Awad v Twin Creeks Properties Pty Limited

Since completion of the contract, the Awads have made observations, concerning the subject property, that various of the expectations generated by the representations contained in the marketing materials and as made by Mr Jones, have not been fulfilled in a number of respects. Essentially, these representations fall into four main categories. The first is that, whereas they had expected that Twin Creeks would comprise 177 residential lots only, each of at least 1 acre in size, the defendant currently intends to develop it into 285 lots, of which 231 will be not less than 1 acre and 54 will be less than 1 acre but not less than 1,500 square metres in size. Secondly, whereas they had expected that a resort hotel managed by Peppers Retreats, Resorts and Hotels ('Peppers') would open at Twin Creeks by 2007 and that Peppers would manage the various recreation and restaurant facilities at Twin Creeks, in fact there is no such resort hotel operated by Peppers or anyone else, and the recreation facilities and restaurant, although at one stage managed by Peppers, are now managed by Troon Golf, as they have been since about mid 2006. Thirdly, whereas they had expected that the houses built at Twin Creeks would be built in accordance with the design stipulations in the pattern book, houses smaller than those that they had anticipated, on parcels of land smaller than had been expected, have now been built on the 1,500 metre lots. Finally, whereas they had expected that the verges would be landscaped and maintained, that has not happened to date, and the verges, at least in that stage of the development (Stage 2) of which the subject property forms part, remain un-constructed and un-landscaped.

The Awads say that, as a result, the subject property is considerably less desirable to them than they had been led to expect. Additionally, they contend that its value is significantly less than it would have been had the representations been fulfilled, and that they would not have purchased the land, but for the representations which they say have since been falsified." 3Only the representations concerning the 177 residential lots and their size and concerning the resort hotel and the connection of Peppers with it were agitated on appeal. The primary judge dismissed the claim for misleading or deceptive conduct on the former, but upheld the claim for misleading or deceptive conduct on the latter. His Honour did not, however, grant the Awads relief by way of rescission under the Trade Practices Act 1974 (Cth) (the "TPA"), s 87; rather his Honour awarded damages under the TPA, s 82. 4The Awads appeal against both the failure of the primary judge to uphold the claim for misleading or deceptive conduct on the ground concerning the 177 lots and against the refusal to grant a remedy of rescission (whether or not they are successful on the first aspect of the appeal concerning the 177 lots). TCP cross-appeals against the finding of misleading or deceptive conduct and against the award of damages. For the reasons that follow the appeal should be dismissed and the cross-appeal allowed. 5It will be necessary, in due course, to say something about the pleading and particulars and the conduct of the cases. For present purposes, it is convenient to adopt the primary judge's outline of the relevant complaints in [7] of his reasons:

The representations the plaintiffs contend were made to them are first, that Twin Creeks would be subdivided into a master-planned community comprising 177 residential lots only, and would never and could never be subdivided into more than 177 lots only; secondly, that no more than 177 homes would be built within Twin Creeks, and Twin Creeks would never and could never have more than 177 homes built therein; thirdly, that the size of each of the residential lots would be no smaller than 1 acre, and would never and could never have lots smaller than 1 acre; ... eighthly, that a resort would be constructed within Twin Creeks which would be open in early 2007 and be managed by Peppers, and residents of Twin Creeks would be able to enjoy the benefits of that resort, and that the defendant had no reason to believe that a resort would not be constructed within Twin Creeks, which would open in early 2007 and be managed by Peppers; ninthly, that Peppers would manage the recreation facilities and restaurant at the country club within Twin Creeks, and that the defendant had no reason to believe that Peppers would not manage those recreation facilities and restaurant; and, tenthly, that Peppers had entered into contractual undertakings to construct a resort within Twin Creeks and/or manage the country club, and all necessary council and statutory consents for that had been obtained." 6The primary judge dealt with the relevant claims concerning the 177 lots at [10]-[12] of his reasons, as follows: "[10]Of the representations to which I have referred, based on acceptance of Mr Awad's evidence of the conversations and the contents of the various marketing materials, I find that the defendant made representations as follows. First, that Twin Creeks would be subdivided into a master planned community comprising 177 residential lots and possibly 80 resort villas. I do not accept that the defendant represented that Twin Creeks would and could never be subdivided into more than 177 lots. Such a representation would be an extraordinary one, not easily reached by a process of implication as distinct from express statement. That planning regimes can vary, and that planning restrictions can be amended by local or by state government, is notorious. The idea that a development, even one such as Twin Creeks, could be frozen forever into 177 acre lots without prospect of change, is far removed from reality. Thus, I do not accept that the representation extended to one that Twin Creeks could never be subdivided into more than 177 lots.

