Botany Bay Apartments Pty Ltd v Badolato

Supreme Court of NSW|2019-02-13|Before: Davies J

ing Ltd (1998) ATPR 41-630 Gestmin SGPS S.A. v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) Hodges v Webb [1920] 2 Ch 70 Kylsilver Pty Ltd v One Australia Pty Ltd [2001] NSWSC 226 Socratous v Koo (1993) 6 BPR 97,448; [1994] ANZ ConvR 208; (1993) NSW Conv R 55-685 Sydney Developments Pty Limited v Perry Properties Pty Limited [2016] NSWSC 515 The Nominal Defendant v Cordin [2017] NSWCA 6 Watson v Foxman (1995) 49 NSWLR 315 Texts Cited: Nil Category: Principal judgment Parties: Botany Bay Apartments Pty Ltd (Plaintiff) Joe Anthony Badolato (Defendant) Representation: Counsel: E W L Anderson (Plaintiff) In person (Defendant)

Solicitors: One Group Legal Pty Ltd (Plaintiff) Self-represented (Defendant) File Number(s): 2018/133324 Publication restriction: Nil

Overview

BBA is a building company. Its sole director is Mahmoud Mohanna (Mr Mohanna). In the period material to these proceedings, BBA was developing a mixed use site at Euston Road, Alexandria consisting of four commercial lots and 35 residential units (Site). The development of the Site was taking place pursuant to a development consent granted to it by the City of Sydney Council (Council) in about September 2016.
Rayed Skaf has been a real estate agent for thirty years and is the managing director of Macquarie York, a property management company. In about November 2017 BBA engaged Mr Skaf to market and sell 'off-the-plan' the residential units to be built on the Site.
In about February 2018 Mr Mohanna discovered that the survey report on which the development plans for the Site had been based and submitted to the Council was incorrect. The survey report (and therefore the development plans based on it) had failed to incorporate approximately one metre of land on the western boundary of the Site backing onto Euston Lane.
After discovering the error Mr Mohanna asked an architect engaged by BBA to draw up new development plans which incorporated the additional one metre of land with a view to lodging with the Council an application to amend the terms of the existing development consent.
In about February 2018 Mr Mohanna informed Mr Skaf of these developments, and they had a conversation to the following effect: a. Mr Skaf asked Mr Mohanna whether the units being marketed were liable to change in any way; b. Mr Mohanna informed Mr Skaf that the altered development plans might involve changes to the internal layouts of some units and increases in the sizes of some units; c. Mr Skaf asked Mr Mohanna what this meant for the prices of the units; d. Mr Mohanna replied that he needed to continue selling as many units as possible in order to secure finance to complete the development; e. Mr Mohanna instructed Mr Skaf to continue selling units at the then current prices and noted that if an application to amend the terms of the development consent was submitted to the Council and was successful then some purchasers might ultimately receive units larger than they had originally purchased; and f. Mr Mohanna informed Mr Skaf that, in the event of a successful application, there would need to be consideration given to whether any unsold units which had increased in size should also increase in price.
Accordingly, Mr Skaf continued to market the units for sale according to the then current development plans and at the then current prices.
The defendant is an experienced property investor. He described his self-employed work as carrying out property renovations. He has a number of qualifications including a diploma in conveyancing law. At the time of the hearing he owned some 11 investment properties. Before the events which led to the present proceedings, he had purchased apartments off-the-plan, including from Mr Mohanna or one of his companies.
On about 11 March 2018 the defendant attended the display suite from which Mr Skaf was marketing the units for sale. During the course of discussing a possible purchase by the defendant of one or more units Mr Skaf informed the defendant of the matters described at [11] above. The defendant agreed to purchase two units on that day.
After exchange of contracts and up to 26 March 2018, the defendant met with Mr Skaf, spoke with him on the telephone and corresponded with him by email. Their communications related to various amendments sought by the defendant to the features and designs of the units and to the terms of the contracts.
Most of the amendments sought by the defendant were agreed to by the plaintiff. However, the plaintiff refused to agree to the insertion of one term requested by the defendant. The defendant requested that he be permitted to rescind the contracts in the event that Council approval was not forthcoming in relation to the plaintiff's application for an amendment to the September 2016 development consent incorporating the additional one metre of land on the western boundary of the Site. Mr Skaf made the plaintiff's refusal plain to the defendant on several occasions both over the telephone and by email.

The proceedings

The plaintiff commenced proceedings on 27 April 2018. The defendant, acting for himself, filed a defence on 13 June 2018. The defence consisted of a lengthy narrative that amounted to the evidence the defendant was likely to give at any hearing, as well as material in the form of submissions.
The plaintiff filed a notice of motion seeking that the defence be struck out and that summary judgment in favour of the plaintiff be granted. The motion was heard by Fagan J on 20 July 2018. His Honour declined to grant summary judgment, but struck out the defence on the basis that it did not comply with the rules of pleading in the Uniform Civil Procedure Rules 2005 (NSW). His Honour granted leave to the defendant to re-plead the defence.
On 9 August 2018, the defendant, still acting for himself, filed an amended defence.
That defence admitted the whole pleading in the statement of claim except paragraph 11 which pleaded that the plaintiff, pursuant to clause 9.1 of the contracts, claimed payment from the defendant in the amount of $185,250. The defendant denied that paragraph. It should be observed that paragraph 11 is not a pleading of a material fact but a claim for the amount which the plaintiff seeks. In substance, the defendant admitted that he breached the contracts in refusing to pay the balance of the deposits. Paragraphs 3 and 4 of the defence then went on to say: 3. The defendant will be pleading that it was due to the extenuating circumstances that the parties where [sic] dealing with which caused the defendant to breach the contracts. 4. The parties were dealing with a situation where the proposed building extension was not approved yet resulting in the defendant being misled, confused and indecisive.
The substantive defences appear in paragraphs 39-49 of the amended defence. The substantive defences can be put into two categories. The first category alleges contraventions of the Australian Consumer Law (ACL) contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth), on the basis of the plaintiff having engaged in misleading and deceptive conduct, unconscionable conduct, and having coerced the defendant. The second category of substantive defence is a reliance on s 55(2A) of the Conveyancing Act 1919 (NSW).
The breaches of the ACL are set out at paragraphs 43-45 of the amended defence as follows: 43. The Defendant asserts that the first contravention occurred as follows: a. On 11 March 2018, based on the actions and statements of the Plaintiff's agent, the Defendant was enticed to enter into contracts believing he would be obtaining apartments in which the internal size would increase by 8.5m2. b. On 15 May 2018, the new plans that were lodged for extending the building have increased the internal size of other apartments in the building but not those apartments for which contracts were entered into by the Defendant. c. Consequently, at the time when Defendant had entered into the contracts, the Plaintiff's agent had misrepresented that the internal size of the apartments that the Defendant was purchasing would be increasing by 8.5m2 d. This misrepresentation contravenes s18 in Chapter 2 and s30 in Chapter 3. 44. The Defendant asserts that the second contravention occurred as follows: a. Prior to entering the contracts the Defendant was shown amended floor plans where the Plaintiff was adding an ensuite bathroom to other apartments which only had 1 main bathroom. The Plaintiff was working directly with his [sic] architect in order to decide which apartments would be given more internal space b. On 27 March 2018, at the time of 5pm the cooling off period expired. c. On 29 March 2018, around midday, the Plaintiff's agent had new plans. d. As new plans were available, then this would suggest that the Plaintiff would have been aware that the internal size of the apartments for which the Defendant had entered into contracts for had not increased by 8.5m2. e. Had the Defendant been made aware of this prior to the expiry of the cooling off period, then the Defendant could have exercised the right to cool off. f. Consequently, around the time of the cooling off period expiring, it would appear that the Plaintiff stayed silent and therefore misrepresented that the internal size of the apartments being purchased would not increase by 8.5m2. g. This misrepresentation contravenes s18 in Chapter 2 and s30 in Chapter 3. h. Further, by staying silent the Plaintiff engaged in unconscionable conduct as it caused the Defendant to be deceived of the true state of affairs and put the Defendant in a position of not being able to make an informed decision. i. Even though the Plaintiff was aware that the Defendant was led to believe he was entering into contracts where the internal size would increase by 8.5m2 and that the Plaintiff now had plans showing the increase would not occur, the unconscionable conduct was exacerbated when the Plaintiff decided he [sic] would still pursue the Defendant to obtain the balance of the 10% deposits. j. This unconscionable conduct contravenes Part 2-2 in Chapter 2. 45. The Defendant asserts that the third contravention occurred as follows: a. Even though the Plaintiff was aware he [sic] could not provide what the Defendant was led to believe when entering the contracts, the Plaintiff decided to either coerce the Defendant to purchase two properties or face going to court. b. On 21 May 2018, the Defendant first hears of this from the Plaintiff's agent. c. On 1 June 2018, the Defendant then hears of this directly from the Plaintiff. d. This coercion or undue influence by the Plaintiff meant that the Defendant was being forced into a position of going ahead with purchasing two apartments which would not have an extra 8.5m2 of internal space. e. This coercion is an unfair practice which contravenes s50 in Chapter 3. f. Further, this act of coercion by the Plaintiff is unconscionable conduct as it caused the Defendant to be pressured to purchase apartments of an internal size that was materially smaller to that which he entered into contracts for. g. This unconscionable conduct contravenes Part 2-2 in Chapter 2.
In relation to the Conveyancing Act defence, the defendant points to the broad discretion in s 55(2A) and sets out a number of matters which the Court should consider in exercising its discretion to order a return of the deposit. He relies, in that regard, on the decision of Hamilton J in Kylsilver Pty Ltd v One Australia Pty Ltd [2001] NSWSC 226.
The substance of the defence is the assertion that the plaintiff's agent represented that the internal size of the apartments being purchased by the defendant would be increased by 8.5m2 when amended plans were put to the council. The plaintiff's agent denies ever having made such a representation. The plaintiff, in any event, says that even if the representation was made, any loss which the defendant now says he will suffer was not caused by that representation.
As the defendant made clear, any rights he may have, whether under s 18 of the ACL, s 50 of the ACL, or pursuant to s 55(2A) of the Conveyancing Act, all depend on the defendant establishing the misrepresentation that the apartments would be increased in size by 8.5m2, and that the defendant's liability for the balance of the deposits was caused by his reliance on that misrepresentation.

