Wait, Kenneth Marr v Reed, Noel Lloyd
[1997] FCA 43
•4 Feb 1997
IN THE FEDERAL COURT OF AUSTRALIA )
QUEENSLAND DISTRICT REGISTRY ) No. SG 38 of 1990
GENERAL DIVISION )
BETWEEN: Kenneth Marr WAIT and Miranda WAIT
Applicants
AND: Noel Lloyd REED and Elizabeth Joyce REED
Respondents
CORAM: Spender J
PLACE: Brisbane
DATE: 4 February 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
Judgment for the applicants against the respondents for $20,900.00.
Costs reserved.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
QUEENSLAND DISTRICT REGISTRY ) No. SG 38 of 1990
GENERAL DIVISION )
BETWEEN: Kenneth Marr WAIT and Miranda WAIT
Applicants
AND: Noel Lloyd REED and Elizabeth Joyce REED
Respondents
CORAM: Spender J
PLACE: Brisbane
DATE: 4 February 1997
REASONS FOR JUDGMENT
I have found this a difficult case, stemming from my conclusion the primary case asserted by the applicants was both extravagant and without foundation. On the other hand, there were some contractual deficiences in the standard of the unit as contracted, most relatively minor, although rectification of many of them was delayed and, in some cases, never rectified.
This is an application for damages pursuant to s 82 of the Trade Practices Act 1974 ("the TPA") arising out of the purchase 'off-the-plan' by the applicants, Kenneth Marr Wait and Miranda Wait ('the Waits') of a home unit, Unit No 4 of a strata title development, "Brighton", developed by the respondents, Noel Lloyd Reed and Elizabeth Joyce Reed ('the Reeds') at 88 Old Burleigh Road, Broadbeach on the Gold Coast. There were five two-bedroomed units in the development, one per floor, with a basement garage and a ground level swimming
pool. The development "Brighton" is located on the south-eastern corner allotment at the intersection of First Avenue and Old Burleigh Road, Broadbeach, approximately 1.5 kilometres north of the Broadbeach Post Office. It is 1.75 kilometres south of central Surfers Paradise near the boundary of Surfers Paradise and Broadbeach. The building is the second allotment back from The Esplanade and within 50 metres of the beach. A patrolled surfing beach is within 400 metres. The Waits executed a contract to purchase Unit 4 on 19 August 1988. Unit 4 which the Waits purchased and occupied for a short time is an airy and spacious unit with a floor area of 131 square metres situated on the fourth level of a five level apartment building. The two-bedroomed home unit enjoys commanding ocean views to both north and south.
There were delays in the development and a deed of variation between the Waits and the Reeds was executed on 15 March 1989. On 17 November 1989 there was a further deed compromising a dispute as to an amount for additional works, and permitting the Waits to move into the unit prior to settlement on paying the balance of the purchase price. The Waits took possession of the unit on 18 November and settlement occurred on 4 January 1990 after correspondence about complaints concerning the unit. The purchase price of the unit was $450,000.00.
These proceedings were issued out of the South Australian Registry on 10 May 1990. On 28 March 1991, the
Waits executed a contract to sell the unit with some furniture, which contract was settled on 25 July 1991. The contract price was $385,000.00.
A valuation by James Eden, a valuer with Herron Todd White, valued the unit in August 1988 at $400,000.00 "as is", and at December 1989 at $375,000.00. The relevance of the unit's value in December 1989 is apparently that that was the completion date of the unit; the valuation gives the date of inspection as 21 December, 1990, and a letter of 12 May 1994 refers to "...our valuation of the above property dated 21 December 1990". Mr Eden valued the unit "if completed to a high prestigious standard" at $50,000.00 higher at each of the times referred to in his report. Mr Eden noted in his written valuation:
"At August 1988 the home unit market on the Gold Coast was very buoyant with strong demand and good 'off the plan' sales volumes being recorded. This was the result of a rapidly growing economy, strong overseas investment, investors switching from the depressed stock market and bullish real estate market Australia wide. "
He later said:
"During 1989 rising mortgage interest rates and increasing economic uncertainty resulted in a dwindling demand for home units on the Gold Coast. By late 1989 demand was slow, purchasers were failing to settle on units bought 'off-the-plan' and values of units were beginning to fall.
This trend continued through 1990 with marketing agents reporting very poor demand for units in the over $250,000 price bracket.
