Turner v Newport Quays Stage 2A Pty Ltd and MC Marina South Ltd (No 2)
[2009] SADC 142
•25 September 2009
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
TURNER v NEWPORT QUAYS STAGE 2A PTY LTD AND MC MARINA SOUTH LTD (No 2)
[2009] SADC 142
Judgment of His Honour Judge Tilmouth
25 September 2009
TRADE AND COMMERCE - TRADE PRACTICES AND RELATED MATTERS - CONSUMER PROTECTION - MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT - CHARACTER AND ATTRIBUTES OF CONDUCT - REPRESENTATIONS
A representation to install a lift in a three storey town-house development, held to be misleading in the context in which it was made.
Elders Trust & Executor Pty Ltd v EG Reaves Pty Ltd (1987) 78 ALR 193; San Sebastian Pty Ltd v Minister Administration (1986) 162 CLR 340; Heydon v NRMA Ltd (2000) 51 NSWLR 1; Sykes v Reserve Bank of Australia (1998) 158 ALR 710; Trade Practices Act ss 51A, 52, 86, 87; Hough v London and North West Railway Co (1871) LR 7 Exch 26; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546; JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378; Lissenden v CAV Bosch Ltd [1940] AC 412; O'Connor v SP Bray (1936) 36 SR (NSW) 248; Zucker v Straightlace Pty Ltd (1986) 11 NSWLR 87, referred to.
Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177; Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; Copping & Perball Pty Ltd v ANZ McCaughn Ltd (No 2) (1995) 181 LSJS 157; Gould v Vaggelas (1984) 157 CLR 215; Majic Markets Pty Ltd v S.M. Motor Repairs Pty Ltd (No 1) (1987) 10 NSWLR 49, applied.
TRADE AND COMMERCE - TRADE PRACTICES AND RELATED MATTERS - ENFORCEMENT AND REMEDIES
Actions of the plaintiff in placing unit up for sale held not to be an affirmation of the contract for the sale and purchase thereof in the circumstances, and not such as to refuse appropriate discretionary orders pursuant to s 87 of the Trade Practices Act.
Coastal Estates Pty Ltd v Melevende [1965] VR 433; Agricultural & Rural Finances Pty Ltd v Gardiner (2008) 83 ALJR 196; ]2008] HCA 57, referred to.
Wallace-Smith v Thiess Infraco (Swanston) Pty Ltd (2005) 218 ALR, applied.
Sargent v ASL Developments Pty Ltd (1974) 131 CLR 634, discussed.
Tiplady v Gold Coast Carlton Pty Ltd (1984) 8 FCR 426; Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26; JAD International Pty Ltd v International Trucks Australia Limited (1994) 50 FCR 378, considered.
TURNER v NEWPORT QUAYS STAGE 2A PTY LTD AND MC MARINA SOUTH LTD (No 2)
[2009] SADC 142The issue
The defendant companies are subsidiaries of a larger conglomerate, the Urban Construct Group of companies. Urban Construct primarily specialises in building large scale residential developments. One project was at Newport Quays on the Port River, consisting of townhouses, apartments and a marina cove. When stage 2, costing something in the order of $150m was first released on the market, Ross Turner expressed a strong interest in a waterfront unit. He subsequently contracted with the first defendant to purchase a three level riverside villa and an associated marina with the second defendant. He claims to have been promised an internal lift. Since that was subsequently refused, he seeks rescission or orders avoiding the contract on the grounds of misrepresentation. The defendants deny any actionable misrepresentation and claim any such orders are inappropriate in all the circumstances.
Pre-contractual events
The first defendant was specifically incorporated to develop Stage 2.[1] Likewise the second defendant was incorporated to sell marina berths associated with the units released for sale in Stage 2. Each stage of the development, of which there are planned to be 12 to 15 over the course of ten years, are released for public sale progressively. The broad sequence of events leading up to the purchase of the subject Unit (no.53), is not in dispute and is largely documented.
[1] T382.3-.7
After spotting an advertisement, Mr and Mrs Turner drove to the marketing office located in the inner harbour on a wharf at the end of Mundy Street, Port Adelaide. This was in all probability Tuesday 5 September 2006, the day after this second stage was first released for sale. They viewed display models and mock-ups of the proposed kitchen and bathroom areas, and discussed the prospect of purchasing a villa with the sales agent and witness in these proceedings, Travis Barber. He was a real estate agent then employed in his father’s company, Max Barber Project Marketing Pty Ltd. This firm was engaged by the defendants as exclusive agents to sell “off-the-plan apartment buildings” in Stage 2.
There was a brief discussion about the units and they expressed a keen interest in them. However, as by then all units had already been sold or otherwise placed on hold for other purchasers, the conversation did not progress very far. The upshot was that Barber agreed to let them know should one become available. As it happened, within a day, one was taken off hold, so he rang Mr Turner who promptly re-attended with his wife to pursue the prospect of purchase further. This was Wednesday 6 September. There was some discussion as to what was on offer. The uncontentious parts were to the effect that Unit 53 had become available at a non-negotiable price of $1,221,150.00. Mr Turner signed a contract that very day for the purchase of the Unit from the vendor Newport Quays Stage 2A Pty Ltd. He contemporaneously signed a contract for the purchase of a lease over a marina berth No. F2, located more or less adjacent to the Unit, for $68,750. As the action stands or falls on the former, nothing turns on the precise terms and conditions of the associated marina lease.
The contracts
The contract of sale and purchase of the Unit contained a number of terms and conditions relevant to these proceedings.[2] A deposit of $122,115 was to be paid immediately to the satisfaction of the purchaser by way of bank guarantee. Another was given for the marina. Although there was provision for special conditions, such as “subject to finance” for instance, none were suggested or added. As these were purchased off-the-plan for building work yet to be undertaken – the projected timeframe was about 2-2½ years – clause Q provided for carrying out additional works, if any were required by the purchaser. It was always contemplated in these standard form contracts that there would be some permissible variations, mostly cosmetic in nature, such as the colour scheme, choice of finishes and the configuration of one or two levels, and the like.
[2] Exhibit P1 V1 tab 2
On the other hand if there were to be any structural changes, these were to be at an additional cost borne by the purchaser. Clause 6.5 of Annexure A to the contract entitled “Special Conditions” contained those provisions with respect to such variations:
6.5.1If the purchaser makes a request upon the Vendor to make variations to the Works (“Purchaser Variations”), the Purchaser acknowledges and agrees that:
(a) the Purchaser will be required to adhere to a strict variation process required by the Vendor and/or the Builder relating to, amongst other things, the timing, detailing, design and formalisation of the Purchaser Variations (“the Purchaser Variation Process”);
(b) as part of the Purchaser Variation Process the Purchaser may be required to expend certain monies to detail the design of the Purchaser Variations and may be required to provide the Vendor with additional security for the value of the Purchaser Variations;
(c) the value of the Purchaser Variations may include an administration fee or the like charged by the Vendor;
(d) the formalisation of the Purchaser Variations may result in the Purchaser having to pay additional government fees such as stamp duty and Lands Titles Office registration fees; and
(e) it will be at the complete discretion of the Vendor at any time, including during the Purchaser Variation Process, whether or not to proceed with, agree to or effect all or any aspect of the Purchaser Variations.
6.5.2If the Purchaser does not adhere to the Purchaser Variation Process the Vendor may at any time and in its complete discretion refuse to proceed with the Purchaser Variation and the Purchaser may not make any objection, requisition or claim for compensation nor rescind or terminate this Agreement, nor delay or refuse to settle by reason of the Vendor’s refusal to proceed with the Purchaser Variations.
6.5.3If the Vendor agrees to proceed with the Purchaser Variations and if requested by the Vendor, the Purchaser agrees to formalise the Purchaser Variations by executing an agreement prepared by the Vendor’s solicitors (“the Variation Agreement”), which Variation Agreement will be on terms and conditions as required by the Vendor in its complete discretion which may include, amongst other things that:
(a) the cost of the Purchaser Variations will be an increase in the Price;
(b) the Purchaser is required to provide additional security to the Vendor for the value of the Purchaser Variations; and
(c) any additional security provided will be treated as additional deposit payable by the Purchaser under this Agreement and the provisions of Clause 7 will apply.
Annexure A also contained a clause 11 “Assignment or Nomination”, the material parts being these:
11.ASSIGNMENT OR NOMINATION
11.1 Notwithstanding that the Purchaser may nominate or may have nominated another person or corporation or other persons or corporations to complete the sale and purchase of the Land the Purchaser will nevertheless remain fully liable as principal for the due observance and performance of all obligations on its part contained in this Agreement.
11.2 The Purchaser or the Purchaser’s nominee may assign its interests benefits or obligations under this Agreement.
11.3 Any assignment of this Agreement will not release the Purchaser or the Purchaser’s nominee (if applicable) from its obligations under this Agreement.
11.4 The Vendor may assign to any person including a purchaser or successor of its title in the Site or the Land any or all of its interests benefits or obligations under this Agreement and upon such assignment, the Vendor is fully released and discharged from all obligations and liabilities under this Agreement.
There were a number of restrictive covenants detailed in Annexure F to the Sale and Purchase Agreement, involving the general appearance of the area as expressed in this clause:
3.4(c)paint, finish or otherwise alter the external façade or appearance of any building, shed or other structure on the land from that which existed as at the completion of the Works;
The agreements were counter-signed on behalf of the vendor. Mr Turner collected executed copies from Urban Construct’s city office the following day. He read through the documentation over the cooling-off period.[3] The requisite bank guarantees in lieu of deposits of $122,115 and $6,875, were duly provided. The evidence was that before the project could proceed to the building stage, confirmed sales had to be subscribed to a level of about 60-70 per cent. This was quickly reached on the first day of “sell down”, Monday 4 September 2006.