The evidence

The defendant relied on four affidavits sworn by him. Much of the material in these affidavits was in inadmissible form. Objection was taken by the plaintiff's counsel, but it was accepted that I should read those parts which were objected to as submissions made by the defendant. There was little admissible evidence in the affidavits which set out the defendant's account of what occurred when he spoke with the agent. Far more time was spent denying evidence contained in the affidavits of the agent and Mr Mohanna. It is fair to say that, except for one paragraph of the defendant's affidavit sworn 8 August 2018, the clearest evidence putting forward the defendant's case emerged from cross-examination of the defendant.
The defendant sought to read an affidavit sworn by his sister, Angela Badolato, on 1 February 2019. The defendant wished to read the affidavit so that I could compare the handwriting of Mr Skaf on the document annexed to that affidavit with handwriting of figures on a floor plan of one of the apartments which the defendant claimed had been written by Mr Skaf. That floor plan was said to provide evidence that Mr Skaf had represented to the defendant that the apartments he was buying would increase in size by 8.5m2 when the amended plans were approved.
I rejected the affidavit of Ms Badolato. I did so for a number of reasons. First, directions were made on 14 August 2018 that the defendant's evidence was to be filed and served by 16 October 2018. That order was confirmed at a directions hearing on 28 September 2018 when the matter was fixed for hearing on 11 February 2019. No reason was offered for the late service.
Secondly, the plaintiff was prejudiced by the late service. The purpose of the affidavit was to support the defendant's claim that it was Mr Skaf's handwriting on the floor plan. The evidence already served contained an allegation that Mr Skaf had written on the floor plan, and a denial by him that he had done so. The matter had been left at that point. If the identity of the handwriting was to be pursued, the plaintiff would have wished to obtain a handwriting expert.
Thirdly, the evidence appeared to have been obtained by subterfuge. The plaintiff's counsel asserted, in objecting to the affidavit's admissibility, that Ms Badolato "went to the display unit masquerading as a [prospective] buyer in order to have Mr Skaf write various numbers on" a floor plan. The defendant did not deny that that was what occurred. Section 138 of the Evidence Act 1995 (NSW) is relevant. Fourthly, in the absence of a handwriting expert, I am in no position to compare handwriting to determine that a particular person wrote figures on a document, when there is a dispute about that fact. Finally, as will become apparent from the later discussion about the figures written on that floor plan, a decision about whose handwriting appears on the document in question is not determinative of the issue of whether a representation was made.
The defendant gave evidence that he visited the display unit on Sunday 11 March. He was interested in purchasing one or two two-bedroom apartments. When he spoke with Mr Skaf, Mr Skaf said that the architect had made a mistake with the approved plans. The building could be extended by one metre which would mean that the apartments at the rear on Euston Lane would be bigger. Mr Skaf said the new plans would be available later that week. The defendant gave evidence that Mr Skaf showed him an email from the vendor with the floor plan amendments to some of the apartments facing the laneway. Mr Skaf could not recall this when asked by the defendant in cross-examination. The matter was not thereafter pursued by the defendant, nor was any such email called for or produced.
Paragraph 3 of the defendant's affidavit of 8 August 2018 says this: Prior to entering into contracts on 11 March 2018, the Plaintiff's agent provided the Defendant with paper copies of the floor plans for both apartments G03 and 204 upon which the Plaintiff's agent wrote down the size would increase by 8.5m2. Annexed hereto and marked "A" is a true copy of the floor plan for apartment 204. The annexure contained handwritten figures under the printed areas of the unit. Those handwritten figures were "+8.5", and underneath, "94.5". The defendant asserted that the handwriting was made by Mr Skaf. Mr Skaf was initially a little uncertain about whether he had written them, but ultimately said that he had not, noting that the "8" and "9" were not how he writes those numbers.
During his cross-examination of the defendant, Mr Ed Anderson of counsel for the plaintiff asked the defendant what he claimed Mr Skaf said to him about the increase in the size of the units. He gave this evidence (T 107-108): Q. I want to know what he told you about the increase in the square meterage of these apartments-- A. Right, sorry-- Q. --by 8.5 square metres? A. Right, so he told me the building's going to be extended by one metre first and then when I told him the units I was interested in, you know, as I mentioned, he said - you know, the vendor said, "These units at the - at the rear should be put on hold" but he then said we could put an offer in and see if the vendor would accept it and - and then, you know, and then I said - and I said, "Okay, well, I'm prepared to pay 950" - the asking price was 950 for G03 and 204 was 970 and I said, "I'll pay for both of them" and then, you know, "can you" - can be - you know, "put that offer to the vendor?" So he rang the vendor and the vendor agreed and then after agreeing, he already had the floor plans on the table for G03, 204, he got out his business card, he put it up against the scale on the plans, to measure where five metres was and then he used that to work out because there was another three and a half metres between the left hand wall and the right hand side wall for each of the units and he said, "it's going to be an extra" - initially, he said it's going to be an extra, another eight metres, but then he calculated it again with his business card and he said, "It looks like it's going to be eight and a half". So he wrote eight - "plus eight and a half" on the floor plans and that's how it happened. … Q. --He said, "It looks like it's going to be eight and a half"? A. Yeah. Q. That can't be all he said because that's-- A. Well, yeah, because he - what - what was then said, "it could end up being eight, eight and a half, nine. We won't know until we get the floor plans, which I will have available next week" but he said, "It looks like you'll be getting an extra eight and a half metres". Q. "Looks like"? A. Based on - on that current floor plan, yes, because that's how much the distance was between the two walls. Q. So he didn't say "you will" be getting an extra 8.5 square metres, did he? A. Well, he didn't say I won't and he didn't [say] "there's no guarantee until later". There's - there - there's issues about whether it was a guarantee when it came up a week and a half later. Q. I asked you a very simple question - he didn't say, "You will be getting an extra 8.5 square metres", did he? A. Well, he didn't say - he didn't say I won't. He said, "We're going to get the new plans next week and you can see", you know, "what the", you know, "what the size of these new apartments will be". Q. Are you going to answer my question or should I move on? He didn't say "you will", did he? A. I can't recall. Maybe he did, I can't recall. It all was quite definite, at that time. Q. When you say, "it was all quite definite", did he tell you, did he, that the architect was going to produce new plans which had increases in the internal square meterage of the two apartments of 8.5 metres squared", is that what he told you? A. Not exactly. What he told me is what would happen is, "All these units would be extended one metre towards the laneway and as a result of that, you'll be getting an extra eight and a half square metres for these two units." (bold and italics added) (The portion in italics should read: "he didn't [say] 'there's no guarantee' until later".)
A little later in his evidence, the defendant said this (T 116-117): Q. Your case is that during the course of that conversation, Mr Skaf told you that the apartments you were purchasing would increase in size by 8.5 metres squared, is that what you say? A. Yes. Q. Could you tell the Court as nearly as you can what words he used? A. He - got the - he had the floor plans for each unit in front of us on the - on the bench top and this - from memory, this is after he rang Mr Mohanna and the offer was accepted because I already realised before the - before he rang Mr Mohanna, I already realised that one square metre - one - one extra linear metre at the back of the building would add close to ten square metres to the unit, so I already realised that - and that's why I made the offer, because I could see there was value there to go ahead with this transaction. So after he got off the phone with - with Mr Mohanna and the offer was accepted, we then went back to the two floor plans which were on the - on the table in the display - display room and he got his business card out, put it up against the - the scale on the floor plans and measured where five metres was, on his business card, put that up against the floor plan, he saw where five metres went between the left wall and the right wall, he then measured how much was left after five metres, put that back to the scale and determined there was another three and a half metres. And then he said, "This is the deal of the century" and he wrote "plus eight and a half" on the floor plans and he gave me the floor plans. Q. Are they all the words that he used? A. Perhaps there were more but I can't recall them all but that was - in terms of the extra square meterage, that's what happened, in terms of his-- Q. The only words you've just told the Court that he used were, "This is the deal of the century"? A. After he - after he confirmed there was an extra eight and a half square metres, he said, "This is the deal of the" - I mean, he said other words-- Q. Yes, I'm not asking what he did, I asked what he said-- A. Yeah-- Q. What were the words he used? A. "Well, this is going to add another eight and a half square metres to the units, internal, internally" and "this is the deal of the century". (emphasis added)
The defendant gave evidence, which Mr Skaf did not dispute, that Mr Skaf said that he would have the new plans within a week.
According to Mr Skaf, the defendant met the agent, Mr Skaf, on 11 March at the display suite for the development. During discussions between the two men, the defendant said that he knew Mr Mohanna and that he had bought from him previously. The conversation then continued: Mr Skaf: Ok. I am told that there are some amendments being done to the plans because the architects didn't design the plans to the correct boundaries. They shortened the building by about a metre. There may be some additional upside. Defendant: Do you think that there will be an additional metre along the back of the building? Mr Skaf: There may be. They are working on amended plans now and it would be subject to Council approval so there is no guarantee.
Mr Skaf denied that he told the defendant that the internal area of the units would increase by 8.5m2. He said, in answer to questions in cross-examination, that it was possible he used his business card and marked five metres on it from the scale on the floor plan of one of the apartments, because he does that from time to time. Although he agreed that applying that scale in that way would produce an extra 8.5 metres if the building was extended by a metre, he denied saying to the defendant on 11 March or at any time that the apartments would be 8.5m2 larger on the revised plans.
When asked in cross-examination if the handwriting on the floor plan was his, he gave the following evidence (T 62-63): Q. Does that look like your handwriting? A. Look, it - it - it - it doesn't really but and to be perfectly honest with you Joe, even if I did write that, I - I remember telling you very, very clearly that - that it was - it was something that had to be approved by council, I couldn't guarantee that. It's something that we couldn't put into the contract for you because it would make the contract conditional and I told you there was no guarantee that you would end up with an extra metre. I said to you, and I made it very, very clear, that you are buying the apartment as it is and if you do get an upside, if you do get some extra metre, then it's a bonus for you. Do you remember having that conversation with me? HIS HONOUR Q. Mr Skaf, it's not up to you to ask questions. Is that your handwriting on the document? A. Look, it doesn't look like it. It looks very similar but I can't - I couldn't confirm it for you. Q. Do you remember writing on it on that day? A. Look, I - I could have - I could have written it to be - to be honest I could have but I don't remember writing it. And I wouldn't have - I wouldn't have added this up like that and put 94 - 94.5 metres because I didn't know the measurements of the-- DEFENDANT Q. No, that's simply a summation of 86 and 8.5. A. I know but I couldn't have told you what the measurements were going to be of the - I mean, yeah, if you add those up, of course-- Q. If you add those two numbers you get that. A. - of course, yeah - yeah - yeah. But I couldn't - I wouldn't have been able to confirm for you what this - what the area of this apartment would be because I wasn't privy to that. Q. But based on what is written here? A. I think we made an assumption when we were, you know, working out if - if the building was extended by a metre what the potential size would be but there was no time that I, you know, did I say that's what your area's going to be. Q. But you do - you are saying you - you potentially wrote that? A. Possibly. Q. Possibly? A. Yeah, I - I don't - I don't remember writing it but I could have possibly written it, yeah. HIS HONOUR Q. Mr Skaf, would you have a look please behind tab 5 in that volume at page 56? Do you see paragraph 26 on that page? A. Yep. Q. Is that correct? A. Yeah, that's - that's my affidavit, yeah. Q. Well, I'm sorry, I'm just trying to reconcile. You said, "You might have written the 8.5 metres," but in your affidavit you say you deny you wrote it. A. Yeah, I deny writing it and, like I said, it - I don't - I don't remember writing it and I'm saying, in all fairness, you know, if I did, you know, but I don't believe I did. I mean, that's - that's my position, I - I - I deny writing it but, like I said, you know, to be fair to you, if I did write it and it doesn't look my writing, I don't even write the eights like that, you know, it's not my writing. DEFENDANT: What about the - what about the nine? A. Well, I don't know, I didn't-- Q. Did you have a look at the nine, is that your nine? A. No, that's not how I write my nines either, no.
The defendant offered to purchase the two units each for $950,000, although one was priced at $970,000. His offer was accepted by Mr Mohanna after Mr Skaf rang him. It was necessary for the defendant to attend at the agent's city office to sign the contracts. He did so later that day. The defendant paid $2,375 on each contract. About half an hour after he had left Mr Skaf's office, the defendant rang Mr Skaf to ask if a term could be added to the contract making it conditional on the defendant getting the extra square metres in the contract as a result of the proposed one metre extension of the building. Mr Skaf said that the vendor would not agree to that. In his evidence, Mr Skaf agreed with what was said in that telephone conversation.
The following day, BBA's solicitors forwarded the signed vendor's copies of each contract by way of exchange. As noted earlier, the covering letters provided for the cooling-off period to expire at 5pm on 26 March.
On 18 March 2018, the defendant returned to the display unit because he had not received the new plans. He asked Mr Skaf if he had the new plans, and Mr Skaf said that he did not. The defendant suggested to Mr Skaf in cross-examination that Mr Skaf told him on that occasion that Mr Mohanna had said to Mr Skaf that he felt he was giving away $300,000. This was because Mr Mohanna believed that the increase in size of the units resulting from the extension of one metre meant that each was worth $1.1m rather than the $950,000 which the defendant had paid. Mr Skaf denied that such a conversation had occurred.
On that day, the defendant also said that he wanted two additional parking spots, he wanted to move the walls and the laundry as per an attached plan, he wanted to confirm the depth of the laundry cupboard, and he wanted to replace carpets with timber flooring in all of the bedrooms. On 19 March 2018 those matters were agreed with prices being stipulated by Mr Mohanna.
There was a further exchange of emails later on 19 March and on 20 March involving further negotiations about these matters. It should be noted that the time recorded on Mr Skaf's emails appears in many cases to be an hour ahead of the correct time. Where below I state that an email is in response to an earlier email despite a time anomaly, I have done so by reason of the email's position in an email chain.