From the buoyant times of late 1988 and until late 1990 we have seen values of units in general fall by up to 25%. "
Mr Eden gave evidence on behalf of the applicants.
A valuation by Mr Kendall of L J Hooker (Qld) Pty Limited, a valuer called on behalf of the respondents, valued the unit at $450,000.00 as at 19 August 1988 and as at 3 July 1991 $385,000.00. Again, the relevance of the valuation at the second date identified escapes me. That date is identified in the valuation as the inspection date. The date of the contract for resale was 28 March 1991, with settlement occurring on 25 July 1991. Mr Kendall said in his valuation:
"At the time of the first assessment date of 19th August, 1988, this period was considered to be at or about the peak level for property prices during the last 'boom section' of the Gold Coast property cycle.
The second date and our time of inspection of 3 July, 1991 is considered to be the lowest level of property values, regarding home units such as the subject property, which have occurred since the peak period described above. "
He commented:
"From our analysis of the available sales evidence, we believe that the two separate sale prices paid for the subject unit accord with the market parameters of the time, and that the percentage reduction is not of an unexpected magnitude for the period.
Given that on both occasions the subject unit was freely exposed to the usual market forces in order to achieve a satisfactory sale result to all parties concerned, and that there is no reliable evidence to contest the prices paid, we believe that it is appropriate for us to adopt both subject sale price amounts as our valuation figures. "
I have at the outset referred to the valuation evidence and the comments by the respective valuers concerning the cyclical activity of the home unit market on the Gold Coast to show that such a cyclical variation in price is clearly a relevant factor and that the difference between the contract price on resale in 1991 with the contracted purchase price of $450,000.00 in August 1988 contains a substantial component attributable to the cyclical activity of unit sale prices in the Gold Coast property market.
There is in evidence a very useful report prepared by Max Christmas Pty Ltd dealing with the Gold Coast residential property market from 1987 to 1991. That survey, which is comprehensive and encompasses all types of residential property with sub-analyses directed at particular types and locations of residential property, expresses the conclusion:
"Looking more specifically at average unit price variations for Broadbeach, sales evidence shows prices peaked in the first quarter of 1989 at $186,515. While figures are preliminary for 1991, based on the first quarter average of $156,610 the average drop is 16.03%. Based on peak figures it is fair to say a drop in the order of 15-20% is reasonable based on current unit sales averages in Broadbeach. "
Importantly, the analysis stated:
"Unit sales averages in Broadbeach above $250,000 gives support to this showing the middle and upper markets sales averages dropping 16.24%. In 1988 the average was $374,458, in 1990 this average had fell (sic) to $313,379. In the same period sales numbers dropped 43%. "
These conclusions mirror the comments of Mr Eden and Mr Kendall as to the nature and probable extent of the timing of the fall in the Broadbeach property market, but in my opinion the analysis by Max Christmas Pty Ltd supports and is more consistent with the respective values derived by Mr Kendall than with those by Mr Eden.
The case for the applicants, based on a claimed contravention of s 52 of the TPA, asserts that a Mrs Nettheim, who was a director of Beachstar Pty Ltd, which carried on business as PRD Realty Broadbeach/Mermaid, made representations to, particularly, Mrs Wait in July and August 1988. PRD was engaged by and acted as agent for the Reeds in connection with the sale of the units in the "Brighton" development.
In August 1988, a PRD advertising sign was positioned on the site, and in that month there were telephone communications between Mrs Nettheim of PRD Realty and, in particular, Mrs Wait, concerning the possible purchase of a unit in the "Brighton" development.
As pleaded in the amended statement of claim, the applicants allege that the representations on which their case is based were as follows:
"In July and August 1988, during several meetings and telephone conversations between the applicants and each of them on the one hand and
Nettheim on the other hand, Nettheim represented ('the Representations') to the applicants that:
4.1Certain sketch plans ('the Plans'), entitled 'floor plans' and 'elevations and section' and 'coordination plan' drawn by Conrad and Gargett Pty Ltd Architects and shown to the applicants comprised the plans for the Development, and the Development would be constructed in accordance with them.
4.2The Development would be to the highest possible standard, using the very best of materials and workmanship, and would constitute a top of the market prestige unit dwelling.
4.3All areas outside the Building on ground level comprised common areas ('Common Areas') for the use and enjoyment of all proposed unit owners.
4.4The areas ('the Areas') shown as 'Drying Area' and adjoining pathway on ground level comprised Common Areas.