[3] T 143.33 – 145.6
Ms Jane Looker, then customer and property services manager with Urban Construct, and now property service manager with the real estate agents Toop & Toop, wrote to Mr Turner on 5 December 2006 advising him to make any internal material and finish selections by Monday 26 February 2007.[4] The letter enclosed a two-page “villa variation procedure”. This required an upfront payment of $1,000 should variations be specified, other than for those falling within the permitted selections. The procedure outlined therein was to the effect that a meeting would be held to discuss the proposed variations, and an architect would be briefed as to the changes required. The architect would then prepare the preliminary documentation for those changes and these would be forwarded to the builder for pricing. The variations could only proceed, if approved and payment was received in accordance with the price quoted by the builder.
[4] Exhibit P1 V2 tab 8
The variation guidelines included this table:[5]
[5] Exhibit P1 V2 tab 9
VARIATION GUIDELINES:
Acceptable Variations:
. Change carpet colour /type
. Change appliances
. Additional power points, TV points, light fittings.
. Change wall or ceiling colours
. Change joinery details/finishes
. Deletion of non structural walls
Unacceptable Variations:
. Revisions to bathroom and kitchen locations and layouts
. Structural alterations
.Alterations to exterior of building, including wall locations, windows, doors, and any external finishes. Changes to the external appearance of the building will bring about compliance issue with the Development Approval.
.Timber floors where required are to be installed after settlement by the owner. Timber floors are highly susceptible to damage by others.
There were corresponding provisions reflecting the variation procedures in the written contractual arrangements between Newport Quays State 2A Pty Ltd and Alpine Constructions Pty Ltd.[6]
[6] Exhibit P8 clause 40 “variation”
Post contractual events
The Turners returned to the showroom in order to select their preferred internal materials and finishes at some time after 5 December 2006, where they had a brief informal discussion with Travis Barber. They discussed nothing about the lift with him on this occasion, despite the contents of the letter of 5 December. Mr Turner confirmed his selections by email on Monday 19 February 2007, indicating preferences for finishes to 13 separate items, including the fact that he wanted no carpets to be installed. At the foot of the email he added this:[7]
Further to the above, Travis informed us that a small lift could be installed in the residence and he estimated the cost would be in the order of $15,000. We are happy to proceed with that too.
[7] Exhibit P1 V2 tab 10
The reference to “Travis” was to the abovementioned salesman, Travis Barber. There was at least one telephone exchange between Mr Turner and Ms Looker at about this time. For the present it is clear this must have been on the morning of 19 February when she requested him to put his proposed variations in writing, which he did in that email later that day.
This was received and forwarded to the sub-contractors engaged by Urban Construct to build the Newport Quays, Alpine Constructions Pty Ltd. It was returned to Urban Construct, by Alpine’s project manager Mr Andrew Hill. He gave evidence of having on 19 April 2007 advised the defendants the lift referred to in Mr Turner’s email, was “outside of the purchaser variation guidelines” and therefore rejected by the builder.[8] When that situation arose he said Alpine Constructions would leave “Newport Quays to deal with the client”.[9]
[8] Exhibit P1 V2 tab 11 and T115.38-116.1
[9] T114.12
What actually transpired at this point in the decision making process did not become clear until the evidence of Ms Looker. Once receiving Mr Turner’s “response in relation to the lift” she went “straight to the project manager, David Ising”.[10] Her evidence was, as the surrounding documents prove, that there was a meeting on 23 April 2007 at which she, Mr Ising, Larissa Barber and possibly representatives from Alpine Constructions were present, when a decision was made “that no lift is available to be installed”.[11] It appears this conclusion was reached because, to quote Ms Looker’s evidence:[12]
… it would've actually encroached on the external part of the building with the carriage…due to the development application approval, it was denied, it was unable to happen.
[10] T457.26-.28 and T461.10
[11] T458.2-.35 and Exhibits D16, D17 & D18
[12] T460.26-.30
The Group’s CEO Todd Brown confirmed that by this time “it became clear that the nature of the construction would prevent the lift from being put in under the encumbrance and would have some planning implications as well”.[13] This evidence establishes that due consideration was given as to whether a lift could be installed in accordance with the contractual variations procedure, or as it was called in clause 6.5 of Annexure A, “the Purchaser Variation Process”.
[13] T420.31-.34
This decision was communicated to Mr Turner by email for the first time that very day, 23 April 2007, by Ms Barber an employee of Urban Construct and who happens to be the sister of Travis. She cursorily advised “no lifts are allowed in Marina Cove in accordance with the planning approvals”.[14] No explanation was provided beyond this as to how or why planning approvals applied to the situation. Nor had anyone from the defendants’ side said anything remotely suggestive of any problem as to the lift proposed, until then. The defendants contend he did nothing about this email for some months after receiving it, and consequently they submitted this “surprising failure” was inconsistent with a definitive promise to install a lift and the assertion that he would not have entered into contract but for that promise.
[14] Exhibit P1 V2 tab 12
As against this, Mr Turner claims to have responded in no uncertain terms. He deposed to an occasion when he was telephoned by Ms Looker following receipt of her email. Upon being advised “there’s no lift”, he retorted:[15]
Well, this was promised to us by Travis Barber and it was the only reason we signed the contract…we only have one alternative and that's to get rid of it because we can't live in the building. I simply cannot climb stairs of that number on a daily basis.
He described being “devastated”, “angry”, “confused” and “disappointed” at this time.[16] He could not remember the precise date when this conversation took place, except that it followed the rejection of the lift, which has been seen was first communicated on 23 April 2007. Indeed on the latter subject, he deposed in affidavit of a conversation with her about this very subject in March 2007.[17] Ultimately it was squarely put to him on behalf of the defendant that this exchange could not have occurred until 8 August 2007.[18]
[15] T58.2-.26
[16] T58.7, 61.10, 62.38, 162.34, 163.14
[17] T170.7-.18
[18] T226.20-.33
When it came to her evidence, Ms Looker frankly admitted to a conversation with Mr Turner at some stage in which he was not very happy, told her that Travis Barber said they could have a lift and that “if he couldn't have a lift, then he would need to dispose of it because he can't climb up stairs on a daily basis”.[19] So it is common ground that a conversation took place between the two more or less in the stated terms. The question remains when?
[19] T469.18-470.6
Mr Ising’s instruction to Ms Looker in his email to her of 26 April read:[20]
As discussed at meeting Monday can you please contact purchasers with the following queries/clarifications…
Villa 53 Turner - Purchasers request for a lift is no due to planning approvals.
Although there were six other purchasers concerned and therefore to be contacted as well, it is reasonable to infer the instruction was carried out proximate to this date, which plainly was.
[20] Exhibit D16
The letter of 28 May the following year quoted below, dispatched by Ms Kuzman, records Mr Turner was “verbally advised by Ms Jane Looker that the installation of a lift was not possible…” and in that context goes on to refer to the email of 23 April 2007. Of course this could have been a reference in point of time to either April or August 2007, and yet the context suggests more the former rather than the latter. Ms Looker conceded the telephone exchange could have been around the time of sending the April email, still she remained unsure when confronted with that suggestion, remaining unable to “remember when that telephone conversation was”.[21]
[21] T470.20-.26
Her letter of 8 August 2007 was written in order to record the “important” fact that Mr Turner elected not to proceed with the variations.[22] She said it was her practise to send confirming letters whenever a matter of importance was discussed with a client.[23] Given the terms of this discussion with Mr Turner about the lift was clearly important, irrespective of when it occurred, it is surprising she did not record that discussion. Indeed on that supposition, the lift would certainly have been referred to by her in the letter of the 8th, if that is when it occurred. The omission to mention the subject at this later opportunity, only serves to reinforce the inference that the conversation under discussion happened on some earlier occasion.
[22] Exhibit P1, V2 Tab 14
[23] T473.7-.10
There are two further clues. In his long letter of 23 May 2008 (reproduced below), Mr Turner mentions his 19 February 2007 email, and a conversation taking place “weeks later”. This places it much closer to April than it does to August. Likewise nominating the call as having occurred in March 2007 in the affidavit filed for interlocutory purposes, lends further weight to the conclusion that it was much earlier than August 2007. This stance is consistent with Hunt and Hunt’s letter of September 2008, which also cited the email of 19 February and then asserted “…some weeks later Mr Turner followed up Ms Looker…[and]… expressed his surprise and complained that…he had been told that a lift would be installed.” Of course this could be no more than a self-serving statement, especially if the solicitor had a copy of Mr Turner’s letter when it was drafted, as appears to be the case as it is referred to therein. Out of an abundance of caution it is best to treat the solicitors letter in that way.
The combined weight of all this material plainly suggests there was a conversation during which Mr Turner expressed his displeasure upon being refused the lift and began to verbalise what the options were for him in that context. Since the email of April 2007 was the first time refusal was communicated, it was inherently likely to have engendered disappointment and provoked an adverse reaction, even if the initial discussions were in the terms deposed to by Barber. The curt manner of refusal could only have heightened the chances of just such a response. Although no findings have as yet been made as to the precise terms or import of the conversation with Travis Barber in September the previous year, the evidence about that sketched above, is sufficient to demonstrate the subject was sensitive to Mr Turner on any view. The distinct probabilities are therefore that Mr Turner raised the question of the lift on the telephone with Ms Looker, within a week or two of first being notified of the decision to refuse him on 23 April 2007. It follows from this finding the hypothesis that could only have been later in August that year, is rejected.
Ms Looker wrote to Mr Turner on 2 August 2007, enclosing a variation contract with respect to the other items nominated by him, omitting all reference to the question of a lift, whilst confirming “purchaser to provide their own floor coverings on all floors including the stairs, other than the wet area tiles”.[24] Mr Turner rang her and indicated he would not be proceeding, in all probability on 8 August 2007. This meant the variations reverted to the standard or “default” position. As a consequence she endorsed the file copy of the letter of 2 August, “cancelled”. Further correspondence of no particular consequence passed between Mr Turner and Urban Construct, other than to progress the agreement towards settlement. There were other telephone calls during which Mr Turner claims to have tried to contact a number of people in order to pursue the lift issue, and messages left, which he claims were never returned. That subject is considered later in these reasons.
