Wallace v Shorescape Holdings Pty Ltd
[2010] WADC 114
•6 AUGUST 2010
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: WALLACE & ANOR -v- SHORESCAPE HOLDINGS PTY LTD & ANOR [2010] WADC 114
CORAM: STAUDE DCJ
HEARD: 1-3, 16 JUNE 2010
DELIVERED : 6 AUGUST 2010
FILE NO/S: CIV 372 of 2008
BETWEEN: CLINTON JOSEPH CHRISTOPHER WALLACE
ROSARIA WALLACE
PlaintiffsAND
SHORESCAPE HOLDINGS PTY LTD (ACN 075 591 703)
First DefendantPARKRIDGE GROUP PTY LTD
Second Defendant
Catchwords:
Misleading or deceptive conduct - Trade Practices Act 1974 (Cth), s 52 - Fair Trading Act 1987 (WA), s 10 - Sale of land - Town Planning Scheme - Residential Design Codes 2002 - Meaning of "duplex" - Reliance - Authority of agents to make representation - Whether agent was a mere conduit - Whether loss proved - Turns on own facts
Legislation:
Fair Trading Act 1987 (WA)
Trade Practices Act 1974 (Cth)
Result:
Judgment for defendants
Plaintiffs' claim dismissed
Representation:
Counsel:
Plaintiffs: Mr A Metaxas
First Defendant : Mr A J Musikanth
Second Defendant : Mr C M Slater
Solicitors:
Plaintiffs: Metaxas & Hager
First Defendant : Jackson McDonald
Second Defendant : Wojtowicz Kelly
Case(s) referred to in judgment(s):
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177
Townsend & Anor v Shire of Dardanup [2007] WASAT 221
Transglobal Capital Pty Ltd v Yolarno Pty Ltd [2005] NSWCA 68
Yorke v Lucas (1985) 158 CLR 661
STAUDE DCJ:
Introduction
Mr and Mrs Wallace have sued the defendants for damages pursuant to s 82 of the Trade Practices Act 1974 (Cth) ("TPA") and s 79 of the Fair Trading Act 1987 (WA) ("FTA") for misleading and deceptive conduct contrary to s 52 of the TPA and s 10 of the FTA.
The conduct complained of as misleading, and on which it is claimed that the Wallaces relied to their detriment, was the description of two lots of a proposed residential subdivision in Eaton as duplex. There is no issue that the conduct in question was conduct in the course of trade and commerce.
Factual background
The following facts are either common cause or facts of which I am readily satisfied on the evidence.
The first defendant Shorescape Pty Ltd at the material time carried on business as a real estate agency under the style Summit Realty. Shorescape was the authorised selling agent for the land development known as Parkridge Estate at Eaton. The second defendant Parkridge Group Pty Ltd was the owner and developer of Parkridge Estate.
In October 2005 Mr Wallace, who at all times acted on his and Mrs Wallace's behalf, telephoned Mr Tony Roelofsen, a real estate sales representative employed by Shorescape, and told him that he was interested in a duplex block which had been advertised for sale by Shorescape. Nothing eventuated in relation to the advertised property, but Mr Wallace told Mr Roelofsen that he remained interested in purchasing a duplex block and would be happy to be informed of any others that became available.
Mr Roelofsen contacted Mr Wallace in late October 2005 to inform him of a proposed subdivision called Peninsula Lakes Stage 3 which was part of the Parkridge Estate. Mr Wallace expressed interest and on 14 November 2005 Mr Roelofsen sent Mr Wallace two documents by facsimile (Exhibit 4A). The first, which I will describe in these reasons as "the price list", was a list of 17 lot numbers, prices and block sizes and dated November 2005. The price list had been faxed by Mr Thurston Saulsman of Parkridge to Shorescape on 31 October 2005. The second document was a surveyor's plan of the proposed subdivision dated 1 November 2005. In the price list Lots 859 and 860 had the word "duplex" in round brackets after the lot number and were stated to be 900 m². The prices were $230,000 and $225,000 respectively. In the plan the lot sizes were 905 and 902 m².
Mr Wallace then asked Mr Roelofsen to check with the Shire of Dardanup that the zoning of the lots did in fact permit duplex development. Mr Roelofsen's response was to suggest that Mr Wallace make his own enquiry, which he did, only to be told that the question could not be answered by the Shire at that time.
Mr Wallace made offers to purchase the lots for $225,000 each. Shorescape communicated the offers to Mr Saulsman who accepted them. The purchases were not settled until 26 September 2006, the issue of title being delayed pending the completion of the development.
Some time later Mr Roelofsen called Mr Wallace to inform him that the lots could be sold for significant profit. Mr and Mrs Wallace then appointed Mr Roelofsen as their selling agent to sell the two lots which were subsequently advertised for sale as duplex blocks. Mr Roelofsen later advised Mr and Mrs Wallace that the lots were in fact not duplex in that not more than one dwelling could be constructed on each and that the term "duplex" would have to be deleted from the advertisements.
Mr Wallace then made further inquiries with the Shire of Dardanup and eventually, on 5 February 2007, sent a letter to the Shire asking whether in fact anything could be done to qualify the lots as duplex. Mr Robert Quinn of the Shire of Dardanup responded by letter on 13 February 2007 stating that duplex development was not permitted in respect of the lots as they were coded R15 for which the minimum lot area for such development was 1,332 m².
At no time did the plaintiffs apply for approval either for subdivision or for development of two grouped dwellings.
The Shire of Dardanup Town Planning Scheme No 3 ("TPS3") applied to the lots. The land was zoned Residential and was coded R15 under the Residential Planning Codes published in the Government Gazette of 13 December 1991 and the Residential Design Codes published in the Government Gazette of 4 October 2002 ("R‑Codes").
The claim
The Wallaces contend that because the general site requirements specified in Table 1 of the R‑Codes prescribed, in respect of land coded R15, an average site area for grouped dwellings of 666 m², the lots did not qualify for approval either for a two‑grouped dwelling development or subdivision. This was so upon a proper construction of TPS3 and the R‑Codes.
It is alleged that by describing the lots as "duplex" (pleaded as the first representation) the defendants represented that the lots were capable of subdivision (pleaded as the second representation) and, or alternatively, that the owner would be entitled to build two dwellings on each lot, subject only to obtaining development approval and a building licence (pleaded as the third representation).
While the statement of claim identifies three representations, the second and third are merely interpretations of the first and do not constitute conduct for the purposes of s 52. The real question is whether the description of the lots as "duplex" amounted to a misrepresentation which is actionable as misleading and deceptive conduct. What is alleged is a misleading representation as to "the use to which the land in question is capable of being put or may lawfully be put", although no express reliance is placed on s 53A of the TPA in this regard.
The claim for damages in respect of each lot is $40,000 based on valuation advice obtained from Quantia Valuation Consultants and contained in reports dated 6 February 2009 in respect of each lot (Exhibit 1A and 1B). In each case, the valuer, Mr Julian Nichols, assessed the value of the lot as at 17 November 2005 to be $185,000. As between the parties there is no issue of substance with the valuation evidence or with the measure of loss submitted by the plaintiffs on the basis of the reports.
The defences
The defence of the first defendant, Shorescape, may be summarised as follows:
1.Shorescape did not make any representation to the plaintiffs; it was merely the conduit of information provided by Parkridge (pars 2a and 4).
2.In any event, the price list properly construed did not represent the lots to be duplex as the subdivision plan had not been finalised and was a mere proposal (par 2c).
3.Alternatively, the term "duplex" described a block which met planning criteria for duplex development, being a two‑grouped dwelling development, or had duplex development potential, and correctly described the lots in question (par 3a).
