Xu v Lindsay Bennelong Developments Pty Ltd

[2020] NSWSC 1692

Supreme Court

New South Wales

Medium Neutral Citation:

Xu v Lindsay Bennelong Developments Pty Limited [2020] NSWSC 1692

Hearing dates:

9–11 and 23 September 2020

Date of orders:

27 November 2020

Decision date:

27 November 2020

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

1.   Dismiss the plaintiff’s claim against both defendants.

2.   Dismiss the first and second defendants’ cross-claim against the plaintiff/first cross-defendant.

3.   Reserve the question of costs.

Catchwords:

LAND LAW — Conveyancing — Contract for sale — Off-the-plan purchase — Alleged breach of fundamental term — Remedies

CONTRACTS — Misleading conduct under statute — Misleading or deceptive conduct — Representations — Remedies

Legislation Cited:

Competition and Consumer Act 2010 (Cth), ss 84, 87CD, 137B; sch 2 ss 4, 18, 29, 30, 236, 237, 243

Conveyancing Act 1919 (NSW), ss 66W

Trade Practices Act 1974 (Cth), ss 52, 53, 53A, 82

Cases Cited:

Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; [2004] HCA 28

Ankar Proprietary Limited v National Westminster Finance (Australia) Limited (1986-1987) 162 CLR 549

Arnold v Britton [2016] 1 All ER 1; [2015] AC 1619

Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2014] FCA 634

Australian Competition and Consumer Commission v Dukemaster Pty Ltd (ACN 050 275 226) [2009] FCA 682

Australian Competition and Consumer Commission v Woolworths Limited [2019] FCA 1039

Awad v Twin Creeks Properties Pty Limited [2012] NSWCA 200

Bain v Fothergill (1874) LR 7 HL 158

Batey v Gifford (1997) 42 NSWLR 710

Beard v Drummoyne Municipal Council [1970] 1 NSWR 432; (1969) 71 SR (NSW) 250

Bill Acceptance Corporation Ltd v GWA Ltd (1983) 78 FLR 171

Bofinger v Kingsway Group Limited (2009) 239 CLR 269; [2009] HCA 44

Bowler v Hilda Pty Ltd (1998) 80 FCR 191

BP Refinery (Westernport) Pty Limited v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266

Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592; [2004] HCA 60

Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26

Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25

Christopoulos v Angelos (1996) 41 NSWLR 700

Clarence City Council v Howlin [2019] TASFC 1

Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd (1987) 72 ALR 601

Concrete Constructions Group Ltd v Litevale Pty Ltd [2002] NSWSC 670; (2002) 170 FLR 290

Dainford Ltd v Lam (1985) 3 NSWLR 255

Darlington Futures Limited v Delco Australia Proprietary Limited (1986) 161 CLR 500; [1986] HCA 82

Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31

Dougan v Ley (1946) 71 CLR 142; [1946] HCA 3

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7

Flight v Booth (1834) 1 Bing (NC) 370; (1834) 131 ER 1160

Fu v Bucasia Pty Ltd [2014] NSWSC 325

Gates v The City Mutual Life Assurance Society Limited (1986) 160 CLR 1; [1986] HCA 3

Gaut v Patterson (1931) 31 SR (NSW) 612

Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82

Gould v Vaggelas (1984) 157 CLR 215; [1984] HCA 68

Greene v West Cheshire Railway Co (1871) LR 13 Eq 44

Harrington v Greenwood Grove Estate Pty Ltd [2011] NSWSC 833

Hart v MacDonald (1910) 10 CLR 417; [1910] HCA 13

Henville v Walker (2001) 206 CLR 459; [2001] HCA 52

Higgins v Statewide Developments Pty Ltd [2010] NSWSC 183

Hissett v Reading Roofing Co Ltd [1970] 1 All ER 122; [1969] 1 WLR 1757

Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168

Hoyt’s Proprietary Limited v Spencer (1919) 27 CLR 133; [1919] HCA 64

HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54

Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206

International Air Transport Association v Ansett Australia Holdings Limited (2008) 234 CLR 151; [2008] HCA 3

Jireh International Pty Ltd v Western Export Services Inc [2011] NSWCA 137

Knight Sugar Company Ltd v The Alberta Railway & Irrigation Company [1938] 1 All ER 266

Lawrence v Cassel [1930] 2 KB 83

Longtom Pty Ltd v Oberon Shire Council (1996) 7 BPR 14,799

Lucantonio v Ciofuli [2002] NSWSC 509

Mark Bain Constructions Pty Ltd v Avis [2012] QCA 100

Marks v GIO Australia Holdings Limited (1998) 196 CLR 494; [1998] HCA 69

Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357; [2010] HCA 31

Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104; [2015] HCA 37

Murphy v Overton Investments Pty Limited (2004) 216 CLR 388; [2004] HCA 3

Nassif v Caminer (2009) 74 NSWLR 276; [2009] NSWCA 45

North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60

Pallos v Munro [1970] 3 NSWR 110; (1970) 72 SR (NSW) 507

Palmer v Johnson (1884) 13 QBD 351

Pascon Pty Ltd v San Marco in Lamis Cooperative Social Club Ltd [1991] 2 VR 227

Redmond Family Holdings v CG Access Pty Ltd [2016] NSWSC 796

Secure Parking Pty Ltd v Woollahra Municipal Council [2016] NSWCA 154

Shepperd v Council of the Municipality of Ryde (1951-1952) 85 CLR 1; [1952] HCA 9

Silva v Tarval Pty Ltd [1990] ANZ ConvR 465; (1990) NSW ConvR 55-533

Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47

Smogurzewski v AIT Investment Group Pty Ltd [2020] NSWSC 490

SPAR Licensing Pty Ltd v MIS QLD Pty Ltd [2014] FCAFC 50

Sumy Pty Ltd v Southcorp Wines Pty Ltd [2004] NSWSC 1000

Svanosio v McNamara (1956) 96 CLR 186; [1956] HCA 55

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8

Tarval Pty Ltd v Stevens (1990) NSW ConvR 55-552

Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165; [2004] HCA 52

Travinto Nominees Pty Limited v Vlattas (1973) 129 CLR 1; [1973] HCA 14

Vella v Ayshan [2008] NSWSC 84

Victorsen v Easy Living Holdings Pty Ltd [2019] NSWSC 1721

Wang v Polaris Holdings Rosebery Pty Ltd [2020] NSWSC 213

Watson v Foxman (1995) 49 NSWLR 315

Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189

Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177

Wilson v Meudon Pty Ltd [2005] NSWCA 448

Zaccardi v Caunt [2008] NSWCA 202

Texts Cited:

J D Heydon, Heydon on Contract (1st ed, 2019, Thompson Reuters)

Category:

Principal judgment

Parties:

Lijun Xu (Plaintiff)
Lindsay Bennelong Developments Pty Limited (First Defendant)
Bennelong Developments Pty Ltd (Second Defendant)
TFM Rushcutters Bay Land Pty Ltd (Third Defendant)

Representation:

Counsel:
M Cairns with A Cameron (Plaintiff)
S B Docker (First and Second Defendants)
D L Cook SC (Third Defendant)

Solicitors:
Dentons (Plaintiff)
Thomson Geer Law (First and Second Defendants)
H & H Lawyers (Third Defendant)

File Number(s):

2019/00364854

Publication restriction:

Nil

Judgment

1. HER HONOUR: Before me for hearing from the Expedition List, in late September and early October this year, was a dispute concerning a car parking space (valued at somewhere between $100,000 and $125,000) in an apartment building in Rushcutters Bay (the Encore Development) that was developed by the third defendant (TFM Rushcutters Bay Land Pty Ltd, to which I will refer as TFM) on land purchased by TFM from the first and second defendants (Lindsay Bennelong Developments Pty Ltd and Bennelong Developments Pty Ltd), to whom I will refer collectively, unless the context otherwise requires, as Bennelong.

2. Bennelong sold TFM the undeveloped parcel of land by contract of sale dated 9 September 2016 (TFM Contract), completion of which occurred on 31 March 2017. Prior to the sale of the undeveloped land to TFM, the plaintiff (Ms Xu) and her husband (Mr Keqi Zhang), who is not a party to these proceedings, had entered into a contract (the Xu Contract) for the sale “off the plan” to them of a particular lot (Lot 36) which was to be created on registration of a strata plan once the development was completed. On the sale of the land to TFM, the parties entered into a Novation Deed dated 25 January 2017 (the Novation Deed) (see below). TFM was directed subsequently (in August 2017) that Ms Xu would be the sole purchaser.

3. The claims by Ms Xu in the present proceedings arise out of the fact that what TFM ultimately transferred to her (the title to which she accepted on completion of the conveyancing transaction, although expressly reserving her rights to make a claim such as is now before me) was an apartment (by then known as Apartment 40, being Lot 36 in the registered Strata Plan) with a single car parking space, instead of with a tandem car parking space (as had been shown on the draft strata plan annexed to the Xu Contract (the Draft Strata Plan)), or two car parking spaces (see the “2 parking” notation in the floor plan contained in the marketing brochure provided to Ms Xu and confirmed by email before her entry into the Xu Contract).

4. Ms Xu’s primary case is that she is entitled to a second car parking space (or, in the alternative, damages) pursuant to the Xu Contract. Ms Xu contends that it was a fundamental term and the main purpose of the Xu Contract (on the proper construction of the contract as a whole, including the diagrams and plans describing the property to be sold) or, in the alternative, an implied term, that the property to be conveyed to her (Lot 36) would have four essential features or characteristics: that it be on the top floor of the building (in other words, a penthouse apartment); that it have three bedrooms; that it have two bathrooms; and that it have two car spaces (a mantra that was repeated numerous times throughout the hearing including by Ms Xu in cross-examination – see, for example, at T 81.36). However, Ms Xu says that the precise configuration of those car spaces was not an essential term of the Xu Contract (T 17.40ff).

5. In these proceedings, Ms Xu seeks specific performance of the Novation Deed, by an order that TFM transfer a second car space to her (there is at least one that would still be available for that purpose – namely, Lot 43, which is the subject of an undertaking to the Court to which I will refer in due course (see the orders of Sackar J on 3 July 2020)) or an order akin to such specific performance under ss 237 and 243 of sch 2 of the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law).

6. Ms Xu’s alternative case is that TFM and Bennelong engaged in misleading or deceptive conduct or made a false representation in contravention of ss 18 or 30(1)(e) of the Australian Consumer Law. On her alternative case, Ms Xu seeks damages at law or under s 236 and/or s 237 of the Australian Consumer Law, from either TFM or Bennelong. (I note that the defendants plead that the damages claim under s 236 of the Australian Consumer Law is an apportionable claim.)

7. Bennelong cross-claimed both against TFM and against Ms Xu but, at the hearing, explained that its cross-claim against TFM was not pressed if (as Ms Xu made clear was the case – see at T 51.42ff) Ms Xu’s claim against Bennelong was premised only on her primary contract claim against TFM not being successful. Accordingly, at the outset of the hearing, by consent, I dismissed Bennelong’s cross-claim against TFM (leaving the issue of costs to be dealt with in due course).