[24] Exhibit P1 V2 tab 13
The question of a lift erupts
The issue came out in the open by 23 May 2008, when the plaintiff wrote at length to Ms Jelena Kuzman, who by then had replaced Ms Looker as client services manager with Urban Construct. Because of its central importance to both sides in this litigation, it is necessary to set out in full:[25]
[25] Exhibit P1 V2 tab 17, formal parts omitted
Re: Marina Villa 53
Following a couple of discussions with your assistant yesterday, she has suggested that I should write to you setting out the particulars of my problems with the execution of my contract. She said she understood my predicament and suggested that the matter would probably be referred to your executive.
I signed a Sale Contract on September 6th 2006, and implicit in that contract were some special conditions.
In discussions with Travis Barber prior to the sale, certain variations from the Ginger Premium finishes were requested, and in particular a personal lift which Travis assured my wife and me would certainly be able to be installed. He told us that several other purchasers had requested similar lifts to cover the three floors, and he said that the cost of such a lift would be in the order of $15,000.
I have had some serious surgery on my back and knees and it is not possible for me to walk up and down 3 flights of stairs every day and so the concept of the lift was absolutely paramount in my decision to proceed with the purchase.
My requirements were apparently not passed on to your design staff by Travis because on December 5th 2006 I received a letter from Jane Looker pointing out that internal materials and finishes selections had to be notified by February 26th 2007. I had understood that my selections were already passed on by Travis.
So I telephoned Ms Looker on these matters, and so on 19 February 2007 I again confirmed my selections to her in writing, and she replied on the same day, Feb 19th, that she would advise when she had some prices.
Weeks later, not having heard from Ms Looker or anyone else, I telephoned her and was informed that the installation of a lift was simply not possible, and in any case would have been much more expensive than I had been quoted. She told me that a lift should never have been offered as an extra.
Having been excited at the prospect of living at the Port, I was suddenly forced to think about disposing of the Villa because of my physical restrictions. Also some of our friends are elderly and cannot manage flights of stairs and so our reasons for purchase had been negated without anyone having the courtesy to advise me on this matter. Ms Looker informed me in no uncertain terms that Urban Construct was not in the business of re-sales and so referred me to Max Barber whom she said would refer enquiries direct to me.
Accordingly, I endeavoured to contact Mr Barber. On numerous occasions I left messages on his voice-mail and was not even accorded the courtesy of an acknowledgement, certainly not a return call. It was only after a very direct message from me which reflected my anger at his complete lack of response that he called back. My attempts to contact Mr Barber and others in the sales team extended over many months.
Since that time, also many months ago, I have received no contact whatsoever from your sales team, no referrals of interested parties, no offers of assistance in view of the particular circumstances of the commitments of Urban Construct to me.
All of this seems to me to be most un-professional, most inconsiderate, and very poor public relations by your representatives. Further, I understand that none of these people on whose advice and integrity I had relied remain in the employ of Urban Construct.
So I have been left in the invidious position of having to find an independent agent to arrange the assignment of my contract prior to the settlement principally because I had relied upon some misrepresentation at the time of signing the contract documents. Misrepresentations like these are not pleasant and have cost me considerable holding charges and inconvenience etc. I had asked Mr Barber what he considered is the current value of my Villa and he suggested $1.5 mill. But he would not undertake to find an alternative purchaser. There has been a complete lack of assistance since it was discovered that our contract was based on some incorrect information.
Suffice to say that my wife and I are very disappointed. What had started out as an exciting concept for us has been spoilt completely by people whose integrity has turned out to be unreliable and unhelpful. We have been extremely patient during these months but we must now resolve the matter as soon as possible.
I enclose copies of some of the correspondence to which I have referred, and if you require further information please call me or I’d be happy to visit your offices to discuss the matter with you personally.
Ms Kuzman responded five days later by her letter of 28 May 2008, in these terms:[26]
Whilst we do not accept that we have or ever had any obligation to install a “personal lift” to service your Villa, we have thoroughly investigated this matter again and our records indicate you were verbally advised by Ms Jane Looker that the installation of a lift was not possible in your Villa. In addition, our records indicate that an email dated 23 April 2007 was sent from Ms Larissa Barber advising you that your request for a lift was not possible.
We would like to take this opportunity to explain the reasoning behind these restrictions. We note that it was not possible to add a lift due to an Encumbrance over the Land. The Encumbrance is a safeguard to conserve and enhance the streetscape character and architectural fabric of the Precinct. Its purpose is to maintain and uphold the desired character of the development and preserve the value of the properties.
As you can appreciate, the villas have been designed to have a visual appearance, scale and materiality consistent with the architecture of the Precinct. In order to maintain the design integrity of the built form it is important for the Architectural language not to be compromised by individual external additions and alterations.
In regard to your comments regarding re-sale of your property, we sincerely apologise for any miscommunication that may have occurred regarding this matter. Please note that the Vendor and/or its agents are not and have never in any past projects been involved in any re-sale advise and/or processes. We agree that this information as well as the details of our preferred real estate agent should have been communicated to you during the said conversations identified by you in your letter. Please note that Toop & Toop Real Estate Agents are our preferred agents and we trust that they would be most obliged to assist you with your re-sale requirements. Please contact Mr Troy Tyndall on 0401 661 997.
[26] Exhibit P1 V2 tab 18, formal parts omitted
Ms Kuzman, who continues to retain the same position with Urban Construct, conceded under cross-examination having no direct knowledge of the facts relating to the lift referred to in this letter.[27] It was composed after speaking with Ms Looker and discussing it with Urban Constructs’ CEO Mr Todd Brown and corporate counsel.[28] It became clear that she had not spoken with Travis Barber about it.[29]
[27] T450.1-.9
[28] T450.7-30
[29] T452.35-.37
Thereafter Mr Turner considered assigning the property, but no one was referred to him who might be interested in taking it. He engaged the real estate agents Toop & Toop of Port Adelaide, to sell the property in June 2008, a course suggested in Kuzman’s letter. However he was unable to find a buyer. As a matter of fact the Unit remains unsold to the present time.[30] It was withdrawn from sale after consulting the solicitor Mr Harley. An expert report tendered by consent, values the property at $975,000 and $25,000 for the marina, as of 28 April 2009.[31]
[30] T14.1
[31] Exhibit D11, T305.14-.30
Mr Turner attended a meeting at Toop & Toop at one stage, where he met other ostensibly “disgruntled purchasers”. This was sometime after the end of May and before September 2008. Nothing turns on that fact, other than to note it must have become obvious to him by then that he was going to have trouble on-selling the property. There was also a conversation in July 2008 between Mr Turner and Travis Barber, parts of which are in contention.[32] On both accounts the subject matter was whether Mr Barber would support Mr Turner or not; otherwise nothing of consequence turns on it.
[32] T341.27-T343.8 (.14- Mr Barber); T209.23-T213.18 (Mr Turner)
When settlement was first anticipated in about September 2008,[33] Mr Turner contacted the solicitor Mr R Harley, a senior partner with Hunt & Hunt lawyers. At this time Harley advised him as to his potential rights of rescission. Of this occasion Mr Turner gave evidence:[34]
That was my first - I knew nothing previously about my ability to rescind the contract. I had never encountered anything like that before.
That this was his understanding of his legal options at that time, was not disputed by the defendants.
[33] Exhibit P1 V2 tab 16 and T448.38-449.13
[34] T68.18-.20
An associate of Mr Harley wrote on 4 September 2008, purporting to exercise the plaintiff’s “right to rescind the contract and the lease” on the grounds of pre-contractual misrepresentation. The most material portion of this letter was this:[35]
[35] Exhibit P1 V2 tab 26 (emphasis from the original)
Pre-contract Representation
Prior to entry into the contract and the lease Mr Turner and his wife attended the Newport Quays sales office and made inquiries to purchase a villa in the Project. Mr Turner and his wife had numerous discussions with Mr Travis Barber, as sales agent for Newport and MC. During these discussions Mr Turner advised that he would require a lift to be installed in the villa because he had had serious surgery on his back and knees and he was not able to walk up and down three flights of stairs every day. Mr Barber responded by saying words to the effect that “I have checked and can confirm we will install a lift but it will cost you about an extra $15,000.00” (“the Representation”). The Representation was made by Mr Barber on 6 September 2006 in the presence of both Mr Turner and his wife.
Mr Turner relied on the Representation and was induced by it to enter in to the contract and the lease. Mr Turner would not have entered into the contract or the lease if he had known that a lift could not be installed because he is physically incapable of mounting stairs on a daily basis.
Post Contract Conduct
Consistent with the Representation having been made, Mr Turner wrote by email on 19 February 2007 to your Jane Looker confirming that the lift would be installed. Some weeks later Mr Turner followed up Ms Looker and was informed by her that a lift could not be installed. Mr Turner expressed his surprise and complained that prior to entering into the contract and the lease he had been told that a lift would be installed. Mr Turner considered his options and later confirmed his position in a letter to your client dated 23 May 2008. By letter dated 28 May 2008 your client explained that an encumbrance over the Project prevented a lift being installed.
By letter dated 27 August 2008 to Mr Turner you advised that the project is nearing completion and settlement is imminent.
The defendants refused to recognise the act of rescission.[36] Thereafter Mr Turner terminated the instructions of Toop & Toop. The development plans were registered on 22 September 2008.[37] Their letter of 23 October 2008 called upon the plaintiff to settle on 10 November 2008 in anticipation of practical completion being achieved in between time.[38] In the event practical completion occurred on 5 November 2008.[39] A further notice to complete was given on 1 December 2008.[40] It is not in dispute that the plaintiff failed to settle at both appointed times.