Secondly, that no more than 177 homes, and possibly 80 resort villas would be built within Twin Creeks. Again, for substantially the same reasons, I do not accept that it was represented that Twin Creeks would never and could never have more than 177 homes built on it. I refer to the 80 resort villas, because reference was made in the promotional material to the incorporation of resort villas 'subject to approval', which had not yet been - and ultimately was not - obtained.

Thirdly, that each of the residential lots, other than the resort villas, would be no smaller than 1 acre in size. However, I do not accept that Twin Creeks represented that the development would never and could never have lots smaller than 1 acre in size, for the reasons expressed above. I also do not accept that there was any representation that the spaces on which the resort villas were to stand, would be no smaller than 1 acre." 7The primary judge dealt with the relevant claims concerning the resort hotel at [17]-[19] of his reasons, as follows: "[17]Eighthly, that a resort would be constructed within Twin Creeks which would open in 2005 (as distinct from 2007, which was alleged in the pleading) and be managed by Peppers, the use of which Twin Creeks residents would be able to enjoy. I do not accept that it was implicit in that representation that Twin Creeks had no reason for doubting that that would happen as pleaded. The true effect of a representation with respect to a future matter is an issue to which I shall come in due course.

Ninthly, that Peppers would manage the recreation facilities and restaurants at the country club. Again, I would not accept that there was an additional representation over and above that, and that the defendant had no reason to believe that Peppers would not do so.

Finally, I do not accept that there was any representation that Peppers had entered into contractual undertakings to construct a resort, or that all necessary council and statutory consents had been obtained. So much does not appear to me to be implicit in the express statements that were made." 8It is convenient to set out at this point the parts of the pleading referable to those representations. Paragraphs 2, 2A, 3 and 6, and relevant particulars in the Amended Statement of Claim sued upon and filed in November 2010 were as follows: "2.In or about September 2004, the defendant made the following statements to the plaintiffs: (a)Twin Creeks will be sub-divided into a master planned community comprising 177 residential lots only; (b)no more than 177 homes will be built within Twin Creeks; (c)the size of each of the 177 residential lots will be no smaller than 1 acre in size; (d)a resort will be constructed within Twin Creeks which will open in early 2007 and be managed by Peppers Retreats and Resorts ('Peppers') and residents at Twin Creeks will be able to enjoy the benefits of the said resort; (e)Peppers will manage the recreation facilities and restaurant at the 'Country Club' within Twin Creeks; ... 2A.Further, the statements conveyed the following representations: (a)Twin Creeks will be sub-divided into a master planned community comprising 177 residential lots only comprising 177 residential acreage lots only and will never, and can never, be subdivided into more than 177 lots only; (b)no more than 177 homes will be built within Twin Creeks and Twin Creeks will never and can never have more than 177 homes built therein; (c)the size of each of the 177 residential lots will be no smaller than 1 acre in size and will never, and can never, have lots smaller than 1 acre in size; (d)that it had not reason to believe that a resort will not be constructed within Twin Creeks which will open in early 2007 and be managed by Peppers; (e)That it had no reason to believe that Peppers will not manage the recreation facilities and restaurant at the 'Country Club' within Twin Creeks; (f)Peppers had entered into contractual undertakings to construct a resort within Twin Creeks and/or manage the 'Country Club' and all necessary council and statutory consents for same had been obtained. 3.Each of the statements and representations constituted: ... (b)a representation with respect to a future matter; ... 6.Each of the statements and representations were: (a)misleading or deceptive or likely to mislead or deceive within the meaning of section 52 TPA; (b)representations with respect to a future matter within the meaning of section 51A TPA; ... Particulars (a)the defendant has sub-divided Twin Creeks into more than 177 residential lots; (aa)Twin Creeks could be subdivided into more than 177 lots; (b)more than 177 homes have/will be built on Twin Creeks; (bb)Twin Creeks could have had more than 177 homes built therein; (c)the size of some of the residential lots are smaller than 1 acre in size; (cc)Twin Creeks could have lots smaller than 1 acre in size; (d)a resort has not been constructed within Twin Creeks and the defendant does not intend to construct a resort within Twin Creeks to be managed by Peppers or otherwise; (dd)there were reasons to believe that Peppers may not construct a resort including the fact that Peppers had not yet contracted to construct and/or manage the resort; (e)Peppers do not and will not manage the recreation facilities and restaurant at the 'Country Club'; (ee)There were reasons to believe that Peppers would not manage the recreation facilities and restaurant at the 'Country Club', including the fact that Peppers had not yet contracted to do so;..." 9It can be seen immediately that the primary judge has conveniently summarised and encapsulated the various complaints of the Awads. It should be noted that the case proceeded on the basis that Peppers was not the constructor of the facilities. 10The response of TCP to the claim of representations as to future matters and the invocation of s 51A was to deny without particulars the misleading or deceptive character of any representations as to future matters. No particulars of any reasonable grounds were originally given. From the Awads pleading no issue was raised as to the financial capacity of TCP to construct or develop any part of the resort development. The primary judge, aware of the debates that had occurred as to pleading and particularisation, held a pre-trial directions hearing. The question in relation to s 51A was explained by his Honour at [28]-[32] of his reasons: "[28]In Sykes v Reserve Bank of Australia (1998) 88 FCR 511, Heerey J (at page 513), took the view that the respondent bank in that case had not properly pleaded its defence to a s 51A claim as it had not alleged, let alone shown, some facts or circumstances existing at the time of the representation on which the representor in fact relied, which were objectively reasonable, and which supported the representation made.