8. As against Ms Xu, Bennelong cross-claims for damages for breach of special condition 50.1 and special condition 57.1.2 of the Xu Contract (under which clauses Ms Xu warranted that she did not rely on any representation outside the Xu Contract and that the Xu Contract represented the entirety of the agreement between the parties), and for misleading or deceptive conduct based on representations in the same clauses and a failure to disclose her reliance on Bennelong’s representations before entering into the Novation Deed (see Bennelong’s cross-claim at [13]-[16]). Bennelong says its loss is its liability to Ms Xu for any judgment and costs and its own costs (see Bennelong’s cross-claim at [17]-[18]). (It is noted that these claims are not raised in defence of Ms Xu’s claim, as such.)

Chronology

9. The relevant chronology of events may be summarised as follows.

Initial interest in the proposed Encore Development

10. Ms Xu first became aware of the proposed Encore Development in mid-2015, at a time when Bennelong had not yet obtained a development approval (see Ms Xu’s first affidavit sworn 28 February 2020, to which I will refer as Ms Xu’s first affidavit, at [16]). In May 2015, Ms Xu paid two $10,000 deposits for two proposed apartments, a one-bedroom apartment with no car space and a two-bedroom apartment with one car space. TFM says that this was apparently done by Ms Xu on the basis of an understanding that, if the development approval were granted, the developer would guarantee the same price on offer at that time. TFM points out that Ms Xu has said that at that time she was looking at purchasing the apartments purely as investments and was not concerned with car spaces.

11. Development approval for the proposed development was granted in about March 2016, but it appears that the development for which approval was granted differed from that which had been originally contemplated; in that only a development with 40 units (rather than a development with 47 units as had been proposed) was approved. It is said that this meant that the one-bedroom apartment that Ms Xu had wished to purchase, and for which she had paid a refundable deposit, was not part of the approved plan. TFM points to this as being the first occasion on which Ms Xu discovered, if she had not previously been aware of this (as to which there is some doubt given her involvement in another property development to which I refer in due course), the uncertainty of buying property “off the plan”.

12. Ms Xu then asked the agent whether there were other apartments available and was told that the only apartments that were available were those on the top floor; and that Apartment 4B was available, which had three bedrooms and one car space. Ms Xu’s response was that she was not interested in Apartment 4B because it only had one car space and she had to have two car spaces. The reason for the change in Ms Xu’s position as to the necessity for two car spaces seems likely to be that by then Ms Xu was contemplating moving into the apartment at some stage as her family residence rather than it being an investment property.

16 May 2016 - Marketing Brochure and First alleged Pre-Contract Representation

13. On 16 May 2016, Ms Xu received a “Marketing Brochure” (Floor Plan) and covering email from Mr Joe Li of ACCE Investments Group Pty Ltd (ACCE), (the entity described as the vendor’s agent on the coversheet of the Xu Contract). The email from Mr Li advised Ms Xu that a three bedroom unit with two car spaces was potentially available and at a price of $2.175 million; and that the apartment was the last penthouse with three bedrooms and two car spaces (this apartment was then shown as Apartment 4A, but ultimately became known as Apartment 40). The subject line of the email was “Information about another three-bedroom apartment – Joe”, and in the email Mr Li gave information about how the proposed Apartment 40 came to have an extra parking space, and stated that there were two bedroom apartments in the building without parking downstairs.

14. Pausing here, Ms Xu says that this is the first Pre-Contract Representation – see as defined below – and that it was both a representation as to current fact (i.e., as to the description of Apartment 40 in the Xu Contract) and a representation as to a future matter (i.e., that when built, Apartment 40 would have those essential features, namely that it be on the top floor, and have three bedrooms, two bathrooms, and two car spaces) (see T 14.37ff).

15. The Floor Plan attached to Mr Li’s email included disclaimers to the effect that the information it contained was not guaranteed, referred to areas on the Floor Plan varying from final strata areas, and stated that changes may be made in accordance with the contract without notice during construction.

Payment of deposit

16. On the same day (16 May 2016), Ms Xu told Mr Li that she wanted to buy the apartment and Ms Xu says that Mr Li told her that she needed to pay a 10% deposit (see Ms Xu’s first affidavit, at [41]). Ms Xu then paid the deposit of $217,500.

Draft contract

17. On 17 May 2016, Bennelong, through its lawyers at a related company, Clarendon Residential Holdings Pty Ltd (Clarendon) (see the first affidavit of Bennelong’s general manager, Mr David Flanagan affirmed 3 April 2020, at [8]) forwarded to Ms Xu’s then lawyers (GE Legal & Migration Services, to whom I will refer as GE Legal) the draft contract for Apartment 40 (Lot 36).

18. Clarendon’s letter of 17 May 2016 had the subject line “Lindsay Bennelong Developments Pty Ltd & Ors Sale to Zhang. Property: Apartment 40, Encore, 18-28 Neild Avenue, Darlinghurst”. The letter enclosed a draft contract for consideration “and signature” by the purchasers, clearly expressed that no contract or obligation arose from the letter and no contractual obligation would be created until formal exchange of contracts, stated that Bennelong would require a certificate under s 66W of the Conveyancing Act 1919 (NSW) (Conveyancing Act) (a “cooling-off” certificate) on exchange, and asked for exchange to be arranged within the next 14 days. Clarendon’s letter did not mention car spaces. That letter was placed into evidence without the draft attached (Ex C). However, during the hearing, an email of 19 May 2016 from GE Legal addressed to Ms Xu and her husband, complete with the attachment (which comprised of the first two pages of the draft Xu Contract, the Draft Strata Plan as it pertained to Lot 36, and the Floor Plan) was tendered (see Ex 3).

19. On the coversheet of the draft Xu Contract, which initially specified the purchaser’s name as that of Ms Xu’s husband (Mr Zhang) only, and which was in the standard form 2014 Law Society edition contract for sale of land entitled “Contract for the sale and purchase of land”, the land for sale was identified as:

Apartment 40, “Encore” 18-28 Neild Avenue, Darlinghurst

Unregistered plan: Lot 36 in an unregistered plan as indicated on Draft Strata Plan (copy attached) which is part of Lot 4 in DP1136932

[Emphasis in original]

20. In the Improvements section, on the front page of the draft Xu Contract, the boxes next to “home unit”, “car space” and “storage space” were checked (but there was no figure indicating the number of car spaces).

21. In the Draft Strata Plan, the apartment for sale is shown to be on level 4 (the top floor of the proposed development) with three bedrooms, two bathrooms and, in the basement car park, a tandem car space (i.e., a long bay with room for two cars parked end to end) marked “PT36” (meaning part of proposed Lot 36). The Floor Plan (which was identical to the “Marketing Brochure” that had been emailed to Ms Xu on 16 May 2016) identified Apartment 40 as an apartment on Level 4 with (again) three bedrooms, two bathrooms and “2 parking”. I here note that Ms Xu maintains that the sending of the draft Xu Contract with the attached Floor Plan is the second time that the Pre-Contract Representation was made.

22. Ms Xu’s evidence as to the time at which Ms Xu first saw the whole of the draft contract for sale was inconsistent. In her first affidavit, Ms Xu deposed (at [43]-[44]) that she received a copy of the draft contract on 19 May 2016 (under cover of an email that she could no longer find), and that she read a copy of the contract. There was nothing there to suggest that Ms Xu received less than the whole contract or that she had read some but not all of the document. In fact, as emerged in the course of cross-examination (following the production in answer to a notice to produce of an email of 19 May 2016 – see Ex 3), what Ms Xu received by email on 19 May 2016 from her then solicitor at GE Legal (Mr Stanley Yan) were five pages (not the whole contract), one of which was the cover page of the draft Xu Contract (showing only Ms Xu’s husband as the purchaser); another of which was a page headed “Basement level diagram”.

20. Ms Xu’s evidence in cross-examination was that she did not read the document “in whole”; and there was the following exchange (see at T 85.25ff):

Q.    If you look at the next box, it’s got a box checked next to a word, can you read that word?

A.   WITNESS:   Car space.

Q.    You can see that there’s no number next to “Car space” can’t you?

A.   WITNESS: Yes.

Q.    You saw that at the time you read this document in May 2016, is that correct?

A.   WITNESS: Yes.

Q.    Is it correct that you were reading the five pages that came with the email because you wanted to check that what it showed was the apartment and the car space that you were going to buy, is that right?

A.   INTERPRETER: I did not read the document in whole.

Q.    Why were you looking at this document in May 2016?

A.   INTERPRETER: The lawyer just sent the document to me, and I pay attention to, to the prices. And then the, the diagram that show what level it was on. Yeah, and then again, the, the floorspace of the apartment, how many bedrooms. Yeah, how many bathroom, toilet, parking spaces. I’m more focus on the location.

24. Ms Xu’s evidence is that having two car spaces with Apartment 40 (Lot 36) was important to her. Her evidence is that, on seeing the Lot 36 car space as one long space in the Draft Strata Plan, she asked her lawyers to “double-check that the ‘long space’ [in the Draft Strata Plan] … fits two car spaces and belongs to Apartment 40” (see Ms Xu’s first affidavit at [45]-[47]). In cross-examination, Ms Xu’s evidence was that she saw a larger space with “36” on it and understood it to be a car parking area (T 87.13), and she saw a small box with “36” on it that did not look like a car space (that smaller area was, as I understand it, a storage space referable to Lot 36); and she could not tell by looking at the plan whether the larger space was for two cars or one (see T 87.21-30). Ms Xu accepted that she asked her solicitor to check “whether I have two space or not” because she could not tell by looking at the plan (T 87.30). The “blow-up” plan to which reference was made in the course of cross-examination had green shading or highlighting on it, but Ms Xu was not aware who had made that (T 86.23).

20 May 2016 “Confirmation Email” – Third Pre-Contract Representation

25. On 20 May 2016, Mr Yan sent an email to Clarendon seeking various amendments to the draft contract and, in respect of the front page, said:

a. Improvements: please confirm two (2) x Carspace included;

26. That same day (20 May 2016), Clarendon responded by email (referred to in submissions as “the Confirmation Email”), stating:

1. a. We confirm there are 2 carspaces and note it’s tandem.

27. Ms Xu relies on the Confirmation Email as amounting to the third time that the Pre-Contract Representation was made to her, specifically in respect of the number of car spaces. In cross-examination, Ms Xu said that she understood Mr Yan to have confirmed that she has two car spaces (at T 88.21ff).

28. TFM points out that the first line of Mr Yan’s email forwarding the Confirmation Email (“[t]he email below is the response of seeking amendments from the vendor’s solicitor”) suggests that the confirmation of the two car spaces was part of a broader request for changes to the draft contract and Bennelong points out that what Mr Yan asked for was “confirmation” about the “carspace” improvement on the front page of the draft contract; that he did not seek any amendment of the draft contract in respect to car spaces, or any representation or undertaking from Bennelong about how many car spaces Ms Xu would be provided with regardless of what the contract allowed the vendor to do in that regard. Ms Xu’s evidence was that she was unsure whether she knew that her solicitor had been asking the developer’s solicitor to make amendments to the draft Xu Contract (T 89.4ff).

29. In any event, TFM points to the content of the Confirmation Email as showing that, from the outset, Ms Xu was aware that the proposed parking to be allocated to Lot 36 was a tandem bay, not two car spaces.