PARTICULARS OF REPRESENTATIONS
The Representations were oral and made by Nettheim as aforesaid. They were made in conjunction with the written Plans, which were shown by Nettheim to the applicants. "
The case for the applicants thus falls into two broad categories of misrepresentations.
The first is an allegation that it was represented to them that the common area and facilities would be as contained in the ground floor plan, which was part of the contract documents. In fact, as a result of negotiations between the developer and the Gold Coast City Council, one of the courtyards depicted on the plan in the contract documents was allocated as part of the ground floor unit, Unit 1. The changes which appear on the building unit plan as registered had the consequence that the Waits could not have access to the pool from the ground floor. Access was gained either from the basement up a flight of stairs to the pool area or by exiting to the street and gaining access by an entrance ramp leading from the street into the ground floor area.
The second category relied on by the applicants is that it was represented to them that the development would be a "top of the line, high market, prestigious or luxurious" type of development, the claim being that in reality the development was "a cheap job".
As submitted by Mr D Campbell, counsel for the applicants, at the conclusion of the trial, there were four alternative bases for an award of damages for which the applicants contended. The first two approaches were based on the TPA.
The first basis of assessment for damages was said to be the total pecuniary loss of the applicants as a result of buying and selling the unit, steps it is said they would not have taken had the representations not been made. That calculation, which included not only the cost of the unit but all associated costs, including holding costs, (one element of which was "interest on purchase price" totalling $181,008.00), from which was subtracted the net proceeds of sale. The result of that calculation was then subjected to interest at 12% until the end of 1993 and then at 10% for the next two
years. The total on this basis of calculation was $487,260.00.
The second alternative basis of quantification of the damages claimed by the Waits, again based on the TPA sought to determine the difference between the cost of the unit and its value at completion, which was December 1989, plus damages for the loss of use/loss of enjoyment of the unit, calculated at 5% of $460,000.00 for 18 months, amounting to $34,500.00, together with interest. By this method of calculation, a total of $262,124.00 was sought to be claimed.
The third alternative basis contended for was founded in tort on negligent statement. Various items in what was referred to as Scott schedule were added to give a total of $94,395.00, together with some other small items and a claim for loss of use and enjoyment similar to that above, giving a figure of $132,957.00, to which interest was added, making the total on this basis $249,960.00.
The fourth alternative method of quantification of damages was one based in contract and calculated by what was said to be breaches of the covenant in the contract to carry out the work in a good and workmanlike manner. The sum claimed under this head was $16,320.00 with two further items of interest paid under protest and some electrical "extras", which totalled slightly more than $4.000.00, as well as a component for loss of use and enjoyment, on this occasion of
some $8,625.00, making a total of $29,007.00, to which interest of $19,724.00 was calculated, giving a total claim on this basis of $48,731.00.
For the respondents it was submitted that nothing contained in the promotional brochures or in what was in fact the subject of discussion between Mrs Nettheim and the Waits constituted misleading or deceptive conduct; that the applicants were not induced to enter into the contract by what they now say influenced them so to do; that the applicants did not suffer any loss by reason of any representations concerning the development or the unit. The decrease between the time of entering into the contract in August 1988, the purchase price being $450,000.00 and the sale price of $385,000.00 obtained in June 1991 on a contract executed in March 1991 was consistent, it was submitted, with the fall in market prices for units in that price range in that area. For the respondents it was said that Mr and Mrs Wait got what they contracted to buy and, in fact, got more than that.
It is therefore necessary to turn to what was in fact represented to the applicants and to consider whether what was represented constituted misleading and deceptive conduct and, if so, whether there was reliance by the applicants on those misrepresentations.
There are marked inconsistencies between the account given, in particular, by Mrs Wait and Mrs Nettheim.
Notwithstanding that Mrs Nettheim would have had many dealings as a real estate agent with prospective purchasers, I am satisfied that her account of what preceded the signing of the contract is much to be preferred.
The account given by Mrs Wait in her written statement was that, after seeing a sign on the site in August 1988, the precise words of which she cannot recall, she and her husband called at the PRD office at Broadbeach/Mermaid enquiring for Judy Nettheim, who was not present in the office and they left a message for her to telephone the Waits in Brisbane. Mrs Wait says that subsequently she had a discussion with Mrs Nettheim concerning the proposed units and that subsequently arrangements were made with Mrs Nettheim for her to visit the Waits in Brisbane. On 18 August she and a man also from PRD Realty came to the office of the Waits in Brisbane. During the course of a conversation in that office they were shown three plans of the proposed "Brighton" development. After those conversations, she and her husband signed a contract for the purchase of Unit 4 in the "Brighton" development.
