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Sutton v Prime Real Estate Australia Pty Ltd (No 2)[2019] QCAT 325

Sutton v Prime Real Estate Australia Pty Ltd (No 2)[2019] QCAT 325

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Sutton & Anor v Cecil Tomkins and Anor (No. 2); Cahill v Cecil Tomkins & Anor (No. 2) [2019] QCAT 325

PARTIES:

In OCR170-14:

SANDRA JOANNE SUTTON

DAVID JOHN SUTTON

(applicants)

v

PRIME REAL ESTATE AUSTRALIA PTY LTD

CECIL THOMAS JOHN TOMKINS

(respondent)

CHIEF EXECUTIVE DEPARTMENT OF JUSTICE AND ATTORNEY-GENERAL

(intervenor)

In OCR176-14:

DAMIEN EDWARD CAHILL

(applicant)

v

PRIME REAL ESTATE AUSTRALIA PTY LTD

CECIL THOMAS JOHN TOMKINS

(respondent)

CHIEF EXECUTIVE DEPARTMENT OF JUSTICE AND ATTORNEY-GENERAL

(intervenor)

APPLICATION NO/S:

OCR 170-14; OCR176-14

MATTER TYPE:

Occupational regulation matters

DELIVERED ON:

5 August 2019

HEARING DATE:

1 May 2018, 2 May 2018, 21 August 2018

HEARD AT:

Brisbane

DECISION OF:

Member Paratz

ORDERS:

The claims made against the Fund maintained under the Property Agents and Motor Dealers Act 2000 (Qld) (and the Agents Financial Administration Act 2014 (Qld)) by Sandra Joanne Sutton, David John Sutton, and Damien Edward Cahill, on 19 March 2012, are rejected.

CATCHWORDS:

ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – where it was alleged that a real estate agent made representations as to purchase of home units ‘off the plan’ – whether representations were made – whether representations were false and misleading – whether representations were actionable – whether the representations gave rise to a claim against the fund maintained under the Agents Financial Administration Act 2014 (Qld)

Property Agents And Motor Dealers Act 2000 (Qld), s 470(1), s 574

Agents Financial Administration Act 2014 (Qld), s 212

Cahill v Cecil Tomkins t/as Prime Real Estate [2014] QCAT 104

Cahill v Tomkins [2015] QCAT 410

Robertson & Anor v Airstrike Industrial Pty Ltd [2016] QCA 104

Sutton v Thompson Pty Ltd [1987] FCA 167

Sutton & Anor v Cecil Tomkins t/as Prime Real Estate [2014] QCAT 111

Sutton v Tomkins [2015] QCAT 411

Sutton & Ors v Tomkins [2017] QCATA 44

APPEARANCES & REPRESENTATION:

 

Applicant:

S Hogg of Counsel, instructed by Diamonds Solicitors

Respondent:

No appearance

Intervenor:

M Steele of Counsel, instructed by Crown Law

REASONS FOR DECISION

  1. [1]
    These two matters have been reheard together. I will issue Joint Reasons and Orders.
  2. [2]
    The matters have a complex and extended history.
  3. [3]
    I extended the time for filing of a claim against the claim fund by Mr and Ms Sutton, and Mr Cahill, on 21 March 2014, and referred the claim to the Chief Executive for processing.[1]
  4. [4]
    I made a decision in the matter of Sutton (OCR170-14) on 7 October 2015 rejecting the claim made against the fund maintained under the Property Agents and Motor Dealers Act 2000 (Qld) (‘the Act’) and the Agents Financial Administration Act 2014 (Qld), by Sandra Joanne Sutton and David John Sutton (‘the Suttons’).[2]
  5. [5]
    I made a decision in the matter of Cahill (OCR176-14) on 7 October 2015 rejecting the claim made against the fund maintained under the Property Agents and Motor Dealers Act 2000 (Qld) (‘the Act’) and the Agents Financial Administration Act 2014 (Qld), by Damien Edward Cahill (‘Mr Cahill’).[3]
  6. [6]
    The Suttons and Mr Cahill appealed those decisions, and Orders were made by the Appeal Tribunal on 7 April 2017 as follows:
  1. 1.
    The applications for leave to adduce further evidence are refused.
  2. 2.
    The appeal is allowed in relation to the claims insofar as they are based on the alleged misrepresentations of the respondent.
  3. 3.
    Otherwise, leave to appeal is refused.
  4. 4.
    The Tribunal’s decisions of 7 October 2015 in OCR170-14 and OCR176-14 rejecting the Applicant’s claims are set aside.
  5. 5.
    The matters are returned to the tribunal for reconsideration according to law in respect of the claims insofar as they are based on the alleged misrepresentations of the Respondent.
  6. 6.
    It is directed that the matters be heard by way of an oral hearing.
  7. 7.
    The parties shall file (and serve on the other party), within 14 days of the date of these orders, written submissions (no longer than 4 pages) in respect of the question of costs of the applications and appeal.
  1. [7]
    The matters were set for rehearing on 10 November 2017 and 15 November 2017, but that date was cancelled. The matters were then set for rehearing on 8 February 2018 and 9 February 2018, but that date was also cancelled. The matters were then set for rehearing on 1 May 2018 and 2 May 2018.
  2. [8]
    When the matter came on for rehearing before me on 1 May 2018, new Solicitors and Counsel appeared for the Suttons and Mr Cahill. They advised that all of the Suttons’ material had been retained by their former Solicitor, Mr Gray; that it appeared that his firm had been put into liquidation; and that they did not have access to the material.
  3. [9]
    I stood the matter down for Counsel for the parties to confer as to the matter proceeding, and subsequently directed that the Suttons and Mr Cahill were given leave to inspect the tribunal files, by their Counsel, and obtain copies of any documents. I then adjourned the matter to the next day.
  4. [10]
    When the matter came on for rehearing on 2 May 2018, Counsel for the Suttons and Mr Cahill advised that the Suttons and Mr Cahill wished to amend their outlines of claim as to representations. Counsel for the Chief Executive submitted that the proposed amendments would entirely change the case for the Suttons and Mr Cahill, and that an adjournment was required for the Chief Executive to consider the new outlines of claim, and prepare its response.
  5. [11]
    I adjourned the matter for a one-day hearing on 21 August 2018.
  6. [12]
    The Suttons and Mr Cahill filed a ‘Further Amended Outline of Claim’ on 4 June 2018. That document added further sub-paragraphs to Paragraph 4 of the ‘Outline of Claim’, which had been filed on 17 October 2014, as follows:
  1. 4.
    The Agent made representations (‘the Representations’) about the property, to the effect that:

….

  1. (f)
    The transaction was a contract to purchase the property but the Respondent would be able to on sell the property to a third party before the time for settlement;
  2. (g)
    By implication from the express statement pleaded at paragraph 4(f) herein, the Respondent had a reasonable belief that he could sell the property to a third party buyer before the date for settlement under the contract arrived; and
  3. (h)
    By implication from the express statement pleaded at paragraph 4(d) herein, the Respondent had a reasonable belief that the matters pleaded at paragraph 4(d) herein were correct.
  1. [13]
    I reheard the matter on 21 August 2018. At the conclusion of the evidence, I gave directions as to the filing of submissions, which were dependent upon a transcript of the proceedings being obtained.
  2. [14]
    The Chief Executive filed submissions on 12 October 2018. The Suttons and Mr Cahill filed submissions on 14 October 2018. The Suttons and Mr Cahill then filed submissions in response to the Chief Executive’s submissions, on 26 October 2018. The Chief Executive then filed submissions in reply to the submissions of the Suttons, on 29 October 2018.
  3. [15]
    These are my reasons on the reconsideration of the matter as directed by the Appeal Tribunal, in respect of the claims by the Suttons and Mr Cahill in so far as they are based on the alleged misrepresentations of the Respondents.

Facts giving rise to the claim

  1. [16]
    The facts giving rise to the claim were set out in my earlier decisions.[4] For convenience, I will reproduce relevant extracts in these reasons.
  2. [17]
    Mr Tomkins was a Real Estate Agent. He was involved in transactions whereby Sandra Sutton and Mr Cahill signed contracts to purchase lots ‘off the plan’ in 2008 in a residential unit development on the Gold Coast known as ‘Elston’ at the corner of Hamilton Avenue and Surfers Paradise Boulevard. They allege that actions of Mr Tomkins, and loss suffered by them, give rise to their entitlement to claim on the Fund.
  3. [18]
    Ms Sutton entered into a contract to buy a unit on Level 3 - Lot 24 for $469,000. The contract was entered into on 23 January 2008. An initial deposit of $1,000.00 was payable. Arrangements were made for the balance of the 10% deposit of $45,900 to be provided by means of a Deposit Bond provided by QBE Insurance (Australia) Limited by its authorised agent Deposit Access Pty Ltd. The application for the deposit bond was signed on 29 February 2008 and it was issued on 4 March 2008.
  4. [19]
    Mr Sutton signed as Guarantor for the Deposit Bond.
  5. [20]
    The price of the lot 24 Deposit Bond was $4,845 which was paid by Ms Sutton.
  6. [21]
    The Contract was due to settle on 14 August 2009. The Suttons failed to complete the contract. On 14 October 2009, Ramsden Bow Lawyers, acting for the Vendor, wrote to the Solicitors for the Suttons advising them that the Seller terminated the contract and had directed that the deposit bond be called on immediately.
  7. [22]
    On 14 December 2010 QBE paid the amount of $46,900 to the Vendor under the lot 24 bond.
  8. [23]
    QBE instituted proceedings against Sandra Joanne Sutton and David John Sutton in the Local Court of NSW. An amended Statement of Claim was dated 20 July 2011. The claim was for a total of $50,770.16 being $47,340 for claim plus interest and fees and costs. The basis of the claim against David Sutton was under a Guarantee written and contained in the deposit bond application dated 29 February 2008.
  9. [24]
    Judgment was given for QBE against Sandra Sutton and David Sutton on 29 February 2012 as per a Consent Order for the amount of $103,243.14. The judgment was entered on 3 April 2012.
  10. [25]
    Mr Cahill entered into contracts to buy two units on Level 3 - Lot 22 for $468,000 and Lot 23 for $469,000. The contracts were entered into on 25 January 2008. Arrangements were made for the 10% deposit of $46,800 and $46,900 to be provided by means of a Deposit Bond provided by QBE Insurance (Australia) Limited by its authorised agent Deposit Access Pty Ltd. The deposit bonds were issued on 28 February 2008.
  11. [26]
    The price of the lot 22 Deposit Bond was $4,845, and the price of the lot 23 Deposit Bond was $4,845, making a total of $9,690.00 which was paid by Mr Cahill.[5]
  12. [27]
    The Contracts were due to settle on 14 August 2009. Mr Cahill failed to complete the contract. On 24 August 2009, Ramsden Bow Lawyers, acting for the Vendor, made demand upon QBE Insurance for payment of the Deposit.
  13. [28]
    On 14 December 2010 QBE paid the amount of $46,800 under the lot 22 bond, and $46,900 under the lot 23 bond, to the Vendor.
  14. [29]
    QBE instituted proceedings against Mr Cahill in the Local Court of NSW. An amended Statement of Claim was filed on 22 July 2011. The claim was for a total of $101,233.38 being $95,879.76 for claim plus interest and fees and costs.
  15. [30]
    Judgment was given for QBE against Mr Cahill on 29 February 2012 as per a Consent Order for the amount of $157,711.93.