With all due respect, it seems to me that the position can in most cases be simplified - at least where the future matter relates to the conduct of the representor - in that reasonable grounds involve that there be on the part of the representor first, an intention to perform the representation, and secondly, an ability to perform it. The best of intentions do not provide reasonable grounds if there is no ability to perform. Similarly, ability to perform does not establish reasonable grounds in the absence of an intention to perform.

For reasons which are not unimportant in the context of the present case, there has been some debate about the pleading of reasonable grounds under s 51A. In Adelaide Petroleum NL v Poseidon Ltd (1988) ATPR 40-901, French J, as his Honour the Chief Justice of Australia then was, said (at 49,700): It was submitted by the respondents that the applicants should be obliged to plead as material facts the reasonable grounds said to be lacking. In my opinion that is not a requirement of a viable plea in reliance upon sec. 51A. It may be however, that to avoid the abuse of the section by persons making the bald assertion that promises or predictions lack reasonable grounds, particulars may be ordered.

On the other hand, in Western Australia v Bond Corp Holdings Ltd (1991) 99 ALR 125, the following view was expressed by French J (at 129): ... a party involving [sic] the application of s 51A to a representation as to a future matter should make clear that it is doing so. In that way the respondent will know that, if the representation was made, it has the burden of showing, and must plead, that it had reasonable grounds for making it. The duty of the applicant to make clear that it invokes s 51A is discharged if it pleads that the respondent did not have reasonable grounds for making the representation and that it was thereby misleading and deceptive.

Hence French J adopted the position, that a party proposing to rely on s 51A should make it clear in the statement of claim that it is doing so, so as to allow the respondent to know that it has the burden of pleading that it had reasonable grounds for making the relevant representation. This was the foundation for the view taken by Heerey J in Sykes v Reserve Bank, to which I have referred. Thus the position on the authorities is, first, that it is not incumbent on a plaintiff to plead as material facts the reasonable grounds said to be lacking. There is, however, an obligation on a defendant to plead that it had reasonable grounds, and what those grounds were. It was for that reason that, at the pre-trial directions hearing, I initially expressed concern that while the case was clearly being conducted on the basis that it was a s 51A 'future matters' case, there did not appear, in the defendant's pleading, an allegation that it had reasonable grounds for making the representations, let alone as to what those reasonable grounds were. That defect was ultimately addressed by amendment to the defendant's pleadings early in the hearing." 11The particulars that were then delivered by TCP were a little over three pages in length. I will not set out the detail of the particulars under the heading "Development and planning" which concerns the planning controls, the 177 lots and the approval process. The following particulars appeared under the heading "Peppers": "15.From about mid 2003, the Defendant had been negotiating with Peppers, including with Peppers' managing director, to operate a boutique hotel at Twin Creeks. 16.In about November 2003, the Defendant concluded a long term agreement with Peppers to operate the hotel and facilities including the restaurant at the Country Club and the recreational facilities at Twin Creeks ('Peppers Agreement'). 17.In or about August 2004, a develoment application was lodged for the hotel to be relocated from the site previously approved so that it would be sited next to the Country Club. 18.The Peppers Agreement was implemented on 30 June 2005. 19.The relevant Development Consent for the hotel was granted on or about 12 December 2005." 12The word "hotel" being used should be understood to be two low rise blocks each containing 20 units, to be constructed adjacent to the resort's golf club house. To the extent that amenities such as restaurants and bars are customarily found in lower floors of hotels, they were not ever intended to be part of those two structures. Such bars and restaurants as were planned, and as have been built, were to be and are situated in nearby areas of the resort. No complaint is made about those facilities other than the fact that they are not now being run by Peppers. 13Of relevance is that neither the Awads in their particulars nor TCP in its particulars identified as a relevant question for dispute whether TCP had the financial capacity to build the two low rise blocks, which I will continue to refer to as the hotel, or to build any other part of the development. 14TCP relied upon the evidence of Mr Wiesener, one of its directors. The Awads relied upon the evidence of Mr Awad. Mrs Awad was not called. The primary judge dealt with the evidence of Messrs Wiesener and Awad at [35] of his reasons, as follows: "[35]As with Mr Awad, so with Mr Wiesener, with, if anything, the most minor exceptions, I found nothing overtly unbelievable about his evidence, or his demeanour. Generally speaking, I accept his evidence as I do that of Mr Awad, although, as will become apparent, there are minor respects - largely relating to matters of retrospective perception - about which I have some reservations."

