had a duty to disclose that the original plans attached to the development had not been approved and that revised plans had already been filed with ACTPLA, such that a failure to do so was itself misleading.
This is a question about whether there is an obligation to disclose. The oft-cited test in relation to silence is as follows:
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.
...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 is particular matters exist they will be disclosed.[22]
[22] Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 39 FCR 31 at [32]
Did the applicant have a reasonable expectation that the ‘revised plans’ would be disclosed? In the Tribunal’s view, he did. When the applicant entered into the sale contract, the first revised plans had been completed and submitted to ACTPLA. By failing to disclose the plans, the respondent mislead the applicant into believing that the Original Plans could still be built.
Consequently, I am satisfied that the respondent’s conduct in attaching the original plans to the sale contract was misleading and deceptive, as was respondent’s conduct in failing to disclose that new plans had been submitted to ACTPLA.
Being satisfied that the respondent’s conduct was misleading, the next issue is whether this misleading and deceptive conduct would entitle the applicant to the remedy he is seeking.
Section 236 of the ACL deals with the issue of damages. In order to succeed in a claim for damages, the applicant must establish that he has suffered some loss or damage as a consequence of the misleading conduct. In broad terms, this means that he must show that he changed his position because of the misleading or deceptive conduct.
There were two ways the applicant could do that in this case:
(a)demonstrating that he would not have entered the sale contract if he had been aware of the first revised plans; or
(b)demonstrating that he would have conducted himself in a different manner during the course of the relationship, if he had been aware of the first revised plans.
There is no evidence before me upon which I can make a finding that the applicant would not have entered into the sale contract, had he been aware of the first revised plans.
The applicant’s complaint centres primarily on the fact that ‘Unit 93’ on the first revised plans was now a different kind of unit. He interpreted as meaning a change to ‘his’ unit. However, on examination of the first revised plans, it was clear that there remained a very similar, three bedroom, Type E townhouse available as at the date of the sale contract, albeit one with a different number. There was no suggestion by the applicant that, had he been advised of the revised unit number, or the other changes to the development, between the original plan and the first revised plan, it would have made a difference to his decision to purchase the unit.
Accordingly, although the respondent’s conduct, in failing to disclose the first revised plans was misleading, and inappropriate, there is no basis upon which the Tribunal can conclude that it caused the applicant’s alleged loss, as argued in this case.
One may speculate that had the applicant been advised of ACTPLA’s rejection of the original plans, he may have conducted himself in a different manner. Perhaps he would have been more aware of the ongoing negotiations between the respondent and ACTPLA, and that in turn may have put him on notice of the risk of the development not going ahead? Or perhaps he would have been motivated to make more rigorous enquiries, sooner? Ultimately, however, speculation is all this can be, as the applicant himself made no such submissions or suggestions.
Accordingly, this ground of the application is dismissed.
Issue 3: The delay
In his submissions, the applicant contends that:
The builder did not notify me straight away that the plan was refused on 29 May 2015. The builder took 3.5 months to notify us about the decision. Within this 3.5 months period, builder tried to identify another buyer to sell the property at higher price.
Although not expressly argued, the applicant appears to rely upon the legal principle of ‘election’. In broad terms, this principle provides that when something happens “...which gives rise to the existence of two alternative rights, and [when] one of those rights is satisfied, the other is no longer available.”[23]
[23] Agricultural and Rural Finance Pty Limited v Gardiner (2008) 251 ALR 322 at [58] per Gummow, Hayne and Kiefel JJ
The applicant appears to argue that, following this principle, by delaying rescission and electing to continue the contract past the approval date, the respondent lost its right to rely on clause 11.1 of the special conditions as a basis for rescission at a latter date.
In reply, the respondent relied on case law to argue that it was under no compulsion to rescind the sale contract at any particular time. For example, in Sargent v ASL Development Ltd[24], Mason J observed that:
A person confronted with a choice between the exercise of alternative and inconsistent rights is not bound to elect at once. He may keep the question open, so long as he does not affirm the contract or continuance of the estate and so long as the delay does not cause prejudice to the other side.