Evidence of the Suttons and Mr Cahill

  1. [31]
    Ms Sutton gave evidence that she met the real estate agent, Mr Tomkins once or twice at Will Jamieson’s house. She said that Mr Jamieson was a ‘bit of a friend’ who had helped her with Body Corporate issues when she had a Body Corporate.[6]
  2. [32]
    She said that Mr Jamieson rang and told her that Mr Tomkins was selling units in a complex on the Gold Coast, and said that it was only a $5,000 deposit, roughly, that’s all you had to pay.[7]
  3. [33]
    She said that Mr Jamieson took her into the Tomkins Real Estate office in January 2008, and introduced her to Mr Tomkins, who introduced the receptionist as his wife.
  4. [34]
    She said that she was not really able to recall what Mr Tomkins said to her, but that he brought out a brochure and a plan of the units, and explained how the deposit access process worked. She recalled that Mr Tomkins said that you had to pay about $50,000 deposit normally, but you didn’t have to pay that.
  5. [35]
    She described what she was told about the deposit in the following way:[8]

Q: What did Mr Tomkins say to you about the deposit access?

A: That – that it was set up that you didn’t have to pay the 50,000, you just paid 4,000 whatever it was and that was a holding deposit on the unit. If you ever did default then it would go to the – that you would have to pay the original amount of the deposit. But it was set up that you didn’t have to do that and – and then he would be on-selling the units so that you never actually owned the unit. That he would on-sell the units before the units were completed.

Q: Right. So, you used the word, or the words ‘set up ‘so that you wouldn’t own the units. Can you remember exactly what Mr Tomkins said to you?

A: He just – he just said that you never owned - your name would never be on the documents that - it doesn’t show that you actually owned the units as such, it’s just a holding thing that was going to get sales for the developer. That showed that the developer had sold so many units. And then your name was just there showing that he’d just sold the units, but then it would be on-sold to Asian buyers before the units were completed.

  1. [36]
    She was asked what she would have done if she had known she had to pay the full deposit, or complete the contract, and replied as follows:[9]

Mr Hogg: What would you have done if you’d known that you may have had to pay the deposit amount if you couldn’t – if you couldn’t complete the contract?

Witness: If I’d had to pay $50,000 I wouldn’t have gone into it at all, because we couldn’t afford to do that.

Mr Hogg: And what would you have done if you had known that you would have had to complete the contract if Mr Tomkins couldn’t sell on time?

A: I wouldn’t have gone ahead with it. He didn’t indicate that there would be a problem, he said he did it all the time and that it wasn’t a problem.

  1. [37]
    She said that she didn’t say anything about her ability to pay the full deposit amount to Mr Tomkins, as he didn’t say they would ever have to do that:[10]

No. He didn’t – he didn’t say we would ever have to do that, he said all we’d have to pay was $5,000 and that would be our only outlay.

  1. [38]
    She said that she later told her husband about the meeting, as he was working away at the time, and that ‘he wasn’t too impressed about it’ but he signed the papers.[11]
  2. [39]
    She said that she was acquainted with Ms Mapp, who was the partner of Mr Jamieson in both a business and romantic way. She said that Ms Mapp was an accountant who came to help her with a travel agency which she had taken over four months earlier, and helped her with her business, but not for personal finances. She said that Deposit Access needed evidence that she was financial, and Mr Jamieson suggested that Ms Mapp do up a letter.
  3. [40]
    She said that she had been self-employed for 10 years, and was the owner of management rights of two Body Corporates at Benowa which comprised 73 or 74 units in total.
  4. [41]
    She said that Mr Jamieson was the owner of the Unit Owners Association on the Gold Coast, but that he was not a lawyer, and she did not know how his name came to be put on the deposit access document under ‘details of applicant’s legal representative’ as:[12]

Name of contact person: Will Jamieson.

Name of firm: Jamieson & Ass.

  1. [42]
    She said that Mr Jamieson was acting as a lay advocate for Body Corporates and Managers, and had come to QCAT with her maybe 3 to 4 times.
  2. [43]
    She said that she had bought the body corporate rights for ‘$400,000 and something’ for both and sold one part, then later sold another part, for a total of just over $500,000.
  3. [44]
    She said that she did not obtain any legal advice before entering into the deposit  bond arrangement or signing the contract  purchase:[13]

Mr Hogg: So I’ll bring you back to the transaction in question, this deposit bond application. Before you signed or entered into this deposit bond arrangement, did you seek any legal advice?

A: No, I didn’t, no.

Mr Hogg: why not?

A: Because when I was there in – in – with Ces that day, he said that it wasn’t – that I didn’t really need to seek legal advice, but it’s something that’s done all the time, buying off the plan. I felt that it was right because, I mean, I– you hear that people do buy off the plan, so I didn’t, sort of, really see anything wrong with that and – and because Will Jamieson had already bought a couple of units. I thought, well if anyone knows if anything is not right, it would be Will, so he wouldn’t have gone into – gone into it if there was a problem.

Mr Hogg: And before you signed the contract to purchase of her unit, did you seek any legal advice?

A: No.

Mr Hogg: And why not?

A: Because it was Cec Tomkins – sort of said that I really didn’t need to have any legal advice because it’s – something that is done all the time.

Mr Hogg: did you?

A: And its standard.

Mr Hogg: sorry to interrupt?

A: It – it was just a standard contract, and – yeah.

  1. [45]
    Ms Sutton said that she did not engage a real estate agent to sell the units, as Mr Tomkins said he would on-sell them:[14]

Mr Hogg: And did you engage anyone to market the unit for you, such as a real estate agent or somebody like that?

A: No.

Mr Hogg: Why not?

A: Because Cec Tomkins was going to on-sell the units. He said that he would contact us. He would organise a buyer, and he would sell units for us, so it didn’t occur to me.

  1. [46]
    She said that when the time came to settle, she tried to contact Mr Tomkins but couldn’t, and contacted Mr Jamieson who was sick at the time on medication.
  2. [47]
    She said that she got letters from the developer saying that there was to be an ‘open day’, and that she did not go. She said that developer rang and asked why she did not attend, and when she said she couldn’t afford to pay, the developer threatened to take her house. She said that she then contacted Mr Gray, who was a solicitor who she knew through her dealings with Mr Jamieson.[15]
  3. [48]
    She said that she trusted Mr Jamieson.[16]
  4. [49]
    She said that she expected that Mr Tomkins would be able to sell it for a higher price, and he indicated the market was good. She said she didn’t think there would be a problem with the Gold Coast market, and that Mr Tomkins was talking about a $20,000-$30,000 profit, which wasn’t huge.[17]
  5. [50]
    She said that she had purchased three houses prior to January 2008.
  6. [51]
    She said that she had never met Mr Tomkins before but that because her friend had signed forms before she didn’t think there was any problem. She said that she did not in her own mind believe that she was actually purchasing a unit:[18]

Mr Steele: but you knew the whole arrangement was, wasn’t it, is that you would sign the contract to purchase and then Mr Tomkins would try to onsell it before settlement? That was the actual arrangement that you thought you had?

A: No, the actual arrangement was that we were – it was like a holding on a unit. He said that our name would never actually be on the unit, that we would – it was like a – a deal that was being done so that the builder could get so many sales and so you could get finance. So our name was there to show that he had basically interested buyers or something in a unit and we had the deposit access because that had to be a security to say that we were interested in the unit, but at the end of the day Cec was going to on sell the unit so that we weren’t – –

  1. [52]
    She said that Mr Tomkins filled in most of the paperwork, and said he would have buyers at the end.
  2. [53]
    She said that she didn’t think that was going to be a problem, as Mr Jamieson had already signed forms. She said that she relied on what Mr Tomkins had said.
  3. [54]
    Mr Sutton gave evidence and said that first he heard of Mr Tomkins was when his wife said there was ‘a bit of a plan about these units he was talking about'. He said that he had never thought of investing in property.
  4. [55]
    He said that Ms Sutton explained that they were getting involved in a unit on the Gold Coast, and that he just went along with what she said. He said that he left it all up to Ms Sutton, and that he had very little input into it all.
  5. [56]
    Mr Cahill said that he first heard of Mr Tomkins in January 2008 when was mentioned to him by his mother. He then met Mr Tomkins.
  6. [57]
    He said that he had not previously thought about investing on the Gold Coast and said that Mr Tomkins gave him a rundown, and said the apartments needed local investors, as he had foreign investors who did not qualify for the builder to be able to get finance.
  7. [58]
    He said that he understood his obligation was the initial deposit which he put down, and that he did not intend to buy the units:[19]

Mr Hogg: So let’s talk about the meeting that you had with Mr Tomkins. Firstly, how many times did you actually meet with Mr Tomkins?

Mr Cahill: Ah, I saw him twice.

Mr Hogg: All right. Well, let’s talk about the first meeting, then. Can you remember what you spoke about in that meeting?

Mr Cahill: Um, I went down to his office. It was just a basic rundown of what he was proposing, which was to buy these apartments off the plan,…

Mr Hogg: So what I’m interested in is what he said to you. So what did he say to you?

Mr Cahill: Um, he, um, said that he has these apartments. He needs to get local investors to sign on for these apartments. He has foreign investors, which don’t qualify, um, for the builder to be able to get his finance to continue the apartments, um, so the local investment was required for the builder to get his finance, um…

Mr Hogg: And did Mr Tomkins explain to you how you could invest in these apartments?

Mr Cahill: Ah, yeah, it was simply a matter of, um, produce the approximately $5000 deposit, um, for a unit, um, he organises all the paperwork, filled out all forms, took care of everything, and that was – that was the – that was it.

Mr Hogg: so how did – did he say how that $5000 was calculated?

Mr Cahill: It was approximately 1% of the total purchase price, of which a certain amount went to deposit, ah, access at QBE, and he – I’m pretty sure he got a cut out of that as well.

Mr Hogg: So let’s talk about deposit access. What did Mr Tomkins say to you about that?

A: Ah, they were - they provided the deposit bank guarantee, um, in the event that we didn’t purchase the apartments, um, and that was – that’s about all but all I can remember.