30. Pausing here, I note that the copy of the Confirmation Email included as an exhibit to Ms Xu’s first affidavit did not include the whole of the email, but Ms Xu accepted that it was part of what had been sent to her on 20 May 2016 (see T 92.29). Ms Xu could not recall whether she had read it at the time.

31. Relevantly, in the second page of that email exchange, Mr Yan had indeed requested certain amendments to the draft contract, one of which was to cl 38.2.1. Ms Xu at one stage in cross-examination appeared to give evidence that Mr Yan had mentioned to her a change to cl 38.2.1 but said she did not “understand it completely” (T 92.45); although she then could not recall whether Mr Yan had told her he was going to ask for a change to cl 38 (see T 93.10).

32. Ms Xu did accept that Mr Yan had told her that the developer could change the Draft Strata Plan under cl 38 (T 92.50), and her evidence was quite firm to the effect that she did not leave it to Mr Yan to decide for himself what changes to ask for (T 93.23), and she expected him to follow her instructions.

Execution of draft contract

33. On 24 May 2016, Ms Xu and her husband executed the draft contract in their lawyer’s office (see Ms Xu’s second affidavit sworn 24 July 2020, to which I will refer as Ms Xu’s second affidavit, at [12]; and Ms Xu’s first affidavit at [50]-[51], [53]). Ms Xu said that she asked her solicitor to show her the whole contract and said that “… what I remember is, before I signed the contract, I had to convince myself that there are actually two car spaces” (T 94.40).

34. There was some contention in the course of submissions as to what Ms Xu’s evidence, properly understood, was in this regard (Counsel for Ms Xu had wished to clarify this in re-examination by, in effect, taking Ms Xu through the contract to determine what she had read – see below). However, what was abundantly clear in my opinion from the cross-examination was that Ms Xu did not read the whole contract “from page one to the last page” before she signed it (see T 98.16); and indeed I doubt whether her level of comprehension of written English would have permitted her to understand the whole of the contract even had she attempted to do so (which I say with no disrespect to Ms Xu, for whom English is not her first language). That was apparent from the occasions in cross-examination when Ms Xu was asked to read parts of documents out in English and when asked if she understood what the word “rescind” (in English) meant.

Exchange of Xu Contracts

35. On 26 May 2016, Clarendon wrote to Ms Xu’s lawyers, acknowledging receipt of her counterpart contract, and sending by way of exchange Bennelong’s counterpart (see the affidavit of Ms Christine Borg, Clarendon’s Group Legal Counsel, sworn 1 May 2020, at [22]).

36. Thus, by 26 May 2016, Ms Xu and Mr Zhang had entered into an “off the plan” contract with Bennelong, under which Ms Xu and her husband contracted with Bennelong to purchase an apartment to be constructed as part of Encore Development in Rushcutters Bay (known as Apartment 40 and, later, Apartment 401), being Lot 36 in the Draft Strata Plan attached to the Xu Contract. The signed Xu Contract included handwritten amendments including to the name of the purchaser and to cl 38.2.1 (Ex 4).

Relevant terms of Xu Contract

37. The Xu Contract is in the form of the draft Xu Contract submitted to Ms Xu (but with handwritten amendment to certain of the terms, including an amendment to add Ms Xu’s name as purchaser, and the handwritten amendment to cl 38.2 to which I have already referred – although I note that the copy of the executed copy ultimately stamped for duty has been amended to have Ms Xu’s name typed).

38. As also already noted, the Xu Contract is in the standard Law Society form (2014 edition) with special conditions. The land is identified on the front page (as it was in the draft Xu Contract as, namely: “Apartment 40, ‘Encore’ 18-28 Neild Avenue, Darlinghurst. Unregistered plan: Lot 36 in an unregistered plan as indicated on Draft Strata Plan (copy attached)”).

39. The Draft Strata Plan annexed to the Xu Contract depicts “Lot 36” as: a level 4 (top level) apartment; with two car spaces (in a tandem configuration); and a storage space. It is noted that those three features match the “home unit”, “car space” and “storage space” check boxes on the front page of the Xu Contract (without a designated space, as such, to enter the number of car spaces – cf the standard form of contract subsequently used by Bennelong for other lots in the Encore Development where a number was included in the car space box on the cover sheet of the contract).

40. The Building Floor Plan (page 1 of which is identical to the Marketing Brochure emailed to Ms Xu by Mr Joe Li on 16 May 2016), at Annexure 6 of the Xu Contract, describes “Apartment 40” as being (these being the four essential characteristics here emphasised by Ms Xu): “Level: 4”; and “3 bedroom”, “2 bathroom”, “2 parking”.

41. The special conditions specific to the Encore Development, entitled “Additional Clauses – Encore at Advanx” include cl 32.1, which requires the registered Strata Plan to be substantially similar to the Draft Strata Plan.

42. Relevantly, cl 38 of the special conditions provided:

38.   STRATA PLAN

38.1   Registration of Strata Plan

38.1.1   Completion is subject to and conditional upon registration of the Strata Plan. Subject to this clause, the vendor must do everything reasonable to have the Strata Plan and the By-laws registered by the Sunset Date.

38.1.2   The vendor may elect to extend the Sunset Date once for a period of six (6) months form the Sunset Date (Further Sunset Date) by serving a notice on the purchaser at any time after the contract date but before the Sunset Date.

38.1.3   If the vendor does not extend the Sunset Date to the Further Sunset Date, and the Strata Plan is not registered by the Sunset Date, then, subject to clause 38.1.5, either party may rescind this contract by serving a notice on the other and clause 19 will apply.

38.1.4   If the vendor extends the Sunset Date to the Further Sunset Date, and the Strata Plan is not registered by the Further Sunset Date, then, subject to clause 38.1.5, either party may rescind this contract by serving a notice on the other and clause 19 will apply.

38.1.5   In the event that:

(a)   the purchaser wishes to rescind this contract pursuant to clauses 38.1.3 or 38.1.4 (as applicable) then the purchaser must serve notice within 14 days after the Sunset Date (or Further Sunset Date, as the case may be); or

(b) the vendor wishes to rescind this contract under clauses 38.1.3 or 38.1.4 (as applicable) then the vendor must serve notice within 14 days after any of the conditions set out in section 66ZL(3) of the Conveyancing Act 1919 have been satisfied.

38.2   Variations to Strata Plan and By-laws

The purchaser acknowledges and agrees that the vendor may make alterations, additions, variations or deletions to the Draft Strata Plan and the Draft By-laws which are required by the local council, the NSW Department of Lands or which the vendor considers necessary or desirable. The purchaser cannot take any restricted action in respect of the following minor variations.

38.2.1   a variation affection the area of the property by less than 5%; in total pursuant to the draft strata plan annexed to the contract [the words after the semi-colon being a handwritten amendment].

38.2.2   any change to the lot or unit numbers;

38.2.3   any alteration, addition, variation or deletion required by the local council or the NSW Department of Lands;

38.2.4   any change to unit entitlements provided that the unit entitlements comply with the requirements of the Strata Titles (Freehold Development) Act 1973; or

38.2.5   any changes to the By-laws required by the strata manager or the vendor which do not detrimentally affect the purchaser’s use and enjoyment of the property to a substantial extent,

(Minor Variations).

38.3   Purchaser’s right to rescind

38.3.1   If there is a difference between the Draft Strata Plan and the Strata Plan or the Draft By-laws and the By-laws other than a Minor Variation which detrimentally affects the property to a substantial extent the purchaser may only rescind the contract by serving a notice on the vendor within 7 days (time of the essence) after notice of registration of the Strata Plan is served.

38.3.2   The purchaser acknowledges and agrees that its only right or remedy in respect of a difference between the Draft Strata Plan and the Strata Plan or the Draft By laws and the By-laws is the right of rescission in this clause and the purchaser cannot take any restricted action in respect of a difference between the Draft Strata Plan and the Strata Plan or the Draft By-laws and the By-laws.

38.4   Miscellaneous

38.4.1   The vendor and the purchaser must adjust on a unit entitlement basis any operating expenses usually payable from the administrative fund of an owners corporation paid by the vendor which have not been reimbursed to the vendor at the date of completion.

38.4.2   Clause 11 does not apply to any notice with which the owners corporation for the Strata Plan must comply and clause 14.8 is deleted.

[Emphasis in the original]

43. “Sunset Date” was defined in cl 32.1 as 30 June 2019.

44. The special conditions go on to provide, in cl 41, the following concerning “construction, fitout and inclusions”:

…

41.2   Purchaser’s right to rescind

If on the registration of the Strata Plan (as far as it relates to the property) and the property at the date of registration of the Strata Plan; or

41.2.1   the Building Floor Plan (as far as it relates to the property) and the property at the date of registration of the Strata Plan; or

41.2.2   the Finishes Schedule and the finish of the property,

which detrimentally affects the property to a substantial extent the purchaser may only rescind the contract by serving a notice on the vendor within 7 days (time of the essence) after notice of registration of the Strata Plan is served. The purchaser acknowledges and agrees that its only right or remedy in respect of these differences is the right of rescission in this clause and the purchaser cannot otherwise take any restricted action in respect of these differences.

45. The term “restricted action” is defined in cl 31.2.3 to include: a claim for compensation (under cl 6.1), rescission, delay, or termination; but not referring to an action for specific performance or damages.

46. Bennelong says that this implied that there might be differences between the Building Floor Plan (which are architectural plans) and the registered Strata Plan. Clause 42.1 then went on to set out that, “the purchaser acknowledges and agrees that the vendor may, from time to time if it considers it necessary or desirable” vary the Building Floor Plan and vary the Draft Strata Plan, and cl 42.2 similarly restricts a purchaser’s remedy for a change which detrimentally affects the property to a substantial extent to rescission.

47. Clause 50 provides, relevantly, as follows:

50.1   Purchaser’s warranties

The purchaser represents and warrants that:

50.1.1   the purchaser has not relied on or been induced to enter into this contract by any representation or warranty (including those concerning the potential or present use or development of the property or the Building [sic] (made by the vendor, its agent or solicitor);

…

50.3   Indemnity

The purchaser indemnifies and keeps indemnified the vendor against all liability, loss or cost arising out of any breach of warranties in this clause.

48. The special conditions also contain an entire agreement clause (cl 57.1), in standard and uncontroversial terms.

49. It is also relevant to note the following standard conditions in the Xu Contract:

6   Error or misdescription

6.1   The purchaser can (but only before completion) claim compensation for an error or misdescription in this contract (as to the property, the title or anything else and whether substantial or not).

6.2   The clause applies even if the purchaser did not take notice of or rely on anything in this contract containing or giving rise to the error or misdescription.

