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Treton Pty Ltd v HM Australia Holdings Pty Ltd

 

[2011] QSC 38

 

SUPREME COURT OF QUEENSLAND

  

CITATION:

Treton Pty Ltd v HM Australia Holdings Pty Ltd and Anor [2011] QSC 38

PARTIES:

TRETON PTY LTD

ACN 105 339 580
(Plaintiff)

v

HM AUSTRALIA HOLDINGS PTY LTD
ACN 101 854 817
(First Defendant)

and

LEI LEI LU
(Second Defendant)

FILE NO/S:

BS 11091 of 2009

DIVISION:

Trial Division

PROCEEDING:

Claim

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

21 March 2011

DELIVERED AT:

Brisbane 

HEARING DATE:

25-26 and 29-30 November 2010

JUDGE:

McMurdo J

ORDER:

On the claim against the first defendant, there will be a decree of specific performance of each contract and an award of damages against the first defendant in the sum of $35,499.49, together with interest upon that sum at 9% from 15 January 2010.

The claim against the second defendant is dismissed.

CATCHWORDS:

CONVEYANCING – STATUTORY OBLIGATIONS OR RESTRICTIONS RELATING TO CONTRACT FOR SALE – PROTECTION OF PURCHASERS – OBLIGATIONS ON VENDOR: DISCLOSURE, WARNINGS AND LIKE MATTERS – where the plaintiff contracted to sell two proposed allotments of land to the first defendant – where the plaintiff was required to provide the first defendant with a disclosure plan including contour maps of the proposed allotments pursuant to s 9(2)(c) of the Land Sales Act 1984 (Qld) – whether the disclosure plan provided by the plaintiff was sufficient

CONVEYANCING – BREACH OF CONTRACT FOR SALE AND REMEDIES – VENDOR’S REMEDIES – DAMAGES – MEASURE OF DAMAGES – where the first defendant invalidly terminated contracts for the sale of land – where the second defendant signed a form of guarantee and indemnity in favour of the plaintiff – what quantum is available to a vendor pursuant to that indemnity where the contract for the sale of land has been invalidly terminated by a purchaser

Acts Interpretation Act 1954 (Qld), s 14

Integrated Planning Act 1997 (Qld), s 1.3.5

Integrated Planning and Other Legislation Amendment Act 2003 (Qld), s 36, s 122

Land Act 1994 (Qld)

Land Sales Act 1984 (Qld), s 6, s 8, s 9, s 10, s 31

Land Title Act 1994 (Qld)

Supreme Court Act 1995 (Qld), s 47

COUNSEL:

LF Kelly SC with D O’Sullivan for the plaintiff

A Crowe SC with D Thomae for the defendants

SOLICITORS:

McInnes Wilson for the plaintiff

Cooper Grace Ward for the defendants

  1. On 14 March 2008, the plaintiff contracted to sell two parcels of land to the first defendant.  This was vacant industrial land at Parkinson near Brisbane.  The land was not the subject of a separate title.  The plaintiff proposed to create these two parcels, one described as lot 10 having an area of 5,700 square metres and the other described as lot 11 having an area of 2,267 square metres, by a subdivision.  A separate contract was made for each parcel, lot 10 being sold for $1,572,120 and lot 11 for $1,296,000.  The contracts were otherwise in identical terms and provided for completion 14 days from notice of the registration of the plan of subdivision. 
  1. Because there was no separate title for either parcel, the plaintiff as the vendor was obliged to provide to the first defendant the material specified in s 9 of the Land Sales Act 1984 (Qld) (‘the LSA’).  In particular, it was obliged to provide a “disclosure plan” according to s 9(2).
  1. The plan of subdivision creating lots 10 and 11 as separate parcels was registered on 12 December 2008. According to the terms of each contract, settlement became due on 30 January 2009. But the first defendant refused to settle, claiming that it had duly avoided the contracts for what it said was the plaintiff’s failure to provide a disclosure plan as required by the LSA.  Whether the plan which was provided was sufficient is the issue in these proceedings between the plaintiff and the first defendant.
  1. Within each contract document, the second defendant signed a form of guarantee and indemnity in favour of the plaintiff.  If the contracts have been duly avoided by the first defendant, the plaintiff says that the second defendant is obliged to indemnify the plaintiff for its loss.  In particular, it claims what it says is the difference between the contract prices and the value of the lots as well as other amounts.  The second defendant denies that he is liable to indemnify the plaintiff at all, or alternatively in the amounts which are claimed. 

The Land Sales Act

  1. Part 2 of the LSA governs the sale of proposed allotments. Within Part 2, as at the date of the contracts and at their purported avoidance, s 9 provided as follows:

9Identification of land

(1)Before a purchaser enters upon a purchase of a proposed allotment, the vendor must give the purchaser -

(a)a disclosure plan and disclosure statement for the proposed allotment; or

(b)a copy of the plan of survey for the proposed allotment approved by the local government under the Planning Act, chapter 3, part 7.

Maximum penalty - 100 penalty units or 6 months imprisonment.

(2)The disclosure plan must include the following -

(a)a copy of any plan for reconfiguring a lot for the allotment forming part of a development  permit mentioned in section 8(1)(a);

(b) the metes and bounds description of the proposed allotment;

(c) contour maps of the proposed allotment showing the following contours -

(i)natural surface contours, with appropriate contour intervals;

(ii)final surface contours as specified in the engineering drawings;

(d)fill levels, and areas to be filled, as specified in the engineering drawings for the proposed allotment.

