Reeves v Elsgrove Pty Ltd[1999] QDC 265

I gave the plaintiffs leave to make these amendments to para. 6 of the plaint.

There was no dispute between the parties that the plaintiffs did not complete the contract. Consequently the defendant, by way of counterclaim, sought an order that the contract be specifically performed by the plaintiffs and for all necessary and consequential accounts, directions and inquiries Md damages.

On the evidence before me the land is part of a subdivision being developed by the defendant adjacent to Brisbane Road. Access cannot be gained to the subdivision from Brisbane Road, and is gained from another direction. Brisbane Road intersects with Old North Road. Old North Road is approximately 150 metres from the subdivision. When the plaintiffs spoke to Mr. Lambert on the land on 6 March 1999, Brisbane Road was sealed with dirt edges. At that time Old North Road was unsealed and part of the road was not accessible to vehicles except it could be traversed by four wheel drive vehicles.

The plaintiffs are husband and wife. They were living on acreage at Upper Caboolture. They were considering buying land in Warner to be near a business they were considering buying. They had previously built next to a major road and did not want to do so again. Also, because of the aspects of the house they were considering building (a two storey home with a balcony), they did not want to overlook a busy road. The plaintiffs met Mr. Lambert on the land on 6 March 1999. According to the male plaintiff (Mr. Reeves) during this meeting Mr. Lambert said that the road behind them had just been sealed and “there's local access - it would be quiet”. Further, that the roads behind them would be sealed for access later on “when we develop the next site on the hill”. Mr. Reeves said when Mr. Lambert made these statements he was pointing towards Old North Road and Brisbane Road.

When Mrs. Reeves gave her evidence, she said when they came out of the office Mr. Lambert said: “This road here will be sealed for access later on because we're developing further up the hill and the other one over here, that will be sealed as well”.

Although Mrs Reeves did not mention in that part of her evidence in chief any local aspect to the access, after some questions I directed to Mrs Reeves, she said Mr. Lambert did refer to “local” and “local access” when Mr. Lambert described what was going to happen to the roads. Mrs. Reeves also stated Mr. Lambert referred to a farther development by the defendant up the hill in the context of one of these roads.

Mr. Reeves stated in his evidence what Mr. Lambert said about these roads being sealed as local access roads was important to him because of their previous experience being near a major road. In cross-examination Mrs. Reeves said from Mr. Lambert's statements about local access she thought it would be like people living on an estate with new roads of the new development, not a major road.

The plaintiffs signed the contract that day. The contract was subject to finance. Finance was approved. However, the plaintiffs' evidence was that after they signed the contract on 21 April 1999, a sales representative who came to the shop in which they worked referred to roadworks in the area. This person told the plaintiffs that these roadworks involved Old North Road becoming a two lane and then a four lane road. This was confirmed by a phone call made by Mr. Reeves to a Mr. Hilton at the Pine Rivers Shire Council. The plaintiffs sent a friend down to the council to collect a plan. When this friend returned with the plan there was also a note with the plan. This note was in the handwriting of Mr. Hilton. Mr. Hilton was responsible for the design and planning of roads in the shire. This note which is in evidence before me states that with respect to Old North Road this was intended to be a four lane arterial road in the long term and in the short term by approximately December 2000 and subject to funding, a two lane road would be built to connect from South Pine Road at Warner to Youngs Crossing Road and Dayboro Road at Petrie. The plan shows plans for a road which I consider could lead a person unfamiliar with road design to believe what Mr. Hilton had written in his note. According to the plaintiffs the plan and the note showed upgrading of the roads and specifically Old North Road to an extent that was contrary to what Mr. Lambert had represented regarding these roads.