4.If a representation were made it was as to a future matter and Shorescape had reasonable grounds for making it (par 5).
5.In any event, the Wallaces did not rely on the representation (par 6).
6.Alternatively, if the Wallaces did suffer loss due to Shorescape's conduct it was caused partly by their own failure to take reasonable care and damages should be reduced accordingly under s 82(1B) (par 7).
7.If Shorescape were liable to the Wallaces, then so was Parkridge as it was the source of the information and liability should be apportioned (par 11).
The defence of the second defendant, Parkridge, may be similarly summarised:
1.The reference to "duplex" in the price list did not convey the representation for which the Wallaces contend, but described a block of land which met the requirements for a two‑grouped dwelling development under TPS3 which each lot did (par 6).
2.The price list did not make a representation as to a future matter as the information in it was stated to be subject to survey (par 10).
3.Alternatively, if the representation were as to a future matter, Parkridge believed that it was true and had reasonable grounds for making it (par 10).
4.If the Wallaces did suffer loss caused by Parkridge the loss was partly caused by their own failure to take reasonable care such that s 82(1B) applied (par 13).
With respect to the question of apportionment Parkridge contends that Shorescape was not the authorised agent of Parkridge when the price list was disclosed to the Wallaces and acted without authority or negligently by doing so and Shorescape was not a mere conduit of information provided by Parkridge because the price list was not finalised and was provided to Shorescape as a draft document on a confidential basis.
The meaning of "duplex"
Counsel for the plaintiffs in written closing submissions proposed:
"The meaning of 'duplex' in Ex 4A was that two dwellings could be built on each lot. There is nothing complicated about the word which has been in common usage in WA for many years."
With this proposition there is no real disagreement between the parties. I am satisfied that the word "duplex" used in relation to a residential lot means a single residential lot on which two dwellings can be built on strata titles pursuant to the Strata Titles Act 1984. I am not satisfied that it refers to any other form of subdivision.
In order to determine whether the description of the lots as "duplex" was a misrepresentation it is necessary to consider the planning regime under which land can be developed. This involves a consideration of TPS3 and the R‑Codes as well as the policy and practice of the Shire of Dardanup at the material time.
TPS3, as amended in April 2004 by Amendment 121, provided by cl 3.4.1 as follows:
"For development of not more than two grouped dwellings in the 'Residential' zone, Council may, in a particular case but only where sewerage is available, modify the development standards to the R20 code requirements. In assessing proposals Council will have regard to access, servicing, topography, drainage, amenity and any other matters Council considers appropriate."
The Scheme Amendment Report which forms part of Amendment 21 explained the need for change in par 1.1 as follows:
"The Shire of Dardanup has been in the process of preparing a local planning strategy since 1999, however it is still some years from completion (the initial draft having been abandoned). Given the above, and due to increasing pressure for grouped dwelling development – particularly within the Eaton townsite – Council consider it necessary to amend the current scheme to provide more certainty for key stakeholders and more control over density development."
Paragraph 1.2 of the Scheme Amendment Report reads:
"The majority of 'residential' zoned land in the Shire (Eaton, Dardanup and Burekup) has fairly low density coding of R12.5 or R15. The average and minimum lot sizes applicable to these codes as set out in the Residential Design Codes of Western Australia are such that it is generally not possible to develop more than one dwelling unit on the land unless it is fairly large – that is 1,332 m² or greater.
However, clause 3.4 of the Scheme sets out provisions which allow Council to consider a higher density of development than that attributed by the Codes. Specifically, clause 3.4.1 states that:
'For development of not more than two grouped dwellings in the 'Residential' zone, Council may, in a particular case but only where sewerage is available, modify the development standards to the R20 code requirements'.
The R20 Code requirement is an average lot size of 450 m² and as such, any lot in excess of 900 m² may potentially be developed with two dwellings."
In fact, for land coded R20 the R‑Codes prescribed a minimum site area for a two‑dwelling development of 1,000 m², not 900 m². In respect of land coded R15 the minimum site area for a two‑dwelling development was 1332m². As will be seen, however, the R‑Codes made special provision for land which was coded R12.5 ‑ 15, R20 and R60 as at 4 October 2002 because the Residential Planning Codes of 1991 prescribed lower minimum site area requirements for grouped dwellings on such land.
At p 4989 (Government Gazette, 4 October 2002), the effect of the R‑Codes on such land was explained as follows:
"Transition Period in R12.5 – R17.5 and R60
The Codes have merged single house and grouped dwelling requirements under Table 1. The superseded Residential Planning Codes established lesser requirements for grouped dwellings than the current requirements. For a limited duration, to ensure that landowners are not disadvantaged by the introduction of the Residential Design Codes, the provisions of the 1991 Codes may be applied in the R12.5 ‑ R17.5 and R60 Codes.
Special Circumstances for Duplexes in Areas Coded R20
Because of the historic acceptance of duplex development on lots between 900 m² and 1,000 m² in areas generally coded R20, provision has been made for the 1991 Codes site area requirements to continue to apply."
A further explanation of the application of the minimum site areas in Table 1 is provided in cl 3.1.3A(3) on p 4991:
"(iv)In the case of grouped dwellings in areas coded R12.5 ‑ R17.5 and R60, the minimum site area shall be as permitted under Table 1 of the Residential Planning Codes, December 1991, where applications are made prior to 31 December 2004.
(v)In the case of grouped dwellings in areas coded R20 at the time of the gazettal of the Residential Design Codes the average site area shall be 450 square metres."
As explained by the Scheme Amendment Report forming part of Amendment 121 to TPS3, cl 3.4.1 permitted the Council in its discretion to approve duplex development of any lot exceeding 900 m² on the basis that that was the minimum site area for a two-grouped dwelling development prescribed by the R‑Codes for land coded R20. In fact, however, as at the date of Amendment 121 the R‑Codes prescribed a minimum lot area of 1,000 m², although, as I have pointed out above, they expressly preserved a minimum site area of 900 m² for land coded R20 as at 4 October 2002 when the R‑Codes were gazetted.
It is arguable, therefore, that the planning regime as it applied in November 2005 would not have permitted a duplex development on a lot of the size of Lots 859 and 860 unless the land were coded R20 prior to October 2002. Indeed, it was contended on behalf of the Wallaces that the transitional provisions to which I have referred only benefited the owners of land coded R15 in this respect if an application for development approval were made before 31 December 2004. In practice, however, this appears not to have been so.
Evidence was given by Mr Mark Jones who was employed as the principal town planner for the Shire of Dardanup from April 1999 to March 2006. Mr Jones was called on behalf of Shorescape, and was also examined‑in‑chief by counsel for Parkridge as both parties relied on his evidence.
In evidence-in-chief Mr Jones stated that the land in question had been zoned Residential R15 since 12 July 1993. He understood cl 3.4.1 of TPS3 (referred to in the evidence from time to time as the density bonus provision) to mean that the Shire had a general discretion to apply R20 code requirements so as to permit grouped dwelling development on any land zoned Residential if certain requirements were fulfilled.
As the principal town planner for the Shire he was able to approve grouped dwelling applications where there was no objection to the development application and to recommend subdivision applications to the Western Australian Planning Commission. As a matter of practice he also exercised his discretion on behalf of the Shire in applying the density bonus provision, cl 3.4.1, to permit two‑dwelling developments on lots coded R15 or R12.5 of between 900 m² and 1,000 m².
In his opinion, Lots 859 and 860, being at least 900 m² in size, were capable of two‑dwelling development or subdivision. They did not form part of the density bonus scheme exclusion areas listed in appendix 10 of TPS3 so provided they could be connected to sewerage he would have approved an application for a two‑dwelling development. In his opinion there was no special procedure for such an application and it was the general practice of the Shire to follow his recommendations.
