Orchid Avenue Pty Ltd v Goode
[2014] QDC 217
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Orchid Avenue Pty Ltd v Goode[2014] QDC 217
- Add to List
Orchid Avenue Pty Ltd v Goode[2014] QDC 217
Orchid Avenue Pty Ltd v Goode[2014] QDC 217
DISTRICT COURT OF QUEENSLAND
CITATION: | Orchid Avenue Pty Ltd v Goode [2014] QDC 217 |
PARTIES: | ORCHID AVENUE PTY LTD (plaintiff) v PAUL KEVIN GOODE and CHRISTINE MARIANNE BARBER (defendants) |
FILE NO/S: | D285/2012 |
DIVISION: |
|
PROCEEDING: | Trial |
ORIGINATING COURT: | District Court, Southport |
DELIVERED ON: | 19 September 2014 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 6, 7 August 2014 |
JUDGE: | McGill DCJ |
ORDER: | Plaintiff’s claim dismissed. On the counterclaim, declare the contracts between the parties dated 20 August 2009 void ab initio and order the plaintiff to authorise the stakeholder to release the deposits and any accretions to the defendants. |
CATCHWORDS: | VENDOR AND PURCHASER – Purchaser’s claim for rescission – representations – whether made – whether misleading or deceptive conduct – whether agent had authority – whether relied on – effect of contractual exclusions – relief. VENDOR AND PURCHASER – Vendor’s claim for damages – expenses of resale – estate agent paid excessive commission – payment illegal – not recoverable – interest on purchase price not recoverable under contract after termination. TRADE PRACTICES – Misleading and deceptive conduct – representations as to future matters – whether made – whether agent had authority – whether relied on – relief. PRINCIPAL AND AGENT – Principal and third party – sale of land by principal – principal liable for representations of estate agent – actual authority – ostensible authority – liability not excluded by terms of contract of sale. Butcher v Lachlan Elder Realty (2004) 218 CLR 592 – considered. Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 – applied. Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 – applied. F A Pidgeon & Son Pty Ltd v Daneshurst Investments Pty Ltd [1986] 1 Qd R 448 cited. Federal Commissioner of Taxation v Park (2012) 205 FCR 1 – cited. Foran v Wright (1989) 168 CLR 385 – cited. Gould v Vaggelas (1984) 157 CLR 215 cited. Hooper v Oates [2014] 2 WLR 743 – cited. I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 cited. Lewis v Orchid Avenue Pty Ltd [2014] FCA 739 – not followed. Mark Bain Constructions Pty Ltd v Avis [2012] QCA 100 – applied. McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 – cited. Mullens v Miller (1882) 22 Ch D 194 – cited. Neville v Lam (No3) [2014] NSWSC 607 – cited. Overbrooke Estates Ltd v Glencombe Properties Ltd [1974] 1 WLR 1335 – distinguished. Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 – cited. R v Ashley [2005] QCA 293 – cited. Rutherford v Brados Pty Ltd (1995) 16 Qld Lawyer Reps 61 – followed. Thompson v Riggall [2010] QCA 144 – applied. Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd [2005] WASCA 174 – applied. Watson v Foxman (1985) 49 NSWLR 315 – distinguished. |
COUNSEL: | G Handran for the plaintiff A J Greinke for the defendants |
SOLICITORS: | Hickey Lawyers for the plaintiff K2 Law, solicitors for the defendants |
- [1]By a contract in writing dated 20 August 2009 the plaintiff agreed to sell to the defendants an apartment in a building to be constructed at Surfers Paradise; by a separate contract the plaintiff agreed to sell a set of furniture for the apartment. The defendants refused to complete either contract on the date fixed for completion, 15 September 2011, and on 22 September 2011 the plaintiff terminated both contracts and forfeited the deposits under them. The apartment, and the furniture, were ultimately resold by the plaintiff at a significantly lower price. By this action the plaintiff essentially claims damages for breach of contract. The defendants allege that they were induced to enter into the contracts by misleading and deceptive conduct by a real estate agent on behalf of the plaintiff, and seek orders under the Trade Practices Act (“the Act”) setting aside the contracts ab initio, or in the alternative compensation in an amount equal to the extent of any liability to the plaintiff. The substantial issue at the trial before me was whether the defendants are entitled to relief under the Act.
Background
- [2]The first defendant is an IT consultant who has his own business; he and the second defendant, his partner, were in July 2009 living in New Zealand, although they are now living in New South Wales: p 79. On 29 May 2009 they incorporated a company in New Zealand for the purpose of holding investment property.[1] They were then interested in purchasing such property up to the value of $1,000,000.
- [3]In July 2009 they came to Surfers Paradise for a week’s holiday.[2] At that stage nothing had been done to give effect to their intention to acquire an investment property, and indeed they had never previously purchased an investment property.[3] On 27 July, Mr Goode went diving, and while he was away Ms Barber went for a walk, and saw large billboards advertising the Hilton Hotel and Residences, surrounding a building site in Surfers Paradise: p 10. There was a sales centre near the site, and she went in and looked at models of the two towers that were on display there; and she was approached by a salesperson.
Representations – defendants’ account
- [4]At that time, the buildings had not been constructed, but the plaintiff was selling “off the plan” lots in one of the towers to be constructed. For this purpose it had retained as agents 360 Project Marketing Pty Ltd, for whom this salesperson worked.[4] They had a conversation, and Ms Barber was shown a promotional video: p 11. According to Ms Barber, there was some discussion about the Hilton brand, she expressed some interest in a two bedroom apartment, and she was told that the cheapest one available was $930,000: p 12. There was only one apartment left at that price. She said she would be looking to rent out the two bedroom apartment, and the salesperson said she could help with figures. According to Ms Barber, she said they would get $1,000 a night at 80% capacity. Ms Barber said she needed to speak to her partner, who had gone diving, and asked her to write down the costs associated with the apartment, and the salesperson made some notes about those costs on a brochure which was given to Ms Barber: Exhibit 2. The salesperson also noted on the brochure that 47%[5] of the income earned by the apartment would be taken by Hilton for operating the building, leaving 53% for the owners of the apartment. She also gave Ms Barber her business card: Exhibit 3.