On 21 March 2018 at 11:42am the defendant sent an email to Mr Skaf saying: As discussed this morning, would you please request the following from the vendor: 1) To change Item 9 of the Schedule in the Contract so that the council rates adjustment allowance is based on $1,000 per annum per lot instead of $1,500 per annum per lot. 2) To change Item 11 of the Schedule in the Contract so that the depreciation certificate allowance is $750 + GST (as per the marketing material) instead of $1,200 + GST. 3) As mentioned a few times now, when I first met you at the project's showroom on Sunday 11 March 2018. I decided to go ahead with purchasing these 2 apartments based on the knowledge that the back part of the building is be [sic] extended by 1 metre. This adds an extra 1 metre in depth all along the inside of the apartments. From my discussions with you it appears that the vendor is going ahead with a Section 96 application to council to obtain approval to extend the back of the building by 1 metre. However, there is obviously a risk that either the vendor will stop the Section 96 process or the council may not approve the Section 96. If the Section 96 did not proceed, for whatever reason, this then adversely affects my decision for purchasing these apartments based on expecting them to have a lot more than 75m2 internal space as shown on the current floor plans. Consequently, in case the 1 metre extension does not go ahead, I would like to add a clause to the contract which provides me the option to either proceed with or rescind the contract if a Section 96 is not approved. Please let me know if you wish to discuss anything further. (emphasis added)
Mr Skaf forwarded that email to Mr Mohanna at 12.47pm, and in his email said that he had explained to the defendant that Mr Mohanna was not in a position to agree to making the extension of the building conditional to the contract.
At 3:06pm (or 4.06pm) on 21 March Mr Mohanna sent an email to Mr Skaf saying that he could not agree to adding the clause to the contract which the defendant had requested. He went on to say: The buyer purchased the apartments as is and as per current price list, I can't guarantee the increase of the apartments size, if happened will be bonus to the buyer. [sic] (emphasis added)
Mr Skaf forwarded that email to the defendant at 4.21pm and asked the defendant to get back to him.
At 3:46pm on 21 March the defendant sent a further email in response to Mr Skaf: I understand that the vendor cannot guarantee that the increase of 1 metre will occur and I am not asking for a guarantee. What I am asking is that if the Section 96 does not go ahead and get approved, then I have the option to rescind the contract. Conversely, if the Section 96 does go ahead and it is successfully approved, then I would not be entitled to rescind the contract. I am sorry about making this an issue but as previously stated I made my decision to purchase based on the extension occurring. So, would you please let the vendor know that I am not after a guarantee but instead I am asking for the option to rescind.
The agent forwarded that email to Mr Mohanna, who emailed back saying he did not agree and the contract had to be unconditional. The agent forwarded that to the defendant at 6:14pm (probably 5.14pm) saying: See below and as discussed it's too hard to make it conditional to the s96 because then your contract is not unconditional and not accepted by the bank as a pre-sale.
The defendant then sent an email to Mr Skaf at 5:41pm saying: Thank you for taking up this Section 96 issue again with the vendor and obtaining a response. About 1 hour ago before receiving your last email, I started to think that having a conditional contract could cause an issue with the vendor's bank. So, I now understand why the vendor is not prepared to agree to my request for an option to rescind the contract if the S96 does not go ahead. As you have explained to me a number of times, the vendor is making a genuine attempt to increase the width of the building by 1 metre. I guess I am taking a risk by going ahead without the S96 being approved yet, but I guess I feel that there is also a high probability that the vendor will obtain approval. As you know I have dealt with the vendor on a previous project and based on that experience I know that the vendor is a person of his word and can be trusted to provide everyone involved the best possible outcome. Now that item 3 of my email from this morning has been resolved, would you please approach the vendor for responses to items 1 and 2. (emphasis added)
By 22 March final agreement had been reached on proposed amendments, and a schedule of amendments sent by the plaintiff's solicitors was attached for annexure to the contracts.
The defendant said that he went back to the display apartment on 25 March to raise his concern with Mr Skaf about the one metre setback of the building when the adjoining building had a two metre setback. The defendant said that Mr Skaf told him he would speak to Mr Mohanna about the matter the next day. Mr Skaf did not remember this conversation. The defendant said that he sent an SMS to Mr Skaf the next day asking what the position was. He said that Mr Skaf then rang him and told him that the plaintiff was lodging new plans to extend the building with a two metre setback. Mr Skaf did not remember those exchanges.
Mr Skaf said that on 26 March 2018 he received a telephone call from the defendant during which the following was said: Defendant: I have been thinking about these contracts and whether I want to proceed. I am concerned that the units may not increase in size as I had hoped for. Mr Skaf: I have told you Joe that you are purchasing the units "as is" and based on the current development approval. The price you are paying is the price for the units as they presently will be built in accordance with the current approval. If there is any increase is size it will be a bonus to you. Thereafter, the defendant sought the one day extension for the cooling off period. The defendant did not dispute that this conversation took place.
Mr Skaf then sent an email to the defendant at 3:43pm on 26 March where he said this: Further to our conversation you are purchasing the apartments "as is" and anything extra achieved from the proposed S96 will be simply a bonus to you. I can't guarantee the S96 will happen or get approved so as discussed you are buying at the discounted price I negotiated for you on an "as is" basis. I strongly believe you've bought very well regardless of any potential extension.
The defendant replied at 6:04pm in these terms: Thank you for your email and for following up with the vendor today regarding the matter of the 2 metre setback. Now that I know that the vendor currently has approval for a 3 metre setback, that is very different from thinking that he only had a 2 metre setback approved and that he was now going to try to get the existing 1 metre setback approved. Now that you have clarified that issue with the vendor, I am much more confident with him having success with a S96. However, as you say and as was accepted by myself by email last week, I know that I am buying the apartments "as is". Prior to today's clarification, I was actually going to rescind the contracts today because I thought that the vendor was perhaps trying to retain the 1 metre setback of the existing building and that I am pretty sure would not be approved. Now that I know that this is not the case, I do feel a lot better with going ahead with the purchases. However, I am considering my options this evening and I will be in touch again tomorrow. (emphasis added)
At 6:25pm on that day Mr Skaf replied as follows: Thanks Joe. Just to be clear I haven't confirmed the exact measurements of the current setbacks or proposed S96 setbacks, so I cannot warrant any of these measurements. Again, we are selling you these discounted apartments on the basis of the current DA approval and what's stipulated in the current contract of sale. I'm making a note of this because I don't want any misunderstanding or dispute down the track so I hope you understand. Again, I think you've got a great deal but you need to be satisfied with your own due diligence. (emphasis added)
The defendant did not respond to this email despite his evidence that he saw it as inconsistent with the representation he alleged Mr Skaf had made to him.
As mentioned earlier, on 26 March, the defendant requested an extension of the cooling off period until close of business on 27 March. The vendor agreed to that extension.
The defendant said that he went back to the display unit on 27 March at about 2.00pm to collect another copy of the floor plan for unit 204. He met Mr Skaf in Euston Lane at the rear of the proposed development. The defendant said that Mr Skaf told him that the Council were intending to widen the lane on both sides. The defendant said that he went home and later in the evening "it started hitting me". He said that he was up until midnight.
He sent an email at 12.13am and another at 12.14am on 28 March in respect of each contract to the vendor's solicitors, copied to the agents, saying that he would be transferring the balance of each deposit to the agent's trust account and that the agent would then transfer the full 10% deposit to the solicitor's trust account.
On 28 March 2018 at 12:53am the defendant sent an email to Mr Skaf in these terms: If the apartments do not get the 1 metre extension, then I have been thinking that I would want to relocate the laundry cupboards. I have estimated that the laundry cupboard is about 1.3m long and then the galley kitchen is about 4.2m long giving a total of 5.5m. I have estimated that the pantry space and the fridge space are about 1.4m long which then leaves about 2.8m for the rest. This does not leave much space for the other kitchen cupboards and also there is not much spare benchtop space available. Consequently, that is why I am considering to relocate [sic] the laundry cupboard to somewhere else probably in the hallway. However, when I started looking at doing this on the plans this was causing the hallway layouts to be somewhat comprised [sic]. Therefore, on the attached floor plans I made a note for this matter to be decided with the builder before construction starts. The other reason that I want to leave this decision to be made later, is because if the 1 metre extension gets approved then I think I will leave the laundry cupboards where they are as I would then probably want to add a small island to the kitchen and that will resolve the lack of space issues in the current galley kitchen design. So, I hope that this approach with making a note on the attached floor plans will be acceptable to the vendor. Would you please let me know if we can proceed in this way.
He said that when he went to bed he did not sleep properly. His evidence then continued: I decided, "Hell," you know, "If they're going to extend this laneway, how am I - I don't - how are they going to be sure to get this one metre extension?" So that was the trigger to stop me paying the deposits on the Wednesday, by Wednesday morning.
In the meantime at 8.21am on Wednesday 28 March, Mr Skaf sent the defendant's email of 12.53am ([61 above) to Mr Mohanna who replied in these terms at 3.33pm: We can't include this in sale contract. I can assure you before commencing construction I will give the purchaser the chance to make changes requested in email below if required.
The plaintiff's solicitors sent two emails, one for each unit, at 3.15pm on 28 March to the defendant saying that if the balance of the deposits was not paid by 5.00pm on 29 March the contracts would be terminated.
At some stage that day (the precise time cannot be identified), the defendant rang Mr Skaf and told him that the deposits would be paid into the agent's trust account the following day. There is an email to that effect from Mr Skaf to Ms Elkington at the plaintiff's solicitors sent at 3.40pm on 28 March.
Mr Mohanna's email at [63] above was forwarded onto the defendant who responded at 11:02pm to Mr Skaf: I am satisfied with the vendors [sic] response on this matter. In regards to the deposits I will speak to you tomorrow.
The defendant's evidence set out at [60] above is not at all consistent with the defendant's actions on 28 March.
The first indication that the defendant had decided not to pay the balance of the deposits occurred on 29 March when he sent the following email to Mr Skaf at 10.38am on that day in these terms: Hi Roy, Before getting to the point of this email, I wish to highlight the following points in chronological order. Sunday 11 March 2018 - I came to the display room for this building project for the first time and I met you for the first time. - As discussed on the day, I was interested in purchasing a 2 bedroom 2 bathroom 1 carspace apartment. When we were discussing the apartments at the back of the building facing the laneway, you mentioned that the vendors [sic] architect had made a mistake with the approved plans. That is, the building could now be extended by 1 metre which would also make the rear apartments larger. - You also mentioned that the vendor had instructed you to place the sale of the apartments facing the laneway on hold. - You also showed me an email from the vendor with floor plan amendments to some of the apartments facing the laneway. - You also told me that in the coming week you would have new plans which would show the proposed apartment changes. - As I have dealt with the vendor before on another project I believed that what I was being told about the extension was true and hence I had confidence in being able to expect that the 1 metre extension would occur for the apartments I was interested in. - As I did not want to lose the opportunity to secure the apartments facing the laneway that I was interested in, i.e. before the apartments were increased in size and then potentially the price increased, I decided to exchange on the apartments that day and I paid a 0.25% deposit. Sunday 18 March 2018 - I did not hear from you during the week regarding any new plans so I came to visit you at the display room. - You did not have any new plans and I said I understand as it takes time for the architect to change the plans and it was probably unrealistic to expect to have any new architect plans available in just the space of 1 week. Wednesday 21 March 2018 - As communicated via email, I was now concerned that the S96 to apply to the council for the 1 metre extension of the building may either not be proceeded with by the vendor or perhaps it may not be approved by council. - As my decision to purchase was based on the 1m extension occurring, I request to add a clause to the contract which provides me the option to either proceed with or rescind the contract if a S96 approval is not obtained. - You put this request to the vendor and the vendor replies that such a clause in the contract would make the contract conditional and that then the contract would not be accepted as a presale by the vendors bank. - I reply that I understand the vendors [sic] response but I am taking a risk without such a clause in the contract. However, as I have dealt with the vendor previously on another project and from that experience I know the sort of person he is then that gives me confidence to be able to expect a high probability the S96 will succeed. Friday 23 March 2018 - As I was unable to secure a contract conditional upon the outcome of the S96, I now start to become very concerned about the possibility that the S96 may not proceed and hence I will not obtain apartments of the size I was expecting. - Therefore, I decide to pass by the property to check the boundary of the existing building and adjoining buildings. - I measure that the existing building on the vendors [sic] site has only a 1 metre setback from the kerb. - I notice that near to the back corner of the existing building there is a surveyor mark at a 2 metre setback. - I walk down the laneway to measure the setback of the next 2 adjoining apartment buildings and find they have a 2 metre setback. - I then become concerned that perhaps the vendor has approval at the 2 metre setback but is seeking to retain the existing 1 metre setback. - I am now seriously considering that I should rescind the contracts before the cooling off period expires 5pm on Monday 26 March 2018. Sunday 25 March 2018 - I visit you at the display room and bring to your attention my concern about the setbacks, - We go into the laneway and I show you with my measuring tape the current setbacks. - We decide that you will contact the vendor in the morning to clarify whether he is trying to do a S96 to get a 2 metre setback for the new building or if he is trying to retain the 1 metre setback of the existing building. Monday 26 March 2018 - I send you a message around 1.30pm to see if you have discussed the matter of the setbacks with the vendor. - I receive a call from you around 3pm and you inform me that the vendor currently has a 3 metre setback approved and hence the S96 is to get the current approved plans changed so there is a 2 metre setback for the new building. - As I was very concerned about this since last Friday and I am now not sure if I wish to proceed, you approach the vendor and obtain a 1 day extension to the cooling off period so it now expires 5pm on Tuesday 27 March 2018. - As communicated via email around 6pm that evening, now that you have clarified the matter of the setbacks I am more confident with the vendor having success with a S96 to obtain a 1 metre extension to the building. - Also as mentioned in that same email, prior to this afternoons [sic] clarification of the setbacks from the vendor, I was actually going to rescind the contracts today before 5pm because I thought that the vendor was perhaps trying to retain the 1 metre setback of the existing building which I am pretty sure would not be approved. Tuesday 27 March 2018 - Around 2pm I visit the display room to see you to collect another copy of the floor plan for unit 204. - We meet in the laneway behind the building and we discuss some matters regarding the laneway. - You mentioned that there is a proposal to widen the laneway on both sides of the laneway. - This starts to concern me about how narrow the footpath will end being [sic] if the laneway is widened. - However, at that stage, it did not make me think that it may have some impact on the building. - Therefore, at that stage, it did not make me think about rescinding the contracts before 5pm. - Although, in hindsight, I should have requested another 1 day extension to the cooling off period. Wednesday 28 March 2018 - This morning I was planning to transfer the balance of the 10% deposits to your agency trust account. - However, I started to give further consideration to your remarks yesterday about the laneway being widened and the fact that the vendor is seeking to lodge a S96 to extend the building from a 3 metre setback to a 2 metre setback. - I then remembered that when I measured the setback of the adjoining buildings further down the laneway, that it was the brick and cement rendered fences that had a 2m setback and not the actual buildings themselves. - Consequently, around 2pm I drive down to the laneway to check the actual setback of the adjoining buildings. - The first adjoining building has the fence at a 2m setback but the building has another 3m setback from the fence. - The second adjoining building has the fence at a 2m setback but the building has another 4m setback from the fence. - I then became concerned that the vendor is trying to get a 2m setback even though the adjoining buildings are further back. - Therefore, in light of the laneway being possibly widened, I now feel that theS96 may not have much chance of succeeding. Now to the point of this email - I do not know all the details of the development plans which the vendor currently has approved and I do not know all the details of the [sic] what the vendor is planning to do in a S96 and perhaps the vendor is very confident of achieving the 1 metre extension, - However, I am now in a position where I do not feel confident that the 1 metre extension will occur and hence I may not end up obtaining apartments of a size of which I was expecting when I exchanged contracts back on 11 March 2018. - Under these circumstances I now find myself, on the day after the cooling off period has expired, in a position where I cannot confidently proceed with the contracts and expect to obtain a 1 metre extension to the apartments I have exchanged upon. - Unless there is some way in which we can delay the payment of the full 10% deposit until the outcome of the S96 is known then unfortunately I cannot proceed with transferring the balance of the 10% deposit for both of the apartments. - If there is no way to resolve this issue to the satisfaction of both parties, then obviously I am in breach of an essential term of the contract which entitles the vendor to terminate the contract and I will then have to face the consequences. Please let me know should you wish to discuss this matter any further. (bold and italics added)