Examined by counsel for Parkridge, Mr Jones said that he had spoken to Mr Saulsman in mid to late 2005 regarding the development of Parkridge Estate and recalled conversations with him regarding the lot area requirements for strata title developments on single residential lots. Mr Jones said that he told Mr Saulsman that it was the Shire's policy to permit R15 land to be developed as if it were R20 land.
In Mr Jones' opinion the density bonus provision applied to Parkridge Estate as, prior to 4 October 2002, the land was zoned Residential. He referred to Amendment 121 which included a map showing lots over 900 m² and less than 1,049 m² with potential for two dwellings. Lots 859 and 860 were not shown as they had not been created at the date of Amendment 121. Mr Jones was a joint author of the amendment.
He specifically recalled discussing the density bonus provision with Mr Saulsman. He told him that it was the policy of the Shire to permit R15 land to be developed as if it were R20 land which was exempted from the requirements of the R‑Codes. Mr Jones referred to Appendix 1 to Amendment 121, a letter from Mr Neil Fraser, Manager, Local Planning, South‑West Region, Department for Planning and Infrastructure, dated 5 June 2003. In this letter, Mr Fraser explained the effect of the density bonus provision on the R‑Codes as follows:
"With the introduction of the Residential Design Codes on 4 October 2002, the average site area requirement for a grouped dwelling has increased from 450 m² to 500 m². However, for lots which are coded R20 at the time of gazettal of the Residential Design Codes, the average site area for a grouped dwelling is 450 m² given section 3.1.3A3 of the Residential Design Codes states:
'In the case of grouped dwellings in areas coded R20 at the time of the gazettal of the Residential Design Codes the average site area shall be 450 m²'.
It should be noted that the intent of this exemption is to modify the average site area requirement for a grouped dwelling for the R20 Code so that landowners of land coded R20 are not disadvantaged by the introduction of the new Codes.
Given the above, it would not be unreasonable to apply section 3.1.3A3 to clause 3.4.1 of the Scheme. In other words, both provisions are applicable to a relevant grouped dwelling application. This is considered appropriate given clause 3.4.1 was in existence prior to the gazettal of the new R‑Codes and gave a clear expectation that sewered lots would in effect be coded R20. Clause 3.4.1 is clearly an R‑Code variation specified in the Scheme, which is permitted by the new R‑Codes.
Further, it would be inequitable to suggest that the density bonus expired for unsewered properties upon the gazettal of the new R‑Codes. Particularly given that this is not specified in the Scheme clause and the construction of the clause would seem to suggest the sewering of the locality over a period of time (i.e. for the life of the Scheme).
Given the above, Council has the ability to approve two grouped dwelling developments on lots of 900 m² and above, where sewer is available given clause 3.4.1 of the Scheme and section 3.1.3A3."
In cross-examination Mr Jones said that for land zoned R20 or less, i.e. R12.5 – R 20, the density bonus provision enabled a two‑dwelling development on a minimum lot area of 900 m². If the density bonus provision was not applied, the minimum lot size for a duplex development would be 1,000 m². In his opinion, the density bonus provision applied to land that was zoned R20 or less at the time of the gazettal of the R‑Codes in October 2002.
In relation to his conversations with Mr Saulsman, Mr Jones said that in 2004, before Amendment 121 came into effect, he advised Mr Saulsman that in respect of lots larger than 900 m² he could apply for Shire approval for grouped dwelling development on R20 criteria. There was no guaranteed right to such development approval. Applications would need to be advertised. If there were any objection the application would be dealt with by the council to whom he would make a recommendation. The decision of the council was discretionary.
My understanding of Mr Jones' evidence, which was somewhat inconsistent as to what he could approve under delegated authority, is that if an application for a duplex development satisfied the requirements of the R‑Codes it would be dealt with administratively under delegated authority by the principal town planner unless there were an objection, in which case it would be referred to council. However, if a concession were required under cl 3.4.1 of TPS3 by way of a density bonus the application required council approval. There was no "as of right approval".
In relation to the density bonus provision created by Amendment 121 he said:
"It was quite clear council's policy about which blocks were eligible; those between 900 and 1050, even though they are zoned R12.5 or R15 … and that went through the Planning Commission and the Minister for Planning."
Mr Jones' evidence as to the policy and practice of the Shire of Dardanup was not challenged or contradicted. Although the letter of Mr Quinn to the plaintiffs dated 13 February 2007 (Exhibit 8) which stated that duplex development was not permitted in respect of the lots was tendered in evidence, Mr Quinn was not called and no other evidence was adduced to prove that the lots in question were not eligible for duplex development approval under cl 3.4.1. Even though no objection was made to the tender on the grounds of hearsay, I can give no weight to the document as evidence of the truth of its contents. There was no evidence that an application by the plaintiffs for approval of a duplex development would not have or been unlikely to have succeeded.
An example of how cl 3.4.1 operated is found in a State Administrative Tribunal ("SAT") decision referred to by counsel for the plaintiffs. The decision in Townsend & Anor v Shire of Dardanup [2007] WASAT 221 involves the refusal of the Shire of Dardanup to approve an application for a two‑dwelling development on a 1,016 m² lot on land coded R12.5 which meant, under the R‑Codes, that a minimum area of 1,600 m² would ordinarily be required for such a development. The application was refused on two grounds. The first ground, which related to a proposed amendment of TPS3 to restrict grouped dwelling developments to certain areas, fell away by virtue of a ministerial decision made after the SAT hearing. The second related to the suitability of the site having regard to the lack of services in the area and the need for the site to be filled in order to overcome problems of overlooking.
The issue determined by SAT was whether the discretion created by cl 3.2.1 should have been exercised in favour of the developer. The reasons for decision do not indicate whether Mr Quinn had a view as to whether, as Mr Jones testified, the density bonus provision could be applied to permit duplex development of any sewered lot greater than 900 m². The point did not arise because the land in question was over 1,000 m². The Tribunal, having addressed the criteria for approval set out in cl 3.4.1 found that approval should be given on conditions, the relevant criteria having been satisfied.
The decision in Townsend v Shire of Dardanup (supra) usefully illustrates the application of the density bonus provision. It does not assist the plaintiffs to support a contention that an application for discretionary approval of a duplex development was not available to them.
The point sought to be made by the plaintiffs was that the term "duplex", as used to describe the lots in the price list, meant that the owner would be "entitled" to approval of an application for a two‑grouped dwelling development on the basis that the lots met the minimum site area requirements prescribed by Table 1 of the R‑Codes. The means described by Mr Jones by which the Shire of Dardanup could approve applications for such development in respect of land coded less than R20, provided that the area of the lot was not less than 900 m², was characterised by counsel for the plaintiffs as having a "tenuous legal basis". The term "duplex" could not reasonably be construed, in the plaintiffs' submission, as meaning that the land to which the description was applied had potential duplex development according to whether the Shire exercised its discretion under cl 3.4.1 of TPS3.
The difficulty with this submission is that the R‑Codes are an appendix to the Western Australian Planning Commission's Statement of Planning Policy No 1 which provides in par 4 as follows:
"Subject to any variation in a town planning scheme all town planning schemes incorporating the Codes shall require residential development, in zones where residential development is permitted, to be subject to the controls contained in the Residential Design Codes. The Residential Design Codes are contained in Appendix 1." (emphasis added)
Turning to TPS3, cl 3.3 provides in part:
"The following variations and exclusions to the Residential Planning Codes shall apply for the purpose of the scheme.
3.3.1The Codes in Table 1 of the Residential Planning Codes which shall be applicable to land within the scheme area shall be limited to R5, R10, R12.5, R17.5, R20, R25, R40 and R100 except as provided for in Clauses 3.4.1 and 3.4.2."