- [5]Ms Barber went back to her hotel, and later had a conversation with Mr Goode. She spoke positively about finding a great investment property and showed him the brochure in which he noted the writing “$1,000 per night”: p 80. At about 4 p.m. they went back to the sales centre and had a further conversation with the salesperson: p 13, p 80. They saw the video again, and then had some further conversation about the quality of the apartments, what units were available, and what they would return, in the course of which the salesperson repeated the statement about $1,000 a night and 80% occupancy, and produced some documents showing that another hotel on the Gold Coast, the Versace, was charging $660 a night; this was said to be six star accommodation.[6] Mr Cooke did some calculations in his head based on 60% occupancy, to be on the safe side: p 81. There was some discussion about the view, and something about that was written down on another piece of paper: p 15. The salesperson also made a statement to the effect that buying off the plan was an attractive form of investment because when the building was completed the unit would be worth $1,100,000.[7]
- [6]They were interested in purchasing the unit, and asked whether they could get any discount on the purchase price, which was rejected.[8] The salesperson told them that if it was to be managed by Hilton it was compulsory to buy a furniture package, at a cost of $35,000, and Mr Goode offered that they would purchase the property if that package was included in the asking price.[9] The salesperson went away, then came back and told them that if they agreed to buy it that day and paid the holding deposit of $5,000 they would include the furniture package in the sale price. They sought to make the payment of $5,000 using a credit card, but there were problems in using the machine in the sales office, and they were asked to come back the following day. That evening they looked through the brochures again and worked out the equivalent of $1,000 a night in English currency which appeared to be consistent with hotel pricing in London: p 16.[10]
- [7]The next day they went back to the sales office, and this time they were able to pay the $5,000 holding deposit: p 82, p 16. They said they had no local lawyers, and the salesperson arranged an appointment with a local lawyer who had dealt with other similar matters, who was in a position to handle the matter the following day: p 17. On that day they again went to the sales office, and went with the salesperson who brought a large bundle of papers to the lawyer’s office, where the documents were handed over: p 83. Ms Barber said that while they were walking to the solicitor’s office she had asked the salesperson what would happen if when it came time to settle they could not afford to do so because of something that had happened in the meantime, and the salesperson replied not to worry about that because the vendor would buy it back in order to prevent the price from falling too much: p 19.
Representations – plaintiff’s evidence
- [8]The salesperson identified by the defendants also gave evidence. She had been a licensed real estate agent since around October 2004, and was working at this sales centre in about July 2009, though she had no particular recollection of the defendants: p 18. All she could do was give evidence by reference to her general practice in relation to selling these apartments,[11] although she could say more specifically that there were things that she did not say because she would not have said such things.[12] She said that when selling units she emphasised mainly the issues of lifestyle, services, the Hilton branding, that the block would be close to the beach, and that it had a beautiful outlook: p 19.
- [9]She denied that she specified what room rates would be charged by Hilton, saying that no room rates had been provided to them at that time, and that if anyone asked about room rates they would normally go to the internet and look up places like the Sheridan, Versace, Marriot, and just look what their rates were: p 20. She would explain what the current room rates were, what past room rates had been, and noted that they went up and down according to the season. She denied that she ever mentioned a room rate of $1,000 a night: p 21. She was quite definite that she would not have said to the defendants that they could expect $1,000 a night as the rental on a 2 bedroom unit: p 27. She denied that she wrote down $1,000 per night on exhibit 2 because that reflected what she had told Ms Barber that day: p 29. She said that was written just as an example: p 22, p 29.
- [10]She said she used what she wrote to explain how Hilton would be taking a share of the income under the management agreement. The split was not quite 50/50, though she would commonly speak in those terms to potential buyers: p 26. If people were concerned about occupancy she would go to an Australian Bureau of Statistics website and refer them to figures there: p 20. She had some recollection that the occupancy rate that she had found was around 60% to 78%, on certain years, though she could not remember specifically. She said that they just knew the majority of the occupancy rates after a while as a result of repetition of the information: p 26. If the occupancy rate of 80% was the rate on the Bureau of Statistics website at the time, that is the rate she would have stated: p 27. She would not be surprised if she had actually said 60% or 80% as the relevant figure, though she sought to qualify that answer by saying that she would not have actually said these figures but would have let the people read them for themselves: p 27.
- [11]The salesperson said she had no information in July 2009 about the prospective value of apartments on the completion of the building: p 21. She agreed that investors would also be interested in capital gain, though she said she did not get involved in matters to do with financing and negative gearing or anything like that: p 25. She had taken over 150 deposits if not more and she had no specific recollection of what she had said to these particular purchasers: p 21. She identified her handwriting as most of the writing on a “contract information sheet” which had been completed in relation to the defendants’ purchase, but this did not remind her of what she had said. She identified her handwriting on exhibit 2, being everything except the words “use of” next to “facilities”, which were not her writing: p 22.[13]
- [12]The contract information sheet was filled in at the time when the purchasers paid the initial holding deposit: p 30. If ultimately the purchasers did not sign up to a contract, the holding deposit was refundable: p 38. There was also a document called a Form 27C, which was signed by the purchasers when they signed the contract, and had also been signed by the salesperson: p 30. The Form 27C was signed before the document went to the solicitor: p 33. The significance of this is that the Form 27C set out precisely the remuneration of the agent, 360 Project Marketing Pty Ltd, so this was something known by the salesperson once she had signed the form: p 31. It follows that her statement at p 23, that she did not know what arrangement that company had with the developers was not correct.[14]
- [13]She said that they had a panel of solicitors who were available to act for purchasers, and she made the panel available, rather than nominating a particular solicitor: p 31. If the purchasers chose a particular solicitor, she would sometimes ring and make arrangements for them to see that solicitor. She would sometimes take them to the solicitor’s office if it was nearby, and if that occurred she would take the documents to be signed by the purchasers: p 31. She did not prepare the documents herself, and she would be given a bundle of documents which she would hand over to the solicitor’s secretary: p 32. She said this was a very big pile of papers: p 34. She would not sit in while the purchasers saw the solicitor, or wait while they did so, but if she were going to walk them back she would have the secretary call her when they were finishing up: p 35 She said that the contract information sheet was the only document signed in the agent’s sales office: p 33.
- [14]She agreed that sometimes an arrangement was made by which the furniture package price was included in the price of the unit: p 34. That this occurred on this occasion was indicated in the contract information sheet: p 35. She agreed that if someone was signing up for the furniture package that suggested that the purchaser was proposing to put the apartment into the Hilton rental pool: p 36.
Subsequent events
- [15]The defendants spoke to the lawyer in the absence of the salesperson. There was a large pile of documents with stick on labels indicating where they were to sign or initial, and they signed or initialled as indicated at all of these tabs: p 18. They did not read the documents before they signed them, nor was any part of the documents drawn to their attention,[15] although Ms Barber recalled seeing a reference to the plaintiff’s name on one particular page.[16] Mr Goode had the words “as nominee” inserted because he had in mind that his company might become the purchaser, but these words were later crossed out, in circumstances not explained in the evidence: p 5.[17] No copies of anything signed were provided to them that day: p 20. Counsel for the plaintiff argued that they were provided by the solicitor with a document called Property Buyers Guide which became Exhibit 12, although Mr Goode denied that this occurred (p 6); Ms Barber had some recollection of the document, but could not say whether it was provided then or not: p 42. The document was tendered on the basis that it had been disclosed by the defendants: UCPR r 227(2). That rule however does not make the document evidence that it was provided to the defendants at that time, there was no positive evidence of that, and I am not persuaded that it was.[18]
- [16]One issue which I am curious about is whether the defendants signed a furniture package agreement at the same time as they signed the contract for the sale of the lot. The contract in evidence is dated 20 August 2009, the same date as the land contract: Exhibit 1, document 10. That it was entered into is clear, but this contract was witnessed by the defendants’ banker in New Zealand, rather than the solicitor: p 20. Ms Barber said that the furniture contract turned up in the post on 4 August, and that after she spoke to the solicitor they signed the contract and paid the 10% deposit of $3,500. I note for what it is worth that Exhibit 12 on the fourth page “Contract details” makes no reference to a furniture contract, or furniture deposit.