6.3   However, this clause does not apply to the extent the purchaser knows the true position.

7   Claims by purchaser

The purchaser can make a claim (including a claim under clause 6) before completion only by serving it with a statement of the amount claimed, and if the purchaser makes one or more claims before completion –

7.1   the vendor can rescind if in the case of claims that are not claims for delay –

7.1.1   the total amount claimed exceeds 5% of the price;

7.1.2   the vendor serves notice of intention to rescind; and

7.1.3   the purchaser does not serve notice waiving the claims within 14 days after that service; and

7.2   If the vendor does not rescind, the parties must complete and if this contract is completed –

7.2.1   the lesser of the total amount claimed and 10% of the price must be paid out of the price to and held by the depositholder until the claims are finalised or lapse;

7.2.2   the amount held is to be invested in accordance with clause 2.9;

7.2.3   the claims must be finalised by a arbitrator appointed by the parties or, if an appointment is not made within 1 month of completion, by an arbitrator appointed by the President of the Law Society at the request of a party (in the latter case the parties are bound by the terms of the Conveyancing Arbitration Rules approved by the Law Society as at the date of the appointment);

7.2.4   the purchaser is not entitled, in respect of the claims, to more than the total amount claimed and the costs of the purchaser;

7.2.5   net interest on the amount held must be paid to the parties in the same proportion as the amount held; and

7.2.6   if the parties do not appoint an arbitrator and neither party requests the President to appoint an arbitrator within 3 months after completion, the claims lapse.

…

50. Clause 19 provides:

19.   Rescission of contract

19.1   If this contract expressly gives a party a right to rescind, the party can exercise the right –

19.1.1   only by serving a notice before completion; and

19.1.2   in spite of any making of a claim or requisition, any attempt to satisfy a claim or requisition, any arbitration, litigation, mediation or negotiation or any giving or taking of possession.

19.2   Normally, if a party exercises a right to rescind expressly given by this contract or any legislation –

19.2.1   the deposit and any other money paid by the purchaser under this contract must be refunded;

19.2.2   a party can claim for a reasonable adjustment if the purchaser has been in possession;

19.2.3   a party can claim for damages, costs or expenses arising out of a breach of this contract; and

19.2.4   a party will not otherwise be liable to pay the other party any damages, costs or expenses.

[Emphasis in the original]

Decision by Bennelong not to proceed with the Encore Development

51. On 9 August 2016, Clarendon wrote to Ms Xu’s lawyers, advising that Bennelong would not be proceeding with the Encore Development due to it being unviable following receipt of construction tenders. The letter conveyed Bennelong’s offer to enter into a Deed of Rescission and refund the deposit plus interest. The letter enclosed a draft Deed of Rescission. Relevantly, under the terms of the Xu Contract, Bennelong could rescind after the Sunset Date if it served notice within 14 days after any of the conditions set out in s 66ZL(3) of the Conveyancing Act (as it then was) had been satisfied. In essence therefore, by this communication Bennelong was notifying its intention in due course to exercise that right and offering the purchasers (i.e., Ms Xu and Mr Zhang) the option to recover their deposit at an earlier time. Pausing here, Ms Xu’s evidence now is that, had she known that a new vendor could choose less than two car spaces when constructed for her apartment, she would have rescinded in August 2016 and recovered her deposit (Ms Xu’s first affidavit at [62]); though Ms Xu has disavowed any claim for loss of opportunity damages (see at T 59).

51. Ms Xu’s evidence is to the effect that she decided not to rescind because she thought that a new developer was likely to buy the development and build it (see Ms Xu’s first affidavit at [59]-[60]), following a conversation to which Ms Xu has deposed with Mr Li of ACCE, in or around August 2016 in which Mr Li told her that he was not intending to sign the deed for his own apartment in the development as a new developer would build the Encore Development. Ms Xu has deposed that she then decided not to sign the Deed of Rescission (see Ms Xu’s first affidavit at [57], [60]).

52. Pausing here, for Bennelong it is contended (and I accept) that from this point Ms Xu cannot have been relying on any Pre-Contract Representation to the effect that Bennelong would do anything in relation to the development because Bennelong had now told her that it would not be proceeding with the development. TFM also points out that the conversation with Mr Li (as to another developer being likely to build) was in his capacity as another purchaser “off the plan”, not as the vendor’s agent as such. There is no suggestion that at any time Mr Li was TFM’s agent.

53. At around this time, Ms Xu changed lawyers from GE Legal to Prudentia Lawyers (T 103). On 22 August 2016, Prudentia Lawyers informed Bennelong’s lawyers that Bennelong’s rescission offer was declined (making allegations as to anticipatory breach); and pressed for performance of the Xu Contract, asserting that what had been conveyed amounted to a repudiatory breach of the Xu Contract.

Involvement of TFM in the proposed development

55. In late July or August 2016, TFM was introduced to the proposed development; and on 9 September 2016 TFM entered into a contract with Bennelong (the TFM Contract) to acquire the land (I note that this contract for sale of land only completed on 25 January 2017) (see affidavit affirmed by Mr Leigh Robert Manser, Bennelong’s Development Director, on 3 April 2020 at [14]).

56. In the period from 20 September 2016 to 20 January 2017, Bennelong provided TFM with various documents: a copy of the Draft Strata Plan and “Marketing Brochure” for Lot 36 (see Mr Flanagan’s first affidavit at [44](a), (d)); architectural drawings for the Encore Development (see Mr Flanagan’s first affidavit at [44](c)); and a copy of the Xu Contract and Confirmation Email (see Mr Flanagan’s first affidavit at [44](g)).

Novation Deed

57. Meanwhile, on 19 September 2016, Ms Xu was informed that the Encore Development had been sold and that a Deed of Novation to the new vendor would be prepared (see Ms Xu’s first affidavit at [66]).

58. On 7 November 2016, Clarendon sent a letter to Prudentia Legal, which stated that Bennelong had sold the site, referred to cl 47.1.2 of the Xu Contract, enclosed the draft Novation Deed for execution, and said it would be executed by the “new purchaser” on completion. It is noted that the draft Novation Deed is the same as the final except for the correction of the spelling of Ms Xu’s name and of TFM’s ACN (T 48.16).

59. Ms Xu has deposed that she was advised that the only change to Xu Contract by the Novation Deed was the identity of the vendor (Ms Xu’s first affidavit at [68]); and she has deposed that it was on this understanding that she signed the Novation Deed (Ms Xu’s first affidavit at [69]-[70], [72]). Mr Zhang also signed the Deed of Novation. (Mr Zhang did not give evidence in the proceedings and Bennelong raises an issue as to the lack of evidence as to what he relied on at the relevant time(s) – see below.)

60. On or about 25 January 2017, each of TFM, Bennelong, Ms Xu, and Mr Zhang entered into the Novation Deed.

61. Under the express terms of the Novation Deed, cl 1.1 and cl 1.4(c) impose a contractual obligation on TFM as the “Substituted Vendor” to perform, and be bound by, all of the vendor obligations under the Xu Contract. Those clauses provide as follows:

1.1.   From the date of completion of the Site Contract [between Bennelong and TFM] (Completion Date), the Substituted Vendor [TFM] and the Purchaser [Ms Xu] covenant to perform and observe the terms and conditions of the Contract and to be bound by it as if the Substituted Vendor were a party to the Contract in lieu of the Original Vendor [Bennelong].

…

1.4.   The parties agree that as from the Completion Date:

…

(c)    the Substituted Vendor must duly and punctually observe and perform all the liabilities, obligations and stipulations on the part of the Original Vendor to be performed and observed under the Contract.

62. At the time of entering into the TFM Contract with Bennelong, it appears that TFM was provided with only the front page of the contracts of sale for the six units that had been pre-sold and in respect of which the purchasers had elected not to rescind their contracts (including the Xu Contract). A request was made by the conveyancing solicitors acting for TFM at the time, AHD Lawyers, on 20 January 2017 (five days before completion of the TRM Contract) for copies of the complete contracts. Those contracts were provided to TFM on that day, together with the correspondence between Ms Xu’s solicitor and Bennelong’s solicitor, which included the Confirmation Email.

Direction that Ms Xu would be sole purchaser

63. In August 2017, TFM was directed that Ms Xu would be the sole purchaser (Ms Xu’s first affidavit at [76]).

Amendment to Draft Strata Plan

64. On 13 December 2018, TFM’s project manager (Construction Consultants) provided a copy of the Basement Level Car Park page of the Draft Strata Plan with handwritten amendments to TFM’s surveyors (ATS). ATS made changes, which included moving the tandem car space from Lot 36 to Lot 39.

65. The car park layout is similar in both the Draft Strata Plan and the Strata Plan with there being only one tandem (or double) space. In opening submissions, Ms Xu complained that no reason was given by TFM (or in the documents produced in the proceedings) as to why the tandem space was moved from Lot 36 to Lot 39. As I understand it, however, in effect there was something of an administrative mix-up in that the coversheet did not specify two car spaces and so only one was allocated.

66. It appears that TFM’s practice in relation to the drafting of “off the plan” contracts in developments of this kind was to indicate on the cover page of the contract the number of car space(s) to be acquired under the contract and to allocate car spaces to lots according to the number of car spaces shown on the coverpage of the contract (see [16] of the affidavit sworn by Dr Yihao (Eric) Zhang, TFM’s General Manager and formerly director and Chief Executive Officer, on 10 December 2019, which was tendered in evidence by Ms Xu as part of Ex B; and [41]; [45] of the affidavit sworn by Dr Zhang on 14 August 2020, also part of Ex B); and that the location of each space was “completely at our discretion” unless a purchaser had specifically requested the location of a bay at a particular position ([41] of Dr Zhang’s 14 August 2020 affidavit). Dr Zhang had also deposed to a recollection that another purchaser (James, who I understand to be a reference to Mr James Zhang, the fourth defendant against whom no relief was ultimately pressed and whose contract (for Lot 39) was the one to which the tandem space was finally allocated) had asked to have his bays near the lift (as the tandem space was) (see [41] of Dr Zhang’s affidavit).

67. Dr Zhang had also deposed to his opinion (based on his experience) that, “when selling property ‘off-the-plan’, it is necessary for developers to have unfettered discretion to vary or amend plans” as and where necessary in order to address unexpected issues which may arise from time to time, including Council restrictions, complications in construction, and “other financial and/or commercial issues” (see at [11] of his affidavit sworn 10 December 2019, which was also tendered by Ms Xu as part of Ex B); and of the value to TFM of having unattached car spaces with which to market the remaining apartments, especially where there are insufficient car spaces for each apartment to have one, as is the case for the Encore Development (see at [41]-[42] of his affidavit sworn 14 August 2020, part of Ex B).

68. As I understand it, Lot 36 had been designated an “adaptable unit” (as a condition of the development approval) (an “adaptable unit” being a unit that can be adapted, if required, to cater for a disabled person to occupy the unit). As adverted to above, the allocation of the tandem car space on the Draft Strata Plan was changed before it was lodged for registration in order to allocate the tandem space to Lot 39 instead of Lot 36; and only a single (disabled) car space was allocated to Lot 36.

Registration of Strata Plan and transfer of Lot 36 on completion of Xu Contract

69. Ms Xu’s solicitor was served with notice of the registration of the Strata Plan on 9 July 2019. Under the terms of the Xu Contract (see cl 38.3.1), Ms Xu then had a period of seven days in which she could have raised a complaint as to the change to the Draft Strata Plan and rescinded if the change “detrimentally affect[ed] the property to a substantial effect” (but no avenue was available to her if the change was a “minor variation” under cl 38.2 of the special conditions). TFM here argues that the change in question was a minor variation but in any event nothing turns on this because no complaint was received from Ms Xu within the seven day period provided for by cl 38.3.1 as to any error or misdescription.