It seems fairly clear from the text of the Scheme and the R‑Codes that cl 3.4.1 of TPS3, the density bonus provision, does constitute a variation from the R‑Codes. As explained by Mr Jones, and as is evident from the text of Amendment 121, including the Scheme Amendment Report and the letter of Mr Fraser from the Department of Planning and Infrastructure to which I have referred, it was the policy of the Shire of Dardanup to approve applications for two‑grouped dwelling development on sewered residential land provided that the site area was at least 900 m².
The question, then, is whether the fact that such an application might be refused on discretionary grounds should render the description of the lots in question as "duplex" misleading. To determine this issue it is necessary to have regard to the context in which the term "duplex" was used to describe the lots.
The circumstances of the representation
The price list had its origins in a draft document which was prepared by Mr Saulsman of Parkridge and sent to Mr Terence Bright and Mr Patrick Brodison who were then real estate representatives employed by Shorescape. Mr Bright, who gave evidence on behalf of Parkridge, had met Mr Saulsman in the mid 1990s and later introduced him to Mr Brodison. Both of them were involved in the sale of the land forming Parkridge Estate.
Mr Saulsman was himself a licensed real estate agent. In 2005 he was planning to release Stage 3 of Peninsula Lakes. In October 2005 he engaged engineers, town planners and surveyors to prepare the subdivision. At the same time he had discussions with Mr Bright and Mr Brodison regarding the proposed prices of blocks to be created. He sent a document by fax to Mr Brodison on 5 September 2005 which was a list of lot numbers, prices and sizes and was endorsed with the words, "Proposed prices for your comments please. Do not offer blocks until receipt of formal instructions with approved price list". This document (Exhibit 58) described three of the proposed lots to be created as duplex, though not Lots 859 or 860. Mr Brodison discussed the suggested prices with Mr Bright and endorsed a number of suggested amendments before returning the document by fax to Mr Saulsman the following day (Exhibit 58A).
Subsequently, on 31 October 2005 Mr Saulsman sent the price list (Exhibit 4A) to Mr Bright and Mr Brodison. The price list was typed and included a number of explanatory notes as follows:
"•Prices subject to change without notice.
•Covenants on all blocks – details forthcoming.
•Caveat to be lodged on all blocks to ensure that covenants are met. Caveats to be lifted when agreed all conditions have been met.
•Minimum house size – standard fencing and colour.
•Blocks are either A or S class. All Class S blocks have built‑in blocks house drainage (sic) connected to main storm water drainage system.
FINAL BLOCK PLANS ARE CURRENTLY BEING FINALISED BY J BULLOCKS SURVEYORS."
The price list described Lots 855, 859, 860, 870 and 868 as duplex. In relation to this description Mr Saulsman said that he had had a discussion with Mr Jones in October 2005 and had been given to believe that lots larger than 900 m² would be approved by the Shire for two‑grouped dwelling development. In this respect Mr Saulsman's evidence accords with that of Mr Jones. In his witness statement at par 30 Mr Saulsman stated:
"At that stage, I knew that the Dardanup Town Planning Scheme No 3 would enable Council to grant an approval which would have been discretionary for the Council."
He decided, in that knowledge, to make some of the lots larger than 900 m². He said at par 34:
"I could market those blocks as very large single residential blocks which I knew were in demand in the south-west, or alternatively a purchaser could buy the lots with a view to obtaining approval from the Council to put a two‑lot strata scheme on that block."
Mr Saulsman said that the price list was sent to Shorescape for discussion purposes and that he had instructed Mr Bright that if a client was interested in a block he was to contact Mr Saulsman who would tell him the price. He said he was not interested in offers. This evidence, however, was unconvincing, implausible and quite inconsistent with the fact that the day after the price list was given to Shorescape six offers were made, and in due course accepted, even before any offer was made on behalf of the Wallaces. What occurred in this respect contradicted Mr Saulsman's evidence that he was not interested in offers. It also contradicted his contention that the price list was not intended to be communicated to prospective purchasers.
Each of the six offers and acceptances of which evidence was given as having been concluded prior to the Wallaces (being in respect of Lots 856, 857, 858, 861, 863 and 866) was for an amount which corresponded to the lot price stipulated in the price list. It is clear that once the price list was received, Shorescape through its sales representatives did in fact invite offers from persons whom they had "on their books" as being interested in acquiring land in the subdivision, just as Mr Greg Gardiner of Shorescape described in his evidence and as Mr Roelofsen did in relation to Mr Wallace. That the land was sold in this way is wholly inconsistent with the evidence of Mr Bright that the price list was regarded by him as confidential.
The case was sought to be made that the price list was a work in progress in the sense that it had not been finalised and, further, that as a matter of practice no price list would be provided to prospective purchasers which was not professionally produced as price lists for previous stage releases had been. On the evidence, however, it is clear that the price list was used to solicit offers to purchase the land prior to an advertised release of the subdivision. No other explanation can be given for the fact that six contracts of sale by offer and acceptance were entered into by Parkridge with purchasers introduced by Shorescape prior to the provision of the price list by Mr Roelofsen to Mr Wallace. It may also be observed that even the professionally printed price lists for Stage 1 and 2 (Exhibits 33 and 34) stated "Prices may change without notice" and "Block sizes subject to confirmation".
There was evidence adduced on behalf of Parkridge as to how other land comprising the Parkridge Estate was marketed and sold on previous occasions, including newspaper advertisements of subdivisional releases and professionally printed price lists. I have no reason to doubt that on previous occasions that was so. It may well have been the case that Mr Saulsman did not intend any land in the Peninsula Lakes Stage 3 subdivision to be marketed before a final list was settled and professionally printed for marketing purposes, but "marketing" in this context means publicly offering land for sale by advertisement as had occurred with respect to the previous stages of the Peninsula Lakes subdivision as Exhibits 13 and 14 (Bunbury Mail advertisements) demonstrate. There is a difference to be respected between marketing in that sense and procuring offers from interested prospective buyers.
I do not accept that Shorescape was not authorised to act as the selling agent in respect of the Peninsula Lakes Stage 3 subdivision. It is patently clear from the history of the transactions which resulted following the provision of the price list to Shorescape that Parkridge intended the lots to be offered for sale at the prices stipulated. There was no warning on the price list such as there was on the earlier draft. It is also apparent that the demand for the lots was such that Shorescape's sales representatives had from pre-release advertising built up a list of potential purchasers to whom the information and the price list was communicated as soon as it was received from Mr Saulsman's office. There was no uncertainty in respect of the subdivision plan, lot sizes or pricing to prevent the sale of Stage 3 in that manner at that time.
That Shorescape may not have obtained a written authority to sell in respect of Stage 3 is of no significance in this factual context. Offers were prepared by Shorescape's representatives, put to Parkridge, and accepted. Commissions were paid on the sales. Shorescape was Parkridge's agent. Its actions were, if not expressly authorised, then within the scope of its ostensible authority. Section 84 of the TPA operates not only to deem the conduct of Mr Roelofsen to be the conduct of Shorescape, but also the conduct of Shorescape to be the conduct of Parkridge.
Mr Saulsman's belief was that the Shire of Dardanup had a discretion to approve duplex developments on lots greater than 900 m². Based on what he was told by Mr Jones he said he had no doubt that such an application would be approved. It was for this reason that he adjusted the block sizes. As far as the Wallaces were concerned, Mr Saulsman said he did not sell the lots to them as "duplex" in that this was not a term of the offer and acceptance. However, I find that when Mr Saulsman accepted the Wallaces' offers he knew from the price list, which he had settled, that they were for duplex blocks. Those blocks had been offered at a premium for that reason.