- [17]The arrangement between the parties was undoubtedly that the furniture package was to be included in the price of the unit: Exhibit 1, document 6. The land contract document 9 specifies the purchase price, but it provides in special condition 5 that if the defendants complied strictly with all obligations under the contract and completed the contract on the settlement day they would immediately after completion be paid $35,000, although the plaintiff might at its discretion deal with the payment by an adjustment to the final settlement figure. This of course was not the deal that had been negotiated with the agent, but this part of the page was initialled along with everything else. In these circumstances it would be a little strange if there was not also a furniture contract provided for signature, but apparently one was not produced at the time and one had to be sent to New Zealand to be signed later. This provides some explanation for the delay prior to the contract being signed and returned on behalf of the plaintiff. The defendants paid the deposit under the furniture contract, as is accepted on the pleadings: statement of claim, para 7. It is not clear however that this was brought to account in the plaintiff’s calculation of its damages.
- [18]After the documents were signed the defendants were escorted by the salesperson back to the sales office, they finished their holiday and returned to New Zealand. At some point they received a letter from the solicitor (Exhibit 5), and a disclosure statement and costs agreement which were signed and returned: Exhibit 4. The defendants may have been sent a tax invoice by the solicitor dated 21 August 2009: Exhibit 14.[19] The balance of the deposit on the land contract was paid within time, despite the efforts of the solicitor: Exhibit 4. Thereafter not a lot happened for a long time, so far as the defendants were concerned, and it seems that eventually they became somewhat unhappy about the absence of any information: p 63. In February 2010 the defendants incorporated a New Zealand company, presumably for use in their business.
- [19]After the building was constructed they inspected the unit on 30 August 2011, and signed an inventory: p 63, Exhibit 6. It was obvious on their inspection that the unit was not going to be rented for $1,000 per night: p 69. They knew that settlement was approaching, and they had until this time intended to complete: p 63. After they saw the unit they sought other legal advice, and on the day fixed for settlement new solicitors for the defendants wrote to the plaintiff’s solicitors refusing to settle the contract, alleging that it had been induced by misleading and deceptive conduct: Exhibit 7.[20] The plaintiff treated this as a repudiation of the agreement and on 22 September 2011 terminated both contracts. The defendants’ solicitors having disputed the plaintiff’s entitlement to the deposit, it was retained by the stakeholder, the plaintiff’s solicitors.
- [20]The furniture package was supplied, and while the plaintiff was attempting to resell the unit it was put into the Hilton letting pool, where it generated a net income of $3,909.47.[21] There was no evidence about the number of days the unit was occupied to generate this return, or indeed the period for which it was available, but it was a pitifully small return for a period of something like 12 months.[22]
- [21]Ultimately the plaintiff’s efforts to resell the unit were successful and a contract was entered into on 13 August 2012 to sell it, with the furniture, as it was for $620,000. That contract was completed on 5 November 2012, when the plaintiff received the balance of the purchase price together with adjustments of $2,607.33, less a mortgage release fee of $152.10. The plaintiff had, while holding the unit after 15 September 2011, incurred holding costs of $11,128.24, and in connection with the resale spent $990 on legal fees and paid $40,920 to real estate agents.
Credibility
- [22]It was submitted for the plaintiff that I should not accept the defendants as reliable witnesses for a number of reasons. It was submitted that there were significant inconsistencies between their evidence, particularly in relation to what was said on which occasion. It was also submitted that there was some inconsistency between what had been pleaded in different versions of the defence,[23] and the evidence at the trial. These inconsistencies however generally related to matters other than the central issue of whether the salesperson had nominated $1,000 per night as the room rate and 80% as the occupation rate which could be used when assessing the return from an investment in a unit.
- [23]Inconsistencies are a matter properly taken into account when assessing whether evidence is truthful and reliable, but the mere existence of inconsistencies does not necessarily mean that evidence must be rejected; some inconsistency is to be expected, because it is natural enough for people who are asked on a number of different occasions to repeat what happened at an earlier time to tell a slightly different version each time.[24] Indeed, an absence of inconsistency may be suggestive that people have invented a story and learned it off parrot fashion, and are simply repeating it when required each time.
- [24]The defendants in the witness box struck me as very much the sort of people they purported to be, naïve investors who had made what in retrospect can be seen to be a foolish decision as a result of reliance on what they had been told. They did not strike me as astute or cunning people who had invented this story as a means of getting out of a contract they could not afford to perform.[25] My assessment of the defendants was that they were people who were trying to recall honestly and accurately as best they could what had occurred in the conversation some years earlier, but inevitably those aspects of the conversation which were now identified as matters of some importance were being stressed by them. They were unshaken by cross-examination.
- [25]No doubt there was much in the conversations with the salesperson that they could not now accurately recall,[26] but that does not mean that their evidence now about their having been told things which would have been seen by them then as significant is unreliable. If they had been told things about what sort of return they might expect from owning the unit, one would expect it to have been at the time a matter of some importance to them and therefore a matter they would be likely to remember.
- [26]It was submitted that I should approach the matter in the way set out in Watson v Foxman (1985) 49 NSWLR 315 at 318-9. I will not quote the passage, but it cautions against the risk that whether what was said orally was in fact misleading in the proved circumstances may depend upon relatively subtle nuances of expression, or the presence or absence of some qualification, the details of which may readily succumb to the frailty of human memory. This however is not a case where that particular issue arises. It is not a case where the issue is whether what was said was one thing, which in context was misleading or deceptive, or something else which was not necessarily very different but which in context was not misleading or deceptive. In the present case, the defendants’ evidence was that the salesperson said X, Y, Z, and the salesperson maintained that she had not said them, or at least, had not said X or Z or anything like them, but might have said Y if she had a proper basis for doing so. Furthermore, this is not a situation where something subtly different from what was alleged by the defendants could have been said without being misleading or deceptive. Accordingly it seems to me that the consideration identified in Watson does not apply here.
- [27]In any case, if his Honour was suggesting that it is going to be virtually impossible to prove the making of an oral representation which was in fact misleading or deceptive unless the party or the relevant witnesses are blessed with the memory of a tape recorder so as to be able to testify in detail and with precision to the conversation in question, I would respectfully suggest that that approach is not in fact commonly adopted by courts.
- [28]I accept that whether conduct is misleading or deceptive should be considered by reference to the conduct as a whole: Campbell v Back Office Investments Pty Ltd (2009) 238 CLR 304. Certainly it is necessary to bear in mind that something stated in one part of the conversation, or in one part of a written document, may be modified in its effect by something stated at some other part, or in some other way, and that it is the overall effect of what was provided that must be assessed.[27] Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 was a case where the plaintiffs had been provided with the relevant documents, including a copy of the contract of sale, three weeks before they entered into it, so that there was time to consider the effect of disclaimers and clarifications within the documents. I do not consider that anything which was said by the salesperson in the present case was effective to erase whatever was otherwise misleading in her statements.[28]
- [29]The disclaimers were buried in a mass of paperwork, and the defendants were provided with no effective explanation of them either by the agents or by the solicitor, nor did the defendants discover them for themselves. The submission was advanced for the plaintiff that reasonable purchasers would have read the whole of the contract and disclosure document,[29] and in that way would have ascertained that they ought not to be relying on anything that the salesperson had told them. It is probably correct to say that if they had read the whole of those documents, and understood them, the problem would not have arisen, because the defendants would never have signed the contract, but I do not accept that the test propounded in the authorities assumes that a reasonable person would read all of those lengthy documents in the circumstances before signing the contract. I doubt if any purchasers of any of the units in this development would have done that.