It should be observed that nowhere in that email is there any assertion that a representation was made, nor is any reference made, to an increase in the size of the units by 8.5m2.
Mr Skaf replied to the defendant's email of 29 March 2018 at 12:25pm in these terms: I'm very surprised to be reading this email. I made it very clear on Sunday 11th March 2018 when we negotiated the purchase with the vendor and you signed and paid the deposit that you are buying the apartments based on the current council approved plans and in no way would the vendor agree to the sale being subject to approval of a s96. As discussed a moment ago, my vendor expects the balance of the 10% paid by close of business today otherwise you are in breach of the contract and run the risk of contracts being terminated and being sued for the full 10% on each apartment. I strongly suggest you give this some serious consideration and seek legal advice because I would hate to see you at a loss.
The defendant replied to this email at 2.40pm that day saying this: In regards to what you say you made very clear to me on Sunday 11 March 2018, perhaps you are correct but my recollection is somewhat different to yours. That is, from my memory, what you are saying you made very clear to me actually did not occur until after I signed the contracts and paid the 0.25% deposits. You may recall that after we left your office, I called you about 30 minutes later and I said to you that I forget to request a clause to be inserted into the contracts to make them subject to the approval of the S96. Over the phone, you then replied that you are sure that the vendor would not have agreed this. I accepted that response as I was then expecting to see new plans during the week showing the new apartment layouts. As detailed in my email of events from this morning, in the week that ensued the new plans did not eventuate as you had expected. As I did not hear from you during the week, I decided to return to the display room on the following Sunday 18 March 2018 to see [if] you had the new plans available. As no new plans were available, I then started to become concerned and that is why on Wednesday 21 March 2018 I requested a clause to be added to the contract which provides me the option to either proceed with or rescind the contract if a S96 approval is not obtained. As we know the vendor denied that request. After this request was denied, it was then that you made it very clear that I am purchasing the apartments "as is" and you followed this up with an email on Monday 26 March 2018 after I saw you again on Sunday 25 March 2018. You may disagree with my description of what I believed occurred, but that is how I remember things happening. (emphasis added)
In the meantime, on 29 March Mr Skaf sent an email to the defendant at 1.02pm saying that he had just received draft s96 plans "if your [sic] interested to review to reconsider your position".
The defendant responded by an email sent at 2.41pm as follows: Thank you for letting me know that you have now received some draft s96 plans. This does give me some further comfort that the vendor is taking genuine steps to get a s96 approved. However, as described in my email of events from this morning, due to the adjoining building setbacks being a lot more than 2 metres and also that there is a possibility of the laneway being widened, it does not give me any further comfort in regards to whether the s96 will actually get approved. The only thing that would give me the level of comfort that I need to proceed with the purchases, is if there is someway that we can delay the payment of the full 10% deposits until the outcome of the s96 is known. So, at this stage, I am not interested in reviewing the draft s96 plans that are in your possession.
The revised plans resulted in one of the apartments only increasing in size by one square metre, and the other not increasing at all. The evidence about which of them increased in size was contradictory. In his email of 4 June 2018 (at [76] below) to Mr Mohanna, the defendant said it was apartment 204, but in court the defendant said it was G03 (at T 208). For present purposes, it does not matter.
When the defendant did not pay the balance of the deposits, the plaintiff commenced proceedings on 27 April 2019. After proceedings commenced the parties had a settlement conference on 1 June 2018.
On 4 June 2018 at 8:49pm the defendant sent an email to the plaintiff's solicitor noting that he was given three options to settle the matter which he identified as:
Continue with Court proceedings, or
Pay the statement of claim; or
Purchase two apartments.
Mr Mohanna agreed that they were the three options he offered. He said, however, in relation to the third option that he also offered to waive the plaintiff's legal fees incurred to that time (approximately $10,000) and to make any amendments the defendant might reasonably request in relation to the apartments.
In the defendant's email of 4 June, he attached an email to Mr Mohanna and asked if the solicitor would ask Mr Mohanna if he was prepared to reconsider the situation. The email to Mr Mohanna was in these terms: After meeting you last Friday, you would recall that I came back to see you regarding whether Roy had the latest plans that have been submitted to the council with the S96 in order to obtain approval to extend the building. You replied that Roy does not have a copy of them but that you would arrange a copy to be emailed to me. Instead of waiting for the email, I decided yesterday to go and visit Justin again from Ray White at the display. As mentioned last Friday, I met Justin for the first time a few weeks ago at the display and at that time he showed me new coloured plans that highlighted the proposed 1 metre extension to the rear of the building. At that time, I noticed the internal layout of apartment G03 was altered but I did not take note of whether the internal size of the apartment had changed from 75m2. Also, at that time, I did not look at the new layout for 204. So, I decided to go back yesterday and see Justin to have another look at the new plans to see the internal sizes. As you would know, apartment G03 is still 75m2 and apartment 204 is now 76m2 an increase of only 1m2. As you are aware, I met Roy at the display for the first time on Sunday 11 March 2018. On that day, when I showed interest in the apartments G03 and 204, then the following things happened and were said: - Roy informed me about the 1 metre building extension to the rear of the building facing the laneway. - Roy told me that you had earlier instructed him to place the sale of the affected apartments on hold. - Roy said that the prices of these apartments would probably increase once the extension is approved. - Using the scale on the floor plans for G03 and 204, Roy calculated that the internal size of the apartments would increase by 8,5m2, i.e. from 75m2 to 83.5m2. Roy provided me a paper copy of these floor plans for both G03 and 204 on which he wrote, in his own hand writing, that the internal size would increase by 8.5m2. - Roy said that he would have new plans during the week so I would be able to see the apartment changes. - Roy said we could approach you with an offer based on the current prices to see if you would accept it so that I could secure the purchase of these apartments at the current prices before the apartments are made larger. Due to the above, I decided to purchase 2 apartments and I exchanged on the day and I paid the holding deposits. On that day, Roy clearly knew that I was buying these apartments based on believing that the internal size of the apartments would be increasing by 8.5m2. Roy believed that it was a very good deal and he wanted me to go to his office to sign the contracts as soon as possible so to avoid the possibility that you may change your mind. So that is what we did and in the excitement of it all I forgot to ask to add a clause to the contract to make it subject to the 1 metre building extension going ahead and the apartments being increased in size by 8.5m2. About 30 minutes after leaving Roy's office I called him and said I forget to ask to include the above clause. Roy said that he is pretty sure that you would not accept such a clause and that he had already emailed the contracts to your solicitor. I said ok and that I look forward to seeing the new plans during the coming week. During the week that followed, I was looking forward to hearing from Roy about the new plans but I did not hear from him. So I decided that I had to go see him on Sunday 18 March 2018 to see if he had the new plans. Unfortunately, at this stage, Roy did not have the new plans. On that day, we then discussed some queries I had about the contracts and some changes that I wanted made to the internal layout of apartment G03. By Wednesday 21 March 2018, I started to become concerned that I have not seen any new plans yet and that you may possibly not proceed with a S96 to extend the building or that the council may not approve it. So, I send an email to Roy expressing this concern and requesting the addition of a clause to the contracts which provides me the option to either proceed with or rescind the contracts should a S96 not be approved. Later on that same day Roy gets back to me and lets me know that such a clause cannot be accepted as it would make the contracts conditional and then your bank would not consider them as pre-sales. I then reply that I now understand that the contracts have to be unconditional. I also reply that I am taking a risk by going ahead without the S96 being approved yet, but I feel that there is a high probability that you will obtain approval as I have dealt with you on a previous project where I got to know that you are a person that sticks to his word and that you can be trusted. By Friday 23 March 2018, as I was unable to make the contracts conditional upon the outcome of the S96, I now start to become very concerned that I may not end up obtaining apartments which are 8.5m2 larger. I start thinking about the rear lane boundary of the existing building and adjoining buildings and decide to go down to the site to check things over. I find that the existing building only has a 1 metre setback from the kerb while the adjoining apartment buildings have a 2 metre setback. This makes me wonder if you are trying to get approval to the existing 1 metre setback which I believe council is unlikely to provide. So, on Sunday 25 March 2018, I visit the display and bring this matter to Roy's attention and he says he will contact you on Monday morning to clarify this matter. Around 3pm on Monday I hear back from Roy and he clarifies that the 1 metre extension that is being sought will be at a 2 metre setback. Due to this issue and the concern it caused me, Roy then obtains a 1 day extension to the cooling off period. However, on Tuesday 27 March 2018, when I visit Roy at the display around 2pm and we meet in the laneway, he tells me that there is a proposal to widen the laneway on both sides of the laneway. This overnight starts me to get very concerned again as to whether the 1 metre extension will proceed. The next day I find that I have lost confidence that the building will be extended and I hence decide to not pay the balance of the 10% deposits and I unfortunately breach the contracts. Getting back to where things are as of today, we discussed at our meeting last Friday and I have now confirmed in the new plans that I saw yesterday in Justin's possession, that apartments G03 and 204 will not have the internal space increased by 8.5m2, i.e. G03 is unchanged and 204 is only 1m2 larger. From looking at the new plans, I found that the two bedroom apartments which face Maddox Street (which on the existing approved plans only have 1 bathroom) now have 2 bathrooms and they are larger apartments. So, what has happened by the building being extended by 1 metre is that the two bedroom apartments facing Maddox Street have been made larger while the two bedroom apartments in the building corner where both G03 and 204 are located have not been increased in size or by only 1m2. By the time the cooling off period expired end of business on Tuesday 27 March 2018, I believe you would have been in a position to know this and to have let me know. I say this, because 2 days later on Thursday 29 March 2018, Roy told me via email that he had draft S96 plans for me to look at. So, had I been made aware that you were intending to only increase the size of the apartments facing Maddox Street then I would have been able to rescind the contracts within the cooling off period. It is now clear from the new plans, that regardless of whether the 1 metre building extension gets approved or not, that the internal size of apartments G03 and 204 will not be increasing by 8.5m2. As I have tried to explain from the beginning of this email, I have purchased these apartments in the expectation that the internal size would increase by 8.5m2 and this is now clearly not going to occur. I feel that it is not fair and just that you are now trying to force me to purchase apartments which are not of the internal size that I was led to believe I would receive on the day when I exchanged. At the end of the day, I am not trying to blame anybody or anyone in particular for what has occurred. Obviously, having the situation where it was proposed to extend the building by 1 metre has caused a lot of uncertainty and confusion resulting in me to unfortunately breach the contracts. The way I see things is that the 3 of us (i.e. yourself, Roy and myself) are the only people who played a role in causing this unintentional and unfortunate situation to occur. Further, I would hope that the 3 of us can continue to be honest enough with each other to resolve it. I believe that the 3 of us have all been genuine and honest in our dealings on this matter from the beginning. However, I think along the way some things may have become misinterpreted or miscommunicated. In other words, from the beginning on 11 March 2018, I have tried to show in the details above that I was just trying to ensure that I would end up getting apartments that were internally 8.5m2 larger because that is what I was expecting based on discussions and the amended floor plans I received from Roy on 11 March 2018. However, after 11 March 2018, for whatever reasons, yourself and Roy had the impression or were trying to get me to have the impression that I had originally intended to buy the apartments "as is". So, I would now hope that you can both see from the details above that this was not the case. Furthermore, in light of the new plans showing that the internal size of apartment G03 is not increasing at all and apartment 204 is only increasing by 1m2, I ask you to please reconsider this matter and not to try to force me to continue purchasing apartments which are not going to be the size I was expecting. I look forward to your reply and I hope we can resolve this matter very soon. (italics added)
The portions above in italics constitute the first reference in any form of written correspondence to the apartments increasing by 8.5 square metres. This email should be compared to the email of 29 March 2018 set out at [68] above.