Mr Saulsman's letter on behalf of Parkridge to Mr and Mrs Wallace of 14 March 2007 was quite disingenuous in its defence of Parkridge's position. The letter (Exhibit 64) made no reference to Mr Saulsman's understanding that the blocks would qualify for approval for duplex development. Rather, he maintained that the price list was not meant as an aid for selling but was an internal document for discussion purposes only, a statement that was obviously untrue having regard to the use to which it was put by Shorescape to procure offers of settlement from as early as 1 November 2005 and the number of transactions that followed. The letter also maintained that the subdivision plan was yet to be finalised, but, of course, the evidence shows that while that may have been the case on 31 October 2005, by the following day Mr Bullocks' plan was finalised. The plan which Mr Wallace received with a price list was the finalised plan. Mr Saulsman conceded that all of the lots in Stage 3 of Peninsula Lakes were sold without the need for any formal marketing campaign.
Mr Bright gave evidence for Parkridge. He is no longer employed by Shorescape, but he continues to be associated with Mr Saulsman. His evidence was that up until late 2005 there was a high demand for land in the Bunbury and Eaton areas and that he received many inquiries. The details of each new inquiry he would add to a list of prospective purchasers whom he would notify of any new subdivisions. He said if prospective purchasers were interested in purchasing a Parkridge block he would seek Mr Saulsman's instructions before discussing anything with them. With respect to Stage 3 he received a handwritten draft price list on 5 October 2007. In this regard he said:
"I recall discussing the prices to any proposed duplex blocks and advised Thurston of my views on the value of these blocks. I was also aware that any duplex development in Eaton, including the Parkridge Estate land, would require an approval from the Shire of Dardanup. Thurston was aware that I was familiar with the Shire requirements as we had discussed the issue like this one and others many times before.
By the end of October 2005 Thurston was closer to finalising lot sizes for Stage 3. On about 31 October 2005 Thurston sent a list of prices for further discussions with Pat and me. The price list sent in September 2005 was out of date."
Mr Bright maintained that the price list was a draft, not a final document, and he anticipated from earlier dealings that his office would receive a professionally prepared price list for marketing purposes. He said that by early November 2005 when the lots in Stage 3 were close to the point at which they could be listed for sale a number of sales were made to people who approached him. He said:
"All of these sales arose from people approaching me for land and not from me sending out any invitation to consider the land. I did not have authority to send out marketing information in relation to the land at this time. That said, as I mentioned earlier, I would pass these approaches I received onto Thurston to decide whether to discuss through me or otherwise the sale of the land."
I do not accept this evidence. Rather, I find it was the case that when he received the price list, Mr Bright, or other Shorescape personnel, communicated the details to prospective purchasers. It was from this action that the offers to purchase lots resulted. The offers were written up by Shorescape's representatives and forwarded to Mr Saulsman without any intervening discussion. The only reasonable inference that can be drawn from the evidence of the offers and acceptances that were made immediately following the receipt by Shorescape's representatives of the price list is that the information in the price list was communicated to prospective purchasers. I am not satisfied on Mr Bright's evidence that he regarded the information in the price list as confidential or for discussion purposes. I am satisfied that once he received the price list he communicated the information in it to persons whom he knew were interested and so attracted the offers that resulted in Stage 3 being sold out prior to public release. There was no need for a formal or professionally prepared price list as no marketing was necessary due to the demand for land at that time.
Mr Bright also gave evidence that he had a number of conversations with a planning officer of the Shire of Dardanup who advised him that any block over 900 m² in Eaton could be subdivided. He had spoken to a female planning officer at the Shire over a period of time on perhaps 20 to 30 occasions and was told the same thing every time. Mr Bright said he had several dealings with the Shire of Dardanup and knew of instances where lots of just over 900 m² had been subdivided.
Mr Bright accepted that council approval would be required for duplex development of the lots so described in the price list. For this reason he thought it was reasonable to describe lots of over 900 m² as duplex for discussion purposes. On a formal list, however, he would expect the description to include the words "conditional" or "provisional" or "subject to council approval". Mr Bright conceded that he knew that from 31 October 2005 sales of lots were made for the prices set out in the price list.
Whether the description was misleading is a question of fact to be determined by considering what was said and done against the background of all surrounding circumstances, remembering that "no conduct can mislead or deceive unless the representee labours under some erroneous assumption": Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 200. It is well established that conduct is misleading or deceptive if it induces or is capable of inducing error: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 per Gibbs J at 198.
The evidence of Mr Bright resolves, in my opinion, the question of whether the description of the lots as duplex signified that they met the minimum site area requirements for the R‑Codes or merely had duplex potential by reason of meeting the principal criteria for an application for discretionary approval under cl 3.4.1. Mr Bright is an experienced real estate agent. He said that no one in his office was authorised to tell a prospective purchaser that the lots were duplex. His evidence as to how he would expect the lots to be described if duplex development approval were discretionary on the part of the council enables me to find that the description "duplex" was likely to signify to a reasonable purchaser in the position of the plaintiffs that the lots met the minimum site area requirement prescribed by Table 1 of the R‑Codes.
The description of the lots as "duplex" has been shown to have been ambiguous, sufficiently so to mislead a person ignorant of town planning rules and procedures. In my view the representation of the lots as "duplex" led the Wallaces to believe erroneously that owners of each lot would be entitled to build two dwellings on it and, as a logical consequence, that the prices put on the lots by Parkridge reflected the value of the right to develop the lots in that way.
I am satisfied, therefore, that the representation bore the meaning for which the plaintiffs contend and was misleading. The error into which the plaintiffs were led was not intended by the defendants. The test is an objective one. Without qualifying words such as those mentioned by Mr Bright to signify that duplex development approval was discretionary, the word "duplex" should not have been used.
I turn now to the issue of whether Shorescape can avoid any liability which may arise due to the representation by showing that it was a mere conduit of information it received from Parkridge. In this regard, Shorescape relied on Yorke v Lucas (1985) 158 CLR 661. The principle on which the defence is based is that a person purporting to do no more than pass on information supplied by another in circumstances that make it apparent that the person is not the source of the information and that the person expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, does not engage in conduct for the purposes of s 52. The evidence, it is submitted, shows that Parkridge prepared the price list and provided it to Shorescape, that Mr Wallace knew that Parkridge was the source and that Mr Roelofsen disclaimed belief in its truth by advising Mr Wallace to make his own inquiry of the Shire.
This issue too can be determined by reference to the evidence of Mr Bright to which I have referred. Shorescape knew Mr Wallace wanted to buy a duplex block and that the description of the Lots 859 and 860 on the price list was material to his decision to make offers to purchase. Shorescape had considerable experience in selling land at Eaton for Parkridge. Mr Bright and Mr Brodison had input into the preparation of the price list. They knew and understood the content and application of the R‑Codes and TPS3. Shorescape, as Mr Bright admitted, should not have represented the lots to be duplex without pointing out that approval for such development would be discretionary. In these circumstances, it cannot reasonably be said that Shorescape conveyed the information provided by Parkridge to the plaintiffs as if it were a mere conduit. The description of the lots was misleading because, to Shorescape's knowledge, it was it was ambiguous so as to induce, or be likely to induce, error.
The description of the lots as duplex was not a representation as to a future matter of which the defendants may be absolved by proof that they had a reasonable basis for believing it to be true. Although the lots were yet be created, the description of them as duplex was not a prediction but a statement that the proposed lots met the relevant R‑Codes minimum site area requirements.
