Byers, P.C. & Ors v. Doretea Pty Ltd [1986] FCA 593

Bu1lders' Reqistration and Home-owners' Protection Act 1979 (Q.), ss,53(2), 55(1)

Building Units and Group Titles Act 1980 (Q.), s.9(8)(b)

Pamela Carlotta Byers & Ors. v. Dorotea Pty. Ltd. Qld G151 of 1984

IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G151 of 1984 GENERAL DIVISION )

BETWEEN: PAMELA CARLOTTA BYERS AND HUGH KIRKPATRICK BYERS

AND: PAMELA CARLOTTA BYERS AND HUGH KIRKPATRICK BYERS

Second Cross-Respondent AND: BYERS HOLDINGS PTY. LTD.

JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 16 DECEMBER 1986 WHERE MADE: BRISBANE

The respondent pay to the first applicants the sum of seventeen thousand eight hundred dollars ($17,800).

The respondent pay to the second applicant the sum of nine thousand three hundred dollars ($9,300).

The respondent pay to the third applicant the sum of fourteen thousand six hundred dollars ($14,600).

The respondent pay the applicants' costs of and incidental to the proceedings to be taxed.

Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

QUEENSLAND DISTRICT REGISTRY ) QLD G151 of 1984 GENERAL DIVISION )

BETWEEN: PAMELA CARLOTTA BYERS AND HUGH KIRKPATRICK BYERS

AND: PAMELA CARLOTTA BYERS AND HUGH KIRKPATRICK BYERS

First Cross-Respondent AND: CHERYL ANN BYERS Second Cross-Respondent

These three sets of applicants seek to escape from contracts to purchase units at the Gold Coast, relying on ss.52 and s.53A(1)(b) of the Trade Practices Act, and also on claims

under the general law. The first applicants are husband and wife,

the second applicant is their married daughter, and the third applicant is a family company. There is a cross-claim for

The misrepresentations relied on are partly oral and are said to have been made nearly six years ago by a Mr. Ian McLeod on behalf of the respondent. I am not satisfied that Mr. McLeod had in truth any specific recollection of the conversation in question. His lack of recollection is fairly evident from a perusal of the transcript but was even more so from his manner of giving evidence. The recollections of the witnesses called for the applicant are also much dimmed by the passage of time, as well as being influenced to some extent by a desire to assist the applicants' case, and I have had considerable difficulty in determining whether to accept their evidence. What they attribute to Mr. McLeod 1s, in substance, uncontradicted except in a formal

sense; all he could really tell me was that he could not have made

the statements attributed to him because they were not in accordance with his practice, and would not have been true. Nevertheless, it 1s I think clear that I am at liberty to reject

the applicants' evidence as to the representations if not

The statement of claim says, and it is common ground, that the applicants severally agreed to buy units ina building

called "Boulevard North" in August 1981. The pleading alleges

in substance that McLeod represented to the first applicants, on

or about 16 January 1981, at a time before construction began:

(a) that it was intended that the building contain an internal heated swimming pool;

(b) that it was intended that it contain the features set out in a certain brochure;

(c) that Boulevard North would be a superior building to, and offer better facilities than, Boulevard Towers, another building close by which was at the time of the representations substantially complete;

(d) that the design, construction and finish of Boulevard North would be of a high standard and superior in every respect to Boulevard Towers;

(e) that there would be a substantial lobby on the ground floor of at least the same size as that in Boulevard Towers.

It is common ground that there was never any intention to have an internal swimming pool, contrary to the assertion 1n a brochure which was tendered. The applicants' witnesses said such a brochure was produced at a meeting on 16 January 1981, but that was denied by McLeod. In support of the denial, documentary evidence was produced to show that the brochure could not have been in existence in January 1981. That evidence, however, 1s inconclusive and I accept that the brochure, Exhibit 2, was produced to the first applicants as alleged. (It should also be mentioned that the terms of the letter Exhibit 4 suggest that the respondent's case that the first brochure was not used is false.) It immediately follows that one allegation of making a misleading statement is made out, and the only question is whether that constituted an inducement; that requires more detailed

It was also common ground that, speaking generally,

Boulevard North was not a building superior to Boulevard Towers in which some of the applicants had bought units; the internal dimensions of its units were significantly smaller, its ground floor lobby was much smaller, and its finish was of much the same standard. There is, however, a dispute (in the rather limited sense mentioned above) as to whether any representation comparing

the two was made and, of course, there is also a dispute on the

question whether any such statement constituted an inducement.