Submissions

The defendant submitted that Mr Skaf was responsible for writing on the floor plan of unit 204 those handwritten figures set out at [32] above, thereby demonstrating that he made the representation that the apartments would increase in size by 8.5m2 when the revised plans extending the building by one metre were approved. The defendant submitted that Mr Skaf's statement that there was no guarantee about the increased size was not made on that first day when the defendant entered into the contract but only a week or so later. The defendant submitted that Mr Skaf had told him that Mr Mohanna had said that he felt the plaintiff was giving away $300,000 because he believed that the increase in the size of the units resulting from the one metre extension meant that each of the units was worth $1.1 million rather than the $950,000 which the defendant had paid.
The defendant pointed to a number of inconsistencies in the evidence of Mr Skaf and Mr Mohanna including about such matters as whether the new plans would be available in the week following 11 March 2018, whether after the settlement conference all of the legal fees were being waived if the defendant went ahead with the purchase of two units or whether some discount was given of $10,000 on the price of the substitute unit being offered to the defendant. The defendant submitted that where Mr Skaf's evidence about events differed from his, Mr Skaf was lying.
The defendant submitted that the plaintiff knew that the two units he purchased were not to increase in size because Mr Mohanna was working closely with the architect on the revised plans. He submitted that the fact that the plans were available for him to see on 29 March demonstrated that the plans were available and known to the plaintiff and Mr Skaf prior to the expiry of the cooling off period.
Although the defendant acknowledged that he decided not to pay the balance of the deposit because he did not have confidence that the s 96 application would be approved or would produce the result he expected, he said that that was irrelevant. He submitted that the mere fact that the apartments were not increased in size as he maintained had been represented to him was sufficient for him to succeed in showing a misleading representation. The defendant submitted that he was in a vulnerable position in all the circumstances and that the plaintiff took advantage of his position.
The defendant submitted that the proceedings fell within the requirements of s 55(2A) of the Conveyancing Act and, in that regard, pointed to what was said by Hamilton J in Kylsilver Pty Ltd v One Australia Pty Ltd.
The defendant submitted that coercion occurred because at the time he was given the three options by the plaintiff, the plaintiff knew that the apartments had not increased in size as had been represented to him. He accepted that the issue of coercion did not arise if he could not establish the misrepresentation concerning the increase in size.

Consideration

The plaintiff's case is a straightforward one. Under the contractual arrangements between the parties, the defendant became bound by the contracts at 5:00pm on 27 March 2018. That time represented the expiry of the cooling off period agreed by the parties. Accordingly, the defendant became bound to pay the balance of the deposit by that time although, by the emails sent at 3:15pm on 28 March, the plaintiff gave the defendant until 5:00pm on 29 March for the two amounts to be paid.
Accordingly, the plaintiff is entitled to judgment for the amount representing the sum of the two deposits together with interest unless the defendant is successful in having orders made either pursuant to the Australian Consumer Law or by virtue of s 55(2A) of the Conveyancing Act.
In relation to the claim under the Australian Consumer Law, the defendant must establish that (1) the plaintiff through its agent misrepresented that the internal size of the apartments which the defendant was purchasing would be increased by 8.5m2, (2) the plaintiff knew before the expiration of the cooling off period that the revised plans for the apartments would show that the apartments the defendant had purchased would not increase by 8.5m2 and stayed silent about that matter, or (3) coercion and undue influence was exercised upon the defendant subsequent to the settlement conference by insisting on one of three options to be performed by the defendant. To establish (2) above, the defendant would also need to establish (1) above. The defendant also accepts that, for him to succeed under s 55(2A), he needs to demonstrate the misrepresentation concerning the increase in size by the plaintiff relied upon under the Australian Consumer Law.