70. On 17 July 2019, Ms Xu inspected the premises. There was an issue (explored in the cross-examination of Ms Xu by TFM) as to when the appointment for that inspection was arranged (see at T 110ff). At [79] of Ms Xu’s first affidavit, Ms Xu deposed to a conversation with TFM’s office “on or before” 15 July 2019, in which she sought to make an appointment to inspect the premises. Ms Xu’s evidence was that she said “[c]an I schedule an inspection for apartments 401 and 308 [that being her daughter’s apartment] on 15 July, on the Monday”. 15 July 2019 was itself a Monday. Hence, it is submitted by TFM that it is unlikely that the conversation occurred on that same Monday. (Pausing here, insofar as TFM’s submission in this regard turns on any infelicity of expression in the sentence “on 15 July, on the Monday”, I accept that one would not likely think it necessary to clarify with the other party to a conversation the day of the week on which the conversation was occurring and that it would be more likely to say “can I schedule an inspection today”. However, I take into account that English is not Ms Xu’s first language and there may well have been a clumsy use of English on her part or an error in translation in the affidavit.)

71. There was in evidence an email dated 16 July 2019 from Ms Yuchen (Serena) Gao of TFM, confirming the inspection appointment for 17 July 2019. It was suggested by TFM that it was more likely that this email was sent on the day of the conversation (though of course that depends on the timeliness of Ms Gao’s response).

72. It was put to Ms Xu in cross-examination that it was more likely that the conversation to which she had deposed was one that had occurred on 16 July 2019 (i.e., on the same day as the email confirming the appointment time) but Ms Xu was adamant that the conversation had taken place on or before 15 July and not on 16 July 2019.

73. The significance of the timing of the conversation can only go to credit (or the reliability of Ms Xu’s recollection) since there has been no claim that TFM did anything to frustrate Ms Xu’s ability to make a claim in relation to the apartment or the change in the Draft Strata Plan within the seven days allowed under the Xu Contract. After a number of objections to the cross-examination (at T 110-T 112), it nevertheless seemed to me that Ms Xu had quite readily accepted that she knew, by the time she swore her first affidavit, that she had only seven days after she had been told that the final Strata Plan had been lodged to complain about a change to the Draft Strata Plan (T 110.49). (I address in due course the submissions made as to this evidence in terms of Ms Xu’s credit but, as noted, other than so far as this gave rise to a credit submission, nothing turns on when the appointment for inspection was made.)

74. Returning to the chronology of events, at Ms Xu’s inspection of the apartment she apparently raised a number of complaints, one of which was that she had been allocated a “disabled” parking space and not two car spaces. Ms Xu says that she immediately raised this as an issue with TFM at the inspection; and that she then went straight from that inspection to her lawyers’ office (see inspection report translation; and Ms Xu’s first affidavit at [86]-[91]).

75. On 18 July 2019, Ms Xu’s solicitors wrote to TFM’s solicitors, referring to the Draft Strata Plan and demanding confirmation that Ms Xu would receive two car spaces. The letter also indicated that Ms Xu would provide TFM with a “detailed list of the major defects and discrepancies in the finishes of the property”. That same day, a further letter was written by Ms Xu’s solicitors indicating that Ms Xu would not settle unless there was “full rectification of the said errors”; and referring to rectification by provision of a second car space.

76. On 26 July 2019, Ms Xu’s solicitors demanded that TFM allocate two car spaces and renovate the property within 14 days; and indicated that she would not complete until her demands were met.

77. On 2 August 2019, TFM served a notice to complete. That notice to complete was (admittedly) defective. On 13 August 2019, Ms Xu’s present solicitors (Dentons) wrote to point out deficiencies in TFM’s notice to complete. On 13 August 2019, TFM served a further notice to complete.

78. Unbeknownst to TFM at the time, Ms Xu, through her solicitors, then lodged a caveat over Lot 46 (which was an unsold car space) on 14 August 2019.

79. On 23 August 2019, Ms Xu’s solicitors demanded that TFM transfer a second car space to her and rectify defects in the property and said that if the demands were not met, Ms Xu would commence proceedings in the District Court of New South Wales.

80. On 27 August 2019, Ms Xu’s solicitors indicated that, whilst reserving her rights to bring proceedings, Ms Xu would at that stage proceed with settlement.

81. On 28 August 2019, having by then discovered the caveat, TFM, through its then solicitors, demanded that Ms Xu withdraw the caveat, asserting that the Xu Contract did not give Ms Xu, on any view, a caveatable interest in Lot 46.

82. On 29 August 2019, Ms Xu’s solicitors informed TFM’s then solicitors that the caveat would be withdrawn. Completion of the sale of Lot 36 (with one car space) then took place on 29 August 2019. Ms Xu’s evidence is that, rather than lose her apartment (and faced with a Notice to Complete and TFM’s refusal to settle the sale of Lot 36 until Ms Xu removed her caveat), Ms Xu withdrew the Lot 46 caveat, reserving her right to bring proceedings for a second car space, and settled the conveyance of Lot 36.

Commencement of proceedings

83. Ms Xu commenced these proceedings on 20 November 2019.

84. On 12 December 2019, an interlocutory dispute between the parties was resolved by TFM undertaking to the Court not to take any steps further to encumber, transfer or otherwise deal with Lots 41-43 (those being unsold car spaces). That undertaking was varied on 3 July 2020 to be limited to Lot 43 from that date. (The significance of the 12 December 2019, as I understand it, is that this was the “Final Repayment Date” under two registered mortgages over Lots 41-46.)

85. A potential priority issue as between a loan from ALS256 Pty Ltd (ALS256) to TFM with the registered mortgages as security and Ms Xu’s equitable interest in one of Lots 41-46 has been resolved by an Undertaking to the Court filed on 28 August 2020 that ALS256 will facilitate the transfer of one of Lots 41-46 to Ms Xu if TFM is ordered by the Court so to do, and ALS256 is paid at least $125,000 (being the value of a single car space based on the expert report served by Ms Xu – see below).

Pleadings

86. In the second further amended statement of claim filed on 8 September 2020, Ms Xu broadly brings two kinds of claim: a claim in contract against TFM; and claims under the Australian Consumer Law against each of TFM and Bennelong. The claims against Bennelong, as noted above, are premised on the contract claim against Bennelong not succeeding.

87. I note that prior to the filing of the second further amended statement of claim, Ms Xu had brought a claim seeking relief against the fourth defendant (a company controlled by Mr James Zhang) in relation to the sale of Lot 39 (which was the Lot that ultimately included the tandem car parking space that had previously been allocated under the Draft Strata Plan to Lot 36) – the allegation being that this was not an arm’s length sale and, in effect, that there was a conspiracy between TFM and Mr James Zhang giving rise to the fraud exception to indefeasibility.

88. The effect of the amendment to the pleadings for which Ms Xu was granted leave was to abandon the fraud claim against the fourth defendant.

89. TFM says that that claim ought never have been made, was unsupported by evidence and was abandoned only a week before the hearing. Sackar J, in granting the leave, reserved the question of costs thrown away by reason of the amendment (and insofar as the discontinuance of the proceedings against the fourth defendant). TFM says that it will seek that its costs thrown away by reason of the amendment be paid by Ms Xu on an indemnity basis. However, that and other costs issues are to be determined in due course.

90. For present purposes, however, TFM emphasises that the abandonment of those allegations (at [52]-[73]) of the second further amended statement of claim and of the relief sought by the prayers for relief at 3-4 and 6b) means that the case (or at least the primary case) against TFM is now confined to a narrow contract construction case.

91. As to the contract case, Ms Xu contends that it is a fundamental term, and the main purpose, of both the Xu Contract and the Novation Deed, for the vendor to sell to her a particular apartment in the Encore Development (north-east facing, with a view of the park) on the top level, with three bedrooms, two bathrooms, and two car spaces (those comprising the alleged four essential characteristics of the property to be acquired to which I have earlier referred). Ms Xu maintains that she is entitled to specific performance of the promise to convey to her a second car space.

92. In the alternative to her proper construction argument, Ms Xu pleads an implied term in fact, namely (at [14] of the second further amended statement of claim):

… that the essential character of the property being sold was a 3 bedroom apartment on level 4 (the top level) of the Development with 2 bathrooms and 2 parking spaces, and that this essential character would not change in the Registered Strata Plan.

93. As to the Australian Consumer Law claims, Ms Xu alleges that Bennelong made the following representations to her: first, in May 2016, that Apartment 40 had two car spaces (the Pre-Contract Representation) (see second further amended statement of claim at [5]-[8]); and, second, between 19 September 2016 and 25 January 2017, that on completion, title to Apartment 40 would include two car spaces (the Pre-Novation Representation) (see second further amended statement of claim at [16]).

94. The Pre-Contract Representation is alleged to have been made on three occasions between 16 and 20 May 2016: first, in the 16 May 2016 email from Mr Li to Ms Xu (see above at [13]) (see second further amended statement of claim at [5]), in which Mr Li refers to a three bedroom apartment that has two parking spaces and the attached Floor Plan which says “2 parking”; second, by the letter dated 17 May 2016 from Clarendon to GE Legal, enclosing the draft Xu Contract, which included the Draft Strata Plan showing a tandem car space in annexure 4 and the Floor Plan (see above at [21]) (see second further amended statement of claim at [7]); and third, in the Confirmation Email (see above at [27]), confirming that “there are 2 carspaces and note it’s tandem” (see second further amended statement of claim at [8]).

93. The Pre-Contract Representation is alleged to have been a continuing representation because: it was repeated; it was not expressly or impliedly limited as to its duration; and, at all material times, no retractions or limitations were made to it (see second further amended statement of claim at [6]).

94. The Pre-Novation Representation is alleged to have been made by Ms Xu’s lawyers receiving a draft of the Novation Deed before 25 January 2017, read with the Xu Contract (see second further amended statement of claim at [16]; Ms Xu’s first affidavit at [68]).

95. The Pre-Novation Representation is alleged to have been a continuing representation because: it was not expressly or impliedly limited as to its duration; and, at all material times, no retractions or limitations were made to it (see second further amended statement of claim at [17]).

96. Both Representations are alleged to be with respect to a future matter within the meaning of s 4 of the Australian Consumer Law (see second further amended statement of claim at [41], [46]); and both Representations are said to be false or misleading concerning the characteristics of land in contravention of s 30(1)(e) of the Australian Consumer Law, because they were to the effect that Apartment 40 would have two car spaces and they concerned the characteristics of the land sold to Ms Xu (whereas Apartment 40 only had a single car space on settlement) (see second further amended statement of claim at [40], [45]). Bennelong complains that neither the second further amended statement of claim (at [40]) nor the plaintiffs’ submission at [73]-[79] says why the Pre-Contract Representation or the Pre-Novation Representation by Bennelong is misleading or deceptive in contravention of s 18 of the Australian Consumer Law.