In her oral evidence she said that prior to signing the contract she had several conversations with Judy Nettheim. She cannot recall the actual number of conversations but there were several. She was asked:
"What was to the best of your recollections said in those conversations? "
To which she replied:
"Well, it was to do with the kind of unit we were hoping "Brighton" was going to be. I spoke to Judy about looking at "Silver Point" which was a very up-market unit, and said that I was looking for something in that area. And Judy let me know that that would be what "Brighton" was going to be. "
She was then asked:
"And could you describe the standard of finishes in "Silver Point"?
A. Beautiful, absolutely top of the market. "
She said of the standard of finish she expected in "Brighton":
"Judy assured me she had had several conversations with Mr Reed and that she was actually able to assure me that the finishes would be just perfect. "
In her oral evidence Mrs Wait said that she had received the floor plans by fax a few days before she signed the contract. In her oral evidence Mrs Wait said she signed the contract in her office in Beatty Road and present on that occasion were Judy and an associate of hers who drove up from the Gold Coast, and "Ken came into my office from his office". She was asked:
"At that time, was there anything said with regard to the quality of the building? "
To which she answered:
"My conversation was 'Well, Ken, you know the main thing that Judy assured me is that the finishes are going to be top of the range and really apart from that I believe that what Judy says is true. You don't have to worry about it.' "
This account presupposes that whatever was said concerning the quality of the unit was not on the occasion of the visit to the office at Beatty Road.
Mrs Wait confirmed that on 30 August 1988, Mr Wait sent a letter to Judy Nettheim about what Mrs Wait wanted in the unit. The text of the letter reads as follows:
"I confirm our telephone discussion today regarding various fixtures and fittings for our Unit at "BRIGHTON".
1.We would like "BOSCH" brand to be installed for the Washing Machine, Clothes Dryer, Dishwasher and in the Sink Garbage Disposal Unit.
2.In the Passage, Living and Dining areas we would like to install Trevatine Tiles rather than Carpet. We will advise the Builder of the Tile Size and Colour closer to the time of instalation.
3.We would like the opportunity to nominate the positioning of various Power Points and the T.V. Antenna outlets.
We thank you for your co-operation. "
On 20 March 1989, Judy Nettheim wrote to Mr and Mrs Wait. The letter said in part:
"...The architects have specified certain fixtures and fittings which they think will be suitable for the quality we are attempting to achieve...We propose, therefore, that you consider information supplied herewith and submit your alternatives to PRD Realty before 31 March, 1989.
In the event of your choice of fixtures and equipment exceeding that allowed for in the building costs, the extra expense will be yours and due at settlement... "
After speaking with Mrs Nettheim, Mrs Wait phoned Don Williamson, the architect mentioned by Mrs Nettheim. Mrs Wait said that she told Mr Williamson:
"...how horrified I was, particularly with things that were going in the kitchen. "
She told him that she:
"...wanted different cupboards; I didn't want just a - the cupboards that they had detailed. And I also wanted at that stage marble on the kitchen bench, which I'd assumed was just going to be there. Mr Williamson convinced me that Corian was the way to go, that it was probably better and more serviceable and it would look as good as, and then assured me that I could go to the tiling place and make my own choices and that the price range would not be a great deal of difference between what he had put down as a broad spectrum as to what I was going to choose. "
Mrs Wait said that she was dissatisfied with the unit upon moving into it and that she sold the unit because:
"It was everything that I didn't want. It was just so badly finished. The times that we went there, we couldn't lock our car in the garage, because the garage door didn't work. We couldn't get the lift to work. It was just an absolute shambles, and I couldn't live there. "
Mrs Wait agreed that in August 1988 she and her husband had purchased a boat. She and her husband purchased a house on Sovereign Island in April 1990. Mrs Wait claimed that the reason she purchased that house was that she couldn't live in the unit. "It was to replace the unit."