[24] (1974) 131 CLR 634, 656; [1974] HCA 40 at [28] Per Mason J
Similarly, in Foote & Anor v Barton Property Partnership No 2 [2015] ACTCA 53 the ACT Court of Appeal (Murrell CJ, Perry J and Walmsley AJ) observed that:
When a party is confronted with inconsistent rights, the party is not bound to make an election immediately. In Tropical Traders Ltd v Goonan (1964) 111 CLR 41 at 55, Kitto J said:
Any act done by [the appellant] and consistent only with the continuance of the contract on foot the law would hold to constitute an election against rescinding; and an election once made could not be retracted. But the appellant was not bound to elect at once. It might keep the question open, so long as it did nothing to affirm the contract and so long as the respondent’s position was not prejudiced in consequence of the delay.
There is no evidence before the Tribunal that the respondent did anything to ‘affirm the contract’. On the applicant’s own evidence, the respondent advised him that it was ‘waiting for the plans’ to be approved. Given the terms of the contract, the applicant must have been aware that, unless appropriate plans were approved, the development the subject of the sale contract would not proceed.
Consequently, I am not satisfied that there is evidence of undue delay or avoidance before the second amended DA was lodged in August 2015.
Still, from the lodgement of the second amended DA in August 2015, the respondent must have known that it was unlikely that it would proceed with the sale contract with the applicant. It does appear that the respondent sat on its right of rescission for a month, from mid August until 14 September 2015. Does this delay amount to a ‘waiver’ of its right to rescind?
In O’Connor v SP Bray Ltd (1936) 36 SR (NSW) 248 at 261-262, Jordan CJ said:
[W]here there has been no intimation of avoidance, the question whether delay, after knowledge of the facts giving rise to avoidability, or things said or acts done during the delay, constitute such an election to go on with the contract as puts an end to the right to avoid, depends upon “the length of the delay and the nature of the acts done during the interval, which might affect either party, and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy: Lindsay Petroleum Co. v. Hurd (L.R. 5 P.C. 221 at 240).
The evidence presented to the Tribunal certainly raises the prospect that, at least from August 2015, a reason for delay was that the respondent was ‘hedging its bets’ by ensuring it had new buyers for the units in the revised development (at an increased price), before rescinding the contract with the applicant. No alternative evidence or explanation for this delay was offered by the respondent. However, while this conduct may be ethically dubious, it could not reasonably be said to be an election to continue with the contract. There is no evidence that the respondent communicated any intention to waive its right of rescission to the applicant.
That said, it is evident that the applicant suffered some detriment as a consequence of the respondent’s delay in exercising its right of recession. As discussed below, quantifying the detriment is difficult, but it was certainly the case that the applicant lost the option to use the deposit monies for an alternative investment. The longer the respondent held the deposit, the greater that prejudice became.
For that reason, I do not accept the respondent’s argument that there is no timeframe attached to the rescission of the contract. At the least, an excessive delay in rescinding the contract, or the taking of some action or conduct that gives rise to a reasonable expectation that the development was to proceed according to the plans, may well give rise to an estoppel which would prevent the respondent from exercising the right to rescission. However, no such argument was advanced in this case, and the relatively short timeframe meant it would be unlikely to be made out on the facts.
Accordingly, I am not satisfied that there was an election to continue with the contract in the circumstances of this case.
Issue 4: What was the reason for the rescission?
The applicant argued that the respondent did not rescind the contract because of the failure to obtain development approval, but rather because there was a rising market and a consequential increase in the value of the unit. Although the applicant has no direct evidence of intention, the applicant points to the delay between the approval date and the rescission of the contract, and the coincidental timing between the rescission of the sale contract and the sale of a unit to a third party as evidence of this. I accept that the weight of evidence does suggest that a reason for the rescission was that, based on the revised plans, the units, and particularly the townhouses, could be sold for a higher price.
The applicant’s argument relies on well known equitable principles: “that a party having a legal right shall not be permitted to exercise it in such a way that the exercise amounts to unconscionable conduct”[25], that a party should not be able to profit from their own wrong, and that a party has an obligation to do all things necessary to enable another party to have the benefit of the contract.[26]
[25] Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406, 444 (per Mason and Deane JJ)
[26] See, for example, discussion in Munro and Anor v Bodrex P/L [2002] NSWSC 122 at [49]
The respondent’s response was that:
(a)first, the respondent was entitled to rescind the contract because development approval was not obtained by the approval date; and
(b)secondly, it was required to do so anyway, due to ACTPLA’s requirement that it reduce the number of Type E townhouses in the complex.