Reliance
Reliance in the context of a claim based on misleading or deceptive conduct is an element of causation. It is the defendants' submission that the plaintiffs did not rely on the representation. Rather, it is submitted, by making an inquiry of the Shire of Dardanup as he was advised to do by Mr Roelofsen, Mr Wallace demonstrated that he did not accept the description of the lots as duplex at face value, and was not, therefore, misled.
I accept Mr Roelofsen's evidence that on or about 14 November 2005 he asked his assistant to obtain a price list for the Peninsula Lakes subdivision because he knew that it was coming up for release. Mr Roelofsen was not otherwise involved in the sale of the Parkridge land. When he saw the word "duplex" next to some of the lots on the document he read it to mean that such lots had the potential for two houses or to be divided into two parts. He could tell from the price list that it had been sent to Shorescape by Mr Saulsman's firm, Realty Executives, and he knew that Mr Saulsman was the developer. I also accept his evidence that when he received the price list he believed it was an official list of lots available and their prices, that it was prepared by or on behalf of Parkridge and that the description "duplex" where it appeared was correct. I also accept that Mr Roelofsen took steps to check the prices. Only then did he send the price list to Mr Wallace.
Mr Roelofsen then had a conversation by telephone with Mr Wallace in which he advised him to make his own inquiries of the Shire of Dardanup to find out whether the blocks were duplex or not. He said this was in accordance with his usual practice. Mr Wallace's evidence was that he in fact asked Mr Roelofsen to check the "zoning of the block" and was advised by Mr Roelofsen to do so himself. Mr Wallace said that he spoke to a Mr Black who identified himself as a senior planner and with whom he had a conversation of which he gave evidence as follows:
"I told Black the location of the proposed subdivision and told him I could fax the plan and list of blocks to him. Black said to me that the proposed subdivision was currently a field and that nobody from the planning department of the Shire could make a zoning call at that particular time. He went on to say that if the people selling the land had written 'duplex' on the sales information, they must know for sure that the block would be zoned 'duplex'. I then telephoned Roelofsen and told him what Black had told me and he said he agreed with Black's reasoning."
Although Mr Roelofsen and Mr Wallace gave somewhat different accounts of the conversation which led Mr Wallace to make his inquiry, Mr Wallace was not challenged with respect to his evidence of the conversation he had with Mr Black. There was no evidence that Mr Wallace had any knowledge or understanding of the operation of the R‑Codes and TPS3. No doubt he expected that an officer of the Shire would be able to say whether the proposed lots would be eligible for approval for duplex development. Mr Wallace said that the Shire "was a place of authority that could tell me or give me some indication of whether a duplex could be built on a block of land". He did not get the assistance one would have expected from the Shire. The advice he was given was that "if it says so on the advertising material, well the developer must know it is".
Clearly, the advice attributed to Mr Black was wrong. Indeed, the suggestion that developer knew what the Shire did not was plainly absurd. Mr Wallace should and could easily have been told that the land on which the lots were to be created was zoned R15 and that therefore a minimum lot area of 1,332 m² would be required, unless discretionary approval was given under cl 3.4.1. This information was not elicited.
The evidence about Mr Wallace's inquiry of the Shire is relevant to two issues. The first is whether he did in fact rely on the information contained in the price list. The second is whether Shorescape through Mr Roelofsen expressly disclaimed the reliability of the description "duplex" by advising Mr Wallace to make his own inquiries.
An issue of fact arose with respect to the conversation Mr Roelofsen had with Mr Wallace in this regard. Mr Wallace's evidence was that he asked Mr Roelofsen to check with the Shire but was told to do so himself. Mr Roelofsen's evidence was that the advice he gave Mr Wallace to check with the Shire was advice he invariably gave in such situations. Having heard the evidence of each witness, I find that Mr Wallace did ask Mr Roelofsen to confirm with the Shire that the lots were duplex and that Mr Roelofsen did not do so but rather suggested to Mr Wallace that he make the inquiry himself because it was Mr Roelofsen's practice to do so for the reasons he gave.
Shorescape submits that Mr Roelofsen's advice put the plaintiffs on notice that they should make their own inquiry and not rely on the price list, pointing to evidence elicited from Mr Wallace in cross‑examination that he sought the Shire's confirmation because he was "not sure" that the lots were duplex as described. This submission is also pressed by Parkridge. Parkridge submits further that the evidence supports a finding that the plaintiffs purchased the lots without reliance on the price list because they proceeded in the light of an inconclusive response by the Shire, took accounting advice on the taxation implications of a resale profit and did not in fact pursue any applications for development.
I am unable to accept any of the defendants' submissions in relation to reliance. The fact that the plaintiffs may have had some doubt about the representation is not necessarily sufficient to establish that the representation was not relied on: Transglobal Capital Pty Ltd v Yolarno Pty Ltd [2005] NSWCA 68. While it is clear that the plaintiffs did seek confirmation of the status of the lots, the Shire's response was of no assistance and left the plaintiffs, to Shorescape's knowledge, with only the information in the price list to rely on. The plaintiffs' investment strategy was to eventually realise a profit upon either the development or resale of the lots. Accordingly, the eligibility of the lots for grouped dwelling development was a factor which informed their decision. The lots were, as I have found, priced at a premium to reflect their eligibility for such development.
I do not accept that the advice given to Mr Wallace by Mr Roelofsen to make his own inquiries of the Shire served to absolve the defendants of liability for the misrepresentation of the lots. I find that Mr Wallace did in fact report to Mr Roelofsen the outcome of his inquiry. Shorescape, which is vicariously liable for the acts of Mr Roelofsen, knew that the eligibility of the lots for duplex development would be determined by the R-Codes and/or the application of cl 3.4.1 and cannot reasonably contend that it effectively disclaimed responsibility for the misdescription.
Damage
Mr and Mrs Wallace never made an application for duplex development or subdivision. Their purchases of the lots in question were completed in September 2006. According to Mr Wallace, Mr Roelofsen later contacted him and informed him that the lots could probably be sold for about $300,000 each. The Wallaces then appointed Mr Roelofsen, who was no longer working for Shorescape by that time, to sell the lots. They were advertised as duplex. Within a short time Mr Wallace was advised by Mr Roelofsen that the lots were not duplex and were only suitable for single dwelling development.
Mr Wallace said that he telephoned the Shire to inquire about the status of the lots. On 5 February 2007 he sent a letter to the Shire of Dardanup (Exhibit 7) in which he asked whether anything other than a single residence could be approved by the Shire in respect of the two lots. He received the letter from Mr Quinn (Exhibit 8) dated 13 February 2007 to which reference has been made. That letter stated:
"Please be advised that both lots are zoned residential R15. The minimum lot area for blocks zoned R15 for two dwellings was 1,332 m². Therefore Lots 859 and 860 are not suitable for duplex development. Only single residences can be constructed on these lots."
There was no evidence called by the plaintiffs from Mr Quinn or any other witness capable of giving evidence as to how an application for duplex development approval would be treated and whether, in fact, the policy and practice described by Mr Jones with reference to cl 3.4.1 of TPS3 would avail the Wallaces, leaving Mr Jones' evidence uncontradicted in this regard. Indeed, the plaintiffs did not seek to disprove the contention of the defendants that both lots had duplex development potential.
The fact that the plaintiffs did not make any application pursuant to cl 3.4.1 which may have been, and on the evidence of Mr Jones would probably have been, approved by Shire raises a question as to whether the misrepresentation of the lots caused the claimed loss.
Shorescape submits that the lots had duplex potential and that, accordingly, absent any evidence that the lots could not have been so developed, the plaintiffs have not demonstrated any loss or damage.
The plaintiffs' alleged losses are not proved by reference to the prices for which they later sold the lots, $237,000 and $242,000 respectively, but by valuation evidence which shows that when they purchased the lots in reliance on the defendants' representation they paid $40,000 more than the lot was worth in each case. It is not disputed that if the lots could not be developed as duplex the measure of their loss would be as claimed. However, there is no evidence that the lots could not be so developed.