Mr Hogg: And what did Mr Tomkins say about, if anything, to you about your obligations about purchasing the apartment?

A: Ah, as far as I can remember, my obligation was the initial deposit down. If we were to pull out of the apartment I would lose that $5000 and whatever was required would be paid by QBE.

Mr Hogg: And do you intend to actually buy the apartment?

A: No, never.

  1. [59]
    He said Mr Tomkins said they would sign documents, and approximately one month before completion, Mr Tomkins would bring his overseas buyers on, and they would get the difference.
  2. [60]
    He said that he did not get legal advice as Mr Tomkins said that it wasn’t necessary.
  3. [61]
    He said that Ms Mapp was his accountant, but she was hesitant to write the letter about his finances, and that she was aware that he was not in a position to proceed if something went wrong. He was not aware as to whether she had any relationship to Mr Jamieson.

Evidence of Mr Hamilton

  1. [62]
    The Chief Executive had engaged Mr Lawrence Hamilton, a valuer with Taylor Byrne, to provide reports in relation to this matter.
  2. [63]
    Mr Hamilton provided a report dated 12 July 2018, and an addendum report dated 6 July 2018. Mr Hamilton said that he had been a real estate valuer since 1976.
  3. [64]
    Mr Hamilton was asked if it was right that the global financial crisis started having an effect on the Gold Coast property market in or around April 2007. He replied:[20]

Interestingly, no. Our market was still quite sound in 2007, and not – hopefully I expressed that view in here, and the market was sound right through 2007. We – again, hopefully I haven’t expressed it in here, but the rate of sales started to fall away in 2008, and then it wasn’t until much later in that year and earlier the following year when pressure became – pressure on prices started to impact on the asking price of values.

  1. [65]
    Mr Hamilton was referred to the sentence under the heading conclusion of his second report where he said:

In January 2008 there was a steady demand for new high-rise units in Surfers Paradise as demonstrated by the market evidence compiled by Midwood.

  1. [66]
    It was suggested to Mr Hamilton in cross examination that the sentence was not actually correct. He responded:[21]

No, you have got to look at the timing. The discussion you and I had a little earlier on when were talking about increase in – I’ll just go back to it. We were talking about at the end of ‘08 was an increase in – I’m just trying to or find the exact – yep, this is on my original report on page 3. We were talking about through those 18 months high-rise (indistinct) the current level of demand – this is in the italics – total unconditional sales during the May quarter fell. There was an increased stock so this is later. So I’m talking – you know, if you’re sitting there at Christmas or the first couple of weeks in January, they’ve been really good. 2007 was a pretty good year. But going forward, until the market became more active in the – in the – say in the end of the first quarter, into the second quarter it was really then that you could predict what that following year was going to – 2008 was going to bring. So up to that – up to January 2008 there had been good statistics in relation to high–rises, but going forward that was properly more difficult to predict a similar sort of level of demand.

  1. [67]
    I referred Mr Hamilton to his observations at page 2 of his second report, which  said:[22]

It would have been reasonable for Mr Tomkins to believe in January 2008 that he could on sell the units prior to the settlement date for sale contracts.

  1. [68]
    I asked Mr Hamilton if that comment was inconsistent with another statement he had made at page 5 of this first report as to appreciation. He replied as follows:[23]

A: It’s more the ability to on sell it. I guess, putting the two together, what I was saying was I think it could be resold, but I don’t think it could be resold for a higher figure.

Q: Would there be any basis in January ‘08 to consider it might in fact be sold for a lower figure, there might be a loss?

A: I don’t have any evidence and my recollection was I wouldn’t have expected the prices to fall, with the overriding proviso that the same level of marketing was adopted.

Submissions of the Suttons and Mr Cahill

  1. [69]
    It was submitted that Ms Sutton went to see the real estate agent, Mr Tomkins, on the recommendation of her friend Will Jamieson.
  2. [70]
    It was submitted that a statement about a future matter can be a misrepresentation under a statute depending on the wording of the Act, and that section 574 of the Act should be read as applying to past, present and future matters.[24]
  3. [71]
    Further, it was submitted that section 574(4) uses almost identical wording to section 4(1) of the Australian Consumer Law, which states that a representation in relation to a matter is taken to be false unless it is proven otherwise, and that in the absence of any rebutting evidence from the respondent, the representations as to future matters in this application should be deemed to be false.[25]
  4. [72]
    In the alternative, it was submitted that statements Mr Tomkins made should be construed as statements of present fact, and that fact may be misleading or deceptive if there is no evidence to show that it was reasonable.[26]
  5. [73]
    Submissions were made as to each of the alleged representations.
  6. [74]
    The applicants did not press the first representation, that the property was unique and should be purchased by the applicants, as a misrepresentation, and accepted that the evidence at the hearing did not support a finding that Mr Tomkins made this representation.[27]
  7. [75]
    The applicants did not press the second representation, that the acquisition of the property could be achieved with a payment of 1% only of the purchase price, as a misrepresentation, and accepted that the evidence at the hearing did not support a finding that Mr Tomkins made this representation.[28]
  8. [76]
    The applicants did not press the third representation, that the agent would look after the applicant’s interests as paramount in relation to the purchase, and accepted that the evidence at the hearing did not support a finding that Mr Tomkins made this representation.[29]
  9. [77]
    The applicants do press the fourth representation, that the applicants would not be obliged to do or contribute anything further towards completion of the purchase of the property (because the agent would take care of everything for them). It was submitted that their behaviour in not arranging finance indicates that they believed that Mr Tomkins would on sell units for them before completion.
  10. [78]
    The applicants submitted that section 574(3) was a further basis for establishing that the fourth representation was misleading or deceptive as there was no cogent evidence to show that even if Mr Tomkins believed that he would be able to sell the units before the settlement date, that it was reasonable.[30]
  11. [79]
    The applicants do press the fifth representation, that the liability of the applicants in any event was limited to the applicant’s upfront payment of 1% of the purchase price. It was submitted that Mrs Sutton was clear and unwavering in her evidence that Mr Tomkins said to her that the payment of the one percent deposit was a ‘holding' and that she was not going to be committed to buy the unit because he would on sell it.[31]
  12. [80]
    The applicants do press the sixth representation, that the transaction was a contract to purchase the property, but the respondents would be able to on sell the property to a third party before the time for settlement. It was submitted that the representation was made by Mr Tomkins, and was false and misleading:[32]
  1. 87.
    The evidence was false and misleading because Mr Tomkins was not able to sell the property to a third party prior to the time for settlement. He could not reasonably have held the opinion that he could have either because:
  1. a)
    He had no actual buyer lined up;
  2. b)
    He did not know when settlement was going to be;
  3. c)
    Given the matters set out in Mr Hamilton’s report (if the tribunal accepts it), there were problems with supply and demand for off plan units on the Gold Coast in late January/early February 2008.
  1. [81]
    The applicants do press the seventh representation, that by implication from the fifth representation, the respondents had a reasonable belief that (Mr Tomkins) could sell the property to a third party buyer before the date for settlement under the contract arrived. It is submitted that if the Tribunal is satisfied that Mr Tomkins made either or both of the fifth and sixth representations, then it should also find by implication that he made the seventh representation as it flows from them.
  2. [82]
    The applicants do press the eighth representation, that by implication from the fourth representation, the respondents had a reasonable belief that the fourth representation was correct. It is submitted that if the Tribunal is satisfied that Mr Tomkins made the fourth representation, then it should also find by implication that he made the eighth representation as it concerns Mr Tomkins’ state of mind at the time he made the representation, and that the representation was false or misleading as Mr Tomkins cannot have had a reasonable belief that the fourth representation was true.[33]
  3. [83]
    It is submitted that under section 470 and section 488(2)(b) of the Act, the Tribunal can only allow a claim if it is satisfied on the balance of probabilities that the claimant suffered financial loss ‘because of’ the happening of the event in section 574. It was further submitted that the evidence supports that the applicants entered into the scheme because of Mr Tomkins’ representations.
  4. [84]
    The influence of Mr Jamieson was discussed in her submissions as follows:[34]
  1. 110.
    While Mrs Sutton knew that Will Jamieson had entered into a similar arrangement via Mr Tomkins, she expressly rejected the assertions put to her in cross examination that she was relying on Mr Jamieson and not Mr Tomkins. She did qualify this by saying later that she relied both on what Mr Jamieson told her and what Mr Tomkins (whom she referred to as ‘Cec’) told her, but the fact remains that her evidence was that she relied on Mr Tomkins’ representations.
  1. [85]
    As to the question of taking reasonable care, it was submitted that Mrs Sutton was not commercially sophisticated, despite running a body corporate management business, as she did not have any deep involvement in the financial side of it.[35]
  2. [86]
    It was submitted that it was reasonable for Mrs Sutton to not seek legal advice on the transaction.[36]
  3. [87]
    It was further submitted that as Mrs Sutton did not see the letter that Ms Mapp wrote as to her finances, and did not know the contents of the letter, that it cannot be said that she was reckless or contributed in some other way to her loss by allowing the letter to be sent.[37]
  4. [88]
    It was submitted that Mrs Sutton placed trust in Mr Tomkins because of his previous association with Mr Jamieson:[38]
  1. 123.
    Mrs Sutton also placed trust in Mr Tomkins because of his previous association with her friend Will Jamieson. Mr Thompkins knew Will Jamieson – Mrs Sutton had seen Mr Tomkins at Mr Jamieson’s house a couple of times before the meeting. It must have been Mr Tomkins who wrote that Jamieson and Associates was Mrs Sutton’s legal representative on the deposit bond application form because Mrs Sutton said Mr Tomkins completed that form, and that she had never heard of that firm. Mr Tomkins must therefore have known that she was referred to him through Will Jamieson. He should also therefore have known that Mrs Sutton was placing trust in him and telling her she didn’t need a lawyer’s advice on the transaction documents, he was consolidating her opinion.
  1. [89]
    It was submitted that, in the circumstances, the applicants took reasonable care to protect their own interests.[39]
  2. [90]
    It was submitted that the loss that the applicants can claim should be as follows:[40]
  1. 130.
    Both applicants are entitled to claim for their losses as both have suffered loss as a result of Mr Tomkins’ misrepresentations in relation to the exchange or sale of property – Mrs Sutton as the purchaser and obligor under the deposit bond arrangement, and Mr Sutton as the guarantor of the deposit bond arrangement.
  2. 131.
    Evidence of the losses that the applicants have suffered are:
  1. a)
    The judgement amount – $103,243.14 being the amount of the judgement entered against them in the Local Court of New South Wales on 3 April 2012;
  2. b)
    The amount of $173,235.28 which the applicants paid to QBE when they sold their house;
  3. c)
    $80,000 which Mrs Sutton has had to pay to assist her son Damien to settle his matter with QBE:
  4. d)
    Their own legal fees outside of the current proceeding, which Mrs Sutton estimates are around $100,000 ‘easy’. Mrs Sutton did accept however, that this amount is speculation.
  1. 132.
    The correct amount of damages the applicants are entitled to is going to be a combination of these amounts, with appropriate subtractions to avoid double claiming.