In cross examination Mrs Wait was asked whether she asked Mrs Nettheim whether it would be of the standard of "Silver Point" and she said "Yes". She was asked further to give the words that Mrs Nettheim had used in speaking with the Waits, to which she replied:
"I can't give you the words she used, but whatever words she used, she established in my mind that it was a luxury, top of the line unit; otherwise we wouldn't have gone ahead with it. "
When cross-examined as to whether she asked what a 'top-of-the-range unit' would mean, she agreed that she asked no questions about what that meant. She did not ask whether, for example, she would get 12 foot ceilings or gold plated taps. She was asked in cross-examination:
"Did you ask whether you would be getting a marble bench kitchen top? "
To which she replied:
"Yes, by saying that I wanted the finishes as at 'Silver Point' which she assured me it would be."
She was then asked:
"Did you specifically ask her whether you would get marble kitchen tops? "
She replied:
"Well, marble kitchen tops are at 'Silver Point'. "
She was cross-examined in particular as to any promise of particular fittings or fixtures. She was asked:
"Particular type of cupboards - did she promise that? "
"Well, no " was the answer. When asked:
"Do you understand the importance of reading that which you were going to sign? "
She said:
"No. I consider it more important that the person offering me the contract tells me than what is on the contract. "
It will be necessary to refer to some of the contractual terms. It may be noted that the Schedule of Finishes, being the Fifth Schedule to the contract signed by the Waits, described the 'Inclusions' which included laminate- covered vanity units, and laminate-covered cupboards and benchtops in the kitchen.
Mrs Wait is an accountant by occupation and has been for 24 years. She has been in business for 30 years and with Mr Wait for 17 of those years. She considers herself a very experienced and very successful businesswoman.
The evidence of Mrs Wait is replete with her belief that the unit was to be a "luxury" unit, a "top of the range" unit. The extrapolation of this to a unit "with all the features of Silver Point" , then to a unit with "marble benches, because that was what Silver Point had" is (at most) an assumption by Mrs Wait. I find it has no basis in anything on the sign or in what Mrs Nettheim said; it is wholly inconsistent with the contract the Waits signed, and in particular the Fifth Schedule.
Concerning the configuration of the common area, Mrs Wait in cross-examination was asked:
"Earlier you said the configuration of the common area did not matter, so long as you had a drying area, a pool? "
To which her answer was:
"No, so long as we had access to the beach and to the pool from the ground level. "
The account of Mrs Nettheim was that she had received a message that Mrs Wait had phoned inquiring about Unit 4 and that a day or two later she phoned and spoke to Mr Wait and rang back the next morning and spoke to Mrs Wait. She said that Mrs Wait was very keen about the unit and was very interested in buying it. Mrs Nettheim told her that she had someone else who was very keen as well, and said to Mrs Wait "If I bring the contracts up would you sign them today?", to which Mrs Wait replied "Yes". She said that she and a Mr Adrian Cook from PRD Realty drove to Brisbane to the office of Mr & Mrs Wait. She denies that prior to the signing of the contract there was any mention of a building called "Silver Point". She said the meeting was quite short - 20 minutes at the most. She said that Mr Wait started to read the contract and Mrs Wait stopped him: "She told him just to sign it and get on with it because, you know, they wanted the building - they wanted the unit and - so he just signed it" . She was asked whether she observed Mrs Wait reading the contract, to which she replied "No. They looked through the initial parts, naturally, but the extra of the plan parts, they didn't read".
Mrs Nettheim referred to the letter of 30 March 1989 concerning the request by the Waits for Bosch equipment and Travatine tiles and the location of power points. She said that the Waits did not complain about the fit-out of the unit to her.
There are two aspects of Mrs Nettheim's written statement which I regard as significant in the resolution of the principal questions in these proceedings. The first concerns her account of discussions after settlement by the Waits regarding the standard of the unit and common property. Mrs Nettheim says:
"Settlement of Unit 4 occurred in early January 1990. At that time, neither Mr nor Mrs Wait commented as to a dissatisfaction with the configuration of the common property outside the building.
There were a number of discussions after settlement with Mr and Mrs Wait regarding certain defects within their unit and the building generally. I think it is fair to say that there were a number of defects present at the time that they settled, but that the vast majority of these defects were satisfactorily remedied within the first six months of 1990. "
The second aspect on which I place reliance is the account by Mrs Nettheim concerning the retainer given to her by the Waits for the sale of Unit 4. Mrs Nettheim says:
"In very early 1990, I recall having a discussion with Mrs Wait at the unit complex. As a result of that discussion I was lead to believe that Mr Wait had recently purchased a very large and very expensive boat which was moored at Southport.
Some short time later I remember having a further discussion with Mrs Wait on site which lead (sic) me to the belief that Mr and Mrs Wait had purchased a house at Sovereign Islands on the Gold Coast which had Broadwater access.