The Quantia reports assume, for the purposes of the valuation, that the lots had no duplex development potential. The lots were valued according to size by reference to the sale prices of other lots at the material time. Each of the valuation reports states at p 18:
"Under the current Shire of Dardanup Town Planning Scheme the subject lot is zoned 'Residential R15'. We advise the lot is suitable for single residential development only. In addition we are advised the changes to clause 3.4.1 of the Planning Scheme occurred in June 2005 which previously allowed bonus densities for lots over 1,000 m² or subject to application, lots zoned 'Residential R20'. We are advised that the subject lot has never been zoned 'R20' so could not have been developed as a duplex. We note this advice has been advised verbally from the Shire of Dardanup. We would recommend confirmation in writing."
This statement is based on hearsay advice which is contrary to the evidence of Mr Jones and Amendment 121 to TPS3 as I have construed it. The plaintiffs have not proved that the lots did not have the extra value represented by the premium placed on them by virtue of having duplex development potential in the sense of meeting the minimum requirements for an application for development approval under cl 3.4.1. Put another way, in the absence of any evidence that the lots could not be developed as duplex, I am not satisfied that the lots were worth less than the plaintiffs paid for them. Notably, at p 17 of each of the Quantia reports the author Mr Nichols states that if the lots did have duplex development potential, the market value at the date of purchase would be in line with the price paid.
The plaintiffs have submitted that if the lots had a higher value due to having duplex potential, the defendants should have adduced evidence of that fact. The plaintiffs ask the Court to infer in the absence of such evidence that none is available. I do not accept this submission. The plaintiffs bear the burden of proving loss. They have sought to do so by calling expert evidence of the value of the lots as if they had no duplex development potential. That is a factual assumption that has been displaced by my findings as to the operation of TPS3.
Accordingly, I am not satisfied that the misrepresentation complained of actually caused any loss. Such loss could only be demonstrated if the plaintiffs proved that the lots could not be so developed or that the chance of obtaining development approval on a discretionary basis had no real value. It is noteworthy in this context, and unfortunate for the plaintiffs, that Mr Roelofsen, who acted as the plaintiffs' agent to sell the lots, demonstrated no knowledge whatsoever of the R‑Codes or of the content and operation of the density bonus provision in TPS3, and that the letter of Mr Quinn dated 13 February 2007 did not refer at all to cl 3.4.1 in responding to Mr Wallace's request for information.
Loss could have been proved conclusively if the plaintiffs, or a successor in title, applied unsuccessfully for duplex development approval. Alternatively, the plaintiffs may have sought to prove loss by adducing evidence in contradiction of that of Mr Jones as to what the Shire would have done on such an application.
For the reasons given above I am of the opinion that an application for approval of duplex development was available at all material times in respect of Lots 859 and 860 as Townsend v Shire of Dardanup (supra) illustrates. On the evidence, that opportunity was available to the plaintiffs. Conceivably, there may have been discretionary considerations that militated against approval of a development application in respect of Lots 859 and 860, but there is no evidence of any. In the circumstances I am not satisfied that the plaintiffs have suffered loss to the extent claimed, or any loss.
Provisional findings
If I am wrong in my conclusion as to damage, two issues would remain to be determined, namely, whether the plaintiffs contributed to their loss by their own failure to take reasonable care, and whether liability should be apportioned between the defendants.
As to the first issue, I find that the plaintiffs took reasonable steps to check whether the descriptions of the lots in the price list were correct by telephoning the Shire and speaking to Mr Black. Had that inquiry been answered as one would expect, the error into which the plaintiffs were led would have been dispelled. In the circumstances, it was compounded. The Wallaces, I find, did not contribute to their alleged loss so as to warrant any reduction of damages pursuant to s 82(1B) of the TPA.
If, contrary to my conclusion, the plaintiffs did suffer loss as a result of the conduct of the defendants, then liability should be apportioned equally between them pursuant to s 87CD of the TPA to reflect their respective contributions to such loss as I find no reason to differentiate between them in this regard.
Conclusion
Although the plaintiffs have proved that the defendants breached s 52 of the TPA and s 10 of the FTA, they have not established any loss or damage. Accordingly, the claims pursuant to s 82 of the TPA and s 79 of the FTA must fail.
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: WALLACE -v- SHORESCAPE HOLDINGS PTY LTD [2010] WADC 114 (S)
CORAM: STAUDE DCJ
HEARD: 17 DECEMBER 2010
DELIVERED : 6 AUGUST 2010
SUPPLEMENTARY
DECISION :13 JANUARY 2011
FILE NO/S: CIV 372 of 2008
BETWEEN: CLINTON JOSEPH CHRISTOPHER WALLACE
ROSARIA WALLACE
PlaintiffsAND
SHORESCAPE HOLDINGS PTY LTD
First DefendantPARKRIDGE GROUP PTY LTD
Second Defendant
Catchwords:
Costs - General rule that successful party entitled to costs - Whether departure from general rule warranted - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 O 66 r 1
Result:
Plaintiffs ordered to pay 50% of defendants' costs
Representation:
Counsel:
Plaintiffs: Mr A Metaxas
First Defendant : Mr A J Musikanth
Second Defendant : Mr C M Slater
Solicitors:
Plaintiffs: Metaxas & Hager
First Defendant : Jackson McDonald
Second Defendant : Wojtowicz Kelly
Case(s) referred to in judgment(s):
Amaca Pty Ltd v Hannell [2007] WASCA 158 (S)
McConnell v Nationwide News Pty Ltd; Prue v Nationwide News Pty Ltd (unreported, WASC, 10 December 1992, Library No 920670)
Townsend & Ors v Collova & Ors [2005] WASC 4 (S)
STAUDE DCJ: On 6 August 2010 I gave judgment for the defendants in this matter, dismissing the plaintiffs' claims for damages pursuant to s 82 of the Trade Practice Act 1974 (Cth), alternatively s 79 of the Fair Trading Act 1987 (WA). I found that the defendants had each engaged in conduct which was misleading or deceptive by representing two residential lots of a subdivision development in Eaton to be duplex.
I was not, however, satisfied that the plaintiffs had suffered any loss and damage because there was no proof that any application for approval of a duplex development on the lots would not have been successful or would have so little chance of success as to have no real value. My decision in this respect was based on the evidence of Mr Mark Jones, former principal town planner for the Shire of Dardanup, as to the operation of cl 3.4.1 of Town Planning Scheme 3, described as a density bonus provision, which allowed the council to give discretionary approval of an application for a two dwelling development on land at least 900 sqm in size.
The defendants each moved for costs against the plaintiffs. The plaintiffs contend that the defendants should be deprived of 75% of their costs, invoking O 66 r 1(3) of the Rules of the Supreme Court 1971 (RSC) which provides:
Where a party though generally successful in an action has, by the introduction of some issue or issues on which he has failed, increased the costs the Court may order such party to pay the costs of such issue or issues.
The applicable principle was enunciated by the Court of Appeal in Amaca Pty Ltd v Hannell [2007] WASCA 158 (S) at [7] ‑ [8]:
The power to depart from the general rule to the effect that costs follow the event and to instead adjust the costs order to be made by reference to the failure of the generally successful party on specific and particular issues within the litigation is recognised by practice, authority and the express provisions of O 66 r 1(3). However, its application depends upon the identification of discrete and severable issues, the litigation of which has increased the costs of conducting the proceedings. Established practice in this state, and the authorities, suggest that the exercise of this power should be approached broadly, and as a matter of impression, and without an attempt at "mathematical precision" which is likely to prove illusory – see, for example, J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (Western Australian Branch) [No 2] (1993) 46 RR 301.