(3)The disclosure statement must be signed by the purchaser and vendor and state the following -

(a)the purchaser’s full name and address;

(b)the vendor’s full name and address;

(c)that the vendor or vendor’s agent has given the purchaser the disclosure plan for the proposed allotment;

(d)if a development permit mentioned in section 8(1)(a) is subject to conditions - the conditions;

(e)that the purchaser has -

(i)for an allotment capable of being staked by a cadastral surveyor -inspected the proposed allotment after it has been staked by the surveyor; or

(ii)for an allotment that is not capable of being staked by a cadastral surveyor - inspected the proposed allotment; or

(iii)been given the opportunity, and declined, to do an inspection mentioned in subparagraph (i) or (ii);

(f)that the vendor must give the purchaser the registrable instrument of transfer for the allotment, together with the other documents mentioned in section 10A(3), not later than 18 months after the purchaser enters upon the purchase of the allotment;

(g)that if the vendor or vendor’s agent contravenes this section, other than subsection (3)(a), (b) or (h), the purchaser may avoid the instrument relating to the sale by written notice given to the vendor or vendor’s agent before the vendor gives the purchaser the registrable instrument of transfer for the allotment;

(h)the day the statement is signed.

(4) The obligation prescribed by subsection (1) or (3) rests upon the vendor’s agent, where it is the agent who procures the signing of the instrument concerned by the purchaser or by the purchaser’s agent, and otherwise rests upon the prospective vendor.

(5) If the vendor or the vendor’s agent contravenes this section, other than subsection (3)(a), (b) or (h), the purchaser may avoid the instrument relating to the sale by written notice given to the vendor or vendor’s agent before the vendor gives the purchaser the registrable instrument of transfer for the allotment.

(6) A stake placed by a cadastral surveyor under subsection 3(e)(i) is not a survey mark for the purposes of the Survey and Mapping Infrastructure Act 2003.

(7) In this section –

appropriate contour intervals means contour intervals of not more than the following -

(a)for a proposed allotment of not more than 2000m2 - 500mm in height;

(b) for a proposed allotment of more than 2000m2 - the smallest of the following contour intervals -

(i)the contour intervals shown on a local government topographic map that includes the allotment;

(ii)the contour intervals shown on a topographic map that includes the allotment and is held in the department administered by the Minister administering the Land Act 1994 or Land Title Act 1994.

  1. It is common ground that each contract was subject to s 9 in that it was for the sale and purchase of a “proposed allotment”, a term which is defined[1] to mean a parcel of land the boundaries of which are not shown on a plan registered under the Land Act 1994 (Qld) or (relevantly here) the Land Title Act 1994 (Qld).  There was no plan of survey which, at the time of the contracts, had been approved by the relevant local government.  Accordingly, s 9(1)(a) applied, with the result that the plaintiff had to give to the first defendant a disclosure plan and disclosure statement for the proposed allotment.  It is the requirement for a disclosure plan which is in issue here. 
  1. Within each contract document, the same map was included in purported compliance with s 9(2).  As that map depicted, the proposed lots 10 and 11 had a common boundary which ran north/south.  Lot 11 was to the east of lot 10.  Each was to have a frontage to a street called Corymbia Place.  There were a series of broken lines which, by the legend on the plan, were shown as “existing contours”.  There were also a series of unbroken lines, which according to the legend, showed the “finished contours surface” and which were described as sourced from certain engineering plans.  The defendants accept that the reference to “existing contours” was an intended reference to “natural surface contours”, and that the reference to “finished contours surface” was to “final surface contours” within s 9(2)(c). 
  1. But by the time of the contract, the earthworks which were relevant to this proposed subdivision had already had been performed so that the landscape then accorded with the “finished” or final surface contours. The plaintiff argues that this circumstance had a consequence for the operation of s 9(2)(c).  It says that this relieved it from the requirement to provide a contour map showing natural surface contours.  Accordingly, if the map did not show natural surface contours as apparently required by s 9(2), this was inconsequential.
  1. The plaintiff argues that the purpose of this requirement for a disclosure plan is to ensure that the land which is to be sold is properly identified. Consistently with that purpose, s 10 of the LSA requires the vendor to tell the purchaser about any significant variation between the details contained in the disclosure plan given under s 9(1) and a plan of survey later approved by the local government and which is proposed to be registered.  If there is a significant variation between the two, s 10(3) provides that “the purchaser may avoid the instrument relating to the sale”.  A “significant variation” is defined by s 10(5)(b) to include:

“[I]n the details between a disclosure plan and an as constructed plan – a variation of more than 500mm in height in details of surface contours or fill levels.”

By being given the two sets of contours in the disclosure plan, the purchaser is able to compare at the time of contract what then exists with what is to be the land upon completion of the sale, and later to compare the land as ultimately developed, with that which it had contracted to purchase, for the possible operation of s 10. 