The 177 lot and acreage representations

The primary judge's reasons 15The primary judge's reasons for dismissing this part of the claim are found in [36]-[37], as follows: "[36]As to the 177 acreage lot representations - the first category of representations to which I referred above - the evidence establishes that, at least until 2007, all plans for the Twin Creeks development limited the development to 177 lots of at least 1 acre (plus potentially 80 resort villas until they were not approved in about late 2004, although some contention about them remained thereafter). More importantly perhaps, there were in place a series of environmental planning instruments, which had the legal and practical effect of precluding development of Twin Creeks into more than 177 lots, or into lots of less than 1 acre. Mr Wiesener's avowed intention was that the development proceed accordingly. All that changed when in 2007, in a meeting with the then Minister for Planning, The Honourable Mr Frank Sartor, at which Twin Creeks was seeking to procure approval for the 80 villa sites which had been described as subject to approval in the promotional material, the Minister proposed that the environmental planning instruments be varied, so as to permit some 54 1,000 square metre lots.

Mr Wiesener's evidence, together with the documentary material, satisfies me very comfortably that, at all times up to 2007, the defendant had the intention of fulfilling the representations in respect of 177 lots of not less than 1 acre and no more than 177 homes (other than potentially the villas), and not only had the ability to comply with that representation, but were legally constrained by the then environmental planning instruments to do so. I am, therefore, satisfied that the defendant had reasonable grounds for the representations it made in respect of the 177 acreage lots."

The complaints on appeal and their disposal 16The submissions on appeal by Dr Birch, who, with Mr Weinberger, appeared for the Awads, emphasised the following matters. First, the gist of the representation and of the complaint was the minimum size of the lots of one acre, not the number of lots. The development was to have a character of exclusivity which would be enhanced by the lot sizes of one acre and which would be diminished by smaller lots. Secondly, the character of exclusivity and luxury was essential. Thirdly, the representation was expressed with a degree of firmness, as illustrated by the heading to one page of the brochure: "Strictly limited to 177 homesites". Fourthly, the aspects of doubt that already existed at the date of the representations falsified any reasonable basis for the representation. The representation was more than a representation about a future matter based on present intention in accordance with current plans; rather, it was an adamant statement about the future, as almost a guarantee. That strength of representation is important to appreciate when one assesses the matters then in existence that the Awads said threw it into doubt. 17What in fact happened was that the 80 four bedroom villa style apartments that were planned to be built on land adjacent to the resort were not approved. In their place permission was given for some 54 1,000 square metre lots. It is these lots in this position (not far from the Awads' block) about which complaint is made. 18I am unpersuaded that the primary judge was in error in his reasoning at [10]-[11] and [36]-[37] of his reasons. One can accept that the express representations set out in para 2 of the pleading were said with a degree of firmness. Nevertheless, as was accepted in argument, a representee would have to make a realistic allowance for uncertainties and contingencies in the future. That said, the firmness and clarity with which the representations are made may tend to heighten any requirement for the reasonable grounds in making them. This really was the core of the complaint. 19The essence of the complaint was that at the time the representations were made the developer had no settled intention to proceed in accordance with the plan and representations, the development being in serious difficulty with the approval for the 80 villas already having lapsed. 20In this last respect, it is important to recall that the primary judge accepted the evidence of Mr Wiesener. Mr Wiesener was cross-examined with some vigour as to the development approval and financial state of the project at about the time of the representation. 21The 80 resort villas were effectively refused approval, by the communication of the Department's views, in August 2004. The contract with the Awads was exchanged in February 2005. TCP's planning advisors told Mr Wiesener in September 2004 that it would be difficult to convince the Department to change its mind. Mr Wiesener wrote to Penrith City Council in September 2004, complaining of the Department's decision. In the letter, he said that it put "into considerable risk other aspects of [the] development". Mr Wiesener was cross-examined on this issue. The cross-examination focused upon not only the letter, but also on events and financial circumstances in later years. The primary judge accepted the truthfulness of the evidence. Mr Wiesener explained that the absence of the villas affected the restaurant and bars, but had nothing to do with the project returns or otherwise. Some of the evidence was contained at [42]-[45] of the primary judge's reasons: "[42]In its evidence-in-chief, Twin Creeks adduced no evidence as to its financial capacity to build the hotel. However, in cross-examination Mr Wiesener, in the course of being taxed with the proposition that by late 2004 the economic viability of the development as a whole was in jeopardy, was asked (at T121, lines 1-9): Q.Do you say that it was quite possible that you could have successfully developed the whole proposal just with 177 rural residential lots and the other matters that were already approved when the development was purchased? A. Absolutely. The bank finance and all of the valuations at the time put no value on the resort site. Q. Do you say there was no economic necessity at all for you to obtain the 80 resort villas? A. None.