Accordingly, the power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the costs of the proceedings in a significant and readily discernable way. In a case in which the generally successful party has failed on only a minor issue, which did not add materially to the cost of the conduct of the proceedings, it would not ordinarily be appropriate to depart from the general rule, unless the conduct of the generally successful party in relation to that issue had been unreasonable. In the event of unreasonableness, different considerations may apply.
In McConnell v Nationwide News Pty Ltd; Prue v Nationwide News Pty Ltd (unreported, WASC, 10 December 1992, Library No 920670) Owen J stated:
Order 66 r 1(3) only applies where the failed issue has increased the costs. The term 'issue' does not mean a precise issue in the technical pleading sense, but any disputed question of fact or issue of law, and a party will not be awarded costs merely because of his success on particular issues: Cretazzo v Lombardi (1975) 13 SASR 4 at 12, 16.
Because of court delays and the high cost of litigation, courts should always exercise the discretion to award the costs of issues on which parties fail in such a way that they will come to realise they will not necessarily recover the whole of their costs of raising a discrete issue, and therefore carefully consider what matters they will raise: Commission of Australian Federal Police v Razzi (1991) 101 ALR 425 at 430.
Similarly, in Townsend & Ors v Collova & Ors [2005] WASC 4 (S) Le Miere J deprived a successful defendant of the costs of valuation evidence in contradiction of the plaintiff's evidence in that point, having rejected the evidence of the defendant's expert. His Honour found that for the purposes of O 66 r 1(3) 'an issue is introduced where a defendant denies a fact asserted by the plaintiff and leads evidence to support the defendant's contention in relation to that fact'.
In Amaca the plaintiff was successful at first instance, but lost on appeal. There were four substantive and discrete issues, namely, foreseeability, duty of care, breach and causation. The Court of Appeal held that the 'factual and evidentiary substratum' to each of these issues was common to all of them. At trial the knowledge of the appellant as to the risk of contracting mesothelioma as a result of the use of materials containing asbestos fibre bore directly upon the issues of foreseeability, duty of care and breach, and was central to the issue of causation.
The Court of Appeal concluded that the major part of the time spent at trial was concerned with evidence which spanned all four identified issues and that it was reasonable for the defendant to put the plaintiff to the proof of all of the issues necessary to establish the cause of action. Consequently, there should be no departure from the general rule. A different outcome was reached with respect to the costs of the appeal because a good deal of the argument on appeal was directed to issues upon which the appellant failed.
In principle, then, the usual order for costs may be departed from in circumstances where there are discrete and severable issues upon which the generally successful party has failed which have added to the costs of the proceedings in a significant and readily discernible way. In a case where those issues have the same factual and evidential substratum costs would not necessarily be increased. In this context it is appropriate to consider whether it was reasonable for the defendants to put the plaintiffs to proof of all elements of their claim.
In this case, a feature of the proceedings identified by the plaintiffs as significant is the joinder of issue with respect to the contribution claims brought by the defendants against each other. These proceedings were redundant as s 87CD of the Trade Practices Act requires the court to apportion liability between defendants, but, effectively, it was the second defendant's contention that the first defendant did not have authority to make the representation complained of, i.e. that the lots in question were duplex, and on the part of the first defendant it was alleged that it was the mere conduit of information provided to it by the second defendant, as the second defendant's agent. These issues were also substantive issues in respect of the plaintiffs' claim.
As between the plaintiffs and the defendants, I note firstly that in respect of the plaintiffs' claim against the first defendant it was necessary for the plaintiffs to prove that the first defendant made a representation which was misleading or deceptive and on which the plaintiffs relied in making their decision to purchase the lots. It was also necessary for the plaintiffs to show that they suffered loss or damage as a result of the first defendant's conduct. The statement of claim alleged that the first defendant was the agent of the second defendant and that the first defendant acted within the scope of its actual or apparent authority in making the representations.
As against the second defendant, the plaintiffs had to show that as the first defendant's principal, the second defendant was deemed to have engaged in misleading or deceptive conduct by reason of the conduct of the first defendant.
The evidence adduced in support of the plaintiffs' case was that of the plaintiffs themselves which occupied most of the first day of trial and a large number of documentary exhibits which were tendered through the first named plaintiff or by consent.
The case of the first defendant consisted of the evidence of Mr Jones, the former town planner for the Shire of Dardanup; Mr Anthony Roelofsen, the agent employed by the first defendant who dealt with Mr Wallace and Mr Gregory Gardiner, a director of the first defendant. The second defendant's case consisted of the evidence of its director, Mr Thurston Saulsman, and Mr Terence Bright, a real estate agent formerly employed by the first defendant. Each case took about one day and addresses took half a day.
The plaintiffs' case was very simple. Based on what they were told, they invested in what they thought were two duplex residential lots. The lots were priced as such. When they came to sell the lots, they were advised by the Shire of Dardanup that the lots were not eligible for duplex development as they did not meet the minimum lot area requirement for a two dwelling development. They were able to this extent to prove that the defendants engaged in misleading or deceptive conduct by describing the lots as duplex.
The plaintiffs were not told by the Shire of Dardanup that pursuant to cl 3.4.1 of Town Planning Scheme 3 they could apply for discretionary approval for duplex development of the lots. Because no such applications were made and refused, and because no evidence was adduced to show that such applications if made were not likely to succeed, the plaintiffs failed to show that the defendants' conduct was causative of loss.
Essentially, as I have observed, the first defendant contended that there was no misrepresentation because the lots at all times had duplex development potential by virtue of the operation of cl 3.4.1 and that, in the alternative, as agent for the second defendant, it was the mere conduit of information received from its client in relation to the lots. By the conduit defence it not only sought to avoid liability to the plaintiffs, but also to claim contribution or indemnity from the second defendant.
The second defendant's case was that the lots were not misrepresented by their description as duplex, but if they were, the second defendant could not be found to have engaged in misleading or deceptive conduct because it did not authorise the first defendant to describe the lots to prospective purchasers as such.
Having regard to my finding the lots did in fact have duplex development potential, it was not unreasonable for the defendants to deny the allegation of misleading or deceptive conduct and to put the plaintiffs to proof of their claims. However, the defendants elected to go further by effectively attributing to each other any liability which the plaintiffs might establish. By the introduction of issues as to whether the first defendant was a conduit of information received from the second defendant which it reasonably believed to be correct and whether the first defendant was the second defendant's authorised agent, the costs of the proceedings generally and the length of the trial in particular was increased.
I do not consider that this is a case in which, as in Amaca, 'the factual and evidentiary substratum' of the main issues was the same. Rather, I find that the issues upon which the generally successful defendants failed concerned their business relationship and the manner in which the land was marketed. These issues were severable and discrete from the issue upon which the plaintiffs failed and did substantially increase the costs of the proceedings.
While recognising that, in the interests of consistency and predictability, a court should be reluctant to depart from the general rule that costs follow the event, I am satisfied that my discretion should be exercised so as to limit the costs recoverable by the defendants to 50% of their costs to be taxed. This apportionment is based on a broad view of the proceedings as a whole.
With respect to the reserved costs of the adjournment of the trial in January this year, counsel for the plaintiffs concedes that those costs should follow the event and be awarded in accordance with the principal costs order.
So far as the costs of the contribution proceedings are concerned, the defendants are agreed that there should be no order for costs.
Accordingly, the orders will be as follows:
1.The plaintiffs do pay 50% of the first and second defendants' costs of the action to be taxed, including reserved costs.
2.The contribution claims as between the first and second defendants be dismissed with no order as to costs.
3
9
2