  1. That first comparison is for the apparent purpose of identifying with sufficient clarity the land to be sold. But in a case such as the present, where the relevant works have been performed by the time of the contract, the natural surface contours would not seem to be relevant to the identification of the land. Those contours could be relevant for other purposes (such as the development of the land) but not for the apparent purpose to be served by the LSA.
  1. As originally enacted, the LSA permitted a sale of a proposed allotment only once a the plan of subdivision had been sealed by the local government. In that circumstance, where any relevant earthworks would have been completed, some further identification of the proposed allotment was apparently considered unnecessary. In 1997, the LSA was amended to permit the sale of a proposed allotment before the plan of subdivision was sealed, if the local government had approved an application for the subdivision. In such a case, if the approval was subject to conditions requiring the applicant to construct works on the land, then there could be a contract for the sale of the proposed allotment if there was also an “approval of the engineering drawings and specifications for [those] works”, according to the then terms of s 8(1) of the LSA.  At the same time, s 9 was amended to require the provision of a disclosure plan and disclosure statement.  So far as contour maps were concerned, s 9(2) was enacted in the terms which still appear in s 9(2)(c).  In particular, there was the requirement for a map showing the final surface contours as specified in the “engineering drawings”, a reference to the engineering drawings within the then terms of s 8(1).  This explains the reference to “engineering drawings” within the present s 9(2)(c), although s 8 has since been amended and there is now no other provision of the LSA which uses that term or defines it.[2]
  1. In 2003, s 8 of the LSA was again amended, so that at the time of these contracts it relevantly provided as follows:

8Restriction on selling

(1)A person may sell a proposed allotment of freehold land only if, when the purchaser enters upon the purchase of the allotment –

(a)if there is no operational work for the proposed allotment – there is an effective development permit for reconfiguring a lot for the allotment; or

(b)if paragraph (a) does not apply – there is an effective development permit for the operational work associated with reconfiguring a lot for the allotment.

Maximum penalty – 200 penalty units or 1 year’s imprisonment.

…”

The term “operational work” was defined within s 6 of the LSA by its meaning according to s 1.3.5 of the (then) Integrated Planning Act 1997 (Qld),[3] where it was relevantly defined to include the excavation or filling of land.  Therefore the reference to “engineering drawings” in s 9(2) can be seen to be a reference to those drawings which depicted the (permitted) operational work within s 8.