[36] On 8 September 2008, Exhibit P1, V2, Tab 27
[37] Exhibit D15
[38] Exhibit P1, V2, Tab 29
[39] Exhibit D14
[40] Exhibit P1, V2, Tabs 30 and 31
As a consequence the defendants gave notice of termination under both contracts on 23 December 2008.[41] Having done so, under the terms of the principal contracts, the deposits were forfeited and the defendant became entitled to retain the properties and to sue for damages.[42] The sums of $1,221,150 and $68,750 respectively, fell due to the defendants accordingly. By then some two years on, the villa had fallen in value to $975,000 and the marina to $25,000, a combined capital loss of $289,900.[43]
[41] Exhibit P1, V2, Tabs 32 and 33, Clause 7.1.3 of the Sale and Purchase Agreement
[42] Clause 7.1.5 Sale and Purchase Agreement
[43] Exhibit D11
The proceedings
A summons was issued in this action on 23 September 2008. The statement of claim filed then and on which the plaintiff went to trial, alleges a conversation between Travis Barber and Mr Turner on the day of signing the contract, to the effect that Mr Turner advised he:
would require a lift to be installed in the villa because he had some serious surgery on his back and knees and he was not able to walk up and down three flights of stairs everyday.
Mr Barber is alleged therein to have responded:
that is not a problem. We have already confirmed we can include a lift for one or two other people.
The pleadings further allege Barber indicated on floor plans where a lift might be installed and advised some space would be lost in the toilet area on the ground floor and storage areas on the upper two levels. It also asserts Barber gave a ballpark figure of about $15,000 for the installation of the lift.[44] An alternative representation was added by leave during the course of the trial, after Barber gave evidence:[45]
13.2.2 in the alternative, said to the plaintiff and his wife in respect of a future matter words to the effect that “it shouldn’t be a problem and it would be considered at the variation stage”.
[44] Further amended statement of claim para 13
[45] Refer submissions T376.29-378.13, T433.13-T439.30 and Ruling T439.31-T440.9
In a joint defence filed on behalf of both parties on 30 January 2009, it was pleaded:[46]
… the plaintiff enquired of Travis Barber as to the possibility of having a lift installed in the villa and was told by Mr Barber that the installation of a lift might be possible but, if the plaintiff wished to pursue that option, he would need to make a request for a variation to the specification of the works to be considered by the Builder in due course, but otherwise the First and Second Defendants deny the matters pleaded therein.
[46] Defence para 3
The plaintiff sues for misrepresentation and consequent rescission, on the basis of misleading and deceptive conduct, or false and misleading representations under sections 52 and 53A(1)(b) of the Trade Practices Act 1974 (Cth).[47] Section 52(1) provides:
Misleading or deceptive conduct
(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
whereas s53A(1)(b) is:
False representations and other misleading or offensive conduct in relation to land
(1) A corporation shall not, in trade or commerce, in connexion with the sale or grant, or the possible sale or grant, of an interest in land or in connexion 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, the price payable for the land, the location of the land, the characteristics of the land, the use to which the land is capable of being put or may lawfully be put or the existence or availability of facilities associated with the land;
Mr Britten-Jones for the plaintiff did not suggest s 53A(1)(b) provided any further remedy that s 52 could not.
[47] Hereafter the TP Act
Clause 21 of the Unit contract provides the agreement is to be construed and governed by the laws of this State and submits the parties to the jurisdiction of South Australian courts. Although primary jurisdiction is conferred on the Federal Court by s 86(1), federal jurisdiction is conferred on the District Court of South Australia by virtue of s 86(2), this being one of “the several courts of the states”, provided the action is otherwise “within the limits of their several jurisdictions”. As this court exercises an unlimited jurisdiction over civil proceedings other than actions in probate and admiralty under s 8 of the District Court Act 1991 (SA), both counsel acknowledged the jurisdiction of this court to entertain the cause.
The plaintiff seeks relief in the nature of rescission, or orders declaring the contracts void and resultant consequential orders. The power to make such orders or voiding contracts, are conferred by s 87 of the Trade Practices Act. For their part the defendants deny such orders are available, essentially because they deny any misrepresentation or other offending conduct and they plead affirmation in the alternative, more or less as a defence. They counterclaim, amongst other things, for damages under the agreements including interest, the enforcement of the bank guarantees and they deny valid rescission was effected by the plaintiff.
During the course of the hearing the following facts, although not formally admitted, where not disputed by the plaintiff’s counsel. These are conveniently collected from the opening of defence counsel:[48]
[48] T306.28-308.3
1.Registration of the plans of division in respect of the land the subject of the contract for the sale and purchase of villa 53 occurred on 22 September 2008.
2.Practical completion of the works subject of the contract for the sale and purchase of villa 53 was achieved on 5 November 2008.
3.On 23 October 2008 the first defendant delivered a settlement notice to the plaintiff, the settlement to occur on the contract for sale and purchase of villa 53 on 10 November 2008 at the Lands Titles Registration Office.
4.As at 10 November 2008 all of the prerequisites for settlement on the contract for the sale and purchase of villa 53 (assuming the contract had not been earlier rescinded as alleged) had been satisfied and the first defendant was ready, willing and able to settle on that date.
5.The conveyancer for the first defendant attended at the Lands Titles Registration Office for settlement on the contract for the sale and purchase of villa 534 on 10 November 2008 but neither the plaintiff nor any representative of the plaintiff attended settlement on that date.
6.On 19 November 2008 the first defendant delivered a notice to complete which gave notice that the first defendant required the plaintiff to settle on the contract for the sale and purchase of villa 53 on 1 December 2008 at 11 a.m. at the Lands Titles Registration Office.
7.On 19 November 2008 the second defendant delivered a notice to the plaintiff giving notice that if the plaintiff failed to comply with the notice to complete delivered on 19 November 2008 by the first defendant under the contract for the sale and purchase of villa 53, the second defendant would treat that failure as a repudiation of the lease of marine berth 52, thereby entitling the second defendant to terminate that lease by reasons of the plaintiff’s, as lessees, default.
8.On 1 December 2008 at 11 a.m. the first defendant’s conveyancer attended at the Lands Titles Registration Office for settlement on the contract and sale and purchase of villa 53, but neither the plaintiff nor any representative of the plaintiff attended for settlement on that date.
9.The first defendant was ready, willing and able to settle on the contract for the sale and purchase of villa 53 on 1 December 2008 at 11 a.m., assuming that the contract had not been earlier rescinded by the plaintiff as alleged.
10.The rate charged by the first defendant’s financiers for the development was at all material times 7.65% per annum.
The evidence in relation to 6 September 2006
Returning to 6 September 2006, it is to be recalled that Barber rang Mr Turner to advise a unit unexpectedly became available, causing the Turners to return immediately to the sales office to see Barber. The essence of the plaintiff’s case in relation to the conversation with Barber then, is captured in this passage taken from Mr Turner’s examination-in-chief:[49]
[49] T40.18-41.8
QWhat did you say to him.
AWell first of all we identified which one it was.
QYes
AAnd I said to him at that stage very definitely that – I didn’t go into my medical history I didn’t think that was his business particularly.
QJust tell us what you said.
AI’d said that I had some serious surgery on my knees and back and I could only consider buying this unit if a lift was provided.
QWhat did he say to that.
AI’m sure that’s when he said ‘That is not a problem. I have had approval for lifts for one or two other people’. He mentioned one was a farmer, he didn’t give us names but we accepted what he said absolutely.
QWhat you are telling the court is that you have got a specific recollection about what he said, is that correct.
AYes, I do.
QHaving responded in that way, namely Mr Barber, did you then discuss anything further about the lift.
AYes, Mr Barber produced a floor plan of unit 53 which was the number of the unit in question and he indicated to us precisely where the lift could go. Now he pointed out a toilet area on the ground floor and he said that would have to be relocated but he said ‘That’s where it would go and you would lose some space on the upper couple of floors as a result of the lift going up there’.
Mr Turner added that Mr Barber told him by reference to the floor plans, where the lift could be accommodated and that it would intrude into the cupboards shown in the upper two floors. He marked these himself on those plans in the course of giving evidence.[50] Mr Barber agreed, indicated the corresponding areas during his evidence.[51]
[50] Exhibit P1 V2 tab 7
[51] T326.25-.35
Mr Turner’s wife Margery Turner gave evidence to a similar, but not entirely identical effect to that of her husband. She insisted the question of a lift was raised on their first visit, but it was not pursued because units were no longer available for purchase at that time.[52] She gave this evidence-in-chief about the conversation on their second visit to the sales centre:[53]
[52] T246.24-247.2
[53] T247.25-248.20
Q… did he identify the villa that was available by reference to the model.
AHe – yes, he did. We liked it but there was one problem, the biggest problem, we wanted a lift.
QDid either you or your husband state that again to Mr Barber.
AYes.
QCan you remember who it was, whether it was you or your husband.
AWe both. Both of us. I have to live with a husband that is in agony lots of times with his knees so I know what it’s like. I know what it’s like.
QWas there reference to the injuries that your husband has to Mr Barber.
AI don’t remember that but my husband may have said something to him but I don’t remember him talking about that to him. I did wander away a bit to have a look at different things so I really can’t comment on that one.
QWhen you said that there was a problem because it didn’t have a lift, what did Mr Barber say to that.
AWell he said ‘Well actually I have sold an apartment to a couple, farmers from the north’, I think he said the north, ‘And they are having a lift’.
QYes.
AAnd we thought ‘Well, that’s wonderful’.
QYes
A‘This is what we want’.
QWhat else did he say about giving you a lift.
AHe said we could have a lift and he showed us a floor plan. He was speaking to Ross, my husband, more than myself, and said ‘The only thing is that if you have a lift you’re going to lose some space. You’ll lose storage and you’ll probably have to have the bottom toilet relocated.’
The plaintiff tendered three medical reports in order to prove the underlying medical condition which he claims to have raised on this occasion. In one dated 6 July 2006, the orthopaedic surgeon Dr Moran refers to a motor vehicle accident in which Mr Turner suffered injuries occurring on 4 July 2001.[54] He said x-rays indicated advanced degenerative changes at L3-4 and L4-5 with pronounced disc resorption, leading to vertical compression and narrowing, compressing both the L3 and L4 nerve roots. Dr Moran concluded there was significant functional impairment of the spine in the lumbar region with associated back, neck and leg pain. In a second report from a Dr Keene, a specialist in joint replacement surgery of the knee, addressed personally to Mr Turner of 19 January 2009, Dr Keene confirms being consulted in early 1996 for right knee pain due to moderately advanced kneecap arthritis. [55] He performed an arthroscopy and bone scan, and operated in February 1996, advising then that a knee replacement would become necessary. There was a further consultation in July 2000 for similar reasons. His clinical records confirm Mr Turner complained of pain on using stairs. The advice at the time was that he should “avoid stairs wherever possible as this was likely to make your kneecap worse”.