Submissions of the Chief Executive

  1. [91]
    The Chief Executive submits that the representations alleged in the application by the Suttons and by Mr Cahill are materially identical.[41]
  2. [92]
    It submits that the claim against the fund should be dismissed because the applicants have not established to the necessary standard that:[42]

(a) the alleged representations were made;

(b) the alleged representations were false or misleading;

(c) the alleged representations were made ‘in relation to the sale of the property'

(d) it was reasonable for the applicants to rely on the representations; or

(e) any loss to the applicants was caused by the representations.

  1. [93]
    It notes that the deposit bond application form signed by Ms Sutton on 31 January 2008, and the two similar forms signed by Mr Cahill on 5 February 2008, each noted that Mr Will Jamieson was their legal advisor.
  2. [94]
    It submits that the three representations pleaded by the further amended outline of claim filed on 4 June 2018 are entirely inconsistent with the alleged representations originally pleaded:[43]
  1. 29.
    Whereas the original alleged representations allege that the applicants would be entitled to ‘acquire’ (and ‘complete the purchase of’) the property for a minimal price (which is in itself implausible) the substantive allegation in paragraph 4(f) of the further amended points of claim is that in fact the applicants never intended to complete the purchase or acquire the property at all.
  2. 30.
    No explanation is offered for those entirely inconsistent allegations.
  1. [95]
    It submits that Ms Sutton’s own evidence was that Mr Tomkins told her about the potential consequences of default, namely that the full amount of the deposit would need to be paid.[44]
  2. [96]
    It submits that Ms Sutton is the only witness who gave evidence of what occurred at the initial meeting with Mr Tomkins, where the alleged representations were alleged to have been made, and that her evidence does not establish that any of the representations were made.[45]
  3. [97]
    Overall it submits that Ms Sutton presented generally as an unreliable witness, and that her evidence is not believable, as Ms Sutton asserted on a number of occasions during her evidence that she did not understand or even read the documents that she signed:[46]
  1. 39.
    She was an experienced businesswoman, having operated a building management company for many years, and a travel agency for about a year for the alleged representations.
  2. 40.
    She said that she expected to make about $20,000-$30,000 profit from the transaction. It is not credible that she did not know or understand the nature of the transaction into which she had entered. It is not believable that an experienced businesswoman would expect a return of that order (from what she said was an investment of less than $5,000) without some risk, and without considering carefully the documents which she signed. She agreed that she knew that ‘any property can go up in price or it may go down in price’.
  1. [98]
    It notes the involvement of Mr Jamieson:[47]
  1. 43.
    It is also noteworthy that Ms Sutton’s evidence was that it was in fact a friend, Will Jamieson, who first suggested to her that she could invest in the unit for a small initial outlay. She said:

‘Will had rung me and said that Cec was selling units in a high – in a complex on the Gold Coast and he told me that it was only a 5000 – a $5000 deposit, roughly, that’s all you had to pay, and did I want to go and see Cec Tomkins about the units'.

  1. 44.
    That is, it is Ms Sutton’s evidence that it was in fact Will Jamieson who told her about the alleged proposal. Mr Jamieson was described on Ms Sutton’s bond deposit application form as her ‘legal advisor’. Mr Jamieson was not called to give evidence, and the applicants did not provide any explanation for the failure to call him.
  2. 45.
    It is open to the tribunal, and consistent with Ms Sutton’s evidence, to infer that it was Mr Jamieson who made any relevant representation about the amount of money required to be outlaid. Certainly it is more likely that Ms Sutton would have relied on what she was told by Mr Jamieson than anything she was told by Mr Tomkins, whom she had only met briefly once or twice before (at Mr Jamieson’s house). In cross examination the following exchange occurred:

So you didn’t know him before…?… No

… You went to attend his office in January 2008, but you knew…?… Just his name.

… Mr Jamieson? You knew Mr Jamieson?… Yes, yes.

And you trusted Mr Jamieson?… Yes

And Mr Jamieson had telephoned you and said that there was a possibility to purchase a unit for only a $5000 deposit?… He said that ‘you – do you remember' – he said, ‘Do you remember Cec Tomkins? He said Cec - Cec. He referred the matter – that – Cec. And he said that he was selling the units on the Gold Coast and all you had to pay was a $5000 deposit and he would – he – he explained what the – what it was, that you’d pay that and – and he onsold them.

  1. 46.
    Her trust in Mr Jamieson is further illustrated by the fact that it was Mr Jamieson’s partner, Ms Glenis Mapp, who wrote the letter at Tab 6 of Exhibit 4. Ms Sutton said:

Will suggested that [Ms Mapp] do up a letter because it was sort of needed at that point rather than, yeah, going and getting my accountant or something like that.

  1. [99]
    The Chief Executive submits that Ms Sutton’s own evidence makes clear that she knew, at the time she entered into the bond deposit, that for the arrangement to work as planned, the apartment would need to be on sold. It further submits this is entirely inconsistent with the contention that she was told (let alone believed) that she and Mr Sutton could ‘acquire’ the property for only 1% of the purchase price.[48]
  2. [100]
    In relation to Mr Cahill, the Chief Executive submits that the same general comments can be made about the inconsistencies between the pleaded representations, and that it is inherently unlikely that the representations were made.[49]
  3. [101]
    It submits that it is unlikely that Mr Cahill would place reliance on Mr Tomkins, who he had never met, without properly reading and understanding the documents and other material provided to him, and signed by him.[50]
  4. [102]
    It submits that Mr Cahill did not give evidence consistent with any of the alleged representations in paragraphs 4(a) to 4(d), or 4(h) of the amended claim, and did not allege in his oral evidence that Mr Tomkins said anything to the effect alleged in those subparagraphs:[51]
  1. 62.
    His evidence of his first meeting with Mr Tomkins, which is the meeting during which the representations are alleged to have been made, appears at T2 – 91 to T2 – 93. Nowhere in that evidence does Mr Carl state that Mr Tomkins told him that the property was ‘unique’ (4(a)); that he could ‘acquire’ the property for 1% of its purchase price (4(b)); that Mr Tomkins would ‘look after’ the interests of Mr Cahill as paramount (4(c)); or that Mr Cahill would not be obliged to do anything further contribute further to the ‘completion’ of the property (4(d)). The allegation in paragraph 4(h) arises only by implication from that in 4(d).
  1. [103]
    It submits that Mr Cahill understood entirely that there was a risk involved in the transaction, albeit he decided to disregard it; and that specifically he understood that there was a risk that the property may not be on-sold.[52]
  2. [104]
    It submits that if Mr Tomkins said only that he hoped to be able to sell lots (or even that he thought there was a good prospect of that), Mr Cahill has failed to make out the alleged representations in 4(e), 4(f) and 4(g), as those alleged representations are presented in absolute, not conditional, terms.[53]
  3. [105]
    The Chief Executive then submits that even if one or more of the pleaded representations was in fact made, that it would also be necessary for the applicants to show which if any of the approved representations were false or misleading.[54]
  4. [106]
    The Chief Executive refers to the market evidence it adduced, which it submits shows that at the time the representations were alleged to have been made, that it was in fact reasonable for a person in the position of Mr Tomkins to believe that the property may be or could be on-sold.[55]
  5. [107]
    It notes the evidence of Mr Hamilton who said in his second report that:[56]

I consider it would have been reasonable for Mr Tomkins, utilising either developer preferred marketing strategies or more traditional marketing strategies, to believe in January 2008 that he could on-sell the units prior to the settlement date for sale contracts in the Elston Grand Surf Resort complex.

  1. [108]
    It submits that the evidence of Mr Hamilton satisfies the requirement in section 574(4) of the Act that the person making the representation (i.e. Mr Tomkins, if that is proved) had reasonable grounds to do so, in relation to a future matter.[57]
  2. [109]
    It submits that the expert evidence is that the market in January 2008 (i.e. when the contract was signed) was still relatively stable, and that market conditions did not start to seriously deteriorate until later in 2008; and that in those circumstances there was a reasonable basis for any representation by Mr Tomkins in January 2008 that he may be able to on-sell the property.[58]
  3. [110]
    The Chief Executive submits that the applicants have not established that the relevant representations were made before the contract was signed, as the bond deposit form was not signed until some days after the contract had been entered into.[59]
  4. [111]
    The Chief Executive submits that any loss which accrued to the applicants arose because of the judgement obtained against them in the District Court of New South Wales in relation to the bond deposit together with ‘costs and outlays’, and that neither species of loss is a loss which arose because of one of the pleaded representations, but rather as a loss which arose because the applicant did not honour their obligations to QBE pursuant to the bond deposit.[60]
  5. [112]
    It submits that the applicants could have paid the remaining amount owing in respect of the deposit (which would have meant that the deposit bond was not called on at all) or they could have repaid the amount of the deposit bond when called on by QBE to do so.[61]
  6. [113]
    It submits that the applicants’ losses in defending the claims brought by QBE are not losses which arose ‘because of’ any representation which Mr Tomkins may be found to have made.[62]
  7. [114]
    It also submits that the applicants did not take any steps to ameliorate their losses; and that if the applicants had tried to honour their obligations under the deposit bond and/or the contracts for purchase, there is no evidence that they would in fact have suffered a loss, or if they may have suffered some loss, what the extent of that loss may have been.[63]