Mr. Reeves said he rang Mr. Lambert upon receiving this information. Mrs. Reeves listened to the conversation by standing close to the telephone. Mr. Reeves said he challenged Mr. Lambert to the effect that Mr. Lambert had not told the plaintiffs that Old North Road was being upgraded to a four lane road. He said Mr. Lambert's response was to deny there was any such plan. However, when he was told by Mr. Reeves he had the plans in front of him from the Pine Rivers Shire Council, Mr. Lambert acknowledged the intended upgrade but claimed that had been planned for the last 20 years and that it might never go ahead, just like the Kippa Ring Railway. Mr. Reeves said that he told Mr. Lambert he had the note from Mr. Hilton that it was going to be a two lane road by December 2000, and as soon as council could afford it, it would be upgraded to a four lane road. Mr. Reeves said Mr. Lambert replied by acknowledging the upgrade but claimed it was only going to be a 60 kilometres per hour speed limit, and that the council would erect sound barriers. Mr. Reeves said he told Mr. Lambert the plaintiffs would like to get out of the contract and that the defendant could keep the deposit. However, Mr. Lambert said he would have to speak to his father first and get back to the plaintiffs. Mr. Reeves said he contacted Mr. Lambert again and asked whether he had spoken to his father and asked if the plaintiffs would be let out of the contract to which Mr. Lambert replied in the negative.

Mr. Lambert in his evidence denied he made any representation regarding these roads. He accepted Mr. Reeves telephoned him and asked if he knew there was a four lane highway going on behind the block to which Mr. Lambert replied in the negative. Mr. Lambert said Mr. Reeves was hysterical and using colourful language. Further, that he wanted his money back and that he said he would not proceed with purchasing the block. Further, Mr. Lambert said that Mr. Reeves told Mr. Lambert that there were sound barriers and that there were four lane highways. Mr. Lambert said he told Mr. Reeves he could not make any decisions because his father was overseas and that any correspondence should go through his solicitor. Mr. Lambert stated that Mr. Reeves said to Mr. Lambert in this telephone conversation that as Mr. Lambert was local, that Mr. Lambert should have known what was going on locally. Mr. Lambert also denied having made any of the other representations that had previously been alleged in the plaint which were not being proceeded with by the plaintiffs in this trial. Mr. Lambert also stated in evidence there were no other developments owned by the defendant in the area or intended to be developed by the defendant in the area. Mr. Lambert said the only mention he made of a road was that he explained to the plaintiffs that the road over the rise was a dead end that just serviced local acreage properties. That was in response to a question from Mr. Reeves what was at the end of that road. Mr. Lambert also said he had no knowledge of what was going to happen with these roads, nor any knowledge of what were council's intentions.

Therefore, one issue to be resolved is whether the defendant by Mr. Lambert did make the representation alleged by the plaintiffs. Counsel for the defendant submitted there were a number of reasons why I should be persuaded not to accept the evidence of the plaintiffs. These were:

There is no doubt the plaintiffs' evidence would not be open to the criticism made about it if the early correspondence referred to the alleged representation in the same terms relied upon by the plaintiffs in this action. The plaintiffs said that the solicitors acting for them at the time were more conveyancing solicitors and did not appear to be acting with their interests to the forefront. They were dissatisfied with these solicitors because their calls were not being returned. Further, the first letter from these solicitors dated 10 May 1999 contains a reference “Mary”. In my opinion that tends to bear out the plaintiffs' concerns. That reference does not seem to be a reference to someone with litigation experience, or at least certainly no one on the letterhead who was a partner of the firm or a consultant to the firm. In my opinion, it could either be that the plaintiffs' failed to tell the person taking instructions everything that had occurred, or if the plaintiffs had told this person everything that had occurred, that person may have failed to convey those instructions by this letter. Nevertheless, the plaintiffs did at least by 21 May 1999 make in express terms the complaint that is the subject of this action. That was only 11 days after the first solicitors' letter. It is not a case of the plaintiffs making an allegation many months after, and after proceedings have commenced, or after a defence has been received. Although the court should still be cautious about accepting the evidence of a person who appears to have not been precise about an allegation at the first opportunity, as the allegation was made 11 days later, I am not prepared to reject the plaintiff's evidence on this ground.