[54] Exhibit P2
[55] Exhibit P3
The defendants accept the question of a lift was raised, in terms appreciably different to those suggested by Turner. Travis Barber’s evidence-in-chief about that was this:[56]
… I took him up to the specific one of villa 53 and showed him the three storeys and was running through the features of the townhouses and it was at that stage that Mr Turner asked if a lift could be installed because he’d had knee surgery from memory. And I said that a couple of other people had asked about lifts but I wasn’t sure, I’d have to ask my boss.
Barber then went to check with his boss, the witness Todd Brown. His evidence was that Brown told him a lift “shouldn’t be a problem but with all variations, got to consider the variation period”.[57] He asked where the lift could possibly go. According to Barber’s evidence Mr Brown thereupon indicated towards the rear of the property on either side, “most probably on the right hand side of that floor plan where the downstairs toilet was”.[58]
[56] T323.24-323.30
[57] T326.20-326.21
[58] T326.27-326.28
For his part Mr Brown gave evidence of Travis Barber approaching him on this occasion. He acknowledged this was the second time the question of a lift had arisen. He collected the sales crew together to brief them on how to handle such requests thereafter. Brown addressed the sales group, including Travis Barber:[59]
AI told – I told Travis that it may be possible but the fact is it needs to go through a process. There’s a whole lot of other architectural planning and other issues around it that need to be checked out, it needs to be priced.
It can be seen that this is not in terms consistent with the version given by Travis Barber. It is however consistent with the defence filed by the defendants, quoted earlier.
[59] T393.12-393.16
Following this brief meeting, Barber returned to the Turners and “relayed basically exactly what Todd said” to him, which according to his evidence was: [60]
[60] T327.27-.28, T328.5
QWhat did you say to the Turners.
AThat I had just spoken to the CEO and he said it shouldn’t be a problem and it would be considered at the variation stage and then I went on to explain how the variation stage worked.
QDid you tell the Turners where it might go.
AI showed him where Todd had indicated it might go.
QWas there any discussion with the Turners about how it might be installed.
AI wasn’t aware how.
QDid you have any discussion with the Turners how much it would cost.
AI don’t recall saying a figure.
QDid you know a figure yourself.
AI don’t know how much the lift would cost to put in.
It was this evidence that prompted the successful application to amend the statement of claim, mentioned earlier.
The discussions of 6 September 2006 - analysis
The essence of Mr Turner’s account is that because of serious medical problems, he only considered purchase if a lift was provided. Whereas the gravamen of Barber’s version was “it shouldn’t be a problem and it would be considered at the variation stage”.
Defence counsel was highly critical of the plaintiff’s evidence on a number of fronts. He maintained that it should be rejected as being no better than reconstruction. In sum it was submitted that as an experienced businessman, which he undoubtedly was, he could so easily have protected himself by making the lift a special condition of the contract. Defence counsel was also critical of his evidence relating to the handwriting in Exhibit P5 which demonstrated reconstruction on his part, that his subsequent correspondence (the email of 19 February and the letter of 23 May) were inconsistent with an unqualified promise to install a lift, there was inexplicable inaction for upwards of two years and there were inaccuracies in either affidavits or statements made in earlier interlocutory proceedings in the action, all being inconsistent with the emphatic language now attributed to Barber. It was further contended the court should draw the inference that Barber repeated what Mr Brown had just told him to say, and that Mrs Turner’s evidence did not advance matters.
In evaluating these various points, we can start with the known fact that the plaintiff suffered from significant physical restrictions making it particularly difficult to regularly climb stairs. He was under specialist medical advice to avoid doing so.[61] Consequently, as this particular unit consisted of three levels, it was not going to be of any use to him personally. The defendants did not dispute any of this.[62] Furthermore he was a man in his later years, not wanting for money,[63] so there is every reason to suppose three flights of stairs were more than of passing concern to him. Next, there was the evidence they intended to live in Port Adelaide for sentimental reasons. He grew up, was schooled and had strong sporting and emotional ties to the area.
[61] T26.1-28.19, 31.26-32.15
[62] T518.32
[63] T519.6-.31
The defendants’ position was that Mr Turner signed up in the hope that a lift could be installed, but if not, as there was so much interest at the time, he would either sell, or it was good enough to hold value as an investment.[64] This theory does not however stand up to much scrutiny. Whatever the exact terms of the September 6 conversations, the lift formed a prominent component from both points of view. Moreover, as soon as they were asked to specify their variations, the Turners elected for “no carpets – we will provide floor covering for all floors other than the wet area tile”.[65] They did this for the very reason that they intended to occupy themselves, as they much preferred to install their own jarrah floors.[66] No evidence was given as to the cost of such flooring, but for a three storey unit having three bedrooms, family and living areas of 240m2, it does not take any more to infer this would be quite expensive. It follows from this analysis that the overwhelming probabilities are that they intended to live in this unit themselves.
[64] T532.28-533.2
[65] Exhibit P1 Tab10, e-mail of 19 February 2007
[66] T50.2-.9, T173.33, T226.12-.15, T236.9-.19, T250.32-.37
It can be accepted that it is somewhat surprising Mr Turner did not insist his desire for a lift be recorded in a special condition, given his extensive experience in property development in the past.[67] When taxed about this in cross‑examination by Mr Burnett, Mr Turner thought it “hypothetical” as he accepted Barber’s assurances.[68] This is what sentiment he was clumsily trying to convey in his letter of 23 May 2008 “implicit in that contract were some special conditions”. However, this inquiry, essentially begs the question.
[67] T83.8-89.28
[68] T140.12-141.9
As for Mrs Turner’s evidence, it certainly does support her husband in relation to his medical condition, his difficulty with climbing stairs and as to the central importance of a lift, for those very reasons. It also supports the intention to live at Newport Quays, that Barber discussed how the lift could be accommodated by reference to the floor plan and that he mentioned the subject of other purchasers raising the same prospects of having a lift. When it comes to the critical moments in the conversations with Barber, there is some force in the contention that she was not always close at hand or paying attention, as the portion of her evidence quoted earlier rather suggests.[69] As her account paid little regard to the precise words used and for the additional reasons just mentioned, her evidence does not advance the present inquiry, other than to be broadly consistent with that of her husband.
[69] And see T271.30-272.21
A noticeably outstanding feature of the plaintiff’s evidence was the insistent reprise, that what Barber told him was unequivocal and unqualified; the lift was never a question of ‘maybe’ or ‘could be’ for instance, it was always ‘would be’.[70] Moreover, try as he might, counsel was unable to extract the terms of the conversation with Travis Barber in direct speech. The dogged insistence on unqualified assurances under cross-examination in the witness box, can be explained by forensic pressure, indignation and frustration, although he would have been better served to have been more directly responsive and less dogmatic at times.
[70] T63.2-.3 and see T135.6, & .31, T136,16-.19, T137.38-T138.4, T139.36, T141.1-.6, T145.4-.5 & .22, T173.30, T179.27-.30,T230.32-.33, T234.9, T280.4-.6 as further examples
The content of the following correspondence provides a more substantial basis for the defence criticisms. The email of 19 February was hardly emphatic about the lift, and expresses an almost casual interest in it - “we are happy to proceed with that too”. Despite this, Mr Turner certainly made himself clearer on the telephone with Ms Looker several weeks later, in the terms found above, by expressing his surprise and complaining forcefully that he was told a lift would be installed. The letter of 23 May 2008 makes his point of view more clearly. The defendants seize upon the delay, as being at odds with an unqualified assurance that a lift would be installed. This criticism is answered by the finding that Mr Turner spoke with Ms Looker in around late April 2007.
However the plaintiff claims to have been referred by her to Mr Barber senior, who he then attempted to contact multiple times without success.[71] Mr Barber gave evidence of speaking with him only once later on and that there were no message bank recording incoming calls from Mr Turner.[72] It is difficult to reconcile this sharply conflicting evidence. There is no obvious or implicit reason to disbelieve either.[73] Just why Looker would refer him to Barber is not clear, as he had no authority to sell the units, but she did concede “he had to go back to Max or Travis”.[74] The letter penned by Ms Kuzman on 28 May 2008 did not refute the assertion that she did refer Mr Turner to Mr Barber Snr. That Mr Turner would try to contact him is not surprising given that he was caught in a dilemma, in light of his belief in the early stages that the Unit was marketable and in his undoubted state of ignorance of his capacity to rescind. In the result the situation seems to be that he was confused and at a loose end, until he saw Mr Harley. What is clear is that having done so, he immediately took steps to rescind. Another consideration is that there was no pressing urgency, as there would be in an ordinary sale and purchase situation, because settlement was still a long way off. What is equally clear is that the defendants did nothing to try and resolve the problem and in fact fobbed him off to “Max or Travis” and later to Toop & Toop.
[71] T65.7-.20
[72] T444.4-.25
[73] T64.29-65.20 (Mr Turner). T444.12-.25, T446.2-.32
[74] T463.31
As for the handwriting on Exhibit P5, it has proved equally impossible to make a conclusive finding one way or the other. Mr Turner claims that it was a copy of a list of his elective alterations, made by Mr Barber. Barber denied this contained his handwriting. No other witness threw any light on authorship and so far as provenance goes, all that is known is it was discovered on the plaintiff’s side. The question of the affidavit has already been disposed of in another context and the court is not prepared to draw any conclusion from the conduct of Mr Turner at the interlocutory stage of proceedings, when the issues in contention were somewhat different.