97. In Ms Xu’s submissions (at [76]) it is asserted that the Pre-Contract Representation led Ms Xu to believe that she would be provided with two car spaces (a future matter), which she relied upon to enter into the Xu Contract and the Novation Deed. In Ms Xu’s submissions (at [79]), the Pre-Novation Representation is said to be a representation to Ms Xu that TFM would provide Apartment 40 in accordance with the Draft Strata Plan in the Xu Contract and TFM which TFM failed to qualify by expressly referring to its absolute discretion to change features of proposed Apartment 40 including the number of car spaces.

98. At [43] of the second further amended statement of claim, it is alleged that if Ms Xu had known that the vendor “may not, or would not, provide her with” two car spaces then she: would have entered into the Deed of Rescission that Bennelong offered her in August 2016; would not have entered into the Novation Deed in its terms; or would have entered into the Novation Deed for a lesser price.

99. In Ms Xu’s first affidavit (at [77] and [99]-[101]), Ms Xu deposed to how she was looking forward to moving into her new apartment and what she valued about the apartment in its inner city Eastern suburb location. Ms Xu also deposed to steps taken by her and a friend to choose the colour scheme for her apartment (Ms Xu’s first affidavit at [54]-[55]), as a matter going to reliance. Ms Xu’s evidence is that, from 2016 to 2019, she had visited the Encore Development at least twenty times from her home on the upper North Shore to see how the construction was progressing, and to explore the surrounding area; and that she was looking forward to moving into her new home (Ms Xu’s first affidavit at [77], [99]-[100]).

100. More relevantly on the issue of reliance is Ms Xu’s evidence that, had she understood (at any of the stages between May 2016 and January 2017) that Lot 36 “may not have” two car spaces, then: she would not have signed the Xu Contract in May 2016 (Ms Xu’s first affidavit at [49]; [51]-[52]); she would have signed the Deed of Rescission that Bennelong offered to enter into in August 2016, and obtained a full refund of her deposit (Ms Xu’s first affidavit at [62]); and, she would not have signed the current form of Novation Deed in January 2017 (Ms Xu’s first affidavit at [72]).

101. At [42] of the second further amended statement of claim, it is alleged that Ms Xu has suffered loss and damage as a result of Bennelong’s conduct; and at [44] of the second further amended statement of claim, it is alleged that Bennelong is liable to pay the amount of loss and damage she suffered by entering into the Novation Deed and/or the Contract in reliance on such conduct.

102. On 30 June 2020, Bennelong sought particulars of the allegations at [42] and [44] of the (then) further amended statement of claim. By letter dated 6 July 2020, particulars of those allegations were given, being: (i) the difference in value of Apartment 40 as is (with a single car space) compared to if it had a tandem space, which Mr Fernando (Ms Xu’s expert) says is $125,000; (ii) legal fees in the amount of $265,734.96 to date; and (iii) late completion interest in the amount of $18,770.55. (It is noted that there was no mention of a loss of opportunity claim – and this was expressly disavowed in oral submissions – nor of the difference between the amount paid and the value of Apartment 40.)

103. However, Ms Xu’s primary claim for relief is against TFM (both in contract and under the Australian Consumer Law, because of the broad discretion under ss 237 and 243 of the Australian Consumer Law to make such orders) for the transfer to her of title of an unsold car space lot.

Evidence

106. Ms Xu affirmed a number of affidavits in the proceedings and was cross-examined, with the assistance of an interpreter in the Mandarin language.

107. As adverted to above, Ms Xu also tendered (as admissions) various paragraphs from three affidavits that had been filed and served by TFM, but which were not ultimately read in its case (being part of three affidavits sworn by Dr Zhang, a former director of TFM, on 10 December 2019, 3 April 2020, and 14 August 2020, respectively). I note that TFM did not concede that the relevant paragraphs contained or amounted to admissions but did not oppose the tender and it is not necessary here to dwell on this.

108. Bennelong adduced evidence from three lay witnesses: its General Manager, Mr David Ian Flanagan, who affirmed affidavits on 3 April 2020 and 20 August 2020, respectively; its Development Director, Mr Leigh Manser, to whose affidavit affirmed 3 April 2020 I have already referred; and its Group Legal Counsel, Ms Christine Borg, to whose affidavit sworn 1 May 2020 I have also already referred. Neither Mr Manser nor Ms Borg was required for cross-examination.

109. As adverted to above, TFM adduced evidence from Ms Yuchen (Serena) Gao by way of an affidavit affirmed 14 August 2020. Ms Gao was not required for cross-examination.

110. Ms Xu adduced expert evidence by way of an expert report dated 25 June 2020 of Mr Fernando of Herron Todd White (the Fernando Report), in which Mr Fernando calculated the difference in value between a tandem car space and a single car space (as at 29 August 2019) at $125,000. In a second affidavit affirmed by Mr Fernando on 21 August 2020, Mr Fernando gave his opinion as to the limited availability of street parking near the Encore Development.

111. TFM tendered in response an expert report from Mr Cameron Hubbard of Civil MJD (annexed to his affidavit affirmed 27 July 2020), which calculated the difference in value between the tandem and a single car space (as at 26 May 2016), at $100,000.

112. Ultimately, there was no cross-examination of either of the expert witnesses. Sensibly, the parties proceeded on the basis that the value of a single car space was somewhat between $100,000 and $125,000.

113. I will consider in due course the issues raised as to the credibility or reliability of Ms Xu. No submissions were made adverse to Mr Flanagan’s credit.

Factual and legal issues

114. In summary, in her submissions Ms Xu identified the issues set out below as the issues arising in the proceedings. TFM did not accept that all of those issues did indeed arise on the pleadings but, nevertheless, responded to them in its submissions. The issues so identified by Ms Xu were as follows:

1.   Proper construction of the Xu Contract – its fundamental term and purpose

2.   In the alternative to 1, implied term to same effect

3.   Whether the Pre-Contract Representation and Pre-Novation Representation were made

4.   Whether the said Representations were (in part) as to future matters; and did TFM/Bennelong have reasonable grounds therefor

5. Whether the said Representations were false or misleading in breach of s 30(1)(e) and/or s 18 of the Australian Consumer Law

6.   Relief

7.   Whether Ms Xu’s remedy was limited to rescission under cl 38 of the Lot 36 Contract

8.   The scope of the vendor’s discretion under cll 38.2 or 42.1 to make changes to the plans that it considered “necessary or desirable”

9.   Whether there was merger on settlement

10.   Whether Ms Xu is estopped from seeking relief under the Australian Consumer Law by cll 50.1 or 57

11.   Whether the defendants are entitled to have Ms Xu indemnify them for any damages or costs order they are ordered to pay

115. TFM also did not concede that it was open to Ms Xu to raise all of the above issues and maintained that Ms Xu should be held to her pleaded case. In particular, this complaint related to Issue 8. Ms Xu says that, contrary to Bennelong and TFM’s contention (Issue 8), the ability to vary the Draft Strata Plan in cl 38.3 did not extend to changing the fundamental character of the property to be sold. TFM says this issue was not, and should have been, pleaded.

Credibility issues

116. There was much debate during the course of submissions as to the issue of Ms Xu’s credibility and it is convenient to deal with this at this stage.

117. For Ms Xu, emphasis was placed on the well-recognised difficulties of a witness giving evidence through an interpreter (see from T 148ff), and a number of examples were given to illustrate this.

118. First, reference was made to a perceived issue of translation in relation to the word “involved” (see T 66.18). It was noted that the witness had clarified what was meant by this. In that regard, my impression at the time was not that this was a problem with translation (and indeed, in later answers the witness, albeit through the interpreter, herself used that word). Rather, the impression I had at the time was that Ms Xu was wanting to clarify not the meaning of the word “involved” as such but, rather, what the cross-examiner was suggesting amounted to involvement (i.e., when the witness asked “What do you mean ‘involve’?” ). So, for example, when asked: “Have you been involved yourself in any property development in Australia?” my impression (as I explained in the course of submissions) was that the witness was asking for more specificity as to the role about which she was there being cross-examined (which rather shows that Ms Xu was being careful to understand what precisely she was being asked to admit, consistent with a cautious attitude to cross-examination). My impression on re-reading the transcript remains the same.

119. Second, I was taken to a number of examples which it was said displayed difficulty Ms Xu had clarifying questions of the interpreter (such as at T 91; T 102; T 103.11). It was submitted that there was some difficulty with the way that the interpreter was translating the evidence for Ms Xu and she was trying to understand and answer the question. I readily accept that there were occasions when my impression was that Ms Xu either took issue with, or did not understand, what the interpreter was saying or did not think the interpreter was accurately translating what she was saying (and there were occasions towards the end of her evidence when Ms Xu spoke directly in English in answering questions). There were a number of answers that Ms Xu gave where I noted that she had answered in English before I thought the question had been translated for her or where she answered in Chinese to the interpreter before the question had been translated. That may well have been borne out of a degree of frustration with the interpreter (or so it seemed to me at the time), but the most I can draw from this is to be cautious of placing too much weight on the phrasing of Ms Xu’s answers insofar as they were translated by the interpreter. An example of that is where there was an answer that used the words “technical jargon”, which I accept might well have been the interpreter’s understanding of what Ms Xu had said rather than necessarily an accurate translation of it.

120. As to the issue of mistranslation, I was taken to the question at T 109.28ff where there was a correction by the witness of “before” and “after”. That, of course, was an instance where the witness herself corrected the interpreter but the submission is made that we do not know how many times an error was made that the witness did not “pick up” (a submission that suffers from the problem that it simply invites speculation). Another example of correction by Ms Xu of the interpreter was at T 104.30ff.

121. Third, I was cautioned against attributing weight to the tone of voice used by the interpreter. It was submitted that the interpreter’s tone was more forceful and loud, such that it could appear argumentative. Apart from the fact that demeanour is an unsafe guide in most cases in any event, I do not place any weight on the manner in which the interpreter spoke when translating Ms Xu’s evidence.

122. Fourth, there was complaint that no one had clarified with Ms Xu when she shook her head in the witness box whether that meant no or whether it may have meant “I don’t understand”. It was said that the witness was at a disadvantage because she was not in control. In that regard, one might say that most witnesses are under a similar disadvantage of not being in control (as evidenced by the response most commonly given when a witness poses a question of his or her cross-examiner). Apart from the observation I made at the time of the submissions that, generally, when Ms Xu shook her head she tended to follow that with a “No”, and when she nodded her head she generally followed up with a “Yes”, I have not drawn anything one way or another from such gestures in the witness box. I simply note that if it was considered that there was an answer that needed to be clarified in that regard, then surely re-examination was the time to do it.

123. Counsel for Ms Xu was quite critical of the manner in which questions were asked of Ms Xu: namely, that there were some long questions; that neither counsel spoke simply; that questions were asked with double negatives; and double‑barrelled and indirect questions were asked. I was urged to take that into account (and I have). Nevertheless, I must put on record that I did not consider any of the cross-examination to be unfair to the witness.

124. Next there was an example of what was said to be Ms Xu’s frustration at not being able to understand what about a particular document she was being asked (see at T 105-106) – an ASIC request for correction form. It seemed to me that in relation to that evidence, the confusion on the part of the witness (not helped by similar confusion on the part of the interpreter) was as to whether Ms Xu was being asked to translate it, or (as I understood the question to be) whether she was being asked about the purpose of the document.