The construction of a significant building such as a hotel is a rather more significant undertaking from a financial perspective than the installation of landscaping and verges. An essential part of constructing such a building is finance. Unless the defendant had the funds, or had grounds for believing that it could get the funds, to build the hotel, it could not have had reasonable grounds for believing that it would be able to do so." He then set out the cross-examination of Mr Wiesener set out at [21] above. He concluded at [46]-[47]: "[46]I have given the closest consideration to whether the first passage to which I referred (at T121, 01-09) amounts to some evidence of ability to perform. I have come to the conclusion that it does not. It is a bare assertion that it was possible to have successfully developed the proposal just with 177 rural residential lots. It does not reveal the grounds on which it was considered possible to do so. In my view, even taken with the evidence of intent - and I fully accept that there was intent on the part of Twin Creeks to fulfil the Peppers representation - there is no evidence of reasonable grounds, because there is no evidence of ability to perform. I have not overlooked the provisions of the contract, in particular conditions 33, 34 and 37. Clause 33.1 provides that the vendor discloses that the completed development may contain a number of residential lots or possibly a number of residential lots (including strata lots) to be developed in stages. Clause 34 relevantly provides that the vendor proposes - but, importantly, is not obliged - to carry out certain 'development activities', which include, amongst others, procuring all necessary consents and certificates for the development and subdivision of the relevant land and parcels. Clause 37 specifies that the vendor discloses and the purchaser acknowledges that certain matters and procedures - including those mentioned in clauses 33 and 34, amongst others - are not final and may change, and that the manner in which the land comprising the development will be developed, subdivided and used, is not final and is to be undertaken at the vendor's discretion. Clause 37.3, significantly, begins 'If there is a Resort'. The salience of those provisions is that they make clear that what was being represented was a plan, that might or might not ultimately be implemented fully in accordance with its terms, and that there was no contractual obligation to implement them. Those provisions, however, do not have the effect that a representor is at liberty to make representations with respect to future matters without having reasonable grounds for making them.

He was asked (at T133, 34-40): Q. The purpose, let me suggest to you, of the villas which would be equally well served by the Minister's proposal was increasing density and providing an appropriate economic return; isn't that correct? A. The economic return was not something that this project turned on in terms of the villas. They were never funded. They were never considered in any valuation or any feasibility by the bank. To the extent that they provided an economic return, they provided an economic return, yes.

Further (at T137, 34-48), he said: Q. So you say that the hotel development was quite unaffected by the fact that the 80 resort villas would not be constructed? A. It had no implications on the hotel. Q. The hotel's commercial viability would depend upon its own restaurant and bar facilities, wouldn't it? A. It depends on the same restaurant and bar facilities, yes. Q. So how could the viability of the restaurant and bar facilities be in jeopardy generally and yet the resort facility not be affected? Surely that doesn't make sense, Mr Wiesener? A. The resort facility - the fact that they were a shared facility, the viability was significantly improved by having additional density on the site. I don't know if that means that without additional density the hotel wouldn't open the restaurant. It may be that the hotel - I don't think it means that. 45Finally (at T138, 40-45): Q. Do you say the development was ever at risk as a result of the failure to get approval for the 80 resort villas? A. The development at all times until 2010 in terms of its bank finance and in terms of the valuations that were being done for the bank never put any value on the resort site, zero value, and the bank freely lent money because the financial returns were appropriate." 22If Mr Wiesener is to be accepted in this and like evidence, there is a clear basis on reasonable grounds for the representations concerning the 177 lots to be made. The 177 lots of one acre each accorded with the company's intention, they were in accordance with the planning approval and they were not financially imperilled by the lack of approval of the 80 villas at the time the representations were made. The change to the lot sizes for 54 lots, ultimately offered in place of the 80 villas by the Department, was not shown to have been anticipated by TCP, to the contrary. 23There has been no error shown in the approach of the primary judge to the 177 lot representations or to his Honour's findings.

The Peppers representations

The primary judge's reasons 24The primary judge summarised the Peppers representations at [17] and [18] of his reasons; see [7] above. His Honour said the following at [40]-[41] of his reasons: "[40]I turn finally to the Peppers representations. Essentially, the evidence of reasonable grounds in that respect is that there was an intention to build a resort hotel and have Peppers operate it; there were negotiations with Peppers to that end; there was a contract entered into with Peppers for Peppers to operate the restaurant, bar and resort facilities, including the hotel if it was built; and - although of dubious relevance, because it was subsequent to the relevant date - that for some time from 2005 to 2006 Peppers did, in fact, operate the resort facilities. The fact is that a hotel was not built and, years after the event, still has not been built.