(1) Representation that the apartments would increase by 8.5m2

As in so many cases alleging misleading and deceptive conduct by representation, the matter must be determined by assessing the relative credibility of the representor and the representee. Here, that means the evidence of Mr Skaf and the evidence of the defendant. However, the matter is made considerably easier in the present case because of the extent of the contemporaneous emails which passed between the defendant on the one hand and Mr Skaf and Mr Mohanna on the other.
In The Nominal Defendant v Cordin [2017] NSWCA 6 from [165] I set out extracts from a number of authorities dealing with the fallibility of human memory, and the desirability of relying on contemporaneous documents to determine more accurately what has occurred in circumstances where competing versions of events are given. In one oft-cited passage, McLelland CJ in Eq said in Watson v Foxman (1995) 49 NSWLR 315 at 319: …human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
In Gestmin SGPS S.A. v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) Leggatt J, having set out a number of propositions flowing from scientific research into memory, said at [22]: In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose - though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.
In some respects, Mr Skaf was not an entirely satisfactory witness. I found him to be somewhat arrogant and a little defensive. In that regard, I recognise that being cross-examined in a less than satisfactory manner by the person with whom he had the dealings now the subject of the dispute, rather than by a lawyer bound by obligations to the court, tends to make the experience much more personal and less than ideal. I consider that Mr Skaf's reactions to matters that were put to him are largely explicable in that way. While his memory for all of the detail was not perfect, his recollection generally accorded with what was to be found in the emails set out above.
Generally, I thought Mr Skaf was trying to give his evidence honestly. I do not accept that, where he differed from the defendant's account of what transpired, he was lying, as the defendant asserted. The only issue for me in relation to Mr Skaf was the reliability of his evidence about whether he said that the defendant would receive apartments with an extra 8.5m2 of area.
In his affidavit, Mr Skaf denied that he said to the defendant that the internal size of the units would increase by 8.5m2. In cross-examination he denied using the scale on the floor plans to calculate that the internal size would increase by eight and a half square metres. He said that he had used his business card to measure things off the scale on drawings in the past. Although he did not recall doing that with the defendant, he may have done it.
The contemporaneous documentation points strongly against Mr Skaf having represented to the defendant that he would receive or was likely to receive an extra 8.5m2 in the event that the s96 application was successful. The defendant's email of 21 March 2018 (at [44] above) makes no reference to such a representation but only to an expectation that the units would have "a lot more" than the 75m2 internal space shown on the current floor plans.
The first document making reference to the 8.5m2 is the email sent by the defendant on 4 June 2018 (at [78] above). Significantly, that email was sent after the proceedings had commenced and after an unsuccessful settlement conference between the parties. Further, a comparison with what appears in that email and what appears in the email of 29 March (at [68] above) is important. The defendant gave evidence that the email of 29 March took him two to three hours to compose. He gave this evidence about it (T 183): Q. It took you two or three hours because you were attempting to be as precise as you could-- A. No, because I had to-- Q. Is that right? A. That's right because I had to remember all the details that had happened over the previous two weeks. It took me a while to get it all together. I had to make notes. It took - you know, it didn't happen in 10 minutes. Q. So you attempted to be very precise in this email. A. I was attempting to be very precise about exactly what happened.
That email was composed at the conclusion of what were virtually daily exchanges between the defendant and Mr Skaf since 18 March about what had happened on 11 March. In my opinion, if Mr Skaf had represented to the defendant on 11 March that the apartments he was buying would be increased by 8.5m2, it is inconceivable that the defendant would not have mentioned that matter in any of the emails he sent which concerned that issue, especially the lengthy email of 29 March which purported to set out the whole chronology that led to the defendant not rescinding the contracts within the cooling-off period, and thereafter indicating that he would not pay the balance of the deposits.
The defendant's explanation for not having mentioned that the alleged representation was that the apartments would increase by 8.5m2 was this (T 182): Q. Do you agree that nowhere in that email do you make any allegation that Mr Skaf represented to you that the apartments that you were purchasing would be increased by 8.5 metres squared? A. No, but as I said yesterday he's mentioned - I've mentioned in here and elsewhere that the building is going to be extended by 1 metre and that indirectly means, when you look at the floor plans and use the scale, you will get an extra eight and a half square metres internal. So indirectly it does - it doesn't directly say eight and a half square metres but indirectly it does.
It is also important to note the sequence of events as described by the defendant. As is apparent from the defendant's evidence in Court set out at [31] and [32] above, the defendant himself concluded, after having heard that the building may be extended by one metre, that he might get a larger unit, with the result that he made the offer to purchase the two units. The defendant also said (T 116-118): He [Mr Skaf] - got the - he had the floor plans for each unit in front of us on the - on the bench top and this - from memory, this is after he rang Mr Mohanna and the offer was accepted because I already realised before the - before he rang Mr Mohanna, I already realised that one square metre - one - one extra linear metre at the back of the building would add close to ten square metres to the unit, so I already realised that - and that's why I made the offer, because I could see there was value there to go ahead with this transaction. … Q. Your evidence a moment ago was before Mr Skaf said anything to you about 8.5 square metres, you had already formed the view that there was likely to be some increase in the size of the apartments if you purchased that day, correct? A. Around ten square metres, yes. I could calculate, I could see that it was almost ten square metres extra. Q. And you made the offer to purchase the two units prior to Mr Skaf making any representation about 8.5 metres squared, correct? A. Yeah, his representation was up until point that the building, and - and hence, the apartments, would be extended one metre towards the laneway and then in terms of him mentioning the eight and a half, that - that perhaps wasn't mentioned until he wrote it on the floor plans. Q. Which was after you'd made the offer to Mr Mohanna, correct? A. I believe so, yes.
His evidence was that after the offers had been accepted he and Mr Skaf then discussed the extension of the building further, which resulted in various measurements being made and finally resulting in 8.5m2 being written on the plans, by whom I am unable to say. I accept that contracts were not signed until later that afternoon nor exchanged until early the next morning, but that evidence of the defendant points against his having entered the contracts in reliance on anything that Mr Skaf told him, apart from the fact that a s 96 application would be made to extend the building by one metre.
It also points against the likelihood of Mr Skaf having said it. He had told the defendant about the possible extension of one metre. On the defendant's own account, that was enough for him to make the offer to purchase which Mr Skaf duly conveyed to Mr Mohanna. If the defendant's offer only came at the conclusion of the discussions, it could be more easily inferred that Mr Skaf may have made the representation as a means of persuading the defendant to buy.
Even accepting the defendant's evidence given in the witness box, it could not be concluded that a representation was made to the effect claimed. On that evidence, the highest Mr Skaf was putting the matter was that he thought there would be an extra 8.5m2, but it wouldn't be known until the revised plans arrived. It is worth setting out again the defendant's evidence where he was asked exactly what Mr Skaf told him. The evidence was this (T 107-108): [H]e said, "It looks like it's going to be eight and a half". So he wrote eight - "plus eight and a half" on the floor plans and that's how it happened. … Q. --He said, "It looks like it's going to be eight and a half"? A. Yeah. Q. That can't be all he said because that's-- A. Well, yeah, because he - what - what was then said, "it could end up being eight, eight and a half, nine. We won't know until we get the floor plans, which I will have available next week" but he said, "It looks like you'll be getting an extra eight and a half metres". Q. "Looks like"? A. Based on - on that current floor plan, yes, because that's how much the distance was between the two walls. Q. So he didn't say "you will" be getting an extra 8.5 square metres, did he? A. Well, he didn't say I won't and he didn't [say] "there's no guarantee until later". There's - there - there's issues about whether it was a guarantee when it came up a week and a half later. Q. I asked you a very simple question - he didn't say, "You will be getting an extra 8.5 square metres", did he? A. Well, he didn't say - he didn't say I won't. He said, "We're going to get the new plans next week and you can see", you know, "what the", you know, "what the size of these new apartments will be". Q. Are you going to answer my question or should I move on? He didn't say "you will", did he? A. I can't recall. Maybe he did, I can't recall. It all was quite definite, at that time.
What Mr Skaf said there, even if I accepted that account of it by the defendant (which I do not), does not amount to a representation of a future matter as alleged.
What is also clear is that the defendant formed an early view that he stood a reasonable chance of getting larger units for the price of the ones actually on offer. What he said in his evidence that is highlighted in bold at [34] above and in the email at [68] above offer some support for that. Further in his oral submissions he said this (T 221): And from my point of view, I found an - I - I - I saw an opportunity to get a property of a larger size at a - at a cheaper price.
On the basis of all of the evidence I think what is likely to have occurred after the defendant made the offer to purchase the units and the offer was accepted by the vendor, is that the defendant and Mr Skaf sat down to calculate what the potential increase in size for the units might be if the building was extended by one metre. I accept Mr Skaf's evidence when he said (T 63): I think we made an assumption when we were, you know, working out if - if the building was extended by a metre what the potential size would be but there was no time that I, you know, did I say that's what your area's going to be. and I wouldn't have been able to confirm for you what this - what the area of this apartment would be because I wasn't privy to that.
While I do not think that the defendant is being deliberately untruthful in the evidence he gave, the contemporaneous material leads me to think that he has come to believe the position he now maintains, although that position does not accord with what really happened. I am strengthened in that view by many of the answers the defendant gave in the witness box, particularly when he was asked why he did not respond to emails from Mr Skaf and Mr Mohanna to assert what he alleges Mr Skaf had represented to him about the increase in size of the apartments, and why he did not rescind the contracts prior to the expiry of the cooling-off period. Many of his answers gave the impression of his trying to make his account of events fit into the picture established by so much of the objective evidence, in many cases with little success.
I find that Mr Skaf did not represent to the defendant that if the building was extended by one metre he would receive an additional 8.5m2 area in the apartments he bought.
Even if a representation had been made about an additional area of 8.5m2, the defendant was sent an email on 21 March by the vendor saying that the vendor could not guarantee the apartment size, and that if there was an increase in size it would be a bonus to the buyer. The defendant was on notice at the latest from that time that no representation was being made about the increase in size of the apartments. That was well within the cooling off period. The true position is disclosed in the defendant's email to Mr Skaf at 5:41pm on 21 March ([50] above) where he acknowledges that he is taking a risk by going ahead without the s 96 application being approved. The defendant's opinion that there was a high probability of the approval being obtained was merely an assumption. It was not the result of any representation made by Mr Skaf.
The email of 21 March is also significant because the defendant did not assert, in answer to it, that it conflicted with what he asserts Mr Skaf had told him. He was asked about that in cross-examination, and he gave this evidence (T 140-142): Q. So you read Mr Mohanna's email of 21 March? A. To - he - yes. Q. And you see it says, "The buyer purchase [sic] the apartments as is and as per the current price list. I can't guarantee the increase of the apartment's size, if happened, will be bonus to the buyer." A. That's right. Q. You see that? A. Yeah, I did. Q. You say that's not what Mr Skaf told you. Correct? A. That's correct. Q. Well, why is it that you didn't say in response to that email, "Wait a second. You told me these apartments would definitely be increasing in size by 8.5 square metres"? A. I didn't go - bother going down that route because the vendor - I then - I then sent another email. Q. I'm just asking A. Yeah. And I didn't go down that route because I - I - because I didn't - I did just send an email, the next email. I - I didn't ask - I didn't state, "You know, that's what you told me, blah, blah, blah," because I thought, "What's the point? We just need to resolve this issue about whether we can have a clause in the contract or not." I didn't - I didn't bother going into what Roy Skaf told me on 11 March. I just wanted to try to get this issue resolved and having a clause in the contract to cover - to cover myself. Q. But what clause? A. To have - that if the section 96 does not go ahead and get approved, then I have the option to rescind the contract. That's on page 28 - 29, sorry. Q. I understand that. A. Yeah. Q. But if Mr Mohanna is not guaranteeing any increase in the size of the apartments and any increase is a bonus to the buyer-- A. That's right. Q. --you must have understood that to mean, he was telling you he couldn't guarantee in any circumstances that the apartments you'd bought would increase in size. A. He couldn't guarantee that he could get - that he could get approval. That's correct. Q. Well, it goes a bit further than that, doesn't it, because it says you've purchased the apartments "as is," that is, according to their present size and according to their present layout. Correct? A. Well, that's what he's saying, as in, his email, his response. Yes. Q. That's how you understood his email. Correct? A. That's right. That's correct. Q. So he was saying you've bought apartments of the size and with the layouts listed and per the current price list. You understood that's what he was saying? A. Yes. Q. That's not what Mr Skaf told you, you said. A. That's right. Q. Is it? A. That's right. Q. You said Mr Skaf told you that you were going to get apartments significantly bigger than the apartments as is. Correct? A. That's right. Q. But Mr Mohanna is telling you quite clearly on 21 March that that's not the deal. Correct? A. He's saying he cannot guarantee that. But he says - he then says, "if it happens, it will be a bonus to the buyer." So my take on this is that obviously he can't guarantee it, because the council may not approve it. But if it gets approved, then there will be a bonus for the buyer. HIS HONOUR Q. Yes, but what I think Mr Anderson's putting to you is that what Mr Mohanna is saying is different from what Mr Skaf had told you, and you haven't challenged that in this email. A. No, I've challenged - challenged it in the next email, your Honour, by continuing to ask about having a - you know, a clause in the next - and then - and then this email - that response was on 3.06 on 21 March from Mr Mohanna. Then at 3.46 I sent another email back, on the next page. Q. Yes, that's right. A. And Q. But you haven't challenged the difference between what they said. A. No. No, I didn't. No. That's right, I didn't. That's right. Q. So did you continue to believe what Mr Skaf had said from this time onwards? A. Yes, and I believed that Mr - yes, sorry. Q. Sorry, you go on. A. No, I was going to say, and I - and I believed that Mr Mohanna was going to do his best to get these plans changed to increase the size of the units and submit it to council. Q. Yes, but you've agreed that what Mr Mohanna was saying was different from what Mr Skaf had represented to you, you say. A. Yes, your Honour. Yes. Q. So why did you go on believing what Mr Skaf had said when Mr Mohanna-- A. Yeah. Q. --who makes the decisions-- A. Yes. Q. --was saying something different? A. Okay - well, this comes down to my submissions, where there were many positive factors, such as the agent on 11 March saying, "This is the deal of the century," such as on 18 March, the agent telling me the - the vendor said, "I'm giving $300,00 away," and - there were - and other positive factors I've mentioned in my submissions. Those positive factors kept me on this course.
That passage also provides a good example of the sort of answers I was referring to at [104] above.
In the telephone conversation and emails of 26 March 2018, it was made perfectly clear to the defendant, and he accepted, that he was buying the units on an "as is" basis. It was those exchanges which led to the defendant seeking an extra day before the cooling off period expired.
The correspondence and the conversations make clear that, whatever view the defendant may have formed about an increase in the size of the units on the day he entered into the contracts, perhaps through a misunderstanding, or perhaps because he had convinced himself about a possible 1m extension to the building, there was no reasonable basis for that view being maintained by the end of the cooling off period.
It is also apparent that the defendant was given all necessary information to enable him to make a decision about exercising his rights to rescind the contract before the cooling off period expired. He had been told by Mr Skaf on the afternoon of 27 March that there was a proposal to widen the back lane by the council. Although that appears to have been the trigger for the defendant deciding not to go ahead with the contracts, as appears in his lengthy email of 28 March 2018 to Mr Skaf, the defendant did nothing to exercise his rights before the cooling off period expired. To the contrary, he sent emails after the expiry of the cooling period saying that he would be transferring the balance of the deposits to the agent's trust account. He also rang Mr Skaf the following day and told him that.
He thereafter purported to rescind on the basis of his analysis of the setbacks in the laneway and the possible widening of the laneway. That led him to the position, he said, where he did not feel comfortable that the one metre extension would occur, and he might not end up obtaining apartments of the size that he was expecting when he exchanged contracts.
The defendant's case is not that he failed to rescind before the expiry of the cooling-off period because of a continuing belief that the apartments would be 8.5m2 larger. He failed to rescind because he did not process all of the information he had until after the expiry of the period. He gave this evidence (T 111): So we met in the laneway and he was in a hurry and he gave me a copy of the floor plan and we were having a discussion about the rear lane, because just the day before, I was - I was concerned about the one metre offset, so we were actually behind the building, in the laneway discussing the offsets again and he said, "By the way, this laneway is going to be widened by one metre" - sorry - "This laneway's going to be widened on both sides" and this was three hours before the cooling off period expired. And when I went home that evening, I started, you know, it started hitting me later in the evening. I was up till midnight and I couldn't sleep properly that night and I decided, "Hell," you know, "If they're going to extend this laneway, how am I - I don't - how are they going to be sure to get this one metre extension?" So that was the trigger to stop me paying the deposits on the Wednesday, by Wednesday morning. Q. So just so I understand this, the reason why you didn't pay the balance of the deposits was because of a concern you had about the laneway at the back of the building being widened. Is that right? A. Which would result in me getting the eight and a half square metres that was represented to me back on 11 March, yes. Q. I will put it another way. You were concerned that the widening of the laneway might mean that the building was not extended by one metre. Is that right? A. That's right. HIS HONOUR Q. But you say Mr Skaf told you this before the cooling-off period expired. A. Sorry, your Honour - Mr Skaf told me? That's right - on 2pm on the Tuesday before the cooling-off period expired. So I only had three hours left to think about and decide to cool off, but because I was still trusting everybody, it didn't hit me until I went home that evening and it was too late. It was after 5pm before I decided I can't go ahead. ANDERSON Q. So it was a conversation about the widening of the laneway that made you decide you weren't going to pay the balance of the deposit. Is that right? A. That's right. That was the final straw.
He also gave this evidence (T 151-152): Q. And from your perspective, the widening of the laneway was a potential problem for Mr Mohanna achieving the one metre extension. A. That's right. Q. So, you were very concerned in light of what Mr Skaf had told you about the widening of the laneway-- A. Definitely, yes. Q. --that you mightn't get apartments of the size that you had hoped. A. That's what went through my mind Tuesday evening, yes. Q. Why didn't you rescind the contracts? A. Because he told me that at 2pm on Tuesday afternoon. I had three hours to go back home - I had to get back home. I didn't till, I don't know, 3.30 or something. Then my daughter came home and other things happened. I didn't start thinking about it until, you know, in the evening, when - when the - when the household wasn't so busy. Q. Ultimately, there was no problem with the widening of the laneway. Correct? A. That's right. Well, he - on 7 April, he - he corrected his statement. He said, "By the way, what I said was wrong. It's not the - the laneway's not going to be widened on both sides. In fact, it's just the footpath which is going to be made two metres wide." Which - which meant the kerbs, the existing kerbs were not going to be touched. It's just that Mr Mohanna was losing one metre of his existing building to make a two metre footpath. Q. But, as I understand your complaint in this case, it's that you weren't given sufficient information in order to rescind the contracts. Is that right? A. To cool off, you mean. Q. Yes. A. Yeah, yeah. Q. But your complaint in respect of the widening of the laneway is that Mr Skaf told you something that would potentially count against you staying in the contracts. A. Sorry, you've lost me, Mr Anderson. Q. Mr Skaf, on 27 March, told you something that, if you'd acted on it, would've been to your benefit because you would've rescinded the contract. Correct? A. I would've cooled off. That's right. That's right. Exactly. Q. So, you can't really complain about suffering any loss as a result of A. Yeah, but-- Q. --his suggestion about the widening of the laneway, then, can you? A. It was only - there was only three hours before the cooling off period expired. I didn't have time to think about it - process the whole thing properly in my mind until overnight. Q. Well, it's the case you didn't cool off on the contracts because of what Mr Skaf said to you about the widening of the laneway. Correct? A. I didn't cool off - no. No. It - mean-- Q. The widening of the laneway didn't - what Mr Skaf told you about the widening of the laneway did not lead you to rescind the contract, did it? A. Not with - not between 2pm and 5pm that afternoon, no, cause I hadn't had time to process it. I had to get home. I had to get home before my daughter got home, et cetera. It was - I was in a rush until - you know, until after - well after 5pm that evening. I didn't have the chance to go through and think about the whole situation properly. HIS HONOUR Q. But you knew, didn't you, at 5 o'clock, the contract had become unconditional against you? A. That's right. I did know that, your Honour. Yes.
Ultimately, overnight on 27/28 March the defendant said that he became nervous that the contingency on which he had banked since entering the contracts would not come to pass. He had been troubled for a week or more about the setback problem, and the news about the potential lane-widening appears to have crystallised his fears. However, whatever he says now about his understanding and belief about the arrangement he entered, the emails (including his own) show beyond any doubt that he was prepared to gamble on the possibility that the vendor would make a s 96 application, that it would be approved, and that the apartments he had bought would thereby benefit, with the result that the value of the properties he purchased would exceed the price he had paid.
Despite having all the necessary information to assist him with his decision whether to rescind before the expiry of the cooling-off period, he let that time pass. What is clear, however, that his decision to do so was quite unrelated to anything that the plaintiff or its agent said or failed to say, except one thing, the potential widening of the laneway, which was a consideration that supported a decision to rescind.
Even assuming the misrepresentation alleged was made, any loss that the defendant suffers by being required to pay the balance of the deposits has not been caused by reliance on that misrepresentation. The loss flows from the defendant's decision to repudiate the contracts by failing to pay the balance of the deposits. That decision to repudiate was not taken because the units had not increased in size by 8.5m2 (that was not known at that time); rather, the decision was taken because the defendant was no longer prepared to take the risk that the s 96 application would be approved, because of what he knew about the setback of the buildings and the proposal, as he had been told, to widen the laneway. Compensation and orders under s 237 of the ACL can only be made if the loss occurred "because of the conduct of another person" who was, relevantly, engaged in in contravention of a provision of chapter 2, which includes ss 18 and 30.
This defence fails.