- [30]I do not find it suspicious that they made no note or record of the representations at the time;[30] that would be entirely consistent with their trusting the salesperson, and believing what she had said. Making a note at the time would look like an evidence making exercise, bespeaking an element of distrust in what they had been told. Nor do I find anything suspicious in the failure to complain when told about a decline in value in the apartments in the other tower, in February 2011. It was submitted that it was suspicious there was no complaint following the inspection of the unit on 30 August, but there was what I regard as a reasonably prompt complaint in the letter from the new solicitors on 15 September 2011.
- [31]It was submitted that I should reject the defendants’ account of what occurred when they saw the solicitor, on the basis that any solicitor would have drawn their attention to certain aspects of the contracts, in particular the “no representations” provisions in clause 29. It would be nice to think that any solicitor consulted in a situation like this would question the clients about why they were purchasing the property, and whether they had been told anything about it by the agent, and whether they were relying on anything they had been told, so as to document those matters, and to warn them of the contractual consequences if they went ahead, but I do not doubt that there are solicitors who would not do so, and doubt whether, if this solicitor had behaved in that way, he would have stayed long on the agent’s panel.
- [32]It was suggested at one point in cross-examination that the proposition that the solicitor had not mentioned anything about the contents of the contract to the defendants during the interview was remarkable: p 55. I do not find it remarkable in the slightest. The solicitor in question had prepared a property buyers guide which was specific to this tower of this project, and was branded with the name of his practice: Exhibit 12. It presented as his document, though it occurs to me that there is nothing in it which is inconsistent with its having in fact been prepared by someone acting in the interest of the plaintiff. It is devoid of any warning to a prospective purchasers of any of the disadvantageous features of the contract that they were being asked to sign.
- [33]If it was prepared by the solicitor he had certainly gone to a good deal of trouble in preparing this document, which suggests that when the salesperson led the defendants from the sales office to his office she was following a well-trodden path. It says on the first page, “We rely on our clients to read the information sheets contained in the guide as they outline action buyers may take regarding the contract.” Perhaps the solicitor thought it was safer if he gave his advice in writing, in order to avoid arguments about whether or not his clients were told things, though even this document is not without its defects. A good deal of the printing on the sheet headed “Buying an off the plan apartment” is illegible, but, so far as I can tell, does not identify any hazards associated with such a purchase. The exhibit includes a five page summary of the contract which must have been prepared by reference to a different version of the contract, as the numbering of the sale conditions does not correspond with the numbering in the version of the contract signed by the defendants, and the latter has at least clauses 17, 19, 23 and 24 which do not feature in the summary. There may well be other deficiencies that I have not detected.
- [34]It may also be noted that the letter that the solicitor sent the defendants dated 20 August 2005[31] advised that the signed copy of the contract had been returned to the solicitor, and identified the date on which the cooling off period ended, but did not draw the attention of the clients to their right before that period ended to withdraw from the contract, something I consider any reasonably careful solicitor acting to protect his client’s interests ought to have done. The letter contained information about the bank details of the solicitors for the plaintiff, which was wrong: Exhibit 4. Overall it does not appear to me that on the evidence I have heard and seen the solicitor made any sort of attempt to act in any meaningful way in the interests of the defendants. In these circumstances I find the defendants’ account of their interview with him, which is uncontradicted, entirely unremarkable and quite plausible. That the solicitor did not investigate the question of whether the defendants were relying on any representations made by the agent was entirely consistent with all of the evidence I have as to the solicitor’s other conduct.
- [35]Finally I should mention that the letter and the earlier defences relied on a number of other matters as misrepresentations which ultimately did not feature particularly in the trial. I do not consider that that is something which reflects adversely on the defendants; counsel for the defendants has correctly identified the crucial matters on the basis on which his clients are entitled to succeed, and focused on those, an efficient approach which in my experience is all too rare in commercial litigation, where there is a tendency to take every possible point no matter how silly.
- [36]A number of other arguments in relation to credibility were advanced on behalf of the plaintiff, but it is sufficient to say that I find them all quite unpersuasive. Many of them are based on factual propositions which I do not accept or which were unsupported by evidence, or were based on what I would regard as wholly unrealistic assumptions about the way people in the position of the defendants would have behaved in certain circumstances. I do not intend to address them in detail; I have considered them and reject them as unpersuasive.
- [37]Purchasers had a choice as to whether a particular apartment when constructed was put into the Hilton renting pool or not: p 24. The only restriction was that it could not go into the renting pool without the standard furniture package, so that if the purchaser did not buy the furniture package, either initially or eventually, the purchaser would not be able to make the unit available to that pool. There was some delay in taking a unit out of the pool, but it was only a matter of a few months, rather than years: p 36. Given that the building in general would be managed by Hilton, there may have been difficulties in renting out the unit in other ways, but the defendants did agree to purchase the furniture package, and it seems clear enough that their intention was to obtain the unit as an investment, and that it would be made available to the Hilton renting pool.[32]
- [38]In such circumstances, what they were purchasing was in effect the stream of income that they would earn as a result of the units being managed in that way. It follows that, in order to assess whether the unit would be a good investment, it was necessary to assess the return likely to be achieved as a result of its use in that way.[33] As the salesperson explained, when guests occupied the apartment the room rate would be split in a fixed proportion, so for practical purposes the return per occupied day would depend on the room rate charged by Hilton.[34] The return per annum would depend on that room rate, and on the number of days during the year the room was occupied, that is to say, the occupancy rate. Once one knows the rate charged by Hilton, and the occupancy rate, one can calculate the return to Hilton, then by applying the percentage from the management agreement, the return to the owners. From this would have to be deducted fixed costs to give the net return on the investment per annum.[35]
- [39]The salesperson said that she was asked from time to time by potential buyers what sort of income they might expect, and said that she would refer them to rates of other properties: p 25. She denied that she said that the property would be superior to Radisson or Versace, or that the nightly rentals would be higher than at those properties: p 26. She denied that she told potential buyers that the property would have a 6 star rating, saying that Hilton was not a 6 star rating: p 26. She did however emphasise the Hilton brand to people, as one that represented quality accommodation.
- [40]The defendants were looking for an investment property to purchase, and signed this contract on the basis that the apartment would be an investment property. Lifestyle considerations would be relevant only to the value of the unit as an investment. If the unit was achieving $1,000 per night with 80% occupancy, this would have been a good investment, producing a return on capital of something like 15% per annum. Even assessed on the basis of a more conservative 60% occupancy rate, the return on capital was in the order of 11%, which makes it still an attractive investment.[36] Although there was no evidence from the defendants that they worked out the figures to this extent, Mr Goode did some calculations, and that the unit was an attractive investment on the basis of the figures they say the salesperson provided was obvious enough.
- [41]If the salesperson had done no more than refer them to the rates of other properties on the Gold Coast, I would have expected people in the position of the defendants to have gone further into the question of what return would be achieved from the unit, and investigated the attractiveness of this investment more rigorously. It seems to me that the fact there was not any more careful consideration given to the economic viability of this investment supports the proposition that the defendants at the time had been told things which if correct indicated that this would be clearly an attractive investment, and were relying on what they had been told.