As the defendant has not adduced evidence which it accepted would establish reasonable grounds for the Peppers representation, it follows that that representation is deemed to be misleading, and the plaintiffs have established in respect of the Peppers representation, but only in respect of the Peppers representation, that Twin Creeks engaged in misleading and deceptive conduct in contravention of Trade Practices Act s 52."

The complaints on the cross-appeal and their disposal 25The issue of the financial capacity to construct two 20 apartment unit blocks, the so-called hotel, was never articulated by any pleading as an issue for trial. It formed no part of the allegations and particulars in the statement of claim. It formed no part of the particulars of the defence. No expert evidence was led by the Awads about it. Rather, the burden of the evidence of Mr Foley-Jennings as to value and damage was as to the involvement of Peppers in the project. The evidence in the case was directed to the significance of Peppers' involvement, rather than to the construction of the hotel. Thus, Mr Awad gave the following rolled up evidence on reliance at paragraph 43 of his affidavit: "[43]Subsequently I decided to make an offer for the Land. I did so in the belief that there would no more than 177 lots, each no smaller than one acre in size, that our investment would be secure and on the basis of the matters which I have been led to believe set out at paragraphs 25 and 28 above. Had I been told that there was a possibility that Twin Creeks would be subdivided with more than 177 lots, or had I been told that some lots may be less than one acre in size or that Peppers may not construct a resort I would not have made an offer for the Land, let alone purchased the Land." 26Peppers was never to construct the resort. The resort was constructed, though without the so-called hotel. Peppers had a connection with the resort. It maintained that connection, managing the restaurant and bars for six months. It has transferred that management to an entity, otherwise apparently reputable, called Troon. Ultimately in argument, Dr Birch accepted that the following was the relevance of the building of the hotel and the connection with Peppers: "That without reasonable grounds to believe that the hotel could be built by whoever was going to build it there were no reasonable grounds to believe that Peppers, who would otherwise need to manage what was on the premises, would stay and manage what was on the premises without the accommodation". 27Particular (d) to paragraph 6 of the statement of claim complains that there has not been a "resort" constructed and that the defendant does not intend to construct a resort to be managed by Peppers or otherwise. That way of putting the matter elides the hotel with a resort. Accepting that, the focus of complaint at the hearing was upon the Peppers connection. 28The evidence of Mr Wiesener was more than bare assertion as described by the primary judge. First, it was given by a director of the company since 1999 who had been involved in real estate development for 20 years. He said the following about his experience in paragraph 6 of his affidavit: "I have been involved in the real estate development business for at least about 20 years. During that period I have been the principal of various companies whose primary business is to manage the investment in and development and sale of land and/or buildings. The nature of the projects I have undertaken include development and sale of Torrens title and strata title real estate, either as part of an estate type development or otherwise, including the development and sale of land in larger community titled estates. Those developments include (in approximately chronological order): ..." He then set out 22 past developments ranging in size by value from $1m to $70m. All were in New South Wales. He also identified four projects upon which he was working, one of which was valued at $500m. Whilst the affidavit did not deal with any particular financial expertise of Mr Wiesener, the nature of land development and 20 years of experience in land development are such as necessarily to involve financial considerations and experience. 29The development was a substantial one. It contained an 18 hole golf course designed by a well-known golfer. No direct evidence was led as to the financial structure underpinning the building of the so-called hotel or of the project as a whole. Mr Wiesener, however, when taxed in cross-examination about the finances of the project, with particular reference to the absence of the 80 villas, gave the evidence recited by the primary judge at [42]-[45] of his reasons (see [21] above). He also gave this evidence: (a)T135 lines 1-7, Black 135 "Q.And just so we are clear, Mr Wiesener, what I put to you a moment ago was this: that ever since the August refusal by the Department the development, as you saw it, had a serious financial problem in that it didn't have sufficient density with 177 residential lots alone. Do you agree? A.No, I don't. There was no issue in August 2004 whether this was approved or not from a financial perspective, none at all." (b)T137 line 50 - T138 line 6, Black 137-138 "Q.In any event, in answer to a question I asked you about 2 or 3 minutes ago, as I understood it, what you tried to convey to the court was that the concern you were referring to in that paragraph related to the viability of things such as bar and restaurant facilities, not the commercial viability of the development overall? A.It had nothing to do with the - the development was going fabulously well at that point in time." 30These are all statements of opinion by someone with personal knowledge of the development as to its commercial viability. He was not cross-examined on them by reference to contemporaneous records. He was accepted as a witness of truth. He plainly had deep experience in land development and its commercial undertaking. 