Certainly the plaintiffs, when they gave their evidence in chief, were not specific by stating that what Mr. Lambert said to them was in the exact terms of the allegation as it is expressed in the letter from the solicitors for the plaintiffs to the defendant's solicitor dated 21 May 1999, and in paragraph 4 of the plaint. However Mr. Reeves did refer to the concept of “local access” in the context of the road behind the land. Either Brisbane Road or Old North Road could be regarded as behind the land. Brisbane Road was adjacent to the land although Old North Road was only 150 metres away. Brisbane Road was accepted by the parties as having been sealed at the time, whereas it was quite clear Old North Road had not been sealed. When cross-examined, Mr. Reeves stated that Mr. Lambert had said the roads behind the land would be sealed for local access. Although that is recorded as in the plural, I do not accept that detracts from Mr. Reeves evidence as clearly one of the roads was not then sealed. Although Mrs. Reeves referred to the roads to be sealed in the plural, I do not consider that detracts from her evidence. Reference to the roads in the plural when one is already sealed does not in my opinion mean the expression “local” or “access” was not used to describe the roads.

Mrs Reeves, at the beginning of her evidence in chief did not state Mr. Lambert said “local” in the context of access. However, she did say that he said the road would be sealed for access later on. As the evidence persuades me as it was uncontested that Brisbane Road was sealed and Old North Road was not sealed, although Mrs. Reeves may have been confused when she said Mr. Lambert stated words to the effect both roads would be sealed in the future, in my opinion Mrs Reeves' evidence is consistent with her husband's evidence that Mr. Lambert used the words “local” and “local access”. If one of the roads was to be sealed it could only be Old North Road as that was not at the time sealed.

When regard is had to the evidence of Mr. and Mrs. Reeves, even though their evidence did not follow precisely the words of the alleged representation, the effect of their evidence did. It was accepted by Mr. and Mrs. Reeves Mr. Lambert did not name the roads. He pointed to them. I consider it is understandable Mr and Mrs. Reeves might, when giving instructions to the solicitors, identify the roads by name.

As I have said, the plaintiffs' bank manager was called. He was called by the defendant. He is Mr. Davies. In my opinion his evidence did not contradict the plaintiffs' evidence. As I have said, the plaintiffs said they wanted the bank manager to decline the application for finance to help them to get out of the contract. Mr. Davies said that Mr. Reeves had told him that this was his only way of getting out and that he knew he had been misrepresented. Although Mr. Davies said he told Mr. Reeves he could not decline finance because it had already been approved, nevertheless after further discussion they came to the understanding that an injection of $50,000 to come from the plaintiffs would not be put in which therefore justified the bank manager issuing the letter that finance had been withdrawn. Mr. Davies would not agree with the suggestion from counsel for the defendant that this was a false letter. That was because as far as Mr. Davies was concerned there was new information which had just come to light which justified the stance taken by the bank. Mr. Davies agreed that from Mr. Reeve's point of view it might be taken that it was a false letter. Although the plaintiffs were prepared in this trial to confess their intentions in this area were not honourable, in my opinion they may well have been making a confession against themselves that was not justified in the circumstances. That is, if the defendant had misrepresented the property as alleged by the plaintiffs, then arguably their circumstances had changed. If that was true, they were buying a property they did not want and the price agreed to be paid may have been because of the disadvantages affecting the property, too high. Consequently being bound to this contract could cause them a loss by paying more than the land was worth to them. That could justify informing the bank of that change. Otherwise the plaintiffs could have been criticised for not informing their bank of what they had discovered if the bank was lending money on a basis that had changed. Although the plaintiffs may have had an ulterior motive, in the circumstances I do not accept their confession on this aspect of the matter adversely affects their credit. After all, they did not, on this aspect of the matter, tell a falsehood under oath.