In March 1990, Mrs Wait contacted me and retained the services of L J Hooker at Mermaid Beach (which was the business I was then operating) for the purposes of selling their unit. On 26 March, 1990, Mr and Mrs Wait signed a sole agency agreement with my business for the sale of Unit 4 for a price of $480,000.00.
As a result of discussions with Mrs Wait at about the time of the signing of the sole agency, I was lead (sic) to the belief that the principal reason for the listing of the property for sale was that Mr and Mrs Wait had purchased the Sovereign Islands property and that the "Brighton" unit was surplus to their needs. "
Mrs Nettheim says that she introduced the purchaser of Unit 4 from the Waits to them in 1991 and that the contract price for the unit was $385,000.00. In her evidence she says that she was of the view, based upon her experience in real estate in the area, that the purchase price paid in 1988 and subsequently paid in 1991 for Unit 4 represented fair market values.
The contract that was dated 19 August 1988 ('the Contract') provided for the sale of Lot 4 for $450,000.00 with a deposit of $45,000.00. The schedule to the unit referred to Lot 4 as "being the unit on floor plan more particularly delineated in red on the sketch plans annexed hereto and marked 'A'...Floor Plan of Lot/Unit: Substantially in accordance with the relevant sketch delineated in blue on the sketch plans annexed hereto and marked 'B'".
Clause 3(b) of the Contract imposed an obligation on the vendor to do all acts and things as may be necessary to obtain registration of the building units plan at the earliest possible date:
"PROVIDED ALWAYS that if the said Building Units Plan shall not have been registered by the 30th day of June, 1989 then either party shall be at
liberty by notice in writing to the other in that behalf to rescind this Contract of Sale..."
The clause however gave the vendor power to extend the date on account of delays caused by inclement weather or any other cause, matter or thing beyond the control of the vendor.
Clause 3(c) provided:
"The Vendor will proceed with the construction of the said building without delay and shall complete the said unit generally in accordance with the approved plans and specifications and in a thorough and workmanlike manner with the subject unit being finished in accordance with and to a standard as set out in the list of finishes in the Fifth Schedule hereto. "
(emphasis added)
Clause 7(d) provided:
"The Purchaser acknowledges that he has not relied on any representations by the Vendor, the Vendor's Agent or any other person or persons or corporation in and about entering into this Contract other than as set out herein and that the conditions and stipulations hereof constitute the only agreement between the Purchaser and the Vendor. "
When asked specifically about this clause, Mr Wait says that she never read it, and that if she had, she and her husband would not have bought the unit.
Clause 7(f) provided:
"The Purchaser shall not be entitled to make any objection requisition or claim for compensation by reason of:-
(i)Any minor variations as regards the said unit between the Plan as produced to the Purchaser and annexed hereto and marked "A" and the Building Units Plan as registered by the Registrar of Titles, if in the opinion of the Vendor, such variation is warranted for aesthetic reasons.
(ii)Any alteration in the number size location or unit entitlement of any lot or lots in the Building Units Plan (other than the lot or lots hereby sold) or in or to the common property, provided that the unit entitlement of the lot or lots hereby sold and the aggregate unit entitlement of all lots shall not thereby be varied;
(iii)Any alteration or variation in the said plans and specifications accordingly. "
Mrs Wait says that she did not read this provision of the contract.
Clause 8 of the First Schedule referred to chattels in the following way:
"CHATTELS: Floor coverings, four-burner electric hot-plate unit, built-in wall oven (conventional and microwave), built-in range hood over hot-plates, electric mains pressure hot water service, built-in dishwasher and light fittings.
Insinkerator in kitchen sink. Washer dryer in laundry. "
The Fifth Schedule to the Contract was a "Schedule of Finishes". The description in the fifth schedule was terse and generally generic. That schedule provided in respect of bathrooms and en suites and kitchens the following:
"Bathrooms and ensuites to have built-in baths (where applicable and shown on floor plans), separate shower recesses, low-down toilet suites, custom made laminate covered vanity units, mirrors and ample towel rails, soap holders etc.
All bathrooms, ensuites shall include vented windows to open air (see floor plans).
Kitchens shall include both under bench cupboards and elevated wall cupboards. All cupboards and bench tops shall be laminated with selected colour and cupboards will be internally lined.
*4 burner electric hot plate unit.
*Built-in wall oven (convenional (sic) and microwave).