31There was evidence that the resort facilities other than the hotel were finished and operated to a high standard: see Blue Vol 1, p 56 in the report of Mr Foley-Jennings. That matter assists in an inference that at a time when the development was underway there was a sound financial basis for it: North East Equity Pty Ltd v Proud Nominees Pty Ltd [2012] FCAFC 1; 285 ALR 217 at 228-229. 32Mr Wiesener said (at T145 S-T) that the viability of the project was never in question up to the time an injection of equity was made by AMP. He also said that the project finance was provided by Macquarie Bank which had provided finance freely (T146 I). 33He said that sales did not begin to drop off until 2006 (T138 X-Y). He said, in effect, that even so the project was viable; the equity injection being required in 2007 by borrowing covenants based on loan to value ratios (T142 E-J and 145). It was not until 2009 (after the global financial crisis in 2008) that the financial viability of the project depended on the development of the villa land (T145 K-V). 34This evidence from a witness who was accepted by the primary judge must be assessed by reference to s 51A and its requirements, as well as by reference to how the trial proceeded. Section 51A does not cast the legal or persuasive onus on the representor. Rather, evidence "to the contrary" of there being a lack of reasonable grounds is required. As I said in McGrath v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2; 165 FCR 230 at 283 [191], what must be adduced is evidence that tends to establish, or that admits of the inference that there were, reasonable grounds for making the representation. See also North East Equity at 223-224 [28]. How one assesses the evidence of the witness under cross-examination is affected by how the case was run. 35As I have noted, the financial capacity of TCP to construct the whole development, including the so-called hotel, was never identified as an issue. As a matter of logic what the primary judge said at [41] can be accepted. If one says that one is going to build something, one will need to fund it. Whether or not there is a real issue as to the availability of funding, however, depends on how issues fall out in the litigation. 36Here, the ability to fund one part of a large development was not, before the trial, identified by either party as relevant for examination. That said, the breadth of the operation of s 51A must be accepted and the responsibility it places on defendants to identify the basis of representations recognised. If representations about future matters are to be made, the statute requires there to be reasonable grounds for their making. The broader and more expansive the representation, the wider the responsibility for proof. 37Litigation, however, is not a game. It is to be conducted, if possible, with efficiency and precision. The plaintiffs identified what they saw as likely subjects for a lack of reasonable belief. The defendant, which had developed and built this large development proposal, did not direct evidence to the funding arrangements in place as at 2004. Its particulars (late given) accorded with its evidence, which was not directed to this question of funding capacity. Whether it should have need not be explored. It did not, but nor did the Awads. The topic was raised in cross-examination. One could readily infer from Mr Wiesener's evidence that there were valuations and finance in place as at 2004 for the construction of the whole development that did not depend upon the cash flow from the sale of the 80 villas. Thus there was evidence from which one could infer that there were reasonable grounds to represent that the developers would build the one part of the whole development that was in question. 38In these circumstances, there was evidence to the contrary for the purposes of s 51A(2), and the plaintiffs therefore bore the onus of proving a lack of reasonable grounds for this representation. They led no evidence to contradict the general evidence of Mr Wiesener and what could be inferred from it. If the issue had been thought appropriate for, or worthy of, agitation and resolution, it could have been properly isolated in due time. In those circumstances the answers in cross-examination may have carried different, perhaps less, significance. It was not, however, put to Mr Wiesener that TCP did not have financial arrangements in place to build the so-called hotel. There was, as I have said, a general attack on the viability of the project without the 80 villas. Mr Wiesener rejected that proposition and his evidence was accepted by the primary judge. He had the knowledge and experience to give that evidence. It did not lie in the realm of bare assertion. It was evidence from which inferences could properly be drawn. 39In my view, the cross-appeal against the Peppers representation should be allowed.