- [42]There is also the consideration that I have the note made on Exhibit 2 at the time by the salesperson. It is true that she put “e.g.” before “$1,000 per night”, and that happens to be a figure which illustrates the percentage division easily, but the same could have been as easily achieved by saying that for every $1,000 received for the room the division would be as indicated. A rate of $1,000 per night was wholly unrealistic on the basis of rates in fact being charged by other properties on the Gold Coast in 2009,[37] and if there had been some consideration of actual current rates, as the salesperson said, it strikes me as quite extraordinary that she would choose to write down, even by way of example, “$1,000 per night”. If on the other hand she had been quoting that figure to them as the room rate that could be expected for the apartment when built and managed by Hilton, it would be natural to nominate this rate as the basis for showing the division of the amount received for the apartment. In my opinion, properly understood, the notes the salesperson made on Exhibit 2 provide strong support for the evidence of the defendants.
- [43]I had a few other minor concerns about the evidence of the salesperson, including that it seemed to me that the effect of her evidence was in substance that she might have quoted 80% as the occupancy rate, although this would have been on the basis that that was a rate she had obtained from an Australian Bureau of Statistics website. No attempt was made on the part of the plaintiff to justify the representations relied on by the defendants, that is, it was not alleged by the plaintiff that if the representation was made there was a reasonable basis for that representation, so as to exclude the presumption that the representation was misleading or deceptive. In those circumstances for the salesperson to claim that in effect there was a reasonable basis for this representation, or perhaps more precisely that if she had made the representation there would have been a reasonable basis for it, strikes me as suspicious.
- [44]There is also the consideration that when she spoke about writing “e.g. $1,000 per night” on Exhibit 2, she went on to say that “that would just be repeated in 10s for 1,000 to 100 to $10 to $1”: p 22. This was said to have been written on other pieces of paper, which were not produced. That statement struck me as implausible and suspicious; if she had been intending to write a number of examples in that way, it is a very odd coincidence that she happened to write one of them, the $1,000 per night one, on Exhibit 2, and the rest on another piece of paper. That statement also made me doubt her evidence.
- [45]Overall I prefer the evidence of the defendants, both as to the making of the representations and in general, and accept that the salesperson did make the two representations particularly relied on,[38] that the apartment would return $1,000 per night to the hotel operator, on the basis of 80% occupancy. As for the representation about the value of the unit when it had been built, I find that that was made also, as supporting the other representations, and because of my overall conclusion on credibility. But there was no evidence from the defendants to support a representation that 60% occupancy would be a conservative figure for the unit. The evidence of Mr Goode was that he did an assessment based on that figure as a worst case scenario (p 81), which involved indirect reliance on the 80% occupancy rate representation.
- [46]Those representations were obviously representations as to a future matter, and are therefore presumed to be misleading or deceptive unless the plaintiff can show that there was a reasonable basis for making them: the Act s 51A. The plaintiff has not even attempted to do so, so the question of whether the plaintiff engaged in misleading or deceptive conduct really turns on whether the representations were made, and on the question of agency of the salesperson.
Agency
- [47]The plaintiff appointed 360 Project Marketing Pty Ltd to sell the residential properties consisting of the lots in the building to be constructed: Exhibit 1, document 1, dated 18 June 2009. The appointment form did not specify how the agent was to perform the service, as required by the format of clause 4.1.1, but did not express any conditions, limitations or restrictions on the performance of the service. The document referred to a sales and marketing agreement between Brookfield Multiplex and 360 Project Marketing; that document is not in evidence, and the evidence did not reveal the relationship between the plaintiff and Brookfield Multiplex. It was also admitted on the pleadings that the salesperson acted on behalf of the plaintiff in relation to the sales of units in the development.[39] The plaintiff had also admitted that the salesperson was employed by 360 Project Marketing Pty Ltd,[40] as the salesperson said in her evidence: p 18.
- [48]It was part, and perhaps the main part, of her job to promote and market to potential purchasers the lots in the building to be constructed, as was assumed by her evidence about how she went about during these things: p 18, 19. There was no evidence of any express limitation of her authority as a salesperson, and I consider that the natural inference to draw is that in the absence of an express limitation she had the authority of the plaintiff to make representations about the apartments to be constructed.[41] In any case, she was working openly as a salesperson of the agents selling the property, and as such she had ostensible authority to make representations in relation to the units.[42] It follows that the representations that she in fact made to the defendants were representations made on behalf of the plaintiff, for which the plaintiff is responsible under the Act: s 84(2).
- [49]Counsel for the plaintiff relied on the decision in Overbrooke Estates Ltd v Glencombe Properties Ltd [1974] 1 WLR 1335. That was a case where it was held that, as a result of an express limitation on the authority of the auctioneers of a property in relation to making representations about the property, representations relied on were not made with the actual or ostensible authority of the principal. The proposition that the agent’s authority could have been limited by the plaintiff is undoubtedly correct, but there was no evidence of any limitation in the actual authority of the agent in the present case. As to the limitation of ostensible authority, Overbrooke Estates is simply a case where it was held that the existence of a specific limitation on the authority of the agent had been sufficiently publicised that it could not be said that the principal was holding the agent out as having authority to make representations on its behalf.
- [50]In that case it was held that, given the particular steps that principal had taken, at the time the purchaser spoke to the agent he knew or ought to have known that the agent had no authority to make any representation in relation to the property, and that the position was the same when the purchaser bid at the auction: p 1341. Clearly therefore that was a case where the limitation on the agent’s authority was publicised prior to the time when the relevant representation was made, and when it was relied on. There was however no suggestion in the present case that any relevant limitation on the authority of the agent, or the salesperson, was in fact drawn to the defendants’ attention prior to the time when they attended the solicitor’s office and signed the contract, nor was it shown that the plaintiff had so acted that it could be said that the defendants ought to have been aware of the limitation of authority.
- [51]The matters relied on were statements in particular provisions, buried within a pile of papers six inches thick, which were presented to the defendants to be signed in places as indicated. I do not regard that as taking reasonable steps to draw the existence of any limitation in the agent’s authority to the attention of the defendants, and accordingly this is not a matter where at the time when the defendants entered into the contract they knew or ought to have known of any limitation on the agent’s authority to make representations about the property. In my opinion the decision in Overbrooke Estates is clearly distinguishable. I do not consider that there is any material basis upon which the analysis of the Court of Appeal in Mark Bain Constructions (supra) can be distinguished.
Reliance
- [52]The next issue is reliance. Given that the defendants were purchasing the unit as an investment, the crucial issue as to the value of the unit as an investment was the financial return which might be expected from it in the light of the way in which it was going to be operated. That was precisely the point to which the representations that I have found were directed.[43] Astute investors might well have been sceptical about the reliability of something that they were told in such circumstances, and have made other investigations themselves, but these defendants were obviously not astute investors,[44] and there was no evidence that they in fact made any other investigations into these matters.
