DJ Fry Pty Ltd v Permanent Mortgages Pty Ltd
[2022] QCA 80
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- Unreported Judgment
- DJ Fry Pty Ltd v Permanent Mortgages Pty Ltd[2022] QCA 80
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DJ Fry Pty Ltd v Permanent Mortgages Pty Ltd[2022] QCA 80
DJ Fry Pty Ltd v Permanent Mortgages Pty Ltd[2022] QCA 80
[2022] QCA 80
COURT OF APPEAL
MORRISON JA
McMURDO JA
MULLINS JA
Appeal No 657 of 2022
SC No 185 of 2019
DJ FRY DEVELOPMENTS PTY LTDAppellant
ACN 065 214 226
AS TRUSTEE FOR THE DJ FRY FAMILY TRUST
v
PERMANENT MORTAGES PTY LIMITEDRespondents
ACN 097 176 362
LATROBE FINANCIAL SERVICES PTY LTD
ACN 006 479 527
BRISBANE
WEDNESDAY, 18 MAY 2022
JUDGMENT
MORRISON JA: The appellant, DJ Fry, borrowed money from the first respondent, Permanent Mortgages, with the second respondent La Trobe being the mortgage manager. The loan was secured by a registered mortgage over land held by DJ Fry. The mortgage was over two parcels of land that DJ Fry required to carry out a proposed property development. In 2010, DJ Fry succeeded in obtaining a development approval to reconfigure the development site as well as an adjacent lot that was not owned by DJ Fry, from three lots into 49 lots. DJ Fry defaulted in its repayments and Permanent Mortgages exercised its power of sale over the property. For that purpose, La Trobe engaged a real estate agent to advertise and sell the property by public auction. The advertising for sale is at the heart of the issues on this appeal.
The advertising was placed in a number of newspapers as well as online websites, such as realestate.com.au, realcommercial.com.au, and on the agent’s website. The advertisement set out an image of the 49 lots proposed in the subdivision and described the land in these terms:
“DA SUBDIVISION
MORTGAGEE IN POSSESSION
1003 NORMAN ROAD, PARKHURST, ROCKHAMPTON
Subdivision at Parkhurst on the Northern Fringe of North Rockhampton’s Growth Area.
- 4.51 Hectare (Approx)
- Development Application for 49 lots – 3 stages.”
And then followed further details of the property. The advertising also gave the name and phone number of the agent. The property was passed in at the public auction but sold the following day. DJ Fry contends that it was sold at an undervalue. DJ Fry commenced proceedings against Permanent Mortgages and La Trobe, seeking an account of all sums due in respect of the sale and damages for breach of duty. The breach of duty was alleged to be under s 85(1) of the Property Law Act 1974 (Qld), s 420A of the Corporations Act 2001 (Cth), or at common law.
The amended statement of claim alleged that the breach of duty was by reason of: (a) advertising the property with the existence of a development application in the written advertisements and announcing at the public auction that there was no development approval, (b) failing to actively and effectively advertise and/or have an appropriately focused or directed marketing campaign to sell the property, (c) the advertisement for the public auction incorrectly referred to a “Development Application for 49 lots”, when in fact that the property had a development approval for 49 lots, which attached to land, and (d) selling the land without regard to the existence of the development approval.
The Defence admitted that the advertisement referred to a “Development application and not a development approval” in those words, but pleaded that: (a) that totality of the advertising conveyed to those genuinely interested in purchasing the land, including registered bidders, that it had the benefit of a development approval, Permanent Mortgages was justified in so describing the features of the land, given the conditions attached to the development approval which meant the approval issued was unlikely ever to be effectuated, (c) the contention that the auctioneer announced that there was no development approval was denied, and it was pleaded affirmatively that a director of DJ Fry announced to attendees that the property did have a development approval in place, and (d) affirmatively pleaded that all registered bidders at the auction were given a copy of the development approval.
DJ Fry applied for summary judgment under r 292 of the Uniform Civil Procedure Rules 1999 (Qld). The case presented was confined to the way in which the land was advertised. Summary judgment was also sought – or was sought on the issue of liability only.
The learned primary judge refused summary judgment, making the following points:
- (a)the development approval was for a reconfiguration of three lots of land into 48 lots, but DJ Fry was only the registered proprietor of two of those three lots;
- (b)the conditions of the development approval required not only the reconfiguration of the third lot, but also the acquisition of sewerage easements over adjacent land which was not owned by DJ Fry, not by the owner of the third lot;
- (c)whilst there was a reasonable argument to be made that the advertising would have been misleading, it was also true to say that the approval could only have practical effect with the acquisition of third-party rights;
- (d)difficult questions arose as to what the proper form of advertising ought to have been in that complicated situation;
- (e)there was “at least a reasonable argument that a reader of the advertisement would have presumed that the ‘DA SUBDIVISION’ was in fact a reference to a development approval”;
- (f)there was no evidence upon which a finding could be made as to what a reasonable residential property developer would have construed by reading the advertisement;
- (g)given that the contention for DJ Fry was that the advertisement must have been such as to “put people on notice that there was a development approval in place, difficult questions arose as to whether the form of the advertisement would have garnered any more interest if it had been so altered, and if so, what type of interest might have been generated in terms of potential property developers; and
- (h)numerous factual issues arose on the face of the pleadings.