The first point must be correct – the respondent was entitled to rescind the contract for the reason that development approval was not obtained by the approval date. The second was also not disputed, although there was little evidence before the Tribunal as to whether more Type E units had actually been sold then were available under the revised plans.
However, that is not the end of the matter. The respondent was, both because of the terms of clause 11, and the equitable principles set out above, required to make ‘reasonable efforts’ to obtain approvals by the approval date. It could not benefit from its failure to do so, if it did not.
Therefore, the question must turn to whether the respondent used its reasonable endeavours to obtain the relevant approvals by the approval date.
Issue 5: Did the respondent breach the sale contract by “failing to endeavour to obtain all approvals necessary to commence the Building works”?
As I understand this aspect of the applicant’s claim, it is that even if clause 11.1 of the special conditions did allow the respondents to bring the contract to an end, the respondent could not rely upon it because it failed to ‘endeavour’ to obtain the relevant approvals, as it would be benefitting from its own wrong.
In order to establish this ground, the applicant needed to show, as a matter of fact:
(a)the respondent failed to ‘endeavour’ to secure the approvals necessary to comply with clause 11.1 of the special conditions; and
(b)had the respondent ‘endeavoured’ to secure the approvals, the project would have been approved by the approval date.[27]
[27] Wang v Kaymet Corporation Pty Ltd [2015] NSWSC 1459 at [72]
The applicant bore the onus of proof. As was observed by Bryson J of the NSW Supreme Court in Munro and Anor v Bodrex P/L:
...the relevant principle can be briefly formulated as: “Non-fulfilment of a condition will justify rescission unless it is proved to be self-induced”, rather than as “Non-fulfilment of a condition will not justify a rescission unless it is proved not to be self-induced.[28]
[28] [2002] NSWSC 122 at [52]
If the applicant were able to establish these two matters, then the consequence would be that the respondent would not have been entitled to rescind the contract, and the applicant would be entitled to damages for repudiation.[29]
Did the respondent fail to endeavour to secure approvals for the plans?
[29] See: Wang at [73]
Having regard to the terms of clause 11.1, the first question for the Tribunal is: What was the respondent required to do by the terms of clause 11?
In particular, what is meant by the word ‘endeavour’?
The applicant’s case, as I understand it, was that the respondent’s conduct in both drawing and then relying upon non-compliant plans during the sale proves the respondent’s failure to ‘endeavour’ to obtain the relevant development approvals. He submitted:
[The] builder could have prepared all the building plans and designs in accordance with legislative requirements and Acts. When they are developed by certified architects/designers, they must know all the basic complying requirements.
I accept this argument as far as it goes – the builders, developers and architects should have been aware of the relevant legislation and Acts. However, obtaining approval can be a complicated matter and many requirements are not ‘black or white’. While I can understand why the applicant was frustrated and disappointed that the original plans were not approved, I do not consider that fact alone to be evidence that the respondent failed to endeavour to obtain the relevant approvals.
The more significant issue is what steps the respondent took to have the plans (whatever version) approved by the approval date, and whether these amount to ‘endeavouring’.
The applicant did not make detailed submissions on the meaning of the word ‘endeavour’.
For its part, the respondent contended that ‘endeavouring’ to do something is not a high test. It’s representative submitted that:
...the respondent had an obligation to simply ‘endeavour’ to obtain the development approval. The respondent’s obligation to ‘endeavour’ is not qualified by terms such as ‘all reasonable’, ‘reasonable’, ‘best’ in any way...
...it is the respondent’s submission that in the present context, its obligations under Special Condition 11 extended to simply making an application to the ACTPLA for development approval of the plans that would allow it to commence construction of the development to allow the sale of a three bedroom Type E unit as proposed under the contract.
The respondent contended that the use of the single word ‘endeavour’ should be contrasted with terms like ‘best endeavours’ or even ‘reasonable endeavours’[30] that are typically found in contracts in the construction industry.