(2) Knowledge of the plans

The second basis upon which the defendant relied to resist the plaintiff's claim was that there had been unconscionable conduct by the plaintiff in staying silent about what the new plan showed in relation to the size of the apartments purchased by the defendant. As counsel for the plaintiff submitted, this aspect of the matter appears to be a continuation of the first misrepresentation claim by not disclosing alleged knowledge held by the plaintiff and its agent about the revised plans, that is, that the apartments were not to be increased by 8.5m2 in size.
The documentary evidence was that on 29 March at 1:02pm Mr Skaf sent an email to the defendant saying that he had just received the draft s 96 plans.
Although the defendant alleged in his email of 4 June 2018 that he believed the plaintiff would have been in a position to know what the new plans provided before the cooling off period expired on 27 March 2018, there was no evidence at all to show that the plaintiff knew about those plans and what they provided by the end of the cooling off period. The evidence from Mr Mohanna was that he did not receive the plans from the architect until after the cooling off period expired. He was not challenged on that evidence, nor was it put to him that he was aware before he received the plans from the architect of what was contained in them or that he was working with the architect on them.
Mr Skaf's evidence was, unaided by seeing his email of 29 March to the defendant saying that he had just received the draft s 96 plans, that he could not remember when he received them, but when he did get them the defendant was the first person contacted by him so that the defendant could go through the plans. When Mr Skaf was reminded of his email, he confirmed that he received the plans on that day, probably within an hour prior to sending the email to the defendant.
Mr Skaf was not challenged to suggest that he received the plans or knew of what was contained in them prior to the time he received them.
The defendant's submissions did not identify any evidence suggesting any knowledge in the plaintiff, either by Mr Mohanna or by Mr Skaf, in advance of those persons receiving the plans after the expiry of the cooling-off period. The defendant's submissions suggested that Mr Mohanna must have known because, the defendant asserted, he was working closely with the architect on the plans. In fact, there was no evidence of that at all.
To the extent that any other form of unconscionability is alleged, the evidence does not disclose that the defendant was in a position of special disadvantage. He was an experienced property investor, with a diploma in conveyancing, who had purchased units off the plan on a number of occasion previously.
There was no unconscionable conduct in relation to the revised plans.