  1. Clearly enough then, the purpose of s 9, as originally enacted and subsequently amended, has been the identification of the proposed allotment.  The heading of s 9 (“Identification of Land”) predated 30 June 1991 and so is not regarded as part of the Act according to s 14(2) of the Acts Interpretation Act 1954 (Qld).  Nevertheless, the heading may be taken into account as “extrinsic material” within s 14B(3)(a) of that Act.  Moreover, the Explanatory Notes for the 1997 amendments to the LSA confirm that these requirements for a disclosure statement and disclosure plan are for the purpose of identifying the proposed allotment.  In particular, according to the Notes, the Act was then being amended so that “there be provisions, including the supply of a disclosure statement and disclosure plan to a purchaser, to ensure that a proposed allotment, in relation to which a registrable instrument of title is ultimately delivered to the purchaser, is substantially identical to that which was originally purchased by him or her”. 
  1. A map showing the contours of the land as at the date of the contract could be relevant to the identification of the land.  It might assist the purchaser to understand what is the proposed “finished” landscape, by being able to relate those levels to existing levels.  It might also assist in the identification of the boundaries of the proposed allotment. 
  1. However, s 9(2) requires a map of the natural surface contours, the levels of the land before any human disturbance, rather than the then existing surface contours.  The drafting of s 9, gives the impression that the difference between the two was overlooked.  Having regard to the purposes of the LSA, and specifically its requirement for a disclosure plan, it is not easy to understand a requirement for the provision of natural surface contours.  And the consequences of not providing the required disclosure plan are serious.  A penalty is provided for non-compliance with s 9(1) and there is the potential for the purchaser to avoid the contract. 
  1. There appear to be two arguments for the plaintiff in this respect. The first is that the term “natural surface contours” in s 9(2)(c) should be understood as a reference to the contours of the land as at the date of the contract, regardless of the levels of the land in its natural or undisturbed state.  Secondly and alternatively, it is argued that if the level of the land has been changed from that of its natural surface, by necessary implication s 9(2) does not require a contour map which shows natural surface contours.  Either way, what was said to have been required in this case was effectively a map showing only the final surface contours.  The plaintiff’s arguments have some appeal because either would result in what would appear to be a more sensible operation of the statute, consistently with its purpose in a case such as the present.  However, the arguments cannot be reconciled with what I see as the unambiguous terms of s 9.  I am unable to accept that “natural surface contours” should be read as “existing surface contours”.  The meaning of “natural surface contours” is confirmed by the requirement that those contours be shown with “appropriate contour intervals” which, according to s 9(7), are to be found within topographic maps kept by a local government or department under the Land Act 1994 of the Land Title Act 1994.  As to the plaintiff’s alternative argument, such an implication is unnecessary to make it practicable to comply with the statute.  As I will discuss, there are readily available topographic maps from which a map showing natural surface contours could be produced.  Moreover, under that alternative argument for the plaintiff, it is not clear what would be the requirement of s 9(2) where, for example, but a very small part of the natural surface of the proposed allotment had been disturbed.  It could hardly be said that in such a case there would be no good purpose in requiring the provision of a map showing the natural surface contours for the balance of the land.  And it would seem to be impracticable to require something which showed the contours for only part of a proposed allotment.
  1. Accordingly, the plaintiff was required to provide a disclosure plan which showed, amongst other things, the natural surface contours, being the contours of the land in its undisturbed state. It is common ground that those contours were shown within a plan kept by the Brisbane City Council. The content of that plan of the Council is a matter of substantial contest. But before going to that question, it is necessary to discuss a submission for the defendants, which is that s 9(2)(c) required two maps, rather than the one map showing two sets of contours as occurred in this case.
  1. Section 9 requires a “disclosure plan”, rather than a series of plans. That plan must include the information specified in s 9(2).  The requirement for information about contours is expressed as a requirement for “maps”, rather than a map.  But that does not mean that the two maps could not be represented on the one page.  Here, there are effectively two maps superimposed one on the other.  If anything, that is likely to be more helpful than two pieces of paper.  In my view, the use of one page containing the two maps was permitted by the section. 
  1. The defendants argue that the natural surface contours were not shown at all, or were shown without the appropriate contour intervals. As to the first point, there were contour lines purporting to show the natural surface contours. But only one of them was shown with a designated level of “70.0”, which was a line running for the most part north/south in the eastern section of the proposed lot 10. The defendants say that the levels of the other natural surface contours were not apparent from this plan, so that it was not apparent whether any other line was higher or lower than that level of 70 and by how much.
  1. The plaintiff’s first response to this argument is that the levels need not be ascertainable from the map for it to show the natural surface contours as s 9 requires.  It argues that a map showing the contour lines would suffice, as long as the contour intervals were “appropriate contour intervals”, although they would not be revealed by the map itself.  But a map which showed the level of only one contour line would hardly serve the purpose of s 9, because it would not inform the purchaser of the levels and slope of the land in its natural state.  If the natural state had not been altered at the time of the contract, the purchaser, in most cases at least, would be able to read the map with the benefit of having seen the land.  Nevertheless, without knowing the amount of the contour interval, the purchaser would not have a map of the natural surface with which to compare a map of the proposed surface.  I accept that if the natural surface contours were not quantified on or quantifiable from the map, it would not satisfy s 9(2)(c).  I am fortified in that view by the evidence of Mr Barbaro, a surveyor called in the defendants’ case whose evidence (which was uncontradicted on this point) was that it is the common practice of surveyors to provide the contour interval, either on the face of a map or in the title block of the map. 
  1. Until the second day of the trial, it appeared to be common ground that this disclosure plan did not reveal contour intervals or levels for the natural surface contours. In the evidence in chief given by a surveyor called by the plaintiff, Mr Purcell, he said that by looking at the disclosure plan, but only that plan, he could not determine what the contour interval was.[4]  But he said that by looking beyond the plan, and in particular at the topographical maps kept by the Brisbane City Council, the contour intervals and levels as shown on the disclosure plan would be revealed.  I accept that last statement, which is not contested.  However, it provides no answer to the case that it was the disclosure plan which had to reveal the information required to be provided pursuant to s 9.  That provision requires the purchaser to be provided with a map which itself shows the natural surface contours.  A search of the Council’s maps would reveal that information, but it was hardly the intention of s 9 that the purchaser should have to do that in order to understand or resolve some ambiguity in what was supposed to be disclosed by the vendor. 
  1. However, on the next day of the trial, Mr Purcell was recalled, having produced yet a further report over the intervening weekend.[5]  In this report, he reversed his opinion that the contour levels could not be ascertained from the disclosure plan itself.  He reasoned as follows.  On the disclosure plan, there were several points at which a natural surface contour intersected a finished surface contour.  Of course, that of itself would signify nothing because the two sets of contours depict different landscapes.  However, in some instances, that intersection occurred precisely on the northern boundary of lot 10 or lot 11.  To the north of lots 10 and 11 on this map, the natural surface contours were continued from where they were drawn on the lots themselves.  But the same was not done for the finished contours.  There were no finished contours shown on the land immediately to the north of lots 10 and 11.  Importantly, Mr Purcell wrote that that land to the north of lots 10 and 11, described on the disclosure plan as “park”, was “not affected by the proposed earthworks”.  In other words, the natural surface on the park would be undisturbed so that it would also be the finished surface.  As the finished surface would be at the same level at the northern end of lots 10 and 11 as it would be immediately beyond their northern boundary, the level of natural surface contour was ascertainable if it intersected a finished contour right on that boundary.  For example, where the finished contour which was marked “67.0” intersected a natural surface contour on the northern boundary of lot 11, it was apparent that both the finished and natural surface at that point was at level “67.0”.  Thus, the level of that natural surface contour could be identified.  The same could be said of the intersections of the finished contours marked “68.0” and “69.0”, because they also occurred at the very point of the northern boundary of lot 10.  In each of those cases, the relatively small print upon the map made that intersection relatively difficult to read.  Nevertheless it was apparent. 
  1. The surveyor called by the defendants, Mr Barbaro, said in cross-examination that he agreed with “Mr Purcell’s methodology” in this respect, and I am persuaded to accept it.  Also, upon the premise, as stated by Mr Purcell, that the property described as “the park” was not affected by earthworks so that immediately to the north of lots 10 and 11 the natural surface would remain unaltered.  That premise is not disputed.  However, must that fact have been known or assumed by the purchaser?  The purpose of a disclosure plan is to reveal, in this respect, the natural surface contours of the land to be purchased, without the need to refer to anything else, or at least anything outside the disclosure statement or the contract itself. 
  1. In my conclusion, the disclosure plan did represent that the land immediately to the north of lots 10 and 11 would not be the subject of earthworks. There was no text which said so. However, the map showed the finished surface contours extending to other land adjoining lot 10 or 11 to the east, south and west. Yet it showed no extension of the finished surface contours beyond the northern boundaries of lots 10 and 11 (or lot 12 in so far as that was shown). Further, there is the fact that there are many points on the northern boundary of lots 10 or 11 at which a finished surface contour intersected a natural surface contour. That indicates that the surface of lots 10 and 11 is being altered, but so that it meets the natural surface of the “park” upon their common boundary. From the finished surface contours, it can be seen that the proposed earthworks on lot 10 would change the natural landscape by making it flatter and lower until the rear or northern part of lot 10, where in the last few metres before the northern boundary the finished landscape would rise sharply. In other words, there was what Mr Purcell described as an evident batter bank to effect a transition from the new surface on lot 10 to the natural surface on its northern boundary.
  1. Therefore, the plaintiff has proved that the disclosure plan, upon that closer examination, did provide information from which the levels and intervals of the natural surface contours can be deduced. It does not matter that this information would not be immediately obvious, at least to the lay person. The question is whether the map unambiguously disclosed that information, albeit that that would require a careful analysis by someone familiar with contour plans.
  1. It can be seen then that the natural surface contours were shown at one metre intervals. The remaining question is whether that interval was an appropriate contour interval. The issue here is whether one metre was the smallest interval shown upon the electronic maps kept by the Brisbane City Council. The plaintiff says it was; the defendants say that the Council’s map showed contours at intervals at half a metre.
  1. The relevant maps of the Council are provided to subscribers through what is called the eBIMAP service. The maps are published to subscribers electronically, and are searched by descriptions of registered land. So in the case of these proposed allotments, a search would be conducted by reference to a larger parcel of land from which these allotments were to be created, which Mr Purcell described as the “mother lot”. In his original report, he identified three pieces of land as the mother lots, being lots 3 and 4 on RP 233946 and lot 7 on SP 109173. However, as he wrote in a later report,[6] on 11 December 2007 the parcel of land from which lots 10 and 11 were to be divided became that described as lot 3 on SP 191150. 
  1. The location of the so-called mother lot is one search criterion in the use of this service. Others are the scale of the map which is sought, whether the user wants a cadastral map (showing streets and lot boundaries), and the contour interval which the searcher wants the map to depict. In the search process, a menu on the screen might allow the searcher to choose between contour intervals of half a metre, one metre or five metres, depending upon the other search criteria. In general, a higher scale of map is likely to limit the options to relatively higher contour intervals. So when Mr Purcell searched the “former Mother lots” (those three referred to in his original report), a half metre contour interval was not displayed at a scale greater than 1:2500.
  1. In addition, the contour intervals which the search will reveal might depend upon the size of page upon which the map is to be printed, again as selected by the searcher. The size of the page affects the extent to which the scale of the map can be reduced and still fit onto the page, and as noted, the scale of the map can affect the contour intervals which are depicted.
  1. But in all of this, the Council’s electronic maps did depict, for what had become the mother lot by the date of this contract (lot 3 on SP 191150), contours at an interval as small as half a metre, as long as the scale of the map was less than 1:2500. In other words, a search for a map of the relevant land showing natural surface contours at the smallest contour intervals would have revealed a map with contours at an interval of half a metre. Accordingly, the defendants argue, contour intervals of one metre, as shown in the disclosure plans, were not “appropriate contour intervals”, because they were not “the smallest of the … contour intervals shown on a local government topographic map that includes the allotment”.
  1. However, Mr Purcell’s evidence was that the user of the eBIMAP service is also directed to what is described as the “metadata information”. He said that the metadata is a key component in the use and understanding of data on the eBIMAP system and that one of its functions is to define the limitations on the use of that data. There is metadata information provided to the user about, in particular, the half metre and one metre contour intervals. Under a heading “Use Constraints”, the same text appears for both half metre and one metre contours:

Use Constraints:  In the Flood Plains and Residential Areas, 90% of all well-defined spot elevations and DEM points are within 0.l5m of their true elevation and the remaining 10% do not exceed 0.3m of their true elevation.  In the Non Residential Areas, 90% of all well-defined spot elevations and DEM points are within 0.3m of their true elevation and the remaining 10% do not exceed 0.6m of their true elevation.  In areas where the number of ALS ground strikes fell to less than 50% of the total ALS strikes, contours were reclassified to ‘approximate contour’.  These ‘approximate contours’ are indicated by a dashed line.”

The metadata about a half metre contour interval also contains this:

Abstract:  The ‘Contour 02 (0.5m)’ data set is a 0.5 metre Contour data set covering the Flood Plains and Residential Areas of Brisbane and in areas considered Non Residential or Forested, eg Brisbane Forest Park, the contour interval has been reduced to 1 metre.”

The corresponding metadata for the one metre contour interval is simply as follows:

Abstract:  The ‘Contour 02 (1m)’ data set is a 1 metre Contour data set covering Brisbane.”

  1. Mr Purcell’s evidence is that the metadata would make it inappropriate to use half metre contour intervals for two reasons. The first is that this land was “Non Residential”. That was not a term defined by the metadata, but Mr Purcell said that ordinarily a surveyor would interpret it in the sense of land not used for residential purposes. Secondly, because the contours for non residential land are correct only to plus or minus 0.3 metres, there is a potential variation of 0.6 metres which would make contour intervals of 0.5 metres unreliable. Mr Barbaro appeared to agree with that in his report, where he wrote that it was “reasonable that a contour interval of 1.0m could be the smallest contour interval available to an accuracy of plus or minus 0.3 metres for non-residential areas”. But in his oral evidence, he said that for the purposes of a disclosure plan as required by the LSA, intervals of half a metre should have been used because they were the smallest depicted upon the Council’s maps. It seemed that Mr Barbaro’s evidence in that respect was really the result of an assumption about a legal question, which is whether s 9 required the smallest contour intervals to be employed where they were shown on a Council map, irrespective of what the Council published with that map which might qualify what was otherwise represented by it. 
  1. The metadata in this respect derives from a letter to the Council written by the entity which the Council commissioned to produce these electronic maps. In that letter, dated 29 April 2003, it is explained that data was collected by laser scanning from the air some 664,000 points across Brisbane.  Under the heading “Accuracy”, this was written:

“In the Flood Plains and Residential Areas, 90% of all well-defined spot elevations and DEM points are within 0.15m of their true elevation and the remaining 10% do not exceed 0.3 metres of their true elevation.