[30] see eg. Joseph Street; Bisognin & Anor v Hera Project Pty Ltd [2016] VSC 75
Numerous authorities have held that ‘best endeavours’ or ‘all reasonable endeavours’ contracts require that the parties do all that is reasonable in the circumstances to achieve the obligation, having regard to the nature, capacity, qualifications and responsibilities of the parties[31] and the terms of the contract, which may contain its own standard of reasonableness.[32] Although some authorities suggest that ‘best endeavours’ and ‘reasonable endeavours’ are synonymous, others draw a distinction.
[31] Hospital Products Ltd v United State Surgical Corporation (1984) 156 CLR 4; Transfield Proprietary Limited v Arlo International Limited (1980) 144 CLR 83 per Mason J
[32] At [55]
Relevantly for the Tribunal, in Stepping Stones Child Care Centre (ACT) Pty Ltd v Early Learning Services Ltd [2013] ACTSC 173 (Stepping Stones) Refshauge J opined that an “... an obligation to use ‘reasonable endeavours’ is not as onerous as one to use ‘best endeavours’ or ‘all reasonable endeavours’”.[33]
[33] At [283]
The respondent submitted that, based on his Honour’s reasoning, the obligation to simply ‘endeavour’ must suggest an even lower standard still.
Having regard to his Honour’s reasoning in Stepping Stones, I accept that there is a difference between a ‘best endeavour’, a ‘reasonable endeavour’ and an ‘endeavour’, although drawing a line is difficult. Still, at a minimum, it seems to me that the respondent was obliged to actively and genuinely try to obtain the relevant approvals.
On this reasoning, the respondent could not meet its contractual obligations by submitting plans that it knew, or believed, would not be approved. It could not simply submit plans without regard to whether they would or could be approved. It had to turn its mind to having the plans approved and take steps to achieve this.
This approach is consistent with the equitable principles set out in paragraph 105, above.
The difficulty for the applicant is that the only evidence before the tribunal as to the process leading to the development approval is the evidence of Mr Farelly. Mr Farelly gave evidence of ongoing negotiations with ACTPLA until the approval date, and then past that date. That evidence established that the respondent was liasing with ACTPLA up to the approval date, that it had submitted plans to ACTPLA that it believed would be approved, and that it was surprised when those plans were rejected on 29 May 2016.
In the absence of contrary evidence, I cannot be satisfied that the respondent failed to exercise reasonable endeavours to secure development approval before the approval date.
The onus was on the applicant to prove his case. He offered no evidence that contradicted that of Mr Farrelly.
Accordingly, I dismiss this aspect of the application.
Issue 6: Was the rescission clause unfair?
At least since the introduction of the ACL in 2010, the law has interceded to enable reviews of so-called ‘unfair standard form contracts’. These protections extend to the purchasers of land for residential purposes.
The relevant provisions are found in Part 2-3 of ACL. In particular, section 23(1) of the ACL provides that:
A term of a consumer contract is void if ... the term is unfair and ... the contract is a standard form contract.
The applicant was not aware of these provisions and did not plead them. That is perhaps not surprising. The ACL provisions can be confusing, particularly as different provisions apply to different classes or persons. For example, unlike the rest of the ACL, the right to take action under these provisions accrues not to a person who meets the definition of a ‘consumer’ in section 3 of the Act, but rather to a person who enters into a ‘consumer contract’ within the meaning of section 23 of the Act. Under subsection 23(3)(ii), a ‘consumer contract’ includes a contract for the “sale or grant of an interest in land to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption.” This includes the applicant, who intended to live in the property as his home.
Still, notwithstanding the failure to mention Part 2-3 of the ACL, the general tenor of the applicant’s submissions on this point is tolerably clear: that is, that the ‘special conditions’ were so unfair that the respondent should not be able to take advantage of them. The respondent addressed the point sufficiently for me to deal with this issue without further representations.
A ‘standard form contract’ is defined in section 7 of the ACL as follows:
7 Standard form contracts
(1) If a party to a proceeding alleges that a contract is a standard form contract, it is presumed to be a standard form contract unless another party to the proceeding proves otherwise.