125. As to other exchanges of that ilk, where Ms Xu was pressing for clarification of matters about which she was being asked (in particular, the exchange at T 89.47-T 90.49), my impression at the time was not that there was confusion about the question Ms Xu was being asked, as such, but, rather, that Ms Xu had diverted herself onto an enquiry as to the identity of the person named in the document – Ms Monica Bourne – rather than focussing on the question, which was whether the second page of an email chain had been attached to the document referred to in her own affidavit (see at T 90-T 91). I say this with no criticism of the witness (or the cross-examiner), but just to explain that the issue seemed to me that the cross-examiner and the witness were there at cross-purposes.

126. Next, my attention was drawn to the fact that the interpreter had not once asked for a break during the course of the task of translation and it was said that the interpreter would just write a note of a question that sometimes took a minute to ask and then recount it back “to the best of his memory”. I am not in a position to draw any conclusion from the fact that the interpreter did not ask for a pause in the course of translation as a whole (some translators do; many more do not); nor do I have any idea of the extent of the particular interpreter’s note-taking ability or its accuracy. I accept that there seemed to be difficulties with some of the interpreter’s translation in that Ms Xu did not agree with some of it (and spoke up when that was the case), and I can understand that she may well have been frustrated at some points with his translation; but, again, that was something out of my control. Apart from the fact that it demonstrated that Ms Xu was able to understand some English (as was not suggested otherwise), it led me to conclude that Ms Xu was being careful in the giving of her evidence (which goes to her credit not against it). Had I considered the situation unfair to the witness I would have raised concerns at the time (as it was I sought to enlist the assistance of the witness’ Chinese speaking solicitor at one stage but to no avail – which I say without criticism of the solicitor). As it was, I considered that, while not ideal, Ms Xu was able to cope with the cross-examination under the prevailing conditions and that it was not in the interests of the just, quick and cheap resolution of the real issues in dispute to take any other step (such as adjourning the proceedings to enable another interpreter to be engaged), nor was I asked to do so.

127. The nub of the lengthy submissions made on behalf of Ms Xu in closing as to the difficulties of giving evidence through an interpreter (and not inconsiderable time was spent on this) seemed to me to be that I should not draw the conclusion that Ms Xu was being argumentative or unco-operative or non-responsive in her evidence. The submission made was that Ms Xu was inhibited in her ability to read and understand English (which I accept), but that despite these difficulties Ms Xu presented as an earnest, honest witness trying genuinely to give her evidence.

128. It was also said that, in assessing her credibility, it was significant that Ms Xu made concessions that she would have understood were potentially against her interests (by reference to T 78.15 for example, where Ms Xu admitted that the emails to which she had referred in her first affidavit at [44] did not attach the whole of the draft Xu Contract). Reference was also made to the exchange at T 87.19 about the same document where Ms Xu accepted that when she was looking at the large space depicted as “PT 36”, she could not tell whether that space was for two cars or for one. Ultimately, for Ms Xu, reference was made to the caution in Watson v Foxman (1995) 49 NSWLR 315 as to the fallibility of human memory and it was said that her case turned on the contemporary documents to which more weight should be given.

129. Pausing here, of the various examples here given, the most relevant in terms of Ms Xu’s reliability of recollection and/or credit as a witness seemed to me to be the cross-examination by Senior Counsel for TFM as to the seven day period within which Ms Xu had the ability to make complaint following registration of the strata plan. Ms Xu (at T 111.35) answered immediately (indeed mid-question) “yes” to a question as to whether she had seven days to do something. I accept that the answer (coming before the question was completed) might have been open to different interpretations, and that there was obvious scope for confusion because the answer came in the middle of the question. However, the question was quite fairly clarified (see at T 112), and my impression was that Ms Xu was firm in her acceptance of the proposition that she knew that she had had seven days to complain about the strata plan once it had been registered. In re-examination, there was a further exchange (T 122.3-9), which I was urged to take into account when considering the earlier evidence (at T 111.29-33 and T 112.20-24), in which Ms Xu was unable to explain the significance of the seven day period about which she had been questioned (“I don’t know is seven important”). I accept that from that answer there is doubt as to the significance of the evidence as to when Ms Xu first called to arrange the inspection of her apartment (which itself was only of any relevance insofar as it was relied upon for an adverse credit submission by TFM – see below).

444. It is again noted by reference to cll 6 and 7 of the standard form contract that, if the varied standard terms allowed a claim for compensation for Ms Xu’s complaint, then that claim had to be made before completion, and none was made.

445. As to the question of relief, TFM says that, even on the hypothesis that the proper construction or implied term alleged by Ms Xu is accepted, specific performance would not be ordered for the following reasons.

446. First, that the only right that Ms Xu conceivably could have to specific performance would be to have delivered to her the property as described in the Xu Contract (which included the location of her car space at the lift). It is noted that this is no longer property of TFM and Ms Xu has abandoned impeaching the title to that property in the hands of the fourth defendant. It is said that TFM could not be ordered to do something which it is not within the power of TFM to do.

447. Second, that whatever right to specific performance Ms Xu had under the Novation Deed (or the Xu Contract), that right merged with the transfer of Lot 36 to Ms Xu (citing Svanosio v McNamara at 211-2 per McTiernan, Williams and Webb JJ). It is noted that Ms Xu has not pleaded that there was a warranty under the Novation Deed (or the Xu Contract) that the property would have two car spaces that gives right to a claim for breach of that warranty (and so reliance upon the decision of Bergin J (as her Honour then was) in Sumy v Southcorp at [53] is misguided).

448. Third, that Ms Xu is not entitled to an order that TFM provide some sort of substitute performance for the performance provided for in the Xu Contract: the car spaces are not fungible property. It is said that Ms Xu has no right to demand the transfer of the title over another lot owned by TFM.

449. Fourth, that any order for “substituted specific performance” of the nature contemplated by Ms Xu would impose undue hardship on TFM in circumstances where the evidence demonstrates that, as at 14 August 2020, there are only five remaining car spaces available to supply fourteen unsold units with an option of a car space. In circumstances where Ms Xu has not, despite her evidence, moved into the unit, but instead has leased it, it is said that damages are the only remedy Ms Xu could seek.

450. Fifth, in relation to damages, that the damages under the Australian Consumer Law would be nil for the reason that Ms Xu has not suffered a loss (but in fact made a profit) by entering into the Xu Contract (and the Novation Deed). It is said that if TFM is found to have breached the Xu Contract, and Ms Xu’s remedy is not confined, then the range of damages appears to be between $100,000 and $125,000 (a matter which TFM says will have some significance on the question of costs, if Ms Xu is successful).

Determination as to issue of relief

455. As the claims for relief are not made good, it is not necessary to spend much time on the issue as to what relief should be granted had Ms Xu succeeded on her primary claim.

456. Had Ms Xu succeeded in her contract claim, and the issue had then been open as to whether specific performance ought be ordered, I would have concluded that such relief did not lie in circumstances where what had been promised to be conveyed as depicted in the Draft Strata Plan (the tandem car space) was no longer able to be conveyed. With that said, I would not have concluded that the relief should be refused on the grounds of hardship (since, if that issue had arisen, it would have been the commercial decision of TFM not to convey an alternative car space and I would not have concluded that the hardship to it outweighed the prejudice to Ms Xu of not enforcing the, on this hypothesis, contractual promise).

457. As to the damages claims based on breaches of the Australian Consumer Law, it has been said that the amount of the loss or damage suffered is measured (for the purposes of the statutory remedy under the Trade Practices Act and now under the Australian Consumer Law) by reference to the measure of damages that properly conforms to the remedial purpose of the statute and does justice and equity in the circumstances of the case (see Henville at [18] per Gleeson CJ; Choo v Zhang [2016] NSWCA 193). It has been said that the Court must compensate the claimant with that amount of damages which will most fairly compensate for the wrong suffered (North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60 at [125] per the Court).

458. Insofar as there was a contest as to the basis (i.e., in contract or tort) on which damages under the Australian Consumer Law are assessed and awarded on a claim such as the present, I note it is also unnecessary for me to express a concluded view on this point. Nonetheless, I note the following conclusions expressed by Gleeson CJ, Gaudron, Gummow and Hayne JJ in Henville at [14] and [18] (albeit there considering the former provisions in the Trade Practices Act).

14. For there to be the necessary causal relationship between a contravention of s 52, and loss or damage, so as to satisfy the requirements of s 82(1), it is not essential that the contravention be the sole cause of the loss or damage. As Brennan J pointed out in Sellars v Adelaide Petroleum NL, where the making of a false representation induces a person to act in a certain manner, loss or damage may flow directly from the act and only indirectly from the making of the representation; but in such a case the act “is a link – not a break – in the chain of causation”. In the present case there were two concurrent causes of the imprudent decision to buy the land and undertake the development project. The conduct of the respondents was one of those causes. That is enough.

…

18. Section 82 of the Act is the statutory source of the appellants’ entitlement to damages. The only express guidance given as to the measure of those damages is to be found in the concept of causation in the word “by”. The task is to select a measure of damages which conforms to the remedial purpose of the statute and to the justice and equity of the case. The purpose of the statute, so far as presently relevant, is to establish a standard of behaviour in business by proscribing misleading and deceptive conduct, whether or not the misleading or deception is deliberate, and by providing a remedy in damages. The principles of common law, relevant to assessing damages in contract or tort, are not directly in point. But they may provide useful guidance, for the reason that they have had to respond to problems of the same nature as the problems which arise in the application of the Act. They are not controlling, but they represent an accumulation of valuable insight and experience which may well be useful in applying the Act. (There the Court was considering issues similar to those when there was an assessment of damages for deceit, or for negligent misstatement, has confronted courts.)

459. Here, effectively what Ms Xu’s evidence was amounts to a “no transaction” case (i.e., she would have entered into the Deed of Rescission and would not have entered into the Novation Deed had she known that she might not end up with two car spaces).

460. An award for damages in a “no transaction” case in a suit for misleading and deceptive conduct requires the court to be satisfied that, “but for” the conduct at issue, the plaintiff would not have entered into the transaction, and so would not have suffered the loss. In Wyzenbeek v Australasian Marine Imports Pty Ltd (in Liq) [2019] FCAFC 167 (Wzyenbeek), the Full Court of the Federal Court described (at [89]) a “no transaction” case as being where, “the claimant asserts that he, she or it would not have entered into the transaction and, so, should be granted relief on the basis of being restored to the position that would have existed if there had not been any transaction.” The Court also noted the following (at [106]):

106.   A “no transaction” case is a legal construct to accommodate the position of a person who claims to have been injured by entering into a contract by or induced by, conduct or a representation of someone, including by a person who was not a party to the contract. The construct would be unnecessary in a case between contracting parties where rescission of the transaction with restitution in integrum is still possible, including if the Court can make allowances for deterioration of the subject-matter of the transaction which, in some instances, can also include a claim for damages.

[Citations omitted.]