The Suttons and Mr Cahill’s Submissions in Response

  1. [115]
    The Suttons and Mr Cahill submit that a Jones v Dunkel inference cannot be drawn as to their not calling Mr Jamieson because he would not assist their case. It is submitted that Mrs Sutton’s evidence was that Mr Tomkins made the representations, and Mr Jamieson just introduced her to Mr Tomkins and told her how the scheme worked; and that Mr Jamieson was just a mere conduit for the information.[64]
  2. [116]
    They submit that if Mr Tomkins did make the representations, liability may still attach to him even if a recommendation was made by Mr Jamieson:[65]
  1. 18.
    Secondly, if the Tribunal finds Mr Tomkins did make representations, he would have materially contributed to Mrs Sutton’s decision to enter into the scheme. Justice McHugh’s judgement in Henville v Walker extracted above states that a defendant can materially contribute to a claimant’s loss even if other factors or conditions (such as a recommendation from Mr Jamieson) play an even more significant role in producing the loss or damage. Mr Tomkins made the representations to Mrs Sutton, and so his actions materially contributed to the Suttons’ loss. The Suttons therefore suffered loss ‘because of Mr Tomkins’ actions and are entitled to compensation from the fund pursuant to ss 470, 488 and 574 of PAMDA.
  1. [117]
    They submit that Mrs Sutton did not say that she met with Mr Tomkins again after she signed the sale contract which was witnessed by Mr Tomkins, so it must be that Mr Tomkins made representations to her, and she then signed the contract to buy the unit.[66]
  2. [118]
    They submit that special condition 1 which refers to a bank guarantee is evidence that Mr Tomkins explained the scheme to Mrs Sutton before she signed the contract. Alternatively they submit that Mrs Sutton could have avoided her obligations within 14 days from the contract, as it was conditional upon her obtaining the deposit bond guarantee, and any misrepresentations by Mr Tomkins after Mrs Sutton signed the contract would still have been causative of the Sutton’s decision to enter into the scheme.[67]
  3. [119]
    They submit that it is not necessary that the applicants’ losses are required to be ‘because of’ Mr Tomkins’ misrepresentations, but that if the misrepresentation has ‘materially contributed’ to the claimant’s loss, it is sufficient under the Act, and referred to Henville v Walker per McHugh J:[68]
  1. [106]
    If the defendants breach has ‘materially contributed’ to the loss or damage suffered, it will be regarded as a cause of the loss or damage, despite other factors or conditions having played an even more significant role in producing the loss or damage. As long as a breach materially contributed to the damage, a causal connection will ordinarily exist even though the breach without more would not have brought about the damage. In exceptional cases, where an abnormal event intervenes between the breach and the damage, it may be right as a matter of common sense to hold that the breach was not a cause of damage. But such cases are exceptional.
  1. [120]
    They respond to the submission that Mrs Sutton most likely entered into the scheme because of what Mr Jamieson told her. Firstly, they submit that the representations had to originate from Mr Tomkins, and that if Mr Jamieson passed representations on to Mrs Sutton he would have been a mere conduit for them.[69] Secondly, they submit that if Mr Tomkins did make representations, he would have materially contributed to Mrs Sutton’s decision to enter into the scheme.[70]

Submissions in Reply of the Chief Executive

  1. [121]
    The  Chief Executive  submits  that  the  applicants  have made  factual and legal errors in  their approach:[71]
  1. [4]
    The applicant’s submissions, in both matters, failed to grapple with the particular pleaded case advanced by them, and with the evidence actually put at trial. Rather, some alternative amalgamated case appears to be put (notwithstanding that the applicants admit that there is no evidence to support the representations alleged in paragraphs 4 (a), 4 (b) and 4 (c) of the further amended outline of claim in each case).
  2. [5]
    In paragraph 3 of the applicants’ submissions in OCR 170/14 (Sutton) it is asserted that:

‘the arrangement would be 1% of the overall purchase price because (the respondent) would be able to on-sell the unit to a third party buyer for a higher price before the time for settlement came’.

  1. [6]
    Paragraph 3 of Mr Cahill’s submissions (OCR176/14) makes a statement in almost identical terms.
  2. [7]
    That is, the applicant’s advances submissions on the basis of the asserted ‘arrangement' referred to in paragraph 3 of each set of submissions. That ‘arrangement’ is not one that arises out of one of the pleaded representations. The representation in paragraph 4 (e) is that the liability of the applicants was limited to an upfront payment of 1% of the purchase price, but that is not said to be contingent on the representation in paragraph 4 (f), that the respondent would be able to on-sell the unit before settlement.
  1. [122]
    It further submits that there was no pleaded representation that Mr Tomkins said he would be able to on sell the properties for a ‘higher price’.[72]
  2. [123]
    It submits that there was a reasonable basis if the representations were made:[73]
  1. [19]
    It is not necessary, as the applicants assert, for the tribunal to find what a reasonable real estate agent would have done or said or believed. Rather, it is only necessary to discern a reasonable basis for the representation. If the representation was (as the applicants assert) for Mr Tomkins would be able to on sell the properties, the evidence supports a finding that that was a reasonable thing to say in January 2008. Indeed, the applicants in their own submissions contended that the property was actually later sold at a profit.
  2. [20]
    Further, the matters raised in criticism of Mr Hamilton’s reports at paragraphs 56 and 60 of the submissions in OCR170/14 (57 and 61 of OCR176/14) are matters about the state of the market after January 2008, which cannot usefully inform whether any proved representation may have had a reasonable basis in January 2008.

Discussion

  1. [124]
    This matter has been returned to the Tribunal  for reconsideration  according to law in respect of the claims insofar as they are based on the alleged misrepresentations of the Respondents (Prime Real Estate Australia Pty Ltd and Cecil Thomas John Tomkins).
  2. [125]
    The alleged misrepresentations are set out in paragraph 4 of the Outline of Claim filed on 17 October 2014, as amended on 4 June 2018. The full final form of paragraph 4 is as follows:
  1. 4.
    The agent made representations (‘the Representations’) about the property, to the effect that:
  1. (a)
    The property for sale was unique and should be purchased by the applicants for reasons including the following;
  2. (b)
    The acquisition of the property could be achieved with a payment of 1% only of the purchase price;
  3. (c)
    The Agent would look after the Applicant’s interests as paramount in relation to the purchase;
  4. (d)
    The Applicants would not be obliged to do or contribute anything further towards completion of the purchase of the property (because the agent would take care of everything for them); and
  5. (e)
    The liability of the applicants in any event was limited to the applicants upfront payment of 1% of the purchase price;
  6. (f)
    The transaction was a contract to purchase the property but the Respondent would be able to on sell the property to a third party before the time for settlement;
  7. (g)
    By implication from the express statement pleaded at paragraph 4(f) herein, the Respondent had a reasonable belief that he could sell the property to a third party buyer before the date for settlement under the contract arrived; and
  8. (h)
    By implication from the express statement pleaded at paragraph 4(d) herein, the Respondent had a reasonable belief that the matters pleaded at paragraph 4(d) herein were correct.
  1. [126]
    In the course of the hearing, submissions were made on behalf of the Suttons and Mr Cahill as discussed previously in these reasons. Those submissions were that:
    1. (a)
      the following alleged misrepresentations were not being pursued: (a), (b), (c); and
    2. (b)
      the following alleged misrepresentations were being pursued: (d), (e), (f), (g), (h).
  2. [127]
    The Suttons and Mr Cahill say that they did not appreciate the significance of the transactions they entered into, due to misrepresentations by Mr Tomkins.
  3. [128]
    The actual transactions which they entered into are disclosed by the signed documents that have been entered into evidence:
    1. (a)
      Ms Sutton and Mr Cahill each signed a ‘Contract of Sale’ in relation to each unit they purchased at the ‘Elston Grand Surf Resort’.
    2. (b)
      The Contract of Sale provided for a 10% deposit which was made up of two parts – an initial deposit payable on the contract date, and a balance deposit payable within 14 days from the contract date.
    3. (c)
      In the contract signed by Ms Sutton, the initial deposit is shown as $1,000 and the balance deposit is shown as $45,900.
    4. (d)
      In the two contracts signed by Mr Cahill, the initial deposits are shown as $1,000 each and the balance deposits are shown as $45,800 and $45,900.
    5. (e)
      The Contracts of Sale provided under clause 21.1 that the Seller could accept a bank guarantee or other form of acceptable security in the amount of the deposit from the buyer instead of the deposit.
    6. (f)
      Ms Sutton and Mr Cahill took out deposit bonds through ‘Deposit Access’, who are associated with QBE insurance, at a cost of 1% of the purchase price of the units, which the seller accepted instead of the deposit.
    7. (g)
      The seller was entitled under clause 19.1 to receive the deposit if the contract settled, or if it was terminated due to the buyers default.
  4. [129]
    In these matters, what occurred was that the buyers did default when called upon to settle the purchase. At that point the seller claimed the deposit from Deposit Access who paid it out. QBE insurance then sought to recover the deposits, which they had paid out, from the Suttons and Mr Cahill.
  5. [130]
    The seller did not seek to recover any damages from the Suttons or Mr Cahill in respect of their terminating the contract due to their default in not settling the purchase.
  6. [131]
    The procedure of taking out a deposit access bond is common in ‘off the plan’ sales. It enables a buyer to enter into a contract to purchase a unit which has not yet been built, and which may be many years away from being available to live in. Instead of the buyer having to outlay a substantial deposit some years before settlement is due, the buyer pays a premium to the supplier of the deposit bond (which is effectively an insurance contract as to payment of the deposit monies). The buyer then settles when the unit is available to move into, and effectively pays the whole of the purchase price (including the deposit) at that time.
  7. [132]
    The contracts for sale were signed in late January 2008. The time when settlement was being discussed was late 2009.
  8. [133]
    The financial situation in which the Suttons and Mr Cahill find themselves is as a result of the amount of the deposit monies which were paid by deposit access becoming amplified by the addition of legal costs and expenses paid to QBE, and by legal costs incurred by them.
  9. [134]
    The Suttons and Mr Cahill did not make an effort to resell the units before settlement was due. It appears that the seller was able to sell the units itself at a price higher than the contract price agreed to by the Suttons and Mr Cahill.
  10. [135]
    Mr Cahill gave evidence that he and his mother had been in contact with Mr Tomkins when it was coming up to the settlement date, and left matters in his hands:[74]

Mr Hogg: and when did you first find out that you might actually have to attend settlement for these contracts? By that, I mean actually pay the money to buy the unit. That’s probably more…?

Mr Cahill: Yep

Mr Hogg:… what I’m asking?

Mr Cahill: We’d been in contact with Cec coming up to settlement date. And he started to explain that things are hard, and he’s struggling to find – find vendors for the - for the apartments.

Mr Hogg: Right. And why did you contact – sorry, who contacted to? Did Cec contact you?

Mr Cahill: No, we contacted Cec.

Mr Hogg: And why did you contact him?

Mr Cahill: Because we hadn’t heard anything with regards to selling the apartments.

Mr Hogg: Right. And when Cec told you that he was having trouble finding buyers, what was your reaction?

Mr Cahill: We just left it in his hands. We assume that it was – he would have it under control.

  1. [136]
    If the Suttons and Mr Cahill had resold the property before the settlement date, and that sale was completed (presumably contemporaneously with the purchase by them), then there would have been no forfeiture of the deposit, they would not be in their current predicament, and there would be no loss to claim upon the fund.
  2. [137]
    Mr Cahill was asked as to why he did not take steps to try to on-sell the units. He said that he didn’t believe that was possible, as it was Mr Tomkins’ deal:[75]

Mr Steele: In about mid – 2009, what steps did you take to try to onsell the units which you’d purchased?

Mr Cahill: We had been in contact with Cec Tomkins.

Mr Steele: Yep?

Mr Cahill: And that’s – that’s about the extent of it.

Mr Steele: Okay?