*Built-in range hood over hot plates.
*Built-in dishwasher.
*Flushing stainless steel sink with insinkerator. "
(emphasis added)
Under the heading "GENERAL", the following was included:
"Driveways and pathways etc. shall be either exposed aggregate or cobblestone type paving or pavers. "
Under "MISCELLANEOUS" in the Fifth Schedule the following appears:
"This Schedule and the accompanying design drawings are subject to minor alteration caused by design necessities, Council requirements and/or structural engineer's dictates. "
In "NOTES' included as part of the Fifth Schedule, there is a reference to the specification sections and a legend, but no copy of the specifications either draft or final accompanied the contract. Attached to the contract were three drawings which were marked "A", "B" and "C".
Drawing "B" suggests that the balustrade on the east did not follow the outline of the balcony but was to be constructed so that part of the balcony was outside the balustrade.
Drawing "C" shows a drying court in the south-eastern corner of the allotment, and conveys that it is available as a common area. The common area is shown as going from the entry on the western side of the allotment, past the entry to the lobby, and circling the building as far as the pool and sunbaking area. A courtyard on the west is shown in that drawing to be able to be accessed only from the unit on the ground floor.
The letter of 20 March 1989 which, according to Mrs Wait she greeted with horror, was accompanied by a colour schedule and extracts of the building specifications. Mrs Wait's claimed reaction is inconsistent with the tone of a letter written by Mr Wait on 30 August 1988.
When being cross-examined about the terms of clause 7(f), she said that she was not aware of the developer's right to vary the common area and that is something that she would consider important. She was asked:
"And yet earlier you said the configuration of the common area did not matter, so long as you had a drying area, a pool? "
To which she responded:
"No, so long as we had access to the beach and to the pool from the ground level. "
The circumstances in which the drying court was altered in position are set out by Mr Reed in his statement. He says:
"During the course of construction it became apparent that the construction of the two metre treated pine fence on the eastern boundary of unit 1 was not aesthetically pleasing. Accordingly I decided that a substantial portion of the timber fence on the eastern side should be removed and in lieu thereof, smart balustrading should be inserted. The balustrading was in accordance with the style and type used on the upper floors. I also decided during the course of construction that the drying court on the eastern side of the property was not aesthetically satisfactory, as it would mean that persons standing on their balconies and looking towards the ocean would be looking over clothes lines and washing.
I therefore decided to move the drying court to the southern side of the complex.
Prior to settlement with Mr and Mrs Wait I became aware of some alleged dissatisfaction on the part of Mr and Mrs Wait with the fact that the courtyard had been provided to unit 1 on the eastern side. In consequence, I instructed my Solicitors to offer to the Solicitors for Mr and Mrs Wait, a re-conveyance to the Body Corporate of a portion of the western courtyard which at that stage was designated as part of lot 1.
By letter dated 3rd January 1990 the Solicitors for Mr and Mrs Wait wrote:
'We note also your clients' offer to reconvey to the body Corporate certain areas currently designated as part of Lot 1 and our clients accept such offer whilst reserving any rights they may have under the Contract or otherwise in respect of matters raised in previous corrrespondence in that regard. '
In accordance with the acceptance of my offer, I instructed Messrs Bennett & Bennett Surveyors to prepare a plan of re-survey whereby a substantial
portion of the western courtyard (prevciously designated to lot 1) was transferred back to the Body Corporate. This task was completed, and I understand a plan of re-survey has been lodged at the Real Property office. This re-survey had the effect of more or less allowing access from the front door of the building (on the southern side) around to the swimming pool via the western side of the building. In order to properly allow continuity of access from the front door in this manner, it would have been necessary to construct a small set of stairs proximate to the south-west corner of the building.
As a result of the fact that Mr and Mrs Wait were in the process of selling their unit soon after settlement, the stairs were never constructed, and indeed the courtyard on the western side of unit 1 has been built in accordance with the original plans. No attempts were made to alter the size of the western courtyard to the new boundary, as a result of the fact that no other proprietor (apart from Mr and Mrs Wait) ever complained about the configuration of the common property. "
Mrs Wait gave evidence that they moved in in November, stayed there only a short number of nights.
An applicant has the onus of establishing conduct in contravention of s 52 of the TPA, reliance on that conduct, and loss or damage by the contravention. Notwithstanding the onus, in this case, I am positively satisfied there was no mis-representation as to the quality of the unit to be inferred from the description on the billboard on the site, or the discussions by Mrs Nettheim.