(2) In determining whether a contract is a standard form contract, a court may take into account such matters as it thinks relevant, but must take into account the following:
(a) whether one of the parties has all or most of the bargaining power relating to the transaction;
(b) whether the contract was prepared by one party before any discussion relating to the transaction occurred between the parties;
(c) whether another party was, in effect, required either to accept or reject the terms of the contract (other than the terms referred to in section 26(1)) in the form in which they were presented;
(d) whether another party was given an effective opportunity to negotiate the terms of the contract that were not the terms referred to in section 26(1);
(e) whether the terms of the contract (other than the terms referred to in section 26(1)) take into account the specific characteristics of another party or the particular transaction;
(f) any other matter prescribed by the regulations.
Under the ACL, a contract of sale between a developer (as vendor) and an individual as purchaser is presumed to be a standard form contract unless the developer can establish otherwise. The applicant’s evidence was that he had no opportunity to negotiate the contract. This was not seriously disputed. There could be little doubt that the Artego special conditions are a standard form contract.
Moving back through the provisions, section 23(1) of this Act provides that:
1. A term of a consumer contract is void if:
(a) the term is unfair; and(b) the contract is a standard form contract.
The meaning of ‘unfair’ term is set out in section 24 as follows:
24 Meaning of unfair
1. A term of a consumer contract is unfair if:
(a) it would cause a significant imbalance in the parties' rights and obligations arising under the contract; and
(b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
(c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.
2. In determining whether a term of a consumer contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the following:
(a) the extent to which the term is transparent;
(b) the contract as a whole.
3. A term is transparent if the term is:
(a) expressed in reasonably plain language; and
(b) legible; and
(c) presented clearly; and
(d) readily available to any party affected by the term.
4. For the purposes of subsection (1)(b), a term of a consumer contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise.
Section 25 includes a lengthy list of examples of the kind of terms that may be unfair.
In my view, the sale contract is significantly weighted in favour of the developer, particularly in terms of the respective rights to terminate the contract. It also lacks transparency. There are several terms that have the potential to be ‘unfair’. However, having regard to the nature of this development, I am not satisfied that clause 11.1 is one of them.
The respondent’s representative submitted that:
...there is a practical nature to this, that if it is an off the plan sale and a builder is required as a result of the regulatory authority to reduce the number of units, then they must be able to have the ability then to reassess the contracts...[34]
[34] Transcript of Proceedings 24 February 2016, page 25 lines 18 - 21
Clearly, this must be the case. At the time that the parties entered into the sale contract, the respondent did not have the authorisation to build the development at all. It must have been within the contemplation of the parties that development approval would not be granted, or would not be granted for the complex as it was at the time of the sale. A term that deals with what happens in a situation where the respondent does not obtain that authorisation is necessary to protect the interests of the respondent. A clause that provides for recession and refund is not, of itself, unfair.
Could clause 11.1 may be ‘unfair’ because it goes further than what is reasonably necessary to protect the interests of the developer? There are two possible bases for arguing that it this:
(a)the clause is unbalanced. Why does the contract only provide the developer with the right to rescind after 29 May 2015? Surely a purchaser should not be left waiting for their home indefinitely while the developer tries out various iterations of the plans with ACTPLA?
(b)the clause provides no reasonable timeframe. Why is there no time limit on the right to rescind? The applicant quite understandably feels ‘wronged’ – the developer has ‘banked’ the right of recession for use at a later time, and used the applicant’s money to assist with the building of the development.
In Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50 at [363] – [364], Allsop CJ (Besanko and Middleton JJ agreeing) emphasised the evaluative nature of the assessment of unfairness, to be carried out with a close attendance to the statutory terms. The Chief Justice also observed that “unjustness and unfairness are of a lower moral or ethical standard than unconscionability.” Even if the term is efficient and practical, it is conceivable that the above imbalances in the rights of the parties could nonetheless make the clause unfair.
Yet, if it is accepted that the clause is unfair, where does that leave the applicant? A contract term which is found to be unfair is void.[35] A void term is not enforceable – it is effectively removed from the contract, and the respondent could not rely upon it to rescind the contract.