Mr Cahill: It’s his – it was his deal. It was his deal from start to finish.

Mr Steele: All right. Did you take any steps to engage any other real estate agent that might be able to help you?

Mr Cahill: I didn’t believe that was possible.

Mr Steele: Okay. Did you – but you didn’t investigate it at all?

Mr Cahill: No

Mr Steele: Okay. Now…?

Mr Cahill: Sorry. I was under this impression it was his – his property to sell, and he had exclusive rights to it, so I didn’t believe it was possible that someone else could come in and – and onsell.

  1. [138]
    The amount of the bond taken out by the Suttons was $46,900. The relief claim by QBE Insurance in the New South Wales local Court was $50,707. The total amount of the consent judgement in favour of QBE Insurance against the Suttons on 28 February 2012 was $103,243.14.
  2. [139]
    The total amount of the bonds taken out by Mr Cahill were $93,700. The total amount of the consent judgement in favour of QBE insurance against Mr Cahill was $157,711.83.
  3. [140]
    The Suttons and Mr Cahill were represented in the proceedings involving QBE by Mr Gray, a Solicitor who conducted a practice operating as ‘Synergy Group Legal Pty Ltd’ or ‘Australasian Lawyers’.
  4. [141]
    The Suttons and Mr Cahill both gave evidence that they had paid substantial amounts of money to Mr Gray as legal fees in matters related to these purchases. It is disturbing that they suggest that they may not have received the required fee disclosure agreements from Mr Gray, and may have made payments to him without proper Tax Invoices or Receipts being issued.
  5. [142]
    Ms Sutton gave evidence that she would have spent about $100,000 between 2009 and 2012 on legal costs paid to Mr Gray. She said that the invoices were probably all over the place, and she didn’t know where they were. She said there were many invoices, and that some of the invoices had probably been thrown out:[76]

We’re talking about a number of years and there would be 2,000 here; 5,000 here; 3,000 there.

  1. [143]
    Mr Cahill gave evidence that he was unsure about receiving invoices from Mr Gray, and did not sign an engagement letter:[77]

Mr Hogg: Yes, all right. I’ll break it up. So there is – there are legal fees, I assume, that you incurred – well, I won’t assume anything. Did you incur any legal fees to Mr Tony Gray or his law firm when you were trying to fight your obligations to actually have to settle the contract with developer?

Mr Cahill: Yes.

Mr Hogg: Can you recall roughly how much you paid in legal fees for that?

Mr Cahill: Mr Gray never provided receipts or itemised invoices. I would guess I would have spent somewhere between forty and sixty thousand dollars.

Mr Hogg: Okay. And then dealing with the court proceedings in New South Wales, I will try and find you some dates for that.

Member: Just while you’re doing that…

Mr Hogg: Yes, thank you, Member.

Member:  Mr Cahill, you said you never got invoices from Mr Gray, so how did you know how much to pay him?

Mr Cahill:  He would ring up and just say ‘Give me more money’,  more or less.

Member: And you never got any paperwork from Mr Gray?

Cahill: There may have been some, but I have no copy of it, and I wouldn’t know how to produce it.

Member: You don’t recall signing an engagement letter…?

Mr Cahill: No.

Member:… From Mr Gray setting out?

Mr Cahill: Never.

Member:… His fees? What, he would just ring you and nominate an amount of money, and you’d pay it?

Mr Cahill: That’s correct.

Member: What sort of amounts were they?

Mr Cahill: Normally it would be in $5,000 increments.

  1. [144]
    It appears that what the Suttons and Mr Cahill describe as ‘the deposit’ which they say that Mr Tomkins told them was all they had to pay, is actually the Deposit Bond premium, rather than the actual deposit under the Contract of Sale.
  2. [145]
    The Appeal Tribunal found that the question whether the conduct of the agent gave rise to a contravention of the relevant legislation is to be determined having regard to the then operative legislation, namely the Property Agents and Motor Dealers Act 2000 (Qld) (‘PAMDA’) which is now repealed.[78]
  3. [146]
    The Appeal Tribunal further found that, pursuant to s 470(1) of PAMDA, a person may make a claim against the fund if the person suffers financial loss because of the happening of specified events, and that the relevant one in this case was a contravention of s 574.[79]
  4. [147]
    The Appeal Tribunal referred to the provisions of s 574, and noted that they were analogous to s 212 of the Property Occupations Act 2014 (Qld) (the ‘POA’)[80]:
  1. [53]
    Pursuant to section 574(1) a licensee (or registered employee) must not represent in any way to someone else anything that is false or misleading in relation to the letting, exchange or sale of property. Subsection (3) provides that, without limiting subsection (1) or (2), a representation is taken, for the subsection, to be false and misleading if it would reasonably tend to lead to a belief in the existence of a state of affairs that does not in fact exist, whether or not the representation indicates that that state of affairs does exist.
  2. [54]
    However, the language of s 212 of the POA is analogous to the language contained in s 574 of PAMDA. In our view, there is no basis for concluding that a different outcome could be reached in relation to s 574 as would be reached in relation to s 212.
  1. [148]
    Section 212 of the POA provides as follows:

212 False representations about property

  1. (1)
    A licensee or real estate salesperson must not represent to someone else anything that is false or misleading relating to the letting, exchange or sale of real property.

Maximum penalty—540 penalty units.

  1. (2)
    Without limiting subsection (1), a licensee or real estate salesperson must not, in connection with the sale, or the possible sale, of an interest in real property or in connection with the promotion of the sale of an interest in real property, represent to someone else anything that is false or misleading relating to—

(a) the value of the real property at the date of sale; or

(b) the potential income from the leasing of the land; or

  1. (c)
    if the land has been previously sold, the date of the sale and the consideration for the sale; or
  1. (d)
    how the purchase of the real property may affect the incidence of income taxation on the buyer.

Maximum penalty—540 penalty units.

  1. (3)
    Without limiting subsection (1) or (2), a representation is taken, for the subsection, to be false or misleading if it would reasonably tend to lead to a belief in the existence of a state of affairs that does not in fact exist, whether or not the representation indicates that the state of affairs does exist.
  2. (4)
    Also, if a person makes a representation relating to a matter and the person does not have reasonable grounds for making the representation, the representation is taken to be misleading.
  3. (5)
    The onus of establishing the person had reasonable grounds for making the representation is on the person.
  4. (6)
    It is not a defence to a prosecution under subsection (1) or (2) for the defendant to prove that an agreement with the person was terminated or that the person did not enter into an agreement because of the representation.
  5. (7)
    This section does not limit another Act or law about false or misleading representations.

Example—

Australian Consumer Law (Queensland), section 30 (False or misleading representations about sale etc. of land)

  1. (8)
    In this section—

false or misleading, for a representation, includes the wilful concealment of a material fact in the representation.

Note—

A person may make a claim, under the Administration Act, against the fund if the person suffers financial loss because of a contravention of this section.

  1. [149]
    The Appeal Tribunal said that the Reasons must consider whether the statements comprising the representations were either not misrepresentations, or if so, were true (or, to put it another way, not false or misleading).[81] They also expressed that the Reasons must consider the contentions that the representations were actionable misrepresentations (or, to put it in the language of s 574 of PAMDA, were representations that were false or misleading in relation to the sale of property).
  2. [150]
    I will consider each of the alleged representations in turn.

Allegation (d): The Applicants would not be obliged to do or contribute anything further towards completion of the purchase of the property (because the agent would take care of everything for them)

  1. [151]
    This allegation contains two propositions within it. The first is that the applicants would not be obliged to do anything further towards completion of the purchase of the property because the agent would take care of everything for them. The second is that the applicants would not be obliged to contribute anything further towards completion of the purchase of the property because the agent would take care of everything for them.
  2. [152]
    As to the first proposition, the evidence of Ms Sutton and Mr Cahill, quoted previously, is that they did not do anything further towards completion of the purchase of the property. They did not seek advice from another real estate agent, and took no steps to attempt to on-sell the property themselves prior to settlement being required.
  3. [153]
    Mr Cahill said that he did not believe it was possible to engage another real estate agent that might be able to help, as he was under the impression that it was Mr Tomkins’ ‘property to sell, and he had exclusive rights to it’. No basis appears on the evidence for Mr Cahill to have formed that impression. There is no evidence that Mr Tomkins made such a representation or statement.
  4. [154]
    Mr Cahill said that ‘We just left it in his hands. We assume that it was – he would have it under control’. When he says ‘we’, he is referring to both himself and his mother.
  5. [155]
    As a matter of law, Mr Tomkins could not have had exclusive rights to sell the property,  or  the  right to  sell property at all,  unless  Ms Sutton or Mr Cahill had signed  an authority to act as agent under section 133 of PAMDA which provides as follows:

133 Appointment of real estate agent – general

  1. (1)
    A real estate agent must not act as a real estate agent for a person (client) to perform an activity (service) for the client unless –
  1. (a)
    the client first appoints the real estate agent in writing; or..
  1. [156]
    There is no evidence that either Ms Sutton or Mr Cahill appointed Mr Tomkins to sell any of the properties at all.
  2. [157]
    The second proposition, that they would not be obliged to contribute anything further, because the agent would take care of everything for them, would require an acknowledgement that there may arise an obligation to contribute something further in the normal course of events, but that in this situation the agent would do something which would result in their not having to contribute something further.
  3. [158]
    The word ‘contribute’ must refer to a financial contribution. This proposition would therefore require an acknowledgement by the Suttons and Mr Cahill that they understood at the outset that a further financial contribution may be required.
  4. [159]
    That proposition is contrary to the evidence and submissions of Ms Sutton and Mr Cahill as to the other alleged misrepresentations, that they did not believe that they would in any circumstance be required to make any further financial contribution at all, and that they did not believe that they were committing themselves to an actual purchase of a property.
  5. [160]
    It is implicit in the allegation that ‘the agent would take care of everything for them’ that it is alleged that the agent represented that he was assuming a duty of care towards them.
  6. [161]
    In Robertson & Anor v Airstrike Industrial Pty Ltd, Jackson J considered a claim where the applicants, who were the buyers of a property, relied on section 8 of the code of conduct for real estate agents as to exercising reasonable skill care and diligence for a client. His Honour held that the agent had no duty to the buyers:[82]

In my view, reliance on s 8 also does not advance the applicants’ case any clear distance. Mr Salt did not owe a duty of care to the applicants. Any duty of care was owed to the respondent as a client. Section 8 of the code, on its face, did not obviously oblige Mr Salt to act to protect the interests of the applicants who are not clients. But even if it did, in my view, it didn’t necessarily inform the meaning or application of s 574.