The change in circumstance of the courtyard was a material alteration but one which was contemplated by the contract. The circumstances of the Contract and its terms
leave me to conclude that there was no representation that ultimately the common areas on the building units plan would be in strict conformity with those on the plan "C" attached to the Contract. Moreover, and crucially, I am not persuaded that in agreeing to purchase Unit 4 in the "Brighton" development, the applicants relied at all on the representations pleaded in paragraph 4 of the amended statement of claim.
The claim by Mrs Wait that it was represented to her and her husband that the finishes in the unit would be the same as at "Silver Point" and that that representation constituted a representation that there would be marble bench tops, air conditioning, gold-plated taps and so on, is wholly inconsistent with the Contract that Mr and Mrs Wait signed. The explanations by Mrs Wait as to why in the face of the contractual documents she believed that the unit would possess the features which she claims Mrs Nettheim promised, I simply do not believe. Contemporaneous documents, in particular the letter of 30 March 1989, and the evidence of Mrs Nettheim as to the lack of complaint, which evidence I accept, is quite inconsistent with the present claims of the applicant. I am quite satisfied that the applicants were not the victims of conduct in contravention of s 52 of the TPA. I think it likely that the fundamental explanation for such dissatisfaction as they had concerning the unit at Broadbeach was that possession of the boat purchased before the "Brighton" unit was compatible with the home at Sovereign
Island but incompatible with continued possession of the unit. I do accept that there were building defects that were the source of real irritation.
Further, I think that the description of Unit 4 to Mrs Nettheim by the Waits when Mrs Nettheim was engaged by them to resell the unit as "surplus to requirements" truly stated the position as the Waits then understood it. The diminution in the sale price of the unit from the time of contract in August 1988 to the time the Waits sold it in 1991, in my opinion, is almost wholly, if not wholly, explained by the dramatic downturn in the sale price of home units at the upper end of the Gold Coast property market during that period.
The claims under the TPA and that based on negligent misstatement fail.
It remains to consider the claim in contract for breach of the contractual covenant that the unit would be constructed in good and workmanlike manner.
The unit was a one unit per floor unit, with very good views. Mr Eden in his valuation prepared for the applicants said at p 12:
"The unit presently provides a good standard of two bedroom accommodation with a fair standard of finish.
Although the quality of some of the internal fittings is good, the actual finish and quality of a number of fittings in the unit is well below what would be expected for prestige unit... "
There is a video tape of aspects of the unit, and many photographs, in evidence, and after evidence was conducted I had the benefit of inspecting the exterior of the building, the entry lobby, basement and Unit 4.
On this aspect of the matter, counsel for the applicants, in the course of submissions, submitted a schedule containing the items for which the applicants contended on this basis. I have considered each of those items. I will not allow the items and amounts claimed which are referred to in that schedule as 5(d), 6(g), 7(b) and 7(d), nor 10(c) or 10(e), and in respect of the defect concerning the balcony columns in item 12(c), I will allow that item in the sum of $550.00. I will allow the others. I have some reservations about some of them. In particular, item 1(c), being a complaint concerning the quality of the interior doors, but there is a difference, in part, between the specifications and what was supplied, so I will admit that item in its claimed amount.
Some of the defects, while relatively small in amount, demonstrate dramatically the absence of a workmanlike manner. In those particular items, I include the joints in the paving, which are splayed and merely sandfilled; the shower construction, item 9(a); and the spiral boxing on the balcony columns, which is particularly obvious. Other items, such as the use of pressed metal hinges, and the painting of the meranti used for door jambs, while not so obvious, are inferior or contrary to the specifications of the contract.
The other components of the claim in contract that are referred to in the schedule handed up by Mr Campbell, are not made out. In particular, both the entitlement and quanti-fication of the claim for loss of use/enjoyment of the unit in contract is of that kind.
The matters I think that have been made out total $11,730.00.
I will allow interest at 12% for 4 years and at 10% for 3 years, totalling $9,149.40. The total amount for claim and interest on this basis is $20,879.40, which I round to $20,900.00. I give judgment for the applicants against the respondents for that sum.
I will hear the parties on costs.
I certify that this and the preceding twenty-eight (28) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender.
Associate
Date: 4 February 1997
Counsel for the applicants : Mr D J Campbell
instructed by : Fisher Jeffries
The respondents appeared in person.
Dates of Hearing : 4-7 December 1996 (incl)
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