461. There is some dispute in the authorities as to whether it is necessary to undertake a comparison between the loss caused by the wrongdoer’s act or omission that a claimant actually suffered, with the evaluation of a chance that the claimant may have engaged in some other hypothetical transaction in which he, she or it would have incurred similar loss or damage (see Wzyenbeek at [92], [118], the Full Court of the Federal Court there expressly disagreeing with Applegarth J in Westpac Banking Corporation v Jamieson; [2015] QCA 50; (2016) 294 FLR 48 at [143]-[144]; see also Cummins Generator Technologies Germany GmbH v Johnson Controls Australia Pty Ltd [2015] NSWCA 264 at [133]-[135]).

462. I consider, with respect, that the better view is that expressed by the Full Court of the Federal Court in Wzyenbeek (at [94]) namely that, “it is sufficient for the claimant to prove that the wrongdoer’s conduct is a cause of the loss claimed” (although comparison with another hypothetical transaction may go to the calculation of the quantum of the damages claimed depending on the particular circumstances). In Henville, McHugh J said that:

134.   Here the misrepresentations induced Mr Henville to enter into a contract and to construct units under the belief that the project would produce a substantial profit. If there had been no misrepresentations, Mr Henville would not have embarked on the course that he did and the loss that he suffered would have been avoided. That being so, his loss was a direct result of the misrepresentations and would have been recoverable in an action for damages for deceit. Moreover, I think that in a general way the loss was a reasonably foreseeable consequence of the misrepresentations. Although Mr Henville badly underestimated the cost of constructing the units, nothing in the findings of Anderson J or the Full Court demonstrates that any of the costs were unreasonably incurred. Matters such as the project being delayed with a consequential increase in costs and interest rates rising are matters that in the ordinary course of a development are reasonably foreseeable. [emphasis added]

463. In Morellini v Adams [2011] WASCA 84, McLure P (Pullin and Newnes JJA agreeing) stated (at [57]) that:

57.   … There will be a relevant causal connection between the breach and the loss or damage if the claimant would not have entered into the transaction but for the misrepresentation, if that misrepresentation is continuing or if the purchaser “is locked into” the transaction.

464. In Cummins Generator Technologies Germany GmbH v Johnson Controls Australia Pty Ltd [2015] NSWCA 264, Beazley P, as Her Excellency then was, (Leeming and Gleeson JJA agreeing), set on the following (at [133]):

133.   In my opinion, the trial judge was correct in stating that there was no strict requirement to prove a “no transaction” or “different transaction” case. Rather, it is necessary for a party to prove that in reliance on the misrepresentation it acted in a particular way that caused it loss and to then prove the quantum of that loss. That involves a consideration of the particular circumstances in which the conduct that caused the loss occurred. This was demonstrated in the recent decision of the Queensland Court of Appeal in Westpac Banking Corporation v Jamieson [2015] QCA 50. …

465. Here, the difficulty I have is that Ms Xu has not established that any loss has been sustained by entering into the transaction; rather, she is seeking to be put in the position that she would have been in had the expectation been satisfied. I accept the submission for TFM that in the circumstances her loss is nil. In any event, even if the measure contended for by Ms Xu had been the appropriate measure, at most her loss would be in the order of $100,000-$125,000 (quite disproportionate to the likely costs of this litigation).

Contributory negligence and proportionate liability

466. Bennelong relies on the following defences if Ms Xu succeeds on her claim under s 18 of the Australian Consumer Law (defence at [55]-[56]).

467. It is said that if Ms Xu suffered loss because she relied on Bennelong and did not seek or follow advice from her solicitors about the Xu Contract, or because she decided to complete the Xu Contract and sue instead of rescinding it, her loss arises mostly from her failure to take reasonable care of her own interests, and Bennelong’s liability must be reduced accordingly under s 137B of the Competition and Consumer Act.

468. Further, it is said that if Ms Xu’s solicitors (GE Legal and Prudentia Legal) failed to advise her as to the proper construction of the Xu Contract or of the Novation Deed and as to the possibilities and contingencies, they are partly responsible for her loss, and Bennelong’s liability must be reduced having regard to their responsibility under s 87CD of the Competition and Consumer Act. Finally, it is said that if TFM also caused her loss it is also a concurrent wrongdoer (see Bennelong’s defence at [56b]).

469. Both arguments are in principle available. It is not necessary here to quantify the deduction that might be made to reflect success on those defences.

Bennelong’s cross claim against Ms Xu

470. Bennelong cross claims against Ms Xu for damages for her breach of cll 50.1 and 57.1.2 of the Xu Contract where she warranted she did not rely on any representation outside the Xu Contract, and for misleading or deceptive conduct based on representations in the same clauses, and a failure to disclose her reliance on Bennelong’s representations before entering into the Novation Deed (see amended cross claim at [13]-[16]). Bennelong’s witnesses gave evidence of reliance on these representations none of which evidence was challenged (see Mr Flanagan’s first affidavit at [64]-[73]; Ms Borg’s affidavit at [24]-[27]).

471. Bennelong says these claims are not raised in defence of Ms Xu’s claim, they constitute a cross claim by Bennelong against Ms Xu, so there is no question of contracting out of the Australian Consumer Law (cf Henjo Investments at 561 per Lockhart J). It is noted that warranties of no reliance on representations and entire agreement clauses (such as cll 50.1 and 57.1.2 in the Xu Contract) are common. Bennelong says that such clauses are not contrary to public policy; rather, they are designed to avoid disputes by confining the parties to the contract in question, not to exclude the operation of the Australian Consumer Law. It is noted that if Ms Xu did rely on representations outside the Xu Contract, then she is in breach of these clauses and she has engaged in misleading or deceptive conduct, upon which Bennelong has relied to its loss. It is said that Bennelong’s loss is its liability to Ms Xu for any judgment and costs as well as its own costs (see amended cross claim at [17]-[18]).

472. Insofar as Ms Xu submits (at [81]-[88]) that Bennelong’s cross-claim under the Australian Consumer Law must fail because Ms Xu’s conduct was not in trade or commerce (citing Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177 at [38] per Emmett AJA, Bathurst CJ and McColl JA agreeing), Bennelong accepts that Bennelong’s cross-claim against Ms Xu under the Australian Consumer Law must fail. However, it says that this does not affect Bennelong’s claim for damages in the amended cross claim against Ms Xu for breach of contract.

473. I have concluded that, had Ms Xu made good her primary claims, then reliance on the clauses to sustain the estoppel or indemnity defences would not have been made good.

Summary of conclusions as to the particular issues identified by Ms Xu

474. For completeness, as to the particular issues as itemised by Ms Xu I have concluded as follows.

Proper construction of the Xu Contract – its fundamental term and purpose (Issue 1)

475. As noted above, I have concluded that the fundamental term of the Xu Contract was not as contended for by Ms Xu but, rather, was for the transfer to her of an apartment to be built substantially in accordance with the Draft Strata Plan (including with a car space that would accommodate parking for two cars) but subject to amendment of the Draft Strata Plan (as considered necessary or desirable by the vendor developer).

In the alternative to 1, implied term to same effect (Issue 2)

476. I consider that no term to the effect contended for should be implied.

Whether the Pre-Contract Representation and Pre-Novation Representation were made (Issue 3)

477. I accept that there was a Pre-Contract Representation that the Property to be transferred would include space for two cars; and that there was a Pre-Novation Representation that TFM would assume the obligations of the vendor under the Xu Contract (as Substitute Vendor).

Whether the said Representations were (in part) as to future matters; and whether TFM/Bennelong had reasonable grounds therefor (Issue 4)

478. I accept that the Pre-Contract Representation was in part as to a future matter, being a prediction or opinion that the building as built would (substantially) have the features indicated in the Draft Strata Plan. However, as noted above, I consider that Bennelong and TFM made the representations on reasonable grounds.

Whether the said Representations were false or misleading in breach of s 30(1)(e) and/or s 18 of the Australian Consumer Law (Issue 5)

479. Neither of the Representations was false or misleading at the time it was made (as per my reasons above).

Relief (Issue 6)

480. This issue does not arise. Had it arisen, I would have concluded that specific performance of the obligation to convey property under the Xu Contract was no longer available, the conveyance under that contract having been completed and there being no contractual obligation to convey a second (separate) car space. As to the appropriate measure of damages for a “no transaction” case (as this was put on the misleading or deceptive contract claim), had relief been granted, I would have held that no loss had been established (and that even if the expectation interest should be the appropriate measure it would be limited to the monetary value of the car space (namely, between $100,000 – $125,000). However, given my findings above, it is not necessary to fix the sum here.

Whether Ms Xu’s remedy was limited to rescission under cl 38 of the Xu Contract (Issue 7)

481. In the circumstances, I consider that Ms Xu’s remedy was limited to rescission under cl 38 of the Xu Contract. I accept that a claim for damages for misleading or deceptive conduct might have arisen, but I do not accept that it was made good in this case.

The scope of the vendor’s discretion under cll 38.2 or 42.1 to make changes to the plans that it considered “necessary or desirable” (Issue 8)

482. This issue does not arise for consideration as it was not pleaded, but, in any event, I do not accept that it is permissible as a matter of construction of the Xu Contract to read such a limitation into the clauses as that for which Ms Xu contends.

Whether there was merger on settlement (Issue 9)

483. Again, this issue does not arise in light of the findings I have made on the contract claim. However, for the reasons set out earlier I have concluded that the promise to convey the property, as properly construed, did merge on completion.

Whether Ms Xu is estopped from seeking relief under the Australian Consumer Law by cll 50.1 or 57 (Issue 10)

484. It is not necessary here to explore the authorities dealing with the circumstances on which reliance can (or conversely cannot) be placed on representations as to the entirety of the contract or the like. Suffice it to note that, had I concluded that there was an actionable cause of action for misleading or deceptive conduct I would not have considered that it was barred or ousted by cll 50.1 or 57. Hence the cross-claim by Bennelong against Ms Xu would not succeed.

Whether the defendants are entitled to have Ms Xu indemnify them for any damages or costs order they are ordered to pay (Issue 11)

485. This follows from my conclusion in relation to issue 10.

Contributory negligence and proportionate liability

486. As I have not found in favour of Ms Xu, it is unnecessary for me to make concluded findings on the defences of contributory negligence and proportionate liability raised by Bennelong. Suffice it to say that there may well have been a basis for a finding that there was a proportionate liability claim (as to the drafting of the relevant contract or as to the advice given in relation thereto – in particular the fact that there was not an express covenant to transfer two separate car spaces; and as to the obligations of TFM under the Novation Deed); contributory negligence is more problematic when Ms Xu appears to have been acting at all times with the benefit of advice from legal practitioners.

Costs

487. All parties have sought to be heard on costs following judgment, including costs as to the abandonment in the claims against the fourth defendant. I will make directions for that to occur. I do not understand there to be a need to make any orders in relation to any undertakings that were proffered in relation to the alternative car space (which would seem to me now to be spent).

Conclusion and orders

488. For the above reasons I make the following orders:

1. Dismiss the plaintiff’s claim against both defendants.

2. Dismiss the first and second defendants’ cross-claim against the plaintiff/first cross-defendant.

3. Reserve the question of costs.

489. When these reasons are published, I will list the matter for directions as to a hearing on costs on a date to be fixed.

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Decision last updated: 27 November 2020