On the other side of the coin, there are some valid criticisms of the defence case. Mr Barber’s version is different from that pleaded, but as he was not taxed on the pleadings, it is not appropriate to make an adverse finding on that account: MWJ v The Queen.[75]Apart from this, Turner says Barber mentioned other purchasers had also raised the possibility of a lift, so that his source of knowledge about that subject-matter could only have emanated from Barber. This tends to confirm that the likelihood of a lift being installed was of some significance. More than this, Barber’s version went further than he was instructed by Mr Brown, so this also suggests there were elements of reassurance or certainty injected into the discussion by him. Brown carefully instructed the sales team that a lift “may be possible” but that is significantly less emphatic than the “shouldn’t be a problem” Barber says was conveyed to Mr Turner. The fact is also that Barber was prepared to indicate on the plans exactly where a lift could be accommodated and what the layout implications were. These considerations served only to enhance the perception that a lift was to be installed and that discussion progressed from conceptual possibilities to something more definite than that.
[75] (2005) 80 ALJR 329 at [38]
On the other hand the question of how much a lift might cost, although perhaps discussed, could only have been perfunctory. Barber himself had no idea and no experience on that aspect of the matter and Brown especially cautioned against putting an estimate on it, because he had no idea of the costs implications either. The court finds that if discussed it was in the most preliminary of terms. Otherwise that consideration was of no moment, as expense was not an issue for Mr Turner and it was not, for that reason, suggested the likely cost was going to be a factor.
The other subject of this conversation by way of rider was whether Barber added that the lift was to be considered at the variation stage. The plaintiff’s evidence on this under cross-examination, was unresponsive.[76] As he had read the papers and knew of the variation process, he was aware the only way the lift question was to be resolved was at that point. The central question is exactly what was to be determined then; whether a lift would be built at all, or just where and what type it would be and at what cost?
[76] T107.37-108.4 quoted below and T137.35-138.5
It is opportune at this point in the analysis to recall that under cross-examination, it was put to Mr Turner that the terms of the critical discussion with Barber were these:[77]
QAnd Travis returned after speaking to his CEO, Mr Brown, and said it shouldn't be a problem but exactly where it could go and how it might be installed and how much it would cost would have to be considered at the variation stage.
ANo. He, in front of both my wife and I, indicated precisely where he considered it should go. He mentioned about loss of space upstairs and we weren’t – that wasn’t a problem for us at all.
The first part of this is consistent with the evidence of Mr Barber, but the second is not. The latter assumes that the installation of a lift “should not be a problem”, what was to be considered at the variation stage was the mechanics of the exercise, not feasibility. However as Barber was not directed to this, it is once again inappropriate to make an adverse finding on that account: see MWJ.[78]
[77] T107.37-108.3, and see also T210.26-.29
[78] Above
Based on all the evidence, the court finds the probabilities are that the terms of the critical discussion of 6 September 2006 between Mr Turner on the one hand and Mr Travis Barber on the other, were that Mr Turner made it clear he wanted a lift if he was to purchase the townhouse, because of his physical frailties. Barber thereupon spoke to the CEO Mr Brown, in the terms deposed to by Brown, then returned to tell Mr Turner that installing a lift “shouldn’t be a problem”. It is not possible to make a precise finding as to what was said thereafter about the variation stages expressed in the first person. Nevertheless on the whole of the evidence taken in the context of the proven underlying physical disabilities, the distinct probabilities are that Barber gave Mr Turner to understand that a lift was going to be installed, but the details would be dealt with at the variation stage. This conclusion is reinforced when the situation is considered in total context and the subject under discussion when Barber gave the assurance, particularly the disclosed physical difficulties mentioned by Mr Turner: Elder Trust & Executor Co Ltd v E Groves Pty Ltd.[79] The question of the potential costs might have been raised, but if it was it was only in passing and it was in any case of no significance, as no misrepresentation as to price is asserted and Mr Turner was indifferent to the cost in any case.
[79] (1987) 78 ALR 193 at 262
Misleading or deceptive conduct or a false or misleading representation?
The substance of what Mr Turner was told was an affirmative and unqualified assurance that he could have a lift. How that was to be implemented, would be dealt with at the variation stage. At this point it is necessary to refer to evidence given late in the case for the defendants. Before doing so, it is worth recalling that Mr Brown expressed considerable reservations about a lift altogether in his preliminary discussions with Mr Barber. Viewed in hindsight, this made eminent common sense, for a lift was never going to be a minor structural variation and a moments reflection would suggest that there were likely to be significant problems. The fact that Mr Turner conceptually foresaw there maybe some difficulties, tends to reinforce his reliance upon Barber’s assurances.[80]
[80] T45.16-.19, T57.36
As it transpires a lift was not an option. The reasons for this were explained by Mr Imgraben, the Director of development management with the Urban Construct group of companies. He was responsible for “project delivery across all of the project… [for]… the Marina Cove development at Newport Quays”.[81] Although the supervisor of Mr Ising, it does not appear he had any involvement or indeed for that matter knowledge of Mr Turner’s request for a lift. He was however, involved in another request for an external lift “outside of the footprint of the building”.[82] That could not be accommodated because it would have breached the terms of planning approval from the local Council.
[81] T480.9-.15.
[82] T482.5.
With reference to Mr Turner’s situation, Mr Imgraben gave this evidence:[83]
Look, there were in my view two reasons, one was that the headroom that would be required in - to install a lift would require some alterations to the structure at roof level and increased heights of parapets. And the other is related to the lift pit itself, and there is a specific requirement in the development approval for Newport Quays that there is a minimum floor level which is set for any floor within a habitable building. And the villa No.53, and in fact all of the villas in that cluster, the floor, the floor levels were already at that minimum level.
[83] T496.9-.19.
Translated into finer detail, a lift would have increased the height of the parapet between 200 and 300 millimetres. This in turn, required adjustments to the whole cluster of the waterfront villas south, since the parapet line had to be the same for all of them. Such adjustments necessitated amended planning approvals as the City of Port Adelaide and Enfield[84] required the development to be “in strict accordance with the details and the amended plans submitted in the development application”, except where minor amendments were involved.[85]
[84] Exhibit D19.
[85] T498.32-.37.
The other fatal impediment related to a lift well or pit. Condition 13 of the Council approval imposed a minimum floor level of 3.65 metres, fixed according to the Australian Height Datum. As lift wells are typically up to 350mm deep, one could not be accommodated. This was no small consideration because the minimum floor height was “not negotiable”; it was the level nominated for “all future developments at Newport Quays and it is based on some calculations done around global warming and anticipated sea level rises”.[86]
[86] T507.27-.32.
Whether conduct amounts to a representation or not is “a question of fact to be decided by considering what [was] said and done against the background of all the surrounding circumstances”: Taco Co of Australia Inc v Taco Bell Pty Ltd.[87] The subject conduct must be examined objectively as a whole in light of the relevant surrounding facts and circumstances: Lezam Pty Ltd v Seabridge Australia Pty Ltd.[88] At this stage of the inquiry it becomes “necessary to consider the character of the particular conduct of the particular agent in relation to the particular purchasers, bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them …” Butcher v Lachlan Elder Realty Pty Ltd.[89]
[87] (1982) 42 ALR 177 at 202
[88] (1992) 35 FCR 535 at 541
[89] (2004) 218 CLR 592 at [37]
Given the fact that installing a lift was impossible, the unqualified and unconditional representation Mr Barber gave the plaintiff to understand that a lift would not be a problem, was plainly false and misleading. This was a statement as to a presently existing state of affairs, because it was tantamount to a representation that it was the defendants present intention to carry out the promise to install a lift. It “connotes a present ability to fulfil that promise …”: Futuretronics International Pty Ltd v Gadzhis,[90] and James v Australian and New Zealand Banking Group.[91] The evidence of Mr Brown conclusively shows the defendants held no such intention. The evidence of Mr Imgraben conclusively demonstrates they were unable to fulfil the promise. In light of all this evidence, Travis Barber should never have said a lift “shouldn’t be a problem”. At best he should only have said, as Brown told him to say, “it may be possible”. Furthermore it should have been made perfectly clear the question of whether he could have a lift at all, was to be considered at the variation stage.
[90] [1992] 2 VR 217 at 239 cited with approval in Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 505-506 per Lockhart & Gummow JJ
[91] (1986) 68 ALR 347 at 372
Reliance and causation
Several defences are raised, the first being that the claim must fail, because Mr Turner would have proceeded with the bargain anyway. Of course the plaintiff must prove loss or damage was caused by conduct in contravention of the Trade Practices Act. This encompasses infringements of ss 52 and 53. These provisions are “understood as taking up the common law, practical or common-sense concept of causation” developed in March v Stramare Pty Ltd[92] as applied in Wardley Australia Ltd v Western Australia.[93]
[92] (1991) 171 CLR 506
[93] (1992) 175 CLR 514 at 525
The defendant relies heavily on a passage in the cross-examination of Mr Turner, an extract not altogether unrepresentative of his other evidence on this topic:[94]
QI’m suggesting you reconstructed the –
ANo
Q- the conversation on 6 September 2006 and that it wasn't that there would definitely be a lift, that you don't have that recollection.
AI'm not telling an untruth, nor will my wife. We are absolutely clear in our mind what was offered to us, said to us, and I make no variance from that. If it was anything less than an absolute offer, we wouldn't have signed the contract. We would have walked away and I must say I'm a bit offended that you suggest that I fabricate an answer.
[94] T197.15-24.
There is no doubt that the plaintiff was far more categorical in his evidence than he was in his correspondence. This issue has been resolved above. Otherwise, the evidence of the plaintiff could not be clearer. He repeatedly maintained that he relied implicitly on the faith of what Travis Barber said in relation to the lift.[95] That being so it is not difficult to accept the assurance a lift “shouldn’t be a problem”, induced Mr Turner to sign the contract.