In the Non Residential Area (Zone 2 in Figure 1), 90% of all well-defined spot elevations and DEM points are within 0.3 metres of their true elevation and the remaining 10% do not exceed 0.6 metres of their true elevation.”

As appears from Figure 1 which was attached to that letter, “Zone 2” was in effect the Brisbane Forest Park, rather than any other area such as the subject land, which had not been developed for residential purposes.  Within the same letter under the heading “Contours”, this appeared:

“The project required 0.5m contours to be provided in the Flood Plains and Residential Areas, and 1m contours in the Non Residential Areas of Zone 2.”

  1. It appears that the content of this letter has not been accurately reproduced in the metadata published to users of the eBIMAP service. According to the metadata, any non residential area is subject to those constraints. Users of the service do not have the benefit of the letter. They would be likely to interpret the metadata as Mr Purcell does.  It is difficult to see what other meaning could be given to “Non Residential”, without the benefit of the letter.
  1. Section 9(7) requires the use of contour intervals of not more than the smallest of the contour intervals “shown” on a local government topographic map that includes the allotment. In my view, what is shown on a topographic map includes any text which is published with that map and which affects what is represented by the map. A scale on a map would be an example. But the metadata is also within this category. According to Mr Purcell, whose opinion as a surveyor is uncontradicted on this question and which I accept, the effect of the metadata is that contour intervals of half a metre, if appearing on a map for land which was non residential, would be unreliable and that the landscape would be reliably represented by intervals of no less than one metre. It is not to the point that, having regard to the letter from the entity which prepared the maps, the metadata should not have been in those terms.
  1. It cannot be supposed that the purpose of s 9 of the LSA would be served by its requiring information to be provided which was unreliable and likely to mislead a purchaser and which the vendor, if properly advised as to what was represented by a relevant topographic map, would know was unreliable.  In this instance, the smallest contour interval represented by the Council to be reliable, in its publication of topographic maps, was an interval of one metre.  It follows that the appropriate contour intervals were those used on this disclosure plan. 
  1. The outcome is that the plaintiff did comply with s 9 of the LSA.  The case for resisting specific performance fails.  There will be a decree of specific performance of each contract.  I will hear the parties as to the terms of those orders.  But I record here that the defendant concedes that for each contract there should be added to the unpaid balance of the purchase price, a sum for interest on that balance from 30 January 2009 to the date of completion (pursuant to cl 11.1 of the standard commercial conditions).  That interest was claimed by way of damages against the purchaser but it is actually an amount payable as a debt under the contract. 
  1. The plaintiff seeks damages, in addition to specific performance, for its costs of holding the lands since 30 January 2009, which are $14,496.51 for rates, $19,627.20 for land tax and $1,375.78 for water and sewerage. These amounts are undisputed and there will be a judgment for their total of $35,499.49.

Claim against the second defendant

  1. The claim against this defendant is upon the premise that the contract was validly terminated by the purchaser. Accordingly, the plaintiff’s claim against the second defendant must be dismissed.  But it is necessary to record my findings relevant to that claim.
  1. The plaintiff’s case against the second defendant was in reliance upon cl 6 and cl 11 of the guarantee and indemnity signed by him.  Those clauses are as follows:

“6.If by reason of the Vendor’s non-compliance with any statute or with any rule of law or equity or for any other reason whatsoever any term or condition of the Contract is rendered void, voidable or unenforceable by the Vendor against the Purchaser then the Guarantor HEREBY COVENANTS at all times to indemnify the Vendor to the full extent possible in respect of the moneys or any part thereof not required to be paid by the Purchaser to the Vendor as aforesaid and the Guarantor further indemnifies the Vendor against and in respect of any damage, loss, claim, demand, cost, expense or obligation direct or indirect which the Vendor has or may suffer, incur or sustain in respect thereof.

  1. As a separate obligation, and for the consideration referred to above, the Guarantor covenants to indemnify the Vendor from and against any damage, loss, claim, demand, cost, expense or obligation direct or indirect out of any breach or non-observance by the Purchaser of any terms or conditions on the part of the Purchaser to be performed or observed under and pursuant to the Contract.  The Guarantor covenants that this indemnity will continue and the Guarantor shall remain liable to the Vendor under this indemnity notwithstanding that as a consequence of any such breach of non-observance the Vendor has exercised any of its rights under the Contract and notwithstanding that the Purchaser may be wound up or that by reason of any statute or any rule of law or for any other reason whatsoever any term or condition of the Contract is unenforceable by the Vendor against the Purchaser.”
  1. Upon several legal arguments, the second defendant denied that he is liable to pay the plaintiff at all.  He argued that upon the proper construction of the document signed by him, these clauses were not engaged by the circumstance that the contracts of sale were avoided under s 9 of the LSA.  He also argued that the clauses which were relied upon by the plaintiff were in each case an “avoidance provision” and therefore void under s 31 of the LSA.  He further argued that because the guarantee and indemnity document was within the contract document, it was also avoided under s 9(5) of the LSA, which provides that “the purchaser may avoid the instrument relating to the sale”.  It is unnecessary to consider those arguments.  I will discuss only the factual issues relating to the claim against this defendant.
  1. Ultimately the plaintiff’s case was quantified, within an annexure to the plaintiff’s written submissions, as follows:

Difference between contract prices and value of the land$786,120

Expenses not reimbursed$8,566

Interest$607,848

Holding costs$35,499

Costs of enforcement (estimate only)$300,000

Total$1,738,033

  1. The contract prices totalled $2,868,120. The plaintiff’s case, based upon the evidence of a valuer called in its case, was that the combined value of the lands as at 30 January 2009, and also at the trial, was $2,100,000. The difference is in fact $768,120. But there was a substantial contest as to the value of the lands. According to the valuer called by the defendants, the lands were worth their contract prices as at 30 January 2009 and had fallen to a combined value of $2,400,000 by 20 September 2010.
  1. The valuer in the plaintiff’s case, Mr Bernoth, and the valuer in the defendant’s case, Mr Olive, conferred and produced a joint report setting out matters upon which they did or did not agree.  The matters on which they agreed included the following:
  • The direct comparison method of valuation is appropriate.
  • The market for vacant industrial land fell as a result of the global financial crisis and other factors.
  • Between the middle of 2008 and the middle of 2009 there were no sales of lots in the development of which these two lots were part, described as the Southlink Business Park and relatively few sales of vacant industrial land in the greater Brisbane area. 
  • The sales to be given the most weight are those within the Southlink Business Park and another development called the Metrowest Business and Technology Park.
  • Lots 10 and 11 would be sold and should be valued together, because lot 11 has a narrow frontage reducing the use which could be made of that land as a separate parcel. 
  1. Whilst the valuers agreed that there had been decline in values after the date of the contracts, they disagreed about the timing of that decline as well about its extent. Mr Bernoth’s view was that the market began to decline from about the middle of 2008; Mr Olive’s view was that values did not fall until the last quarter of 2009. But neither was able to base his opinion upon a sale within the Southlink Business Park between the middle of 2008 and the middle of 2009. 
  1. In the seven months from January through July 2008, in addition to the subject sales, there were some eight comparable sales within the Southlink Business Park.  The valuers agreed that it was the price per square metre which was relevant under these comparable sales.  The range within those eight transactions was from $360 to $430 per square metre.  The total area of lots 10 and 11 was 7,989 square metres so that the contract prices equated to $359 per square metre.  After July 2008, the next sale in Southlink was on 31 August 2009, for the land described as lot 27 on SP 211082.  The price was $1,240,525 for an area of 3,817 square metres, an amount per square metre of $325.  However, that land had benefited from a material change of use (from light industry to commercial use) so that its use as a comparison is limited.  There were then four further sales within Southlink in 2009, at prices which equated to amounts ranging from $240 to $290 per square metre.  The highest of those, Mr Bernoth said, benefited from its highway frontage. 
  1. In the Metrowest subdivision, there were seven sales in the period of June through October 2008, for prices equivalent to $338 per square metre up to $387 per square metre. There were three sales in early 2009: one in January for the equivalent of $345 per square metre and two in March for $334 and $370 per square metre. There were then a further 15 sales from July 2009 to July 2010 at prices ranging from $305 to $380 per square metre. But it appears that of those 15 sales, the 13 of them which occurred in or after November 2009 were for substantially lower prices than the two which occurred in July and August 2009, providing some support for Mr Olive’s view that the values of such property fell only from late 2009. 
  1. Mr Olive’s opinion that there was no fall in value by 30 January 2009 seems difficult to accept, when the events of the financial world of 2008 are recalled. It was late in that year that, for example, the Commonwealth government saw fit to guarantee all bank deposits. The global financial crisis had a major impact upon the availability of credit, including for investment in land such as this. It seems inconceivable that the values of these lands were unaffected. Yet Mr Olive said that values had held up, because it was not until mid 2009 that the sale prices in Southlink were seen to fall.  But that does not mean that the values were unaffected.  Rather, it was the consequence of such a weak market that there were no sales in Southlink until then.
  1. Mr Bernoth’s figure of $2,100,000 equates to $262 per square metre. This does not seem low in comparison with the sales in Southlink in 2009 (apart from lot 27). That represents a fall of about 26.8% in value, if it be assumed for the moment that the contract prices equated with the values at the time when the contracts were made. It is consistent with Mr Bernoth’s statement that there was a 25% to 30% reduction in the value of such property from about the middle of 2008 onward.  Mr Olive’s view was that there was a 25% to 30% drop in value in this market, but only from about October 2009. 
  1. There was other evidence relied upon by the plaintiff, from witnesses who had been involved with the marketing of Southlink. There was unchallenged evidence from Mr Seale of Colliers International and Mr Otter of Australand Holdings Limited (a joint venturer in this development) which was to the effect that the plaintiff was unable to sell lots in the Southlink subdivision at prices even 25% below those obtained for lots 10 and 11, in the period from mid 2008 through to May 2009.  This provides a further reason to doubt Mr Olive’s opinion. 
  1. My view is that the extraordinary economic circumstances of late 2008 explain the low activity in this market, and in particular the absence of sales of other lots within the same subdivision, between late 2008 and mid 2009. I find that the values of these lands had fallen by January 2009, and the then values are indicated by the prices which were achieved when sales resumed in 2009, rather than by the prices which had been achieved in the first half of 2008. I am persuaded to accept Mr Bernoth’s opinion that these lands had a combined value of $2,100,000 as at 30 January 2009 and from then until the trial.
  1. Accordingly, had I held that the first defendant had duly avoided the contracts but that the second defendant was liable to indemnify the plaintiff for its loss, I would have allowed the difference between the contract prices and that value, in the amount of $768,120. 
  1. The next component of the plaintiff’s claim was for $8,566. This was the total of adjustments to be made in the plaintiff’s favour for rates, water rates and land tax, had the contracts been completed on 30 January 2009. According to the plaintiff’s annexure, the relevant amounts are taken from settlement statements sent by its solicitors ahead of the proposed settlements. I would not have allowed these expenses. They were proposed adjustments, in effect, for post settlement expenses which had already been paid by the vendor. Effectively the same amounts are claimed within the “holding costs” component, which is the total of rates, land tax and water rates from 30 January 2009.
  1. Next there was a claim for interest of $607,847.94, calculated from 30 January 2009 to 25 November 2010 and $992.34 per day from then. This was said to be calculated at the contractual rate on the balance purchase prices to be paid on settlement, according to the terms of the contracts. That calculation was not disputed. The plaintiff submits that it represented “an appropriate guide” to its loss from not receiving the net sale proceeds under the contracts of sale on 30 January 2009.
  1. At this point, it is necessary to mention GST. The contracts provided that the stated prices were exclusive of GST, so that the purchaser was to pay in addition to the purchase price “an amount equivalent to the amount payable by the vendor as GST on the Supply of the Property”.[7]  All of the figures which I have discussed thus far in relation to the claim against the second defendant do not include GST.  For example, the prices under comparable sales were net of GST.  But at this point GST becomes relevant, because the plaintiff says that it should have interest on the amounts it would have received at settlement, which would have included GST. 
  1. I would not have allowed the interest as claimed. In particular, I would not have allowed, as against this defendant, interest on the balance purchase prices. I would have allowed interest under s 47 of the Supreme Court Act 1995 (Qld) at 9% upon the difference between the prices and values ($768,120) from 30 January 2009.  The plaintiff’s loss from its contract being duly avoided by the purchaser was from the fact that it then held land which was worth less than the contract price.  Put another way, the plaintiff’s loss of bargain deprived the plaintiff of the receipt of a higher sum than the land was then worth.  Damages for a purchaser’s failure to perform a contract for the sale of land are usually measured by that difference between price and value, upon the theory that when the contract is terminated by the innocent vendor, it is able to immediately resell for the land’s then value.  The plaintiff’s argument would seek to have the plaintiff compensated for not having the purchase price during the period since January 2009, when it also retained the land.  The plaintiff did not attempt to prove that it could not sell those two lots for what I have held was their value as and from January 2009.  I would have allowed interest at, say, 9% on $768,120 from 30 January 2009. 
  1. Similarly, I would not have allowed the holding costs as claimed against the second defendant.  The fact that these costs were incurred by the plaintiff is not contested, as I have noted above in allowing them as damages in addition to specific performance against the first defendant.  But the claim against the second defendant is a different matter.  Here the plaintiff would be compensated for the loss of the contracts, a loss which occurred on 30 January 2009.  Again, in theory the plaintiff was able to resell the lots at their then values.  If the plaintiff did not take the necessary steps to do so, it could not claim the ongoing costs of ownership.
  1. There remains a component of an estimated $300,000 for what was said to be the plaintiff’s “legal and other costs of enforcement”. These were not proved at the trial. In the ultimate submissions for the plaintiff, it was said that the plaintiff would provide evidence as to them “after the date of any judgment that the guarantee responds and also provides a complete indemnity for [the plaintiff’s] costs of enforcement”. This component seems to be claimed mainly upon the basis of cl 11 of the document signed by the second defendant, by which he agreed to indemnify the plaintiff against any cost or expense out of any “breach of non-observance by the Purchaser … notwithstanding that … by reason of any statute … any term or condition of the Contract is unenforceable by the Vendor against the Purchaser”.  The notion that the plaintiff was entitled to be indemnified for its legal expenses in pursuing an unmeritorious claim against the purchaser seemed difficult to accept.  Further, the suggestion that this component did not have to be proved at the trial is curious at least.  For present purposes, it is sufficient to say that no finding can be made as to the quantum of these expenses. 