DJ Fry has appealed the dismissal of the summary judgment application on grounds that relate to the advertising utilised for the sale.
The evidence established that there had been 11 inspections of the land as a result of the advertising process, culminating in three registered bidders at the auction process itself. As for those bidders, the pleadings exposed a clear factual issue concerning whether they had been told there was or was not a development approval for the land.
The form of the advertisement used contained, relevantly, two material lines. The first was in the most prominent font, and in capitals, reading: “DA SUBDIVISION”. Whilst it is true to say that the letters “DA” could mean development application, as opposed to development approval, the natural meaning one would give to it, considering that this was a potential subdivision being sold, was that the land had a development approval for the subdivision.
The conclusion that the initials “DA” would signify a development approval rather than a development application, received some support in the evidence before the learned primary judge. In 2012 when consideration was being given to the sale by the mortgagee, the agent organising the sale used the term “DA”, claiming to mean a development approval. Further, in October 2012, the real estate agent appointed to advertise as to the sale also used the phrase “DA” to indicate a development approval.
There is no criticism levelled at the frequency or the selected avenues for the advertising. One can therefore conclude, for present purposes, that the advertising reached as many people as it should or could have.
The advertising was plainly directed at property developers. The land was sold as a property development. It is, in my view, inherently likely that buyers such as property developers would take the advertisement at face value without checking with the agent as to the status of the “DA” and obtaining a copy. The conditions attached to any development approval form a critical part of an assessment of the value of the land with the approval.
In October 2012, a second real estate agent’s firm was consulted for their recommendations for the method of marketing. They advised that the property should be marketed as “Mortgagee in Possession”, because their experience was marketing that way:
“Definitely created more interested more interest from buyers in a marketing campaign and they are more prepared to do their research prior to the auction date.”
That lends support for the inference one would draw from normal experience, that purchasers interested in a property development would carry out their own research, particularly as to the state of the development approval.
The evidence before the learned primary judge showed that;
- agents for the purpose of conducting the auction were appointed on 21 January 2013;
- the advertising campaign was in February and March 2013;
- on 12 March 2013 the advertising campaign had resulted in 11 inspections with the agent;
- some of the inspecting parties expressed concerns that the development may suffer from issues relating to the stormwater drainage, and that it impacted on their level of interest;
- despite that, the agent was hopeful that three or four parties might attend as bidders at the auction and at the auction; and
- a copy of the development approval was made available to all those who attended.
It is therefore evident that factual questions would arise as to whether the advertisement reached all of the target market, and whether any of the target audience proceeded under any misapprehension.
Further, the question of whether an advertisement in a different form would have resulted in any different potential buyers or attendees of the auction, or registered bidders, is one classically for resolution at a trial. Resolution of those issues would depend upon evidence of an expert nature from real estate marketers and auctioneers, and maybe others. Further, more evidence is required to resolve the factual dispute on the pleadings, as to whether those attending the auction were told there was a development approval and given a copy.
All of the matters to which I have referred meant that the application for summary judgment should have been dismissed. Such an application is usually granted when it can be demonstrated that there is no real prospect of successfully defending that part of the plaintiff’s claim and that there is no need for a trial: Halverson & Anor v Birkenhead Super Pty Limited [2021] QCA 211, at [25]. A Judge hearing such an application has to be able to reach a high degree of certainty about the ultimate outcome of the proceedings before exercising the discretion to give judgment in a summary way: Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232.
Mr Honchin, of counsel, appearing for DJ Fry, frankly conceded that La Trobe only acted as an agent, and the pleading should be understand that way. That creates the problem that the appellant’s pleading does not reveal an apparent cause of action against the second respondent. This was a sale by the first respondent exercising its power of sale. Consequently, no judgment could be given against the second respondent, which, as was also conceded, provides a further discretionary consideration against giving summary judgment against the first respondent.
In my view, the learned primary judge was correct in dismissing the application. The appeal must be dismissed with costs and I propose the following orders:
- Appeal dismissed.
- The appellant pay the respondents’ costs of and incidental to the appeal.
McMURDO JA: I agree.
MULLINS JA: I agree.
MORRISON JA: The orders of the Court are as follows:
- Appeal dismissed.
- The appellant pay the respondents’ costs of and incidental to the appeal.
Is there anything further?
MR HONCHIN: Nothing further, your Honour.
MORRISON JA: Thank you. Thank you both. Adjourn the Court.