[95] T45.32-T46.1, T62.36-T63.8, T139.8-.16, T145.3-.38, T151.7-.10, T161.34-T162.21, T174.1-.10, T230.20-.26, T234.18-.26
In order to establish reliance and causation, it is unnecessary for a plaintiff to say that the particular misrepresentation was relied on, if that representation viewed objectively is of a kind likely to induce the person to whom it is directed to enter into a bargain: Elders Trustee & Executor Pty Ltd v EG Reaves Pty Ltd;[96] San Sebastian Pty Ltd v Minister Administering Environmental Planning & Assessment Act 1979.[97]Indeed, it is often unrealistic to always expect a plaintiff to do so. Questions of reliance are not necessarily readily divisible in this way, for the reasons explained by King CJ in Copping & Perball Pty Ltd v ANZ McCaughn Ltd (No 2):[98]
[The plaintiff] did not say expressly that he relied upon the precise statement which was found to be negligent. It would be unreasonable to expect him to dissect what [the defendant] told him and to indicate which parts he relied upon. He said that he relied upon what [the defendant] told him. If that is so and if a material part of it was a negligent misstatement the reasonable inference is that he relied in part upon that misstatement.
[96] (1987) 78 ALR 193 at 242
[97] (1986) 162 CLR340 at 366
[98] (1995) 181 LSJS 157 at 158
Furthermore, as pointed out by Wilson J in Gould v Vaggelas,[99] the representation need not be the sole inducement:
Having made those findings, the trial judge proceeded to deal with the submission strongly advanced at the trial by Mr. Pincus and maintained both before the Full Court and this Court that a misrepresentation is no ground for relief unless it induces the representee to enter into the contract and that on the evidence the Goulds had failed to establish the fact of inducement. His Honour correctly elucidated the law in this regard. He referred, inter alia, to Smith v. Chadwick [65], at p. 196, Arnison v. Smith [66], at p. 369; Holmes v. Jones [67], at p. 1710 and Cheshire and Fifoot on the Law of Contract, 4th Aust. ed., pars. 1028, 1029 and from them drew the applicable principles, which can be re-stated as follows:
1.Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case.
2.If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation.
3.The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation.
4.The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract.
[99] (1984) 157 CLR 215 at 236, footnotes omitted
Applying these principles to the facts as found above, there can be no doubt given the objective circumstances, that the plaintiff relied upon and was induced to sign the contracts because of what Travis Barber told him. Had there been any qualification, there would have been no transaction – the lift was too important to the Turners to take the risk.
The defendants next contended the statement of Mr Barber was merely an opinion, not proffered or represented as necessarily correct. They contend what was said clearly conveyed the notion that the question of a lift would be considered later on, which in fact it was. Hence, the submission was that simply because the lift could not be provided, it was not misleading because of the contingent nature of the representation: Heydon v NRMA Ltd.[100]This submission cannot be sustained in light of the findings the Court has already made. These entail a misrepresentation as to an existing state of affairs, namely that the lift would be provided. The submission for the defendants does not confront the unavoidable conclusion that the representation has a two-fold aspect. The first was that a lift shouldn’t be a problem – this was neither contingent, nor qualified – it was proffered as a matter of fact. The second was how that would be dealt with at the variation stage. This involved such considerations as to where it would be located and how much it would cost.
[100] (2000) 51 NSWLR 1 at [431]
In his alternative argument, the plaintiff relied on s 51A of the Trade Practices Act. This provides that where there is a representation as to a future matter, that shall be taken to be misleading unless the maker had reasonable grounds for making it. The section provides:
(1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.
(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.
(3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.
On the findings already made properly characterised, s 51A simply has no application to the facts. But even if it had the defendants must fail. They argued that as Mr Brown had reasonable grounds for expressing the opinion he conveyed to Barber, and which Barber relayed to the plaintiff, the necessary evidentiary grounds to overcome the deeming provision continued in s 51A, was satisfied. This may well have been the case if what was said by Brown was relayed accurately by Barber, but it was not. Otherwise the defendants adduced no evidence directed to them holding reasonable grounds for making the representations that were in fact made: Sykes v Reserve Bank of Australia.[101] What Barber communicated was both foolhardy and inaccurate. It went beyond his brief, much further than his instructions permitted or authorised. The evidence of Mr Imgraben shows a lift was an impossibility. That being the case, there is simply no reasonable basis for Barber to have asserted that a lift should not be a problem, when Brown had effectively indicated only minutes beforehand, that it would be. None of the significant doubts Brown expressed to Barber were conveyed to the plaintiff. Accordingly, had s 51A been applicable to the facts, the plaintiff would have succeeded on that ground as well.
[101] (1998) 158 ALR 710 at 712
Affirmation?
The defendants further contend after being told in unequivocal terms by no later than 23 April 2007 that a lift would not be installed, Mr Turner affirmed the subject contracts. The point seems to be that as representee to a false or misleading statement, the right to rescind is lost if the representee affirms the contract, which is then binding on him: Hough v London and North West Railway Co.[102]Whilst affirmation might serve as a bar to rescission in equity or at common law, this consideration if it arises, is a discretionary matter the Court takes into account in determining whether in a given case the discretion to grant relief under s 87 should be exercised: Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1),[103] JAD International Pty Ltd v International Trucks Australia Ltd[104] and Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd.[105]
[102] (1871) LR 7 Exch 26 at 34
[103] (1988) 39 FCR 546 at 564FF
[104] (1994) 50 FCR 378 at 380
[105] (2005) 224 ALR 134 at [69]
The contention founds on offering the property for sale through the land agents Toop & Toop on 10 June 2008 and keeping it on the market until 4 September 2008 when it was withdrawn from sale, as well as taking no step to rescind in the intervening period. By these actions it is submitted the plaintiff must be taken to have kept the contracts on foot.
The doctrine of affirmation or election applies where one party holds two inconsistent rights and elects for one as opposed to the other, by which election the party is irrevocably bound. It was famously captured in the notion of Viscount Maugham in Lissenden v CAV Bosch Ltd,[106] that “you may not both approbate and reprobate” and by Jordan CJ in O’Connor v SP Bray,[107] “you cannot have the egg and the halfpenny too”. An example of the application of this principle to contracts of sale is to be found in S Gormley & Co Pty Ltd v Cubit.[108] The underlying principle is stated by Stephen J in Sargent v ASL Developments Pty Ltd:[109]
The doctrine only applies if the rights are inconsistent the one with the other and it is this concurrent existence of inconsistent set of rights which explains the doctrine; because they are inconsistent neither one may be enjoyed without the extinction of the other and that extinction confers upon the elector the benefit enjoying the other, a benefit denied to him as long as both remained in existence.
[106] [1940] AC 412 at 417
[107] (1936) 36 SR (NSW) 248 at 257
[108] [1964-65] NSWR 557
[109] (1974) 131 CLR 634 at 645 and see also Mason J at 655-656
It must be established that the plaintiff had knowledge of the facts giving rise to the inconsistent rights.[110] On the authorities it is an open question whether or not it is necessary for a defendant to go further and establish knowledge of the right of rescission.[111] It may well be that knowledge of the right is essential when rescission is exercised outside the terms of the contract, but it is not essential when a contractual right of rescission is invoked, as in O’Connor v S P Bray Ltd.[112]
[110] Above at CLR 645
[111] Above at 645-646, Coastal Estates Pty Ltd v Melevende [1965] VR 433
[112] (1936) 36 SR(NSW) 248
It is also remains an open question whether the relevant election, if made, must be communicated to the other party, that is to say whether it must come to “the other party’s attention whether the electing party or not that the election has been made”: Zucker v Straightlace Pty Ltd.[113] It is unnecessary to take this issue any further, because Mr Turner told Ms Looker in their telephone conversation not long after 23 April 2007, that there was only “one alternative and that’s to get rid of it”,[114] and made it clear in his letter of 23 May 2008 that he was thinking “about disposing of the Villa”. In point of fact he was referred to and engaged an estate agent. Ms Kuzman positively facilitated that course in her letter of 28 May 2008, and they discovered the advertisement on the net on 24 July 2008,[115] so the defendants were plainly on advance notice of what he was doing.
[113] (1986) 11 NSWLR 87 at 95 and refer to the cases in paragraph 118 in the defendant’s written submissions
[114] T58.23-.24 (Mr Turner), T470.1-.6 (Ms Looker)
[115] Exhibit P1 V2 tab 22
As noted earlier, the defendants concede the plaintiff was not aware of the right of rescission until he consulted Mr Harley. The uncertain state of the authorities produced a lively debate from both ends of the bar table, in relation to whether the balance of authority favoured the view that knowledge of the right to rescind must be shown or not. The plaintiff contended that it had to be, whereas the defendant contended that it did not. This is probably a question of principle that can now only be authoritatively determined by the High Court of Australia.[116] Given the findings to follow, it became unnecessary to examine the authorities more closely. Sargent v ASL Developments was a case in which the point was decided in light of the fact that the vendors had full knowledge of the facts and the legal choice to rescind.[117] So were Tiplady v Gold Coast Carlton Pty Ltd,[118] and Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW).[119] The view that such knowledge is essential is most clearly stated in Coastal Estates Pty Ltd v Melevende.[120] In Sargeant v ASL Developments both Stephen and Mason JJ considered it was not necessary to establish the applicant knew of the right to elect.[121] However Mason J was somewhat dubious as to the purpose of drawing such a distinction.[122]
[116] See comment in Meaghor, Gummow and Leane [24-030]“Equity: doctrines and remedies” (4th Ed) Lexis Nexis Butterworths 2002, “in this respect, regard should be had to the inconsistent decisions of the High Court of Australian in Sargent v ASL Developments Ltd and Immer (No 145) Pty Ltd v Uniting Church in Australia
[117] Stephen J at 642-644, 645 and Mason J at 658.