- [53]They said that they also relied on the Hilton name,[45] but this is not really something independent of the other representations; rather the Hilton reputation as quality accommodation was used to give plausibility to the representations about the economic return the apartment would achieve.[46] In any case, it is clear that what matters is whether the misleading and deceptive representations were relied on, not whether they were the only thing that was relied on, or even the main thing that was relied on.[47] It seems to me clear that the defendants’ initial enthusiasm for the investment must have been on the basis that they were in fact relying on representations about the economic return it would achieve that had been made by the salesperson. In all the circumstances, I have no hesitation in finding that the representations were relied on by the defendants in entering into the contract.
- [54]The fact that they had the “benefit” of “independent” legal advice does not prevent this from occurring. The solicitor that they consulted was, on any view of the matter, one recommended by the plaintiff’s agent and the uncontradicted evidence is that the interview consisted of nothing more than some enquiry into their capacity to pay the price, and the mechanical process of signing the contract or initialling it in the numerous places where that was required. There was no evidence that anything that was said or done by the solicitor had the effect of interfering with the defendants’ reliance on what they had been told by the salesperson prior to that interview.
Contractual provisions
- [55]The plaintiff also relied in the reply para 14 on provisions of the contract as excluding any reliance. Clause 29 of the general conditions provided that the contract set out the entire agreement between the parties, and superseded all prior negotiations, and continued:
“29.2 You warrant that you have not relied on any statement made by us (other than one contained in the contract) nor any real estate agent or other consultant appointed by us, and that you have signed the contract after making your own investigations and enquiries. You agree that you do not have any right to make any objection on the ground of any such alleged statement.
29.3 In particular, you warrant that you have not relied on any artist impression, model, display unit, plans, sketches, specifications or sales aid of any description (other than as contained in the contract) and you agree that you do not have any right to make any objection on the ground of any such alleged reliance.”
In addition Schedule 7 of the contract contained a number of special conditions including:
“1. No representations
1.1. Without limiting clause 29 of the contract, you agree that you have not relied on any statement made by us or any real estate agent or other consultant appointed by us except those statements in this contract.
1.2 In particular, you warrant and agree that neither we nor any real estate agent who acts as our agent has made any statement or representation to you in relation to:
- (a)any potential capital growth of the lot or any other lot in the development; and/or
- (b)any expected or projected return from the letting of the lot or any other lot in the development for residential purposes; and/or
- (c)the potential for resale of the lot at a profit prior to completion of this contract.
1.2 [sic] You confirm to us that you have made your own enquiries in relation to the matters referred to in the special condition and you are satisfied with your own enquiries in that regard.”
- [56]This condition appeared on a page where the defendants had initialled the bottom, but there were several such pages and this in itself has no significance and does not indicate that they were conscious of the terms of that special condition. The significance of contractual provisions of this effect is well established in the authorities: in effect, the plaintiff cannot in this way contract its way out of the restrictions and prohibitions contained in the Trade Practices Act, or whitewash misleading or deceptive conduct in fact engaged in by it or its agents. It would make a travesty of the consumer protection provisions which are now contained in the Australian Consumer Law if provisions of this nature were effective, so that real estate agents could mislead and deceive to their heart’s content and the developers who employ them could still take the benefit of the resulting contracts. Ultimately counsel for the plaintiff did not particularly rely on these clauses in the contract. There are a number of authorities which deal with the situation,[48] I apply them and do not need to say anything further on this point.
Relief
- [57]It is clear from the size of the plaintiff’s claim for damages against the defendants that the defendants have suffered loss and damage as a result of entering into the contract. Accordingly it is open to the court to give relief under s 87 of the Act. The appropriate course in my opinion is the simplest one, of avoiding the contract for the sale of land ab initio, and ordering the plaintiff to authorise the stakeholder under the contracts to return the deposit monies and any accretions to the defendants. It follows that the plaintiff’s claim should be dismissed. It was not suggested at the trial that any distinction should be drawn between the land contract and the furniture contract.
- [58]The defendants also claimed interest on the deposit monies pursuant to s 58 of the Civil Proceedings Act 2011, but that section applies to a proceeding in the court for the payment of money, and provides that the court may order that interest be included in the amount for which judgment is given: s 58(1)(3). I do not doubt that that applies to a proceeding by way of counterclaim, but the judgment on the counterclaim in the present case is not a money order against the plaintiff. (The plaintiff has not received the deposit, so there is no entitlement to recover the deposit from the plaintiff). In these circumstances, in my opinion the case does not fall within s 58, and there is no entitlement to interest under that section.[49]
Precautionary assessment
- [59]In case a different view may be taken elsewhere, I should deal with some issues which arose in relation to the assessment of the plaintiff’s damages. The plaintiff claimed liquidated damages under clause 15.4 of the Sale Conditions, on the basis of the resale which occurred. The plaintiffs, when making submissions in relation to quantum, adopted the approach of comparing the net amount which would have been received by the plaintiff if the contract had settled with a net amount which was in fact received by the plaintiff as a result of the resale contract. Clause 15.4 of the Contract provides that in the event of the plaintiff terminating the contract it may resell the lot “and any deficiency on the price on a resale and the expenses arising from the resale shall be recoverable by us from you as liquidated damages…”
- [60]If the first contract had settled on 15 September 2011, a total of $910,800.21 would have been received, the purchase price, plus the adjustments which would have occurred on settlement of $2,292.71, less the costs of the sale.[50] The plaintiff would have paid the rebate of $35,000 which would then have been used to pay for the furniture package. On the resale, the plaintiff received the contract price of $620,000 plus adjustments on settlement of $2,607.33, less actual selling expenses of $42,062.10.[51] No extra amount was paid for the furniture. The amount received therefore was $580,545.23. The difference between those two amounts is $330,254.98, but this is subject to the deduction of the total of the deposits and the addition of the expenses on resale, to give the amount recoverable under the liquidated damages clause. There was also a claim for net holding costs of $7,218.77;[52] that this is also recoverable was uncontroversial.[53] The total deductable in respect of the deposits comes to $96,500.[54] Accordingly, subject to one matter, the amount properly recoverable is $283,035.85.[55]
Real Estate Agent’s Commission on Resale
- [61]The defendants disputed the amount claimed as a real estate agent’s commission on the resale, on the basis that it was in excess of the amount prescribed under the Property Agents and Motor Dealers Regulation 2001. That Regulation prescribes the maximum amount of commission a real estate agent may lawfully recover, $900 plus 2.5% of the part of the sale price which exceeds $18,000.[56] The contract price on the resale of the apartment was $620,000 so that the maximum lawful commission was $15,950 (plus GST). The amount claimed was the total of $13,640 paid to 360 Project Marketing Pty Ltd,[57] and $27,280 paid to Ray White Surfers Paradise.[58] The latter sum was said to include a marketing fee of $8,850.
- [62]It is clear that in some circumstances a real estate agent may lawfully incur expenses of sale which are passed on to the client, which are not included in the commission. A common example is the cost of advertising in newspapers. For this reason, the form for appointment of a real estate agent authorised under the Property Agents and Motor Dealers Act, which was used to retain Ray White Surfers Paradise (Exhibit 1, document 13) had commission dealt with under Part 7, and expenses under Part 9, where the retainer provided that “the client authorises the agent to incur the following expenses in relation to the performance of the services”. All of these are said to be “as per Schedule B attached”. That Schedule provided commission to be in accordance with the maximum amount payable under the Regulation, plus GST, and there was also said that “an amount of 4% of the purchase price less commissions paid or payable as per Item 7.1 above will be payable as reimbursement for costs of advertising, marketing and administrative fees for each sale”.