  1. [162]
    It would require a clear expression by the agent that he was assuming a duty of care towards the Suttons and Mr Cahill, which is not a usual duty, to support this allegation.
  2. [163]
    The evidence of Ms Sutton and Mr Cahill shows that they did not take an active role in following up the transactions until the settlement date was approaching. That was a matter of their own conduct. There is no evidence that Mr Tomkins made any representation at the outset to dissuade them from taking an active role.
  3. [164]
    I am not satisfied that the Suttons and Mr Cahill have identified representations made by Mr Tomkins that he would ‘take care of everything for them’.
  4. [165]
    This alleged misrepresentation is therefore not supported by evidence of such a representation by Mr Tomkins, is inconsistent with the evidence and other submissions of Ms Sutton and Mr Cahill, and is not made out.

Allegation (e): the liability of the applicants in any event was limited to the applicants’ upfront payment of 1% of the purchase price

  1. [166]
    Ms Sutton gave evidence that she did not believe that the arrangement was that she was that she was signing a contract to purchase, and that Mr Tomkins would try to on sell the unit before settlement – rather her evidence was that arrangement was that it was a ‘holding’ and that their name would never actually be on the unit.
  2. [167]
    Mr Cahill gave evidence that, as far as he can remember, Mr Tomkins was saying that Mr Cahill’s obligation was the initial deposit, and that if they were to pull out of the apartment that he would lose that $5,000, and whatever else was required would be paid by QBE.
  3. [168]
    The Chief Executive submits that Mr Cahill’s evidence was that he understood entirely that there was a risk in the transaction.
  4. [169]
    It becomes fundamental to several of the allegations of misrepresentation as to the context in which the representations were said to have been made. The case that was put forward by Ms Sutton and Mr Cahill was that they did not believe that they were acquiring units, or would be required to purchase them at all.
  5. [170]
    In order to support that scenario forward by Ms Sutton and Mr Cahill, there would have to be a supportive set of circumstances, and a comprehensible set of business practices. The documents that the Suttons and Mr Cahill signed, whilst being sophisticated legal documents, were not in themselves misleading.
  6. [171]
    The purchase document is clearly headed on the front cover ‘Contract of Sale’. The opening schedule refers to ‘buyer’ and ‘seller’. An accompanying PAMD Form 30 C, which is a warning, and was signed by each of Ms Sutton and Mr Cahill plainly states:

WARNING

Do NOT sign the attached contract without reading and understanding this warning. Do not sign if you feel pressured.

You should obtain:

  • Independent legal advice

and

  • an independent valuation of the property
  1. [172]
    There is nothing in the contract of sale, or the deposit bond documents, which supports the proposition that the transaction was anything other than a straight out purchase.
  2. [173]
    The contentions of the Suttons and Mr Cahill, that the transactions were in the nature of a ‘holding’, or were revocable at will, or were perhaps some form of option, are not apparent in, or supported by, any of the documentation.
  3. [174]
    Ms Sutton and Mr Cahill were clearly strongly influenced by the actions of Mr Jamieson. It is apparent that from the outset, Ms Sutton had confidence in whatever Mr Tomkins was proposing, because she was relying on her knowledge that Mr Jamieson had already gone into similar transactions.
  4. [175]
    Ms Sutton’s evidence was that she hadn’t sought any legal advice because she knew that Mr Jamieson had already bought a couple of units, and that ‘I thought, well if anyone knows if anything is not right, it would be Will, so he wouldn’t have gone into – gone into it if there was a problem’.
  5. [176]
    I consider that neither Ms Sutton nor Mr Cahill applied an inquiring mind to the transactions they entered into. They did not seek legal advice before signing the documents, or take notice of the clear wording of the documents. I consider that a primary reason for Ms Sutton acting in that way was that she was heavily influenced by her confidence in the judgement and business experience of Mr Jamieson. I consider that Mr Cahill was in turn influenced by the confidence of his mother.
  6. [177]
    There is no indication that Ms Sutton found any of the representations made by Mr Tomkins to be concerning, or inconsistent with her prior understanding of the opportunity which was outlined to her by Mr Jamieson.
  7. [178]
    If Mr Tomkins had told Ms Sutton something that did not sound correct to her, then it would have been expected that she would have gone back to Mr Jamieson and have queried that.
  8. [179]
    The provisions as to representation are set out in PAMDA. A direct comparison cannot necessarily be made with the law as to misleading conduct in other jurisdictions. It is instructive however to be aware of principles that are applied in similar provisions. In Sutton v Thompson Pty Ltd & Ors the Federal Court of Australia considered a claim of misleading and deceptive conduct under the Trade Practices Act 1974 (Cth) arising from the sale of a business, and commented on the tests applicable under that legislation:[83]

29. However, in a case such as the present, where the allegedly misleading conduct consists in representations directed specifically towards a particular person or group of people, with a view to making a single specific sale, it is more helpful to recall the principles of law restated by Wilson J. in Gould v. Vaggelas (1984) 56 ALR 31 at 46. Although these related to the common law action of deceit, they are in our view equally applicable to breaches of s.52 of the Act. The principles are:

(i) Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case.

(ii) If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation.

(iii) The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation.

(iv) The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract."

30. In this formulation, the possibility that a foolish person might be misled by some representation which no normal person would take seriously, is covered by the exclusion of representations which are not "calculated to induce" entry into the contract - the test is objective, but must take into account the respective positions of the parties, including such matters as their knowledge of each other through previous dealings and their respective familiarity with the subject-matter of the contract.

31. Similarly, if a person is so determined to enter into a contract that he is not in truth influenced by some false representation made to him, he clearly has no case. But there is nothing in the principles cited, or in any other authority which has been brought to our attention, to suggest that a person who has been misled into entering a contract, by false representations of a type which were likely to produce that result and in fact did so, can be deprived of his remedy because of his failure to check the accuracy of those representations. See, to the contrary, Neilsen v. Hempston (1986) 65 ALR 302 at 309, and Collins Marrickville Pty. Ltd. v. Henjo Investments Pty Ltd (unreported decision of Wilcox J, 16 April 1987).

  1. [180]
    The alleged representation is that liability was limited to a payment of 1% of the purchase price. The item that was 1% of the purchase price was the fee for the deposit bond. There is no evidence as to any discussions between Mr Tomkins, and Ms Sutton and Mr Cahill, as to what would result if QBE were ever to pay out the 10% deposit which was secured by the deposit bond which they purchased.
  2. [181]
    Ms Sutton’s evidence was that she understood that ‘if you ever did default then it would go to the – that you would have to pay the original amount of the deposit. But it was set up that you didn’t have to do that…’[84]
  3. [182]
    Ms Sutton was therefore aware that there was a possibility that a liability of 10% of the purchase price (being the original amount of the deposit) could arise in some circumstances. That is inconsistent with the alleged representation that liability greater than 1% of the purchase price was limited ‘in any event’, which suggests that such a liability would not arise in any circumstances.
  4. [183]
    The overall picture that results is not one where clients listened to representations of the agent, which they accepted and acted upon in forming a view to enter into the transactions; but rather is a situation where the clients did not apply a questioning or critical mind to the transaction, and did not rely upon what they were being told by the agent, as they were already persuaded to take a positive view of the transaction by their prior information from Mr Jamieson.
  5. [184]
    The Suttons and Mr Cahill had the opportunity to read the written documentation before they signed it. That documentation does not support a proposition that the buyer’s liability was limited in any way.
  6. [185]
    Having regard to the inconsistencies in the evidence, the nature of the documentation, and the lack of critical attention by Ms Sutton and Mr Cahill to the sales promotion that was made by Mr Tomkins, I am not satisfied that an actionable representation was made to them by Mr Tomkins as to the limitation of their liability as alleged.
  7. [186]
    This allegation is therefore not made out. 

(f): The transaction was a contract to purchase the property but the Respondent would be able to on-sell the property to a third party before the time for settlement

  1. [187]
    This allegation predicates that the agent made a representation that the transaction was a contract to purchase the property. This allegation is not reconcilable with the case that was presented at the hearing. As discussed, Ms Sutton and Mr Cahill gave evidence that they did not believe that they were purchasing a property at all.
  2. [188]
    The substantive allegation is that Mr Tomkins made a representation that he would be able to on-sell the property to a third party before the time for settlement.
  3. [189]
    It is history that Mr Tomkins did not sell the property to a third party before settlement. The question however is as to whether Mr Tomkins was false or misleading if he said at the time of the initial discussions that he would be able to sell the property to a third party before settlement.
  4. [190]
    The sales promotion by Mr Tomkins to Ms Sutton and Mr Cahill outlined a future likely course of events:
    1. (a)
      that Mr Tomkins would continue to be involved in reselling the units;
    2. (b)
      a resale would occur to Asian buyers before the time for settlement arose, and
    3. (c)
      a profit would result to the Suttons and Mr Cahill from the resale.
  5. [191]
    There is no evidence that units were not being on-sold to Asian buyers at the time, and   that it was not reasonable to believe that such onsales could readily be made as to these units, and would deliver a profit on the resale.
  6. [192]
    It has not been established that the outline of the future likely course of events by Mr Tomkins was a false or misleading representation at the time he made it.
  7. [193]
    The evidence of Mr Hamilton, a valuer, was that it would have been reasonable for Mr Tomkins to believe in January 2008 that he could onsell the units prior to the settlement date. I accept the evidence of Mr Hamilton.
  8. [194]
    This allegation therefore cannot succeed, as it is inconsistent with the evidence of Ms Sutton and Mr Cahill, and even if such a representation was made by Mr Tomkins, it is not established that it was false or misleading at the time of making it.
  9. [195]
    This allegation is therefore not made out.

Allegation (g): By implication from the express statement pleaded at paragraph 4(f) herein, the respondent had a reasonable belief that he could sell the property to a third party buyer before the date for settlement under the contract arrived

  1. [196]
    This allegation is predicated upon allegation (f) discussed above. It questions whether Mr Tomkins had a reasonable belief that he could sell the property to a third party buyer before the date for settlement under the contract arrived.
  2. [197]
    For this allegation to be made out, it would have to be established that Mr Tomkins did not have such a reasonable belief, but that he represented that he did, and that it was false or misleading to do so.
  3. [198]
    There is no evidence that Mr Tomkins did not have a reasonable belief that he could sell the property to a third party buyer before the date for settlement under the contract arrived.
  4. [199]
    Further, as indicated, I accept the evidence of Mr Hamilton that it would have been reasonable for Mr Tomkins to have had such a belief. Mr Hamilton’s opinion is set out in his report dated 12 July 2018:[85]

I consider it would have been reasonable for Mr Tomkins, utilising either developer preferred marketing strategies or more traditional marketing strategies, to believe in January 2008 that he could on sell the units prior to the settlement date for sale contracts in the Elston Grand Surf Resort complex.

  1. [200]
    This allegation is therefore not made out.