(3) Coercion

The defendant's case is that, after the proceedings commenced, although the plaintiff knew it could not provide to the defendant what he wanted, being apartments with an extra 8.5m2, the plaintiff attempted to coerce the defendant into purchasing two properties without that extra area, or to defend the plaintiff's claim in court.
The claim depends upon the assumption that the plaintiff had been promised two apartments with an extra 8.5m2. I have found that no such promise or representation was made. On that basis alone, the claim fails.
However, even if there was a genuine dispute about whether or not a promise or representation to that effect was made, an offer such as the plaintiff made could not amount to coercion within s 50 of the ACL. That section provides: 50 Harassment and coercion (1) A person must not use physical force, or undue harassment or coercion, in connection with: (a) the supply or possible supply of goods or services; or (b) the payment for goods or services; or (c) the sale or grant, or the possible sale or grant, of an interest in land; or (d) the payment for an interest in land. Note: A pecuniary penalty may be imposed for a contravention of this subsection. (2) Subsections (1)(c) and (d) do not affect the application of any other provision of Part 2‑1 or this Part in relation to the supply or acquisition, or the possible supply or acquisition, of interests in land.
Coercion involves force or compulsion or threats of force or compulsion negating choice or freedom to act: Hodges v Webb [1920] 2 Ch 70 at 85-87; Australian Securities and Investment Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164 at [16]. The coercion need not be "undue": Australian Competition and Consumer Commission v Maritime Union of Australia (2001) 114 FCR 472 at [59]-[62], but cf. Australian Competition and Consumer Commission v McCaskey (2000) 104 FCR 8. However, coercion is a much stronger word than harassment: Maritime Union at [61].
Commencement of proceedings that are not vexatious, frivolous, baseless or an abuse of process cannot amount to coercion: Campbell v Metway Leasing Ltd (1998) ATPR 41-630 at p 40917; Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427; (2006) 236 ALR 665 at [75]. It must follow that a refusal by a plaintiff to negotiate after commencement of legitimate proceedings cannot amount to coercion. A fortiori, if a defendant is given a number of options, it cannot be said that there is a negation of choice or freedom to act.
In the present case, the defendant became liable, prima facie, to pay the balance of the deposits. He did not do so. Proceedings commenced. A settlement conference was held. As a result of that conference, the plaintiff gave the defendant three options. One of those options was to continue with the court proceedings. If that situation amounted to coercion, most or all offers of settlement of court proceedings could be said to amount to coercion.
It is significant also that the defendant accepted, in his lengthy email of 29 March that, if the issue between him and the plaintiff could not be resolved, he would be in breach of an essential term and he would have to face the consequences. Those consequences were that the defendant would have to defend his conduct in court. So far from that being a negation of choice, the plaintiff offered two alternatives, one of which was coupled with an offer to waive the legal fees incurred to that time, and to make any amendments to the plans which the defendant might reasonably request.
This claim is entirely misconceived.

(4) Section 55(2A) Conveyancing Act

Section 55(2A) of the Conveyancing Act provides: In every case where the court refuses to grant specific performance of a contract, or in any proceeding for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit with or without interest thereon.
Although the plaintiff initially took the position that the defendant was not entitled to claim for the deposit in the present proceedings because there was not "any proceeding for the return of a deposit", it ultimately accepted that a number of cases provided support for the applicability of the sub-section where a vendor was suing to recover the balance of the deposit, so as to avoid circuity of action.
In Socratous v Koo (1993) 6 BPR 97,448; [1994] ANZ ConvR 208; (1993) NSW ConvR 55-685 McClelland CJ in Eq said (at p 13,228): I have already made reference to s 55(2A) of the Conveyancing Act 1919. In terms, that provision only operates where a deposit has in fact been paid. But it may assume relevance in an action to recover an unpaid deposit or in a claim for damages for breach of an obligation to pay a deposit. In the former class of case, it would in my view be open to a purchaser sued for the amount of a deposit to raise as a defence a contention to the effect that if the deposit were to be paid the circumstances are such that the court would order its repayment to the purchaser on an application under s 55(2A). Such a defence would be available to avoid circuity of action. In the latter class of case, into which the claim for damages in the present proceedings falls, it would be open to a purchaser to rebut the proposition that the amount of the unpaid deposit should be included as an element in the damages suffered by the vendor, by raising a contention to the effect that if the deposit had been paid, and had been subsequently forfeited to the vendor, the court would nevertheless have ordered its repayment to the purchaser on an application under s 55(2A).
In Kylsilver Hamilton J said at [13]: It is submitted that that discretion cannot be exercised at all (at least in respect of the excesses over $1,000 per contract) as the deposits were not in fact paid. The plaintiff bases this argument on the words of the section. However, it concedes that the contrary was decided by McLelland CJ in Eq in Socratous v Koo (1993) NSW ConvR 55-685; and see Peter Butt, The Standard Contract for Sale of Land in New South Wales (2nd Ed, 1998) ("Butt") [9.105]. It says that I should not follow McLelland CJ in Eq's decision. However, in my respectful view, his Honour's decision was correct, for the reasons he gave, and I propose to follow it.
I am satisfied that the defendant brings himself within s 55(2A) to make the claim under that section.
In relation to the exercise of the discretion, Darke J said in Sydney Developments Pty Limited v Perry Properties Pty Limited [2016] NSWSC 515 at [52]-[53]: [52] It is not necessary to demonstrate special or exceptional circumstances in order to justify an exercise of the discretion under s 55(2A) (see Harkins v Butcher [2002] NSWCA 237; (2002) 55 NSWLR 558 at [77]; Havyn Pty Limited v Webster (supra) at [149]). However, a proper approach to the discretion must appreciate the legal context of the established nature of a deposit as an earnest of performance in conveyancing transactions (see Havyn Pty Limited v Webster (supra) at [150]-[151]). [53] As Santow JA stated in Havyn Pty Limited v Webster (supra) at [155]: For these reasons, I do not consider that there is anything controversial in the submission of the vendor that the grounds in support of an application to repay the deposit must be sufficient to warrant a departure from holding the purchaser to its obligations under the contract. Indeed, this goes to the "justice and equity" of the case, drawing on the observations of Street CJ in Eq in Lucas & Tait. That conclusion must be correct, if the notions of justice and equity conditioning the discretion are to have some meaning drawn from the purpose of a deposit and the circumstances in which it is forfeited. The purchaser must therefore do more than merely show that the deposit has been forfeited, and that it will thus result in a 'windfall' to the vendor as will usually be the case. The Court should not take an approach to ordering the return of deposits under s55(2A) which weakens the proper function of a deposit in providing a sanction so that purchasers treat the making and completing of contracts with due seriousness: Wilson v Kingsgate Mining Industries [1973] 2 NSWLR 713 at 735, Fraser v L O'Malley & Sons Pty Ltd [1975] 2 BPR 9133 at 9139-40. In so saying, I am not to be understood as putting a gloss upon the plain words of s55(2A), but merely highlighting the critical importance of a judge exercising the wide discretion according to its plainly beneficial purpose to consider 'justice' and 'fairness' in their proper context. See also the observations of Kirby J regarding the important role played by the payment of deposits in contracts for the sale of land in Romanos v Pentagold Investments Pty Limited [2003] HCA 58; (2003) 217 CLR 367 at [54].
The defendant submitted that what triggered the exercise of the discretion under s 55(2A) was that the situation he was faced with was a very unusual one (as he described it), and that what happened was not fair or just. The difficulty for the defendant, however, is that in the absence of his being able to establish that there was a misrepresentation, no basis is shown for the exercise of the discretion under s 55(2A) to justify an order for the return of the deposit. He was, as I noted earlier, an experienced property investor with a diploma in conveyancing law who, at the time of the hearing owned 11 residential units, and had purchased six units off the plan previously.
The evidence, particularly the emails, show that he was prepared to take a risk that the units would increase in size so that he would end up with units more valuable than the price he paid for them. Under the contractual arrangements, he had more than twice the statutorily provided time to reflect on his entry into the contracts and rescind if he wished to do so. He had all the information he needed at the time the cooling-off period expired to rescind. He knew by that time that the revised plans were not available as he had been told on 11 March that they would be. He had been told, and he had accepted, that he was buying the units "as is". His decision not to rescind before the expiry of the cooling-off period can only be seen as one that involved taking the risk that the hope he had would eventuate.
In his submissions, the defendant appeared to accept that. Having said that if Mr Skaf had not told him about the lane widening he would have paid the balance of the deposits, the following exchanges occurred during the defendant's closing address (T 227): HIS HONOUR: But that's not what happened. You were given information which caused you to think that you should not go ahead but you didn't think it in time. DEFENDANT: That's right. HIS HONOUR: You knew you had three hours before the contracts became unconditional and for whatever reason, you didn't make a decision in that time. DEFENDANT: That's correct, your Honour, yes, that's correct but what I'm trying to explain to your Honour is because of the whole situation with this being an unapproved - what I ended up getting into a contract for was something that is unapproved, it made me totally vulnerable to all these issues. Once I couldn't get a clause on 21 March into the contract to cover this risk, I started going crazy wondering about the 1 metre offset, the 2 metre offset, the adjoining buildings, the laneway being widened. It's all because I was made vulnerable. HIS HONOUR: But you had then five and then six days to decide to get out of the contract. DEFENDANT: No, this - this particular issue didn't occur until 2pm, Tuesday afternoon. HIS HONOUR: No. But you said you became vulnerable on 21st when you were not-- DEFENDANT: That's true-- HIS HONOUR: --even the right to have a s 96 clause - as I'll call it - in the contract. DEFENDANT: That's right, that's right. HIS HONOUR: You then had five and then six days to avoid this contract but you chose not to do so. DEFENDANT: That's right, your Honour, you're correct and that comes back to my submissions, what I'm saying, there were so many positive factors, where I believed everybody, I trusted everybody. HIS HONOUR: But that's the risk you took, you see? DEFENDANT: It is, your Honour, yes, it is. I accept that.
He indicated he did not pay the balance of the deposits, not because he had ascertained that the units in the revised plans would not be increased by 8.5m2, but because, by the time he made the decision not to pay, he was sufficiently sure in his own mind that the s 96 application was unlikely to be approved. It is significant that he made no assertion about the alleged misrepresentation being the reason for his decision not to pay until after the proceedings commenced, although the revised plans were available from 29 March.
In the absence of a misrepresentation or some other unconscionable conduct by the plaintiff, no basis is demonstrated for the defendant to be relieved of his obligation to pay the balance of the deposits by reason of s 55(2A) of the Conveyancing Act.

Conclusion

Accordingly, the plaintiff is entitled to a judgment in an amount to be determined. I order that the plaintiff bring in short minutes of order to quantify the judgment.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 March 2019

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