Other Issues 40That conclusion makes it unnecessary to resolve the other legal and factual issues in the appeal. The question of the availability of rescission was dealt with by the primary judge at [51]-[57] of his reasons. I will not set these out. He accepted that the place of Peppers was a significant selling point, there to influence buyers. He was satisfied that the Awads relied on the Peppers representations as one of a number of matters which contributed to their decision to purchase the property, at the price they did. His Honour examined the evidence of Mr Awad, in particular paragraph 43 of his affidavit set out at [25] above. 41His Honour said at [57] of his reasons: "[57]Evidence of this type, on the other hand, is in my view inherently unreliable. It is well known, for example, in medical negligence cases, that a plaintiff patient's views or evidence as to what he or she would have done, had he or she been warned of a minor risk of the operation, may be given with all due honesty after the event, but is very much coloured by what has happened in the meantime. Conscious as I am of the risks of rejecting unchallenged evidence, it seems to me that when it comes to reliance in the context of a Trade Practices claim of this type, a court is much better assisted by examining objectively the indicia as to what a party would or would not have done, rather than relying on the party's subjective assertion. I do not doubt that Mr Awad's affidavit contains what he now believes would have been the position. But, looked at objectively, considering his reasons for visiting Twin Creeks in the first place, and examining his description of what it was he was looking for, a neighbouring resort hotel simply does not feature in the picture, and I am unpersuaded that, but for the Peppers representation, he would not have purchased the land." 42His Honour then at [58] dealt with relief: "[58]That conclusion is very important when it comes to relief. As I have said, the plaintiffs seek an order under Trade Practices Act, s 87, avoiding the contract. Alternatively, they seek damages under s 82. It would not be appropriate to avoid the contract if the impact of the representation would not have been that the purchase was not undertaken, but only that any purchase would have proceeded at a lower price. In my view, this is a case in which it cannot be concluded that the purchase would not have proceeded, but I can conclude that the Peppers factor added something to the price at which the Awads were prepared to purchase." 43I have some difficulty with this approach. Relief under the TPA, s 87, should be viewed not by reference to general law analogues but by reference to the rule of responsibility in the statute that is directed against misleading and deceptive conduct: Marks v GIO Australia Holdings Ltd [1998] HCA 69; 196 CLR 494 at 503-504, 510 and 528-529; Henville v Walker [2001] HCA 52; 206 CLR 459; Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388 at 407; and see generally Bullabidgee Pty Ltd v McCleary [2011] NSWCA 259 at [64]-[72] and Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 364-367. Involved in that rule of responsibility is the public policy of protection of people in trade and commerce from being misled, and the width of the powers given by the TPA that are apt to be employed in a manner conformable with the just compensation or protection of the representee. Whether or not to grant a form of rescission under s 87, or to limit a plaintiff to damages under s 82, is a question in the nature of a discretion to be approached by reference to the facts of the particular case, the policy and underpinning of the TPA and the evaluative assessment of what is the appropriate relief to compensate for, or to prevent the likely suffering of, loss or damage "by" the conduct: see Kizbeau Pty Ltd v WG & B Pty Ltd [1995] HCA 4; 184 CLR 281 at 298; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; 210 CLR 109 at 117-120 [19]-[29], 127-128 [52]-[57] and 142 [106]; and Akron Securities v Iliffe. An approach that is limited mechanically around a but for causation enquiry will be likely not to involve a full evaluative assessment of the appropriate relief. 44If a defendant has contravened the norm of the statute and made misleading or deceptive representations that are operative to induce the representee to enter a contract, many factors may influence the question of relief. One of them could be the weight of the influence of the impugned conduct. It is not, however, a determinative factor upon which relief under s 87 turns. To view the matter thus is to constrict the exercise of power contemplated by the TPA. This is how the primary judge appears to have approached the matter. With respect, that was an error. 45Here the findings of the primary judge were not that the Awads would still have purchased the land. Rather, he was unpersuaded that they would not have done so. The attempt to disentangle these kinds of operative factors on the mind of a representee in respect of the relevant decision may often be an unrewarding exercise. In some cases, however, the relevance of the impugned conduct may be seen only to have affected price, rather than entry at all into a contract. Each case must be assessed individually. Here, though the Peppers representation was not necessarily decisive, there was considerable difficulty in assessing any reliable sum for the value attributable to it. The somewhat unsatisfactory evidence of Mr Foley-Jennings reflects that difficulty. Ascribing a value to a vague but (on the findings) material inducement of this character to enter into a contract may also be an unrewarding task. The difficulty of extracting from the various inducing considerations a value for one ephemeral (though material) consideration may militate against the appropriateness of the task and in favour of an order in the nature of rescission. This might be seen to be particularly so where damages are reduced to reflect the operative contribution of the solicitor found to be negligent. 46In the circumstances here, if I be wrong in relation to the Peppers representation, I would allow the second aspect of the Awads' appeal and make an order under s 87. The representation was operative; it was intended to be material; and it contributed to the decision to purchase. It was accepted that there was some loss or damage. It would be appropriate, in my view, to give relief conformable to the rule of responsibility and relieve the Awads of the purchase that they were induced to enter into by misleading or deceptive conduct, in particular where ascription of value is so difficult. Any such grant of relief would be subject to counter restitution being able to be made by them. 47The orders that I would make are: 1.Appeal dismissed with costs. 2.Cross-appeal allowed. 3.Set aside the orders made by the Supreme Court on 30 June 2011 and entered on 4 July 2011 and in lieu thereof order that judgment be entered for the defendant and that the plaintiffs pay the defendant's costs. 4.Cross-respondents pay the cross-appellant's costs of the cross-appeal. 48MACFARLAN JA: I agree with Allsop P. 49SACKVILLE AJA: I agree with Allsop P.

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