Orders

  1. There will be a decree of specific performance of each of the contracts between the plaintiff and the first defendant.  There will be an award of damages, in addition to specific performance, against the first defendant in the sum of $35,499.49, together with interest upon that sum at 9% from 15 January 2010.[8]  The claim against the second defendant will be dismissed.  I will hear the parties as to other orders including costs.

 

Footnotes

[1] By s 6.

[2] Apart from s 9(2)(d).

[3] Integrated Planning and Other Legislation Amendment Act 2003 (Qld), s 36(2), s 122(2).

[4] Transcript 2-27.

[5] Supplementary Report No 3, exhibit 21.

[6] Exhibit 5.

[7] Clause 34.5 of the standard commercial conditions.

[8] Being about the half way point in the period from 30 January 2009 and 31 December 2010, the date to which those holdings costs were calculated in the plaintiff’s submissions.

Close

Editorial Notes

  • Published Case Name:

    Treton Pty Ltd v HM Australia Holdings Pty Ltd and Anor

  • Shortened Case Name:

    Treton Pty Ltd v HM Australia Holdings Pty Ltd

  • MNC:

    [2011] QSC 38

  • Court:

    QSC

  • Judge(s):

    McMurdo J

  • Date:

    21 Mar 2011

Litigation History

Event Citation or File Date Notes
Primary Judgment [2011] QSC 38 21 Mar 2011 -
Appeal Determined (QCA) [2011] QCA 382 23 Dec 2011 -

Appeal Status

{solid} Appeal Determined (QCA)