- [63]This purported to impose a charge calculated by reference to the purchase price less commissions already payable, said to be for the costs of advertising, marketing and administrative fees, the third of these being undefined. Plainly the amount sought to be so charged is independent of any amount in fact expended by the agent on advertising or marketing, or for that matter internal administration; it is a transparent attempt to evade the restriction in the Act and Regulation, and is clearly ineffective for that purpose.[59] It is in substance another commission sought to be charged, contrary to the legislation,[60] so that the payment and receipt of it was illegal.
- [64]No doubt the plaintiff agreed to this illegal payment because it was expecting to be able to pass on the burden of it to people like the defendants, but in my opinion it is plainly not recoverable, for two reasons. First, because it would be contra bonos mores for such an illegal payment to be recoverable, the plaintiff essentially relying on its own illegality as the basis for this part of its claim. Second, in my opinion, the contractual provisions entitling the plaintiff to reimbursement in respect of expenses of the resale are to be naturally interpreted as confined to lawful expenses. Accordingly the only amount properly payable to Ray White Surfers Paradise was $15,950, plus GST, and the balance of $9,735 is not recoverable.
- [65]The next question is whether the plaintiff is entitled to recover two lots of real estate agents’ commission. This is essentially a question of interpretation of the contract, but that it is not difficult to imply into the provision a requirement that the real estate commission sought to be recovered be reasonable, and prima facie only one lot of commission is reasonable. There was no evidence led by the plaintiff that this apartment was so exceptionally unattractive that it required the combined efforts of two separate real estate agents to locate an alternative purchaser. In my opinion the plaintiff is confined to one lot of real estate agent’s commission on the resale, at no more than the maximum lawful amount, and the balance of the commission claimed of $23,375 is not recoverable.
- [66]This has significance in two ways: it reduces the amount recoverable as resale expenses to $18,687.10,[61] and it reduces the amount properly deducted from the gross resale price to give the net resale price. The plaintiff received the contract price of $620,000 plus adjustments on settlement of $2,607.33, and after deducting proper selling expenses of $18,687.10, the amount which ought to have been received was therefore $603,920.23. The difference between this amount and the net sale price the plaintiff would have received if the defendants’ contract had settled was $306,879.98.[62] The total recoverable is therefore $236,285.85,[63] plus interest.
Interest under the contract
- [67]The plaintiff also claimed interest under the contract. Clause 15.6 of the contract provides “if you fail to pay on the due date any money payable by you under the contract, you must pay interest at 15% per annum on the amount outstanding from the due date until (and including) the date of actual payment…” Clause 8.3(a) of the contract provided that “on the settlement date, you must pay us the purchase price, less the cash deposit paid by you…” It also went on to require payment of any other money owing under the contract. The obligations of the parties on settlement are complimentary, so that the purchase price is not payable until performance is tendered,[64] but it may be that in the event of later settlement as a matter of construction of the contract there was a contractual right to interest which arose on the date of settlement in relation to the balance of the settlement money (and any other monies to be paid under that clause) pursuant to clause 15.6 until the date of actual payment.
- [68]The difficulty however is that there was no date of actual payment, because settlement never occurred; in fact the contract was terminated by the plaintiff on 22 September 2011. I accept that some provisions, including potentially clause 15.6, extended in operation after such termination, as did any liability to pay damages for breach. But once the contract was terminated, any obligation to pay the balance of the sale price necessarily came to an end. The plaintiff’s entitlement against the defendants at that point (disregarding for these purposes the defendants’ entitlement to have the contract set aside under the Act) was one of damages for breach of contract.[65] Those damages had not then been quantified, but there was at common law an entitlement to them, and they could have been quantified, and in those circumstances an entitlement to pay interest could attach.[66] In fact however, the common law claim which came into existence upon termination of the contract was ultimately not pursued.
- [69]What was pursued was the claim under clause 15.4. That claim only came into existence when the elements of that contractual entitlement had arisen, namely that the plaintiff had resold the unit and incurred the loss thereby suffered. That contractual entitlement arose only on settlement of the resale contract, on 5 November 2012. It was at this point that the contractual entitlement to be paid the deficiency on resale as liquidated damages arose, so interest under clause 15.6 of the contract can attach only from that time until the date of actual payment, or judgment. The liquidated damages come to $229,067.08, and interest on that amount at 15% from 5 November 2012 to 19 September 2014, comes to $64,253.31.
- [70]The plaintiff relied on the approach adopted by Dowsett J in Lewis v Orchid Avenue Pty Ltd [2014] FCA 739, at [171]-[173]. His Honour did not cite any authority for the position he adopted there, which he described as “the better view”, and despite the respect I have for his Honour, in my opinion his Honour’s approach is contrary to principle, and I will not follow it. In my opinion it is clear to the point of demonstration that any obligation to pay the balance purchase price disappeared once the contract was terminated. There was at that point an entitlement to pay common law damages, but those damages were never quantified, the plaintiff preferring to pursue its entitlement under the specific provision to recover the loss on resale. Accordingly, the plaintiff cannot recover interest on the hypothetical common law damages which might have been theoretically recoverable during the period from termination until the resale occurred which in any event was not an amount payable under the contract. The entitlement to recover the loss on resale can only have accrued once the resale occurred, that was the entitlement which was pursued to judgment, and it is that contractual liability which founds the contractual entitlement to interest.[67]
- [71]Although no doubt the plaintiff would rather have more money than less, there is in truth no injustice to it in this, in circumstances where it is recovering holding costs as compensation for the fact that it was subjected to the burden of having to continue to own this apartment from 15 September 2011 to 5 November 2012. The plaintiff is plainly not entitled to have both the apartment and the purchase price. For essentially the same reasons, it is not entitled to receive both compensation for having to own this apartment over that period, and compensation for being kept out of its money over that period.
- [72]Apart from this, a claim for interest on the consequential loss in the form of holding charges, less the amount recovered by renting out the unit, in the sum of $7,218.77, was pursued. This loss was incurred during the period between the original date for settlement and the date when the resale contract was completed, and the particular amounts recoverable would have arisen on particular days, so that the amount payable could be calculated, at least in theory, with considerable precision. In fact there is no evidence before me which would permit that degree of precision of calculation of an entitlement to interest on this loss, and in my view the appropriate way to approach this is to allow interest from the midpoint of that period. That is 11 April 2012. This claim for consequential loss is really a claim for common law damages. This is permitted under the contract – clause 15.5 – but that does not make this amount “money payable under the contract”, so there is no contractual right to interest. There is therefore nothing to prevent interest being allowed under the Civil Proceedings Act 2011 s 58. Interest at the practice direction rates to 19 September comes to $1,419.78, which is virtually the same as interest at 8% per annum. I allow interest by statute on the consequential loss, at $1,419.78.
- [73]I would therefore assess on a precautionary basis the amount recoverable under the contract, or as damages for breach, but for the relief under the Trade Practices Act, at $301,958.94, including interest of $65,673.09. For the reasons given earlier however, there will be judgment for the defendants in the proceeding. I assume that costs will follow the event, but will invite submissions when these reasons are published.