Allegation (h): by implication from the express statement pleaded at paragraph 4 (d) herein, the respondent had a reasonable belief that the matters pleaded at paragraph 4 (d) herein were correct

  1. [201]
    This allegation is predicated upon allegation (d) discussed above. It questions whether Mr Tomkins had a reasonable belief that the applicants would not be obliged to do or contribute anything further towards completion of the purchase of property (because he would take care of everything for them).
  2. [202]
    For this allegation to be made out, it would have to be established that Mr Tomkins did not have such a reasonable belief, that he represented that he did, and that it was false or misleading to do so.
  3. [203]
    There is no evidence that Mr Tomkins did not have a reasonable belief that the applicants would not be obliged to do or contribute anything further towards completion of the purchase of the property (because he would take care of everything for them).
  4. [204]
    Mr Hamilton’s evidence was that it was reasonable for Mr Tomkins to believe that he would on sell the units prior to the settlement date.
  5. [205]
    If the units had been on-sold, then someone would have had to arrange that second sale, and prepare contract documents, and there would have been transfer duty payable on the first sale, which would incur costs. If the sale price achieved on the second sale was sufficiently in excess of the price on the first sale to cover these costs, then no further contribution may have been required. This may have occurred if Mr Tomkins had acted as agent on the second sale, and prepared the contract documents, without charging commission, or by charging commission that was covered by the increase in price.
  6. [206]
    Mr Hamilton’s report dated 6 July 2018 canvassed his opinion of the state of the market on the Gold Coast regarding the sale of off the plan units at the beginning of 2008 (including sale and resale volumes), and in particular, the units are subject of these proceedings. He concluded that there would not have been a reasonable expectation that the prices for such units would appreciate over the next 12 to 24 months:[86]

There was a sharp decline in sales volumes from early 2008, although there was no immediate adjustment in sale prices. As sales of off the plan units stalled, there was increased pressure developer to maintain sales volumes. Eventually, sale prices were adjusted down significantly, generally as these projects came under control of the mortgagees.

The evidence of heavily discounted prices for off the plan units became evident towards the end of 2008 into 2009.

In early 2008, I would characterise the off the plan units mark in Surfers Paradise as follows:

  • The market had passed at peak sales and price point towards the end of 2007.
  • There was increasing concern is towards the global financial outlook.
  • The Reserve Bank had further increased the cash rate which resulted in higher mortgage borrowing costs.
  • There was a high volume of developer stock available off the plan.

Given these market characteristics, I consider a prudent investor would not have reasonably considered that prices for off the plan units in Surfers Paradise in early 2008 would have had any real prospects of capital value appreciation over the next 12 to 24 months.

  1. [207]
    Notably, it appears that the developer was able to resell the units without loss, and they were resold at a higher price. Mr Tony Gray, the solicitor, stated in an affidavit sworn on 30 June 2012 that Mr Tomkins told him that the units were sold at a significant profit:[87]

[8] On 17 November 2011, I also interviewed Cec Tomkins, as agent of the developer, as to what happened to the Sutton and Cahill units. He informed me and I verily believe these, together with all remaining unsold units, were sold with the Management Rights to the building to ‘The Wyndham Group’, a timeshare operation at a significant profit; so that no loss at all would have been suffered by the Developer as a result of the failure of the Suttons and Cahill to proceed with their purchases.

  1. [208]
    Mr Gray was not called to give evidence, and no opportunity arose to cross-examine him. However the suggestion that the units were in fact sold to ‘The Wyndham Group’ by the developer for a significant profit has not been challenged by any evidence.
  2. [209]
    Whether Ms Sutton and Mr Cahill bought the units at a ‘heavily discounted price’ (as referred to by Mr Hamilton) was not canvassed in the evidence. It is conceivable that they did in fact buy the units at a discounted price, and could have been able to resell them through Mr Tomkins at a higher price, and not incur any further costs as a result of the transactions, although there is no evidence to that effect.
  3. [210]
    It has not been shown that it would not have been reasonable for Mr Tomkins to have formed a belief that the applicants would not be obliged to do or contribute anything further, on the basis that he would have been able to arrange a further sale, with a consequence that no further action or contribution was required from Ms Sutton and Mr Cahill.
  4. [211]
    Consequently, even if Mr Tomkins had made the representation pleaded at paragraph 4(d), it is not established that it was not reasonable for him to have formed that belief, and that it was false or misleading for him to have expressed that reasonable belief to Ms Sutton and Mr Cahill.

Conclusion

  1. [212]
    Whilst it may be seen that the Suttons and Mr Cahill have acted in a gullible way, they did elect to enter into commercial transactions with a view to making a profit.
  2. [213]
    I note that I:
    1. (a)
      have sympathy for the unfortunate financial position which the Suttons and Mr Cahill have found themselves in;
    2. (b)
      recognise the personal strains that this has put upon them;
    3. (c)
      have concerns that they received poor commercial, and other, advice from Mr Jamieson; and
    4. (d)
      have queries as to their dealings with their former Solicitor, Mr Gray.
  3. [214]
    I also note that I did caution them back in 2014, when I granted leave for an extension of time for them to bring these claims, as to their prospects of success:[88]

[56] I have doubts as to whether the Suttons will ultimately be able to overcome the hurdles highlighted by the Chief Executive, and I would urge them to consider further action carefully as to its utility. That said, I am reluctant to deny them the opportunity to pursue the claim if they seek to do so, and consider they can establish it within the Act.

[64] For the reasons discussed, I am satisfied the requirements of s 511 are made out, and allow the extension of time, although I do so with the notes of caution I have made.

  1. [215]
    I have reconsidered the claims according to law in respect of the claims insofar as they are based on the alleged misrepresentations of the Respondents.
  2. [216]
    I have considered each of the alleged representations which were pursued, being 4(d), (e), (f), (g) and (h).
  3. [217]
    I have considered the submissions made by the parties, and the evidence.
  4. [218]
    I am not satisfied that any of the alleged representations are shown to have been actionable representations made by Mr Tomkins to Mr or Ms Sutton, or Mr Cahill, which come within section 574 of the Property Agents and Motor Dealers Act 2000 (Qld), and give rise to a claim upon the fund under that Act.
  5. [219]
    I reject the claims made by Sandra Joanne Sutton, David John Sutton, and Damien Edward Cahill against the fund.

Footnotes

[1]Sutton & Anor v Cecil Tomkins t/as Prime Real Estate [2014] QCAT 111; Cahill v Cecil Tomkins t/as Prime Real Estate [2014] QCAT 104.

[2]Sutton v Tomkins [2015] QCAT 411.

[3]Cahill v Tomkins [2015] QCAT 410.

[4]Sutton v Tomkins [2015] QCAT 411; Cahill v Tomkins [2015] QCAT 410.

[5] Affidavit of Mr Cahill sworn 12 October 2011, [7].

[6] Transcript 2-31, Line 41.

[7] Transcript 2-32, Line 18.

[8] Transcript 2-33, Line 10.

[9] Transcript 2-34, Line 19.

[10] Transcript 2-34, Line 46.

[11] Transcript 2-34, Line 39.

[12] Transcript 2-39, Line 46.

[13] Transcript 2-43, Line 6.

[14] Transcript 2– 43, line 29.

[15] Transcript 2 – 43, line 41.

[16] Transcript 2-58, Line 30.

[17] Transcript 2-60, Line 21.

[18] Transcript 2-69, Line 36.

[19] Transcript 2-91, Line 11.

[20] Transcript 2-12, Line 27.

[21] Transcript 2-17, Line 27.

[22] Transcript 2–21, Line 20.

[23] Transcript 2-21, Line 25.

[24] Applicant's submissions following trial, [34] and [35].

[25] Ibid [36] and [37].

[26] Ibid [38].

[27] Ibid [69].

[28] Ibid [70].

[29] Ibid [71].

[30] Ibid [75].

[31] Ibid [79].

[32] Ibid [87].

[33] Ibid [98] and [101].

[34] Ibid [110].

[35] Ibid [119].

[36] Ibid [119].

[37] Ibid [122].

[38] Ibid [123].

[39] Ibid [127].

[40] Ibid [130].

[41] Submissions of the Chief Executive - Justice and Attorney-General 12 Oct 18, [3].

[42] Ibid [9].

[43] Ibid [28].

[44] Ibid [33(e)].

[45] Ibid [37].

[46] Ibid [38].

[47] Ibid [43]-[46].

[48] Ibid [49].

[49] Ibid [56].

[50] Ibid [58].

[51] Ibid [61].

[52] Ibid [68].

[53] Ibid [69].

[54] Ibid [72].

[55] Ibid [74].

[56] Ibid [75].

[57] Ibid [78].

[58] Ibid [79].

[59] Ibid [86].

[60] Ibid [90].

[61] Ibid [92].

[62] Ibid [95].

[63] Ibid [96].

[64] Applicant's submissions in response to intervenor’s submissions, [1] and [2].

[65] Ibid [18].

[66] Ibid [7].

[67] Ibid [9].

[68] Ibid [12]; (2001) 206 CLR 459, [106].

[69] Ibid [17].

[70] Ibid [18].

[71] Submissions in reply of the Chief Executive Officer – Justice and Attorney-General, filed 29 October 2018.

[72] Ibid [8].

[73] Ibid [19].

[74] Transcript 2-98, Line 44.

[75] Transcript 2-105, Line 25.

[76] Transcript 2-51, Line 39.

[77] Transcript 2-102, Line 41.

[78][2017] QCATA 44, [18].

[79] Ibid [52].

[80] Ibid [53] and [54].

[81][2017] QCATA 44, [63].

[82][2016] QCA 104, [72].

[83][1987] FCA 167, [29]-[31].

[84] Transcript 2-33, Line 13.

[85] Report of Taylor Byrne, 12 July 2018, p 2.

[86] Report Taylor Byrne, 6 July 2018, p 5.

[87] Affidavit of Tony Gray sworn 30 January 2012, bundle No. 5.

[88]Sutton & Anor v Cecil Tomkins t/as Prime Real Estate [2014] QCAT 111, [56] and [64]; and similarly in Cahill v Cecil Tomkins t/as Prime Real Estate [2014] QCAT 104.

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Editorial Notes

  • Published Case Name:

    Sandra Joanne Sutton, David John Sutton v Prime Real Estate Australia Pty Ltd, Cecil Thomas John Tomkins and Chief Executive Department of Justice and Attorney-General (No. 2); Damien Edward Cahill v Prime Real Estate Australia Pty Ltd, Cecil Thomas John Tomkins and Chief Executive Department of Justice and Attorney-General (No. 2)

  • Shortened Case Name:

    Sutton v Prime Real Estate Australia Pty Ltd (No 2)

  • MNC:

    [2019] QCAT 325

  • Court:

    QCAT

  • Judge(s):

    Member Paratz

  • Date:

    05 Aug 2019

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