Although Mr. Lambert and his father claimed they had no other development in the area, nor intended any further development in the area as to which any access road would be relevant, that does not, in my opinion, mean that Mr. Lambert may not have made the statement attributed to him by the plaintiffs. While a reason to make this statement about a further development did not reveal itself in evidence that does not mean that it was not said.

Further, that the plaintiffs did not proceed at the trial with the other alleged representations does not persuade me that is something that discredits the plaintiffs or would lead me to conclude the plaintiffs are unreliable. Of course, to make allegations and then withdraw them is not to anyone's credit. However, that must be judged in light of the allegations made. Here, these allegations even though denied by Mr. Lambert, were of no consequence in the context of the plaintiffs' claim. I consider that it was the exuberance of the plaintiffs' new solicitors that led to repeating everything the plaintiffs claimed to those solicitors Mr. Lambert had said to them during the course of the negotiations. To some extent these solicitors perhaps could be commended because they may have pressed the plaintiffs to tell them everything, and if the plaintiffs told them everything, they took note of everything that was said and put it forward in the letter to the solicitors for the defendant. To then not proceed with those allegations at the commencement of the trial is, I consider, understandable. Those representations were probably true and would not affect the position of the legal relationship between the parties.

On the other hand, it was submitted by counsel for the plaintiffs I could not accept the evidence of Mr. Lambert. Central to this submission is a letter from the solicitors for the defendant to the plaintiffs solicitors dated 10 May 1999 (“the letter”).

The text of the letter is as follows:

When Mr. Lambert gave his evidence in chief he was asked by the defendant's counsel what knowledge he about council's intentions with respect to Old North Road and Brisbane Road in the future. Mr. Lambert stated he did not have knowledge of what was going to happen with either road. Further, that Old North Road ended at Baroona Street and it was not even linked through so there were no notices up to say that there were any roadworks proposed. However, his attention was drawn to the letter. As to the letter, he said in evidence in chief that after he finished his telephone conversation with Mr. Reeves, he rang Mr. Colwell, the defendant's solicitor. He stated he told Mr. Colwell exactly what he could remember of what Mr. Reeves had said and what was contained in that letter were not Mr. Lambert's actual words, but were Mr. Reeves' words. During cross-examination Mr. Lambert said that when explaining to Mr. Colwell what Mr. Reeves had said there had been a slight misinterpretation. Mr. Lambert said that he told Mr. Colwell at a later date that the letter expressed matters the wrong way. I asked Mr. Lambert with respect to that part of subparagraph (iv) of the letter which states: “It may be years before the road is built” whether he thought it could be incongruous for a buyer wishing to get out of a contract for an alleged misrepresentation about a road proposal that in the same breath the buyer would make that statement. Mr. Lambert was unable to comment on that proposition. A further answer Mr. Lambert gave was he did not believe that Mr. Colwell had actually got that right. Mr. Lambert also offered an explanation that what Mr. Reeves had complained about in this context was that as Mr. Lambert was a local, and as the proposal had been in existence for years, that he should have known about it. However that statement does not appear in the letter.

Consequently it became relevant to call Mr. Colwell. The defendant did so. Regarding the letter, he stated in his evidence in chief that the information contained in it he got from Mr. Lambert. He also said soon after supplying a copy of the letter to Mr. Lambert's father, it was only a matter of hours that he received a call from Mr. Lambert and his father stating that Mr. Colwell was wrong in what he had stated in the letter. Mr. Colwell said that Mr. Lambert told him that what was in that letter was the information that he had got from the purchasers. Mr. Colwell said that Mr. Lambert Senior wanted Mr. Colwell to do another letter to the plaintiffs' solicitors. Mr. Colwell stated that he did not think much of it at the time, and thought it could probably be rectified at a later date if it became an issue and it was left at that. Mr. Colwell was prepared to accept that there must have been a misunderstanding on his part as to the way Mr. Lambert put matters to him, but that they were very quick to point out to him that he was wrong in this letter. During cross-examination Mr. Colwell confirmed that he dictated the letter immediately as he received the instructions. He confirmed that the letter contained his instructions. He also confirmed he had no difficulty understanding Mr. Lambert when he telephoned and gave Mr. Colwell instructions.