[118] (1984) 8 FCR 438
[119] (1993) 182 CLR 26
[120] [1965] VR 433
[121] Above at 645 and 648
[122] Above at 658
The Full Court of the Federal Court is divided on the question. In Tiplady v Gold Coast Carlton Pty Ltd,[123] McGregor and Spender JJ (Lockhart J not expressing a view) held it sufficient to establish knowledge of the facts giving rise to the election, whereas in JAD International Pty Ltd v International Trucks Australia Limited,[124] Keely, Hill and Drummond JJ seemed to have preferred the apposing view, but found it unnecessary to pursue the question, as did Von Doussa, Mansfield and Goldberg JJ in Ellison v Lutre Pty Ltd.[125]
[123] (1984) 8 FCR 438, 451-452
[124] (1994) 50 FCR 378 at 385
[125] (1999) 88 FCR 116 at [58]
There may well be a good deal of merit in the submission of Mr Burnett for the defendants that policy reasons dictate a complete election can be made without knowing of the right to rescind, because there is no logical reason why different tests apply according to whether the right to rescind is provided for under a contract or under general law [except perhaps that in contractual elections the knowledge is conclusive], ignorance is not in any other branch of the law an excuse, and there is no apparent or logical reason why a party not having the benefit of legal advice, should be in any better position that one who has not. The defence submission is in tune with the reservations expressed by Mason J in Sargeant v ASL Developments:[126]
However, it should be kept firmly in mind that the doctrine of election is of general application and that no good purpose is to be served by drawing distinctions in its various applications unless considerations of justice make it necessary or expedient so to do.
[126] Above at [658]
Returning to these contracts, the plaintiff was not required to settle until after practical completion.[127] In fact he was not called upon to settle until the defendants’ solicitors wrote to him on 23 October 2008 giving notice of settlement scheduled for 10 November 2008.[128] When he refused they gave notice of termination on 23 December 2008.[129] Furthermore the purchaser was described in the contracts as “Ross Turner and/or nominees”. Clause 11 of the special conditions of Annexure A, entitled him to assign or nominate “another person or corporation” to complete the sale and purchase. Pursuant to clause 11.2 he was additionally entitled to “assign [his] interests, benefits or obligations under this agreement”, although doing so did not release him from liability under the agreement.
[127] Exhibit P1, V1, Tab 2, Annexure A, clause 9
[128] Exhibit P1 V2 Tab 29
[129] Exhibit P1, V2 Tab 33
Once confronted with the awkward position when told there was no lift, whatever his legal rights were, as a practical matter the plaintiff was on the horns of a dilemma. A party in this situation is fully entitled to take a reasonable time to consider the position and contemplate the merits of the available choices: Majik Markets Pty Ltd v SM Motor Repairs Pty Ltd (No 1).[130]It was more than reasonable, if only in an endeavour to mitigate his situation, to sell or assign the property in order to relieve him of the contractual burden he faced. The contracts permitted that course of action. In the confusing situation confronting him, it would have been unreasonable not to have attempted to do so. Even if he had known of a right to rescind, an election to rescind can be a gamble at the best of times, invariably so if the grounds for rescission relied upon are not ultimately made good.
[130] (1987) 10 NSWLR 49
More importantly, the defendants did not challenge him when he purported to sell the property; indeed they not only acquiesced, but referred him to Toop & Toop. The situation is akin to that described by Allsop J (Weinberg J agreeing at [143] and see the comments of French J to the same effect at [85-91]) in Wallace-Smith v Thiess Infraco (Swantston) Pty Ltd:[131]
[325] The Notice of Appeal and the submissions of the appellants did not seek to distinguish between the notions of affirmation and election. It is sufficient to deal with the arguments on principles of election. The true nature of election is the making of a choice in the face of two mutually exclusive courses of action: Spencer Bower and Turner The Law Relating to Estoppel by Representation (3rd Ed, 1977) p 313 cited by Deane J, Toohey J, Gaudron J and McHugh J in Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26, 41. As their Honours said on the following page (p 42) in Immer, when the asserted election is the continuing on of an agreement in circumstances where a right to terminate or rescind has arisen the relevant choice is not whether to go on with the contract or not, but whether to abandon the right to terminate or rescind or not. After referring to passages from the judgments of Kitto J and Mason J in Tropical Traders Ltd v Goonan (1964) 111 CLR 41, 55 and Sargent v ASL Developments Ltd (1974) 131 CLR 634 , 656, respectively, their Honours said that a right to rescind will not necessarily be lost by election or affirmation if the relevant party acts on the basis that the contract remains on foot. Likewise Brennan J at 30 said that the act amounting to the election must be unequivocal and an act may be consistent with the continuance of the contract, but also consistent with the reservation of the right to terminate.
[131] (2005) 218 ALR 1 at [325]
In the combined circumstances, the situation confronting Mr Turner and his reaction to them, fall well short of an election to affirm. He did no more than was reasonable in the circumstances. The attempt to sell or assign was a wholly reasonable step in mitigation and made good business sense. And fatally, he was never required at any time before his letter of rescission, to make an election between two inconsistent rights. That point only arrived when settlement fell due: Agricultural & Rural Finances Pty Ltd v Gardiner.[132] As the judgment in Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW)[133] points out: “at the heart of election is the … necessity of making a choice …”. Until Mr Turner was irrevocably “once and for all” placed in a position of having to settle or rescind, he did not confront a relevant election decision. By placing the Unit up for sale, he in no sense abandoned the right to rescind. As of December 2008 he remained entitled to nominate another purchaser, he remained entitled to assign his interest under the contract and it was open to him to settle if called upon. That being the situation, no question of election ever accrued.
[132] (2008) 83 ALJR 196: [2008] HCA 57 at [93].
[133] 42 per Deane Toohey, Gaudron and McHugh JJ
In any case, even if the step of placing the Unit in the hands of agents for sale is properly regarded as an act of affirmation, the court would have to consider the situation as a factor to be taken into account when determining what orders were appropriate under s 87. As the Unit was on the market for a very short period of time, to the knowledge of the defendants, and as they went along with it, the supposed affirmation was so transitory and so inconsequential to the defendants, that it could have played very little part in the discretion under s 87, if any.
Appropriate orders
The principal relief sought by the plaintiff is effectively rescission. That this or akin remedies are available under s 87 of the Trade Practices Act was conceded by the defendant. The power derives from s 87(2)(a). The powers conferred by s 87 of the Trade Practices Act, are wider than under general law and they are discretionary. So far as applicable to this case, s 87 provides:
(1)Subject to subsection (1AA) but without limiting the generality of section 80, where, in a proceeding instituted under this Part, or for an offence against section 44ZZRF or 44ZZRG or Part VC, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this subsection) in contravention of a provision of Part IV, IVA, IVB, V or VC, the Court may, whether or not it grants an injunction under section 80 or makes an order under section 82, 86C, 86D or 86E, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2) of this section) if the Court considers that the order or orders concerned will compensate the first‑mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.
(1A)Subject to subsection (1AA) but without limiting the generality of section 80, the Court may:
(a) on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in contravention of Part IVA, IVB, V or VC; or
(2) The orders referred to in subsection (1) and (1A) are:
(a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after such date before the date on which the order is made as is specified in the order;
…
(3)(d)directing another party to the contract, or another person who would, but for subsection 45B(1), be bound by, or entitled to the benefit of, the covenant, to do any act in relation to the first‑mentioned party or person that the Court considers just and equitable.
A delay in exercising a right of rescission and indeed any depreciation in the value of the goods or property in question, are factors to be taken into account in the exercise of the discretion to grant remedies of the kind under consideration: Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (New York Deli case):[134] JAD International Pty Ltd v International Trucks Australia Ltd.[135]As the premises remain unoccupied in specie, there is no practical difficulty with restitution. The fall in value is historical and unconnected to the infringing conduct. As noted already, the defendants acquiesced when Mr Turner sought to assign the contract and they made no attempts themselves to re-sell the property after the issue of the lift surfaced, or to assist him in that endeavour, as they might have. The present affirmation being rejected, no other reason remains for declining to make such an order. Although there was no active misrepresentation infecting the marina lease, the parties accepted that one went with the other, so that the marina contract, stands or falls as one with the primary contract over Unit 53. On the basis of these findings it is proposed to make orders under s 87 of the Trade Practices Act, however as the precise terms were not debated, the parties shall be heard as to the form of any such orders.
[134] (1988) 39 FCR 546
[135] (1994) 50 FCR 378
Residual damage
The plaintiff claims a relatively small amount comprising bank fees of approximately $10,000.[136] As these are incurred quarterly, and have not been calculated to the date of judgment, the parties should be heard as to the appropriate monetary sums applicable. It also follows from the order proposed, that the defendants should deliver up the bank guarantees, but once again the content of such orders has not been argued.
[136] See Exhibit P13
It should be mentioned in this context, that had they been successful, the defendants formulated consequential damages for breach of contract, as of the date of hearing at $296,051.00 on the contract Unit and $47,103.15 on the marina lease. These were calculated according to the default provisions of the subject contract (clause 7.1.1). Of course the value of the bank guarantees would have to be deducted. These were $122,115 and $6,875 respectively. This arithmetic was not disputed by the plaintiff.
The defendants also laid claim to Walker v Hungerfords damages on account of being kept out of the use of the monies they were entitled to, had settlement taken place on the due date. At one point Mr Britten-Jones contended there was no evidence as to how the proceeds of the sale upon settlement would have been applied. However, the solicitor’s file maintained by Finlaysons acting on the instructions of the defendants (Exhibit D23), proves the income the defendants received went straight into their National Australia Bank account. That being the case, had the Court been called upon to make orders for damages in favour of the defendants, it would have entered judgment in the respective amounts claimed, as they were not otherwise in contention.
Conclusion and orders
For the reasons outlined at length above, the court is driven to the conclusion that it was represented to the plaintiff installing a lift in Unit 53 should not be a problem. Although it is not possible to express precisely what was said by Travis Barber as to variation, given the impediments Mr Turner would undoubtedly have faced without a lift and the other surrounding and objective circumstances, he must have led Mr Turner to understand in unequivocal terms that a lift could be installed. On the strength of that representation he proceeded to enter into the subject contracts. In light of the evidence of Mr Todd Brown and Mr Imgraben that a lift was an impossibility, the court finds by representing that one shouldn’t be a problem, was misleading, within the meaning of s 52(1) of the Trade Practices Act.
It is therefore proposed to make orders pursuant to s 87 of the Trade Practices Act, in terms yet to be debated by the parties. They should also be heard as to any other appropriate consequential orders, as well as costs.
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