Footnotes
[1] Goode p 84; Barber p 24.
[2] Goode p 79; Barber p 10. It was her first visit: p 77.
[3] Goode p 80; Barber p 10.
[4] Exhibit 1 document 1; Exhibit 3.
[5] On the face of Exhibit 2 this figure was produced by a mathematic error on her part, but that is of no significance in this trial.
[6] Goode p 81; Barber p 14.
[7] Goode p 83; Barber p 16.
[8] Goode p 81; Barber p 15.
[9] It was a joint decision to purchase: Goode p 87, Barber p 28.
[10] Mr Goode said there was some discussion of the investment and the return that evening: p 82. There was no evidence of their seeking information from any other source.
[11] This continued until January 2014, presumably reselling units where the original purchasers had defaulted: p 19.
[12] Evidence based on usual practice can be given in such circumstances, and indeed may prove more persuasive: see e.g. Neville v Lam (No3) [2014] NSWSC 607.
[13] Ms Barber said she wrote this on: p 34.
[14] I suppose another possibility, which was not explored in evidence, is that she knew that what was contained in the Form 27C was not correct.
[15] Goode p 83, Barber p 55. They did not notice the contents of the special conditions: Goode p 9, Barber p 58.
[16] There was no discussion about the matter with the solicitor, but she said this was the first she had heard of the plaintiff, as she had thought that they were buying the unit from Hilton: p 19. Nothing flows from this in this action. Her attitude was understandable.
[17] He had no recollection of another change, as to the period of notice for settlement, although it had been initialled: p 6.
[18] It may have been disclosed because it turned up on their solicitor’s file. The solicitor did not give evidence.
[19] Mr Goode had no recollection of it: Goode p 4. This document was also not signed by the solicitor, and may have been taken from the file, or be the file copy for an invoice which was sent but never received. The position is the same with the second letter dated 20 August 2009, Exhibit 13.
[20] One of the allegations was that they had relied on a representation that the unit would be let for $1,000 per night, at 80% capacity.
[21] Statement of claim, para 21.
[22] I wonder if the ultimate purchasers were told this before they signed up.
[23] Copies of earlier versions became Exhibits 9 and 10; reliance was also placed on differences in detail from the letter of 15 September 2011, Exhibit 7.
[24] Bench Book p 64.1, based on R v Ashley [2005] QCA 293, a case where there were features relevant to the existence of inconsistencies which are not present here; nevertheless I consider the general approach to be applicable.
[25] There was no issue on the pleadings that at the date of settlement the defendants were not able to perform the contract. The defendants said they could have completed, and there was no evidence to the contrary.
[26] Barber p 21.
[27] As for example in the written documentation considered in Downey (supra), where it was necessary, in order to determine whether a particular representation was communicated, to have regard not to just one document but all of the relevant documents provided to the purchasers: see paras [93]-[104].
[28] As it was put in a passage adopted by the Court of Appeal in Downey at [83].
[29]Butcher v Lachlan Elder Realty (2004) 218 CLR 592 at [50]-[51] was relied on, but that was a very different case, the relevant document was brief ([7]), and those purchasers had it for 12 days before they agreed to buy the property: [6], [16].
[30] Goode p 88; Barber p 25.
[31] Exhibit 5; this is the one they admitted receiving. There was another letter of the same date they did not recall, but which had been disclosed and so became Exhibit 13.
[32] Goode p 80; Barber p 75.
[33] As the salesperson knew: p 24.
[34] The return depended on the performance of the individual unit, at least at the time, though the salesperson believed that that has now changed, and it operated as a pooled investment: p 36.
[35] Obviously as these are all future matters, this assessment can only be made on the basis of an expectation as to those matters; the validity of the assessment will depend on the existence of a reasonable basis for that expectation.
[36] At realistic room rates of course this was not a good investment, unless there were good prospects of capital gain, which in 2009 was unlikely.
[37] There was evidence of a figure of $660 per night for the Versace Hotel (p 14), which the salesperson said was a superior property (p 26), and her rejection of the idea that she had mentioned the figure seemed to be on the basis that it was quite unrealistic.
[38] Barber p 29; p 33.
[39] Reply and answer para 2, admitting defence and counterclaim para 3(c).
[40] See Exhibit 1 document 17, para 6.
[41]Mullens v Miller (1882) 22 Ch D 194 at 199; Mark Bain Constructions Pty Ltd v Avis [2012] QCA 100 at [18]-[20].
[42]Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [36], [38].
[43] They were representations of a kind calculated to induce a purchaser to enter into a contract: Gould v Vaggelas (1984) 157 CLR 215 at 236.
[44] That they were not astute investors was really demonstrated by the fact that they signed up to buy one of these units at all.
[45] Goode p 85; Barber p 25.
[46] In view of clause 25.7 and 25.8 of the contract, it was probably misleading and deceptive conduct to market the property without qualification as a Hilton property, but that was not a matter relied on by the defendants.
[47]I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at [57], [62].
[48]Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [31], [130]; Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 at [82], [83]; Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd [2005] WASCA 174 at [59].
[49] Compare the analysis in F A Pidgeon & Son Pty Ltd v Daneshurst Investments Pty Ltd [1986] 1 Qd R 448, dealing with the question of interest on money paid before judgment.
[50] Agents’ commission $20,460; legal fees $900; mortgage release fee $132.50: Exhibit 1 document 16.
[51] Agent’s commission $40,920; legal fees $990; mortgage release fee $152.10: ibid.
[52] Holding costs $11,128.24 minus net letting income of $3,909.47: Exhibit 1 document 16.
[53]Thompson v Riggall [2010] QCA 144 at [39]; there was no equivalent in this contract to clause 9.5 of the contract there.
[54] $93,000 for the land contract, $3,500 for the furniture contract.
[55] $330,254.98 - $96,500 + $42,062.10 + $7,218.77.
[56] Schedule 1A, Part 1, Item 1(b); this was residential property.
[57] Exhibit 1 document 15.
[58] Exhibit 1 document 14.
[59]Rutherford v Brados Pty Ltd (1995) 16 Qld Lawyer Reps 61.
[60]Property Agents and Motor Dealers Act 2000 s 141(2). It was an offence for the agent to recover or retain the unlawful reward: s 141(6). The plaintiff was a party to that offence, by agreeing to pay it and paying it.
[61] Agent’s commission $17,545; legal fees $990; mortgage release fee $152.10.
[62] $910,800.21 - $603,920.23.
[63] $306,879.98 – deposits $96,500 + sale expenses $18,687.10 + holding costs $7,218.77.
[64]Foran v Wright (1989) 168 CLR 385 at 396; Federal Commissioner of Taxation v Park (2012) 205 FCR 1 at [98].
[65]McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 477 per Dixon J. That liability was not for “money payable under the contract” so did not carry interest under clause 15.6, even if interest was otherwise payable, as damages or by statute.
[66] Assuming damages were assessed in the traditional way, as the difference between value and price at the breach date. Damages may be assessed at a later date – see Hooper v Oates [2014] 2 WLR 743 – and in those circumstances interest would not be payable from the date of breach: see [16].
[67] The plaintiff at the trial relied only on the contractual claim, so it is not necessary to consider if interest is recoverable as damages at common law.