I am prepared to accept that Mr. Lambert telephoned Mr. Colwell stating to Mr. Colwell the letter did not contain what Mr. Lambert wanted to convey in that letter. However, I am not persuaded that Mr. Colwell made any relevant error when taking instructions for the purpose of this letter. The only inference I am prepared to draw from Mr. Colwell's evidence is that Mr. Lambert wanted to change his instructions as contained in the letter. As the letter reads on its face, it appears that the letter in subparagraphs (i) to (iv) attempts to give reasons why council's proposals were not so detrimental. I am not prepared to accept that Mr. Reeves would make these statements to Mr. Lambert. Further, I am not prepared to accept that this letter contains what Mr. Reeves said to Mr. Lambert. I do not accept that a purchaser desirous of getting out of a contract for an alleged representation subsequently believed by a purchaser to be a misrepresentation would state that it may be years before the road that is of such concern to the purchaser is built. The same considerations would apply to an alleged statement by such a purchaser that a sound barrier would be constructed beside the road, or that the road would be one with a 60 km speed limit. According to Mr. Lambert, Mr. Reeves was not placid when speaking on the telephone. I do not accept a purchaser as described by Mr. Lambert on the telephone would make statements to this effect as contained in this letter.

Therefore, I do not accept that these statements in the letter were made by Mr. Reeves. I find these were statements made by Mr. Lambert to Mr. Colwell, and reflected Mr. Lambert's opinions regarding the road proposals in the context of Mr. Reeve's complaint about what Mr. Lambert told Mr. and Mrs. Reeves during the discussions on the land.

For the reasons I have given, the criticisms of the plaintiffs' evidence do not persuade me to reject the plaintiffs' evidence. On the other hand. I am not prepared to accept Mr. Lambert's evidence. That is because he sought to claim the matters referred to in the letter were statements made by Mr. Reeves. As I have said, for the reasons I have given, I do not accept those statements were made by Mr. Reeves. In my opinion, Mr. Lambert's claim that they were made by Mr. Reeves was because he wanted to contradict the appearance on the face of the letter that he was aware of the proposals of the council and that he had not used that knowledge to respond to Mr. Reeves' complaint in the telephone conversation. Therefore, I accept the evidence of Mr. and Mrs. Reeves.

Although Mr. Hilton acknowledged that there was no certainty that these road proposals would proceed at any particular time, his evidence persuades me that the council had these intentions and subject to funding and the need to do so, would proceed with its intentions. However, Mr. Hilton stated, and I accept this evidence, that in this financial year there is a strong possibility that works will take place in Old North Road. As I understood his evidence which I accept, the road manager for the council confirmed his position to Mr. Hilton on the morning before he gave his evidence that he had allowed for construction of this project within his program starting December of this year. Therefore, insofar as it is relevant to inquire into what council's intentions may have been in March of this year and what those intentions have been since then, the conclusion I reach on the evidence of Mr. Hilton is that the upgrading of Old North Road to a two lane carriage way was a proposal of council in March 1999 and that it is a strong possibility that works will commence on that proposal in December of this year. Further, that in March 1999 it was the council's intension that at some time in the future after upgrading Old North Road to a two lane carriage way that it would be upgraded to a four lane carriage way subject to funding. I consider the inference to be drawn from what Mr. Lambert said to Mr. Reeves in the telephone conversation on 21 April 1999 is that Mr. Lambert was aware of proposals of council to upgrade these roads beyond works for local access or access to areas near the land. In my opinion, it does not alter the plaintiffs' rights against the defendant that these plans may have been council's intentions rather than decisions made with fonding allocated to make the proposals a matter of fact.