[35] ACL section 23(1)
This would leave a difficult situation. The Respondent could not build the development it had contracted with the applicant to build. Would it be obliged to continue to negotiate with ACTPLA until it could finalise the development? Or would a timeframe be imposed whereby agreement would have to be reached, or the applicant could sue for breach of contract? It seems unlikely that such a contract would even have been offered. These practical difficulties are avoided by a term that allows for rescission.
Setting aside these issues, let us assume however, that the term is unfair and the rescission clause void, and that the respondent’s failure to complete the development in accordance with the contract enables the applicant to sue for breach of contract. The usual remedy for a breach of contract involving the acquisition of land is specific performance. But a Court cannot grant specific performance in this case, as the respondent cannot in fact provide the applicant with the Type E townhouse he contracted to buy. Damages would need to be awarded instead.
What damages would be awarded? Australian courts generally only award loss-based damage. Gain-based damage, such as an account of any profit the respondent made by breaching the contract, cannot generally be awarded. The question is: what is the applicant’s loss?
In broad terms, damages for a breach of contract are available on two bases:
(a)Expectation losses: This is the usual award for a breach of contract and attempts to put an applicant in the position they would have been in had the contract been performed.
(b)Reliance losses: more rarely, a court may attempt to put an applicant in the position they would have been in if the contract had never been performed. This compensates the claimant for expenses incurred and losses suffered in reliance on the contract.
The applicant seeks $10,000.00 on the basis that “similar properties in the vicinity from other sellers have been increased approximately $25,000.00 in comparison to the prices in April.” His loss, he claims, was the missed opportunity to buy another property at an April 2015 price. This appears to be a form of reliance loss.
However, the applicant offered no substantive evidence to establish his asserted loss. He offered no evidence of another apartment that he could have bought, had he not bought this property. He offered no evidence of comparable property prices at the date of rescission. In such circumstances, it is exceedingly difficult to assess whether there was a price rise as alleged during the relevant period. It is impossible to know whether other three bedroom properties were available for a similar price. It is impossible to know whether other developments were sold subject to similar conditions as the subject property. It is impossible to assess what discount was applied to be properties in this case because they were unapproved. The alleged damage simply has not been substantiated.
Accordingly, even if I were satisfied that clause 11 was an unfair term, which I am not, I would not be satisfied that the applicant has made out any case for damages as a consequence of a breach of contract by the respondent.
Accordingly, I dismiss this aspect of the application.
Conclusion
The sale contract contained a clause that allowed the respondent to rescind it if development approval was not obtained by the approval date. That condition having been met, the onus was on the applicant to show that the clause could not be relied upon. He did not meet that onus of proof. He also failed to establish that he suffered the damage alleged. Accordingly, I have dismissed the application.
That is not to discount the genuine feeling of grievance experienced by the applicant. Clearly, the respondent attached misleading plans to the sale contract, took a deposit from him for an apartment it could not build, profited from holding the deposit, and then rescinded the contract and sold a similar apartment to someone else. It compounded the situation by not rescinding the contract in a timely manner, and by failing to offer any reasonable explanation. In such circumstances, the applicant’s feeling of being wronged is well placed. They do not, however, entitle the applicant to the kind of damages sought in this case.
While there appears to be no law that prevents sale of unapproved plans of the kind the subject of this proceeding, the circumstances of this case illustrate the risks of buying into such a project. The Tribunal has no evidence as to how widespread a practice this is, but if the applicant’s position is typical, this is one area that may warrant legislative intervention.
……….......……………..
Senior Member H Robinson
HEARING DETAILS
FILE NUMBER: | XD 1181/ 2015 |
PARTIES, APPLICANT: | Siva Tummala |
PARTIES, RESPONDENT: | Tiger Property Group Pty Ltd |
COUNSEL APPEARING, APPLICANT | N/A |
COUNSEL APPEARING, RESPONDENT | Mr D Robens |
SOLICITORS FOR APPLICANT | N/A |
SOLICITORS FOR RESPONDENT | Kamy Saeedi Law |
TRIBUNAL MEMBERS: | Senior Member H. Robinson |
DATE OF HEARING: | 24 February 2016 |
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