In these circumstances I find on the balance of probabilities that Mr. Lambert, on behalf of the defendant, in the negotiations represented to the plaintiffs that the dirt roads would be sealed as local access roads. Further, that even though these roads may not have been described by Mr. Lambert by their names, he in any event pointed in the general direction of these roads and that it was reasonable for the plaintiffs to understand the roads Mr. Lambert was generally pointing to were Brisbane Road (which was already sealed) which was adjacent to the subdivision and Old North Road which was approximately 150 metres from the subdivision. Further, that the plaintiffs were induced by this representation to enter into the contract. Further, because of Mr. Lambert's knowledge of council's proposals for these roads, by making the statement he made regarding these roads, he engaged in conduct that was misleading or deceptive. I find on the bailee of probabilities the defends was engaged in trade and commerce because the defends was conducting a commercial venture which was the sale of subdivided lots of land to members of the public. Mr. Lambert described how Mr. Reeves contacted Mr. Lambert from an advertisement in a local newspaper enquiring what land the defendant had for sale. I find on the balance of probabilities the plaintiffs relied upon the representation made by Mr. Lambert. Although it was alleged as a particular of the misleading or deceptive conduct on the part of the defends that Mr. Lambert was aware that Brisbane Road would be sealed and Old North Road would be upgraded to a two lane road by December 2000 and thereafter to a four lane arterial road, the evidence persuades me on the balance of probabilities that the defendant was aware of proposals to this effect, and that by failing to qualify the representation Mr. Lambert made, his conduct was misleading or deceptive within the meaning of that term as used in s.52 of the Act. That qualification would be to inform the plaintiffs there was a potential for the council to upgrade Old North Road to a two lane thoroughfare with a possibility to an upgrade to a four lane thoroughfare. Further, that because of his knowledge of these proposals, Mr. Lambert did not have reasonable grounds for making the representation he made. Therefore, I find the defendant engaged in misleading and deceptive conduct within the meaning of s.52 of the Act. I find the plaintiffs have suffered loss and damage as a result of having made the contract in reliance on the representation made by Mr. Lambert. In monetary terms, that loss is the withholding of the deposit of $ 1,000 which was claimed by Mr. and Mrs. Reeves after the contract was terminated. Further, Mr. and Mrs. Reeves incurred $580 in costs and expenses in and about the sale. Further, that loss is the detriment or disadvantage suffered by the plaintiffs by being bound to a contact induced by misleading or deceptive conduct in contravention of s.52 of the Act: (Demagogue Pty Ltd v. Ramenskv & Anor (1992) 39 FCR 31.)

Section 87(1) of the Act gives the court a discretion to make such order as it thinks appropriate against a person who engaged in conduct in breach of s.52 of the Act. I accept the land is not in the circumstances land the plaintiffs would want to own being contrary to what they were prepared to buy having regard not only to the intentions of council in the respect to Old North Road, and the style of home the plaintiffs intended to build.

As I am satisfied the plaintiffs have suffered and are likely to suffer loss or damage by reason of the contravention of s.52 of the Act, I consider it is proper that in my discretion I ought to declare the contract between the parties to be void, and I do so. Further, the plaintiffs should have returned to them the deposit and be compensated for the $580 lost by reason of the defendant's conduct. Orders pursuant to s. 87(1) and (1A) of the Act can be made to compensate the plaintiffs or can be made to prevent or reduce loss or damage.

Therefore, I declare the contract entered into between the plaintiffs as purchasers and the defendant as vendor for the sale of Lot 56, Vantage Court, Warner, dated 8 March 1999, is void.

I order the defendant to pay to the plaintiffs the sum of $1,000 within 7 days representing the deposit paid by the plaintiffs under the contract and to pay to the plaintiffs the sum of $580 within 7 days to compensate the plaintiffs for their costs and expenses in or about the sale represented by the contract.

I dismiss the defendant's counter-claim.

I will hear the parties regarding costs.