An important factor in the case, of assistance to the respondent, 1s that the contracts for sale were signed about the peak of the Gold Coast unit boom which, as is well known, took the sale prices of units to unrealistic levels. The applicants did not purport to rescind until 26 January 1983, well after it had become clear that the market had slumped. The respondent argued that the applicants had simply bought in the excitement of a rising market, without having any real concern as to the particular qualities of the units purchased and had rescinded, not

because of any disappointment with the units as built, but because

I am inclined to think that the slump in demand for units was a factor, and an important one, in the applicants'

decision to rescind. However, that is not necessarily an answer

It is to be noted, at the outset, that the applicants are from Sydney and had for that reason less opportunity to

observe the progress of the building than would local residents. The first applicants came to McLeod's office on 16 January 1981 as satisfied customers; that is, they had already purchased two units in Boulevard Towers, a neighbouring building. Those units had been sold to them by one Duncan, a business associate of McLeod,

and they had proved satisfactory, not least in that their value

The first applicants had bought into Boulevard Towers with the intention of leasing one unit out permanently and the other casually; they intended to use the latter for their own holidays, also. They were not, and never have been, dealers in real estate. They were accompanied to McLeod's office, however,

by their friends Mr. and Mrs. Perez, who at relevant times traded

The applicant Mrs. Pamela Byers seemed to me an imprecise witness, and Ido not think she had avery good recollection of the conversation in January 1981. She said, and I accept, that the party was given two copies of the brochure, Exhibit 2. She said there was discussion about "how beautiful" the units "were going to hopefully look", and McLeod said that there was a "really excellent architect". Mrs. Byers said that the units in Boulevard North would be much more expensive than those in Boulevard Towers but that she was, in effect, tempted by the thought that the new units were to be "much more luxurious". She attributed to McLeod the expression "Oh, they are just bigger

and better". She described McLeod as having "given us_ such

glowing reports about the units", and that McLeod had been "giving

us the impression of luxury and the size of the units".

If the matter depended only on the evidence of Mrs Byers, it would seem to me wrong to find for the applicants. Although she was a guileless witness, she ieft me with no confidence that she had any clear recollection other than of an

Mr. Byers aiso seemed to me an honest witness, but I think his recollection was fairly poor. He said that he looked at the brochure which was presented to him, noticed there were no measurements, and "asked Mr. McLeod whether these units compared with Boulevard Towers". According to Byers, McLeod said, "Ali I can tell you is they are bigger and better". Byers went on to explain that he was concerned about that point, because the prices asked were very much higher than had been paid in Boulevard Towers. I think the expression "these units" was used as equivalent to "this unit project"; although the lobby, about which the applicants complained strongly, as being of very mean size, is not aunit but part of the common property, in my view Byers reasonably took the representation as relating to the common areas

of the new building as well as the units strictly so-called.

There were reasons other than statements by McLeod which

might have explained the Byers' willingness to pay much more. Not only had the market risen, but Boulevard North had a better aspect than Boulevard Towers. Further, an aspect of Byers' evidence

which shook my confidence in his recollection was that he did not

recall there being any discussion, after the contracts were made, about a request that the vendor let them proceed to purchase one unit only, whereas the correspondence clearly shows that that subject was raised. Nevertheless, I am satisfied to the requisite standard that Byers was given to understand that the new units would be bigger and better, whereas the respondent had in truth no

The second applicant 1s the first applicants' daughter and has married since January 1981. She did not have any conversation with McLeod. She appeared to me to have a better recollection of the circumstances than either of her parents, and gave evidence that in early 1981 her parents persuaded her that 1t would be a good idea to buy a unit in Boulevard North, as they knew she was interested in having an investment. She was then living with her parents, working and earning, but proposed to borrow money from the Commonwealth Bank to effect the purchase. The second applicant's evidence was to the effect that she was induced to buy by information conveyed to her by her parents, including that "these units in Boulevard North would be more glamorous and bigger, and just better, overall". I accept that she was told that by her parents, and it appears to me unlikely that she would have been so told unless they had obtained the information from McLeod; the brochure does not make any comparison

Mr. and Mrs. Perez both gave evidence in support of the applicants' case. Although friends of the applicant, they had no

financial interest in the outcome of the case. They had also

bought units in Boulevard Towers through a company, Labrova Pty. Ltd. Mr. Perez appeared to me quite vague about the conversation in McLeod's office, but I accept that he recalls that McLeod mentioned prices in the new building, and explained the increases on the basis that "these units were going to be bigger and better". Perez did not claim to have a precise recollection of

Perez said that he and his wife had not, in the past,

bought more than one unit at a time. On this occasion they decided to buy a whole floor (three units). Catherine Perez, his wife, gave evidence to similar effect. She said that on being

told by McLeod that the prices would be considerably more than in

"This is when he indicated that they would be bigger

and better and more sumptuous ... at that point I think I might have really got a bit carried away, and I turned to my husband ... and I sort of urged

I found Mrs. Perez a convincing witness and believe that her

Mr. Lennon Q.C., senior counsel for the respondent, put

the case that there was no comparison made between the two buildings and that all McLeod did was to show Mr. and Mrs. Byers and Mr. and Mrs. Perez plans of the then proposed new building. He argued that there was no necessity for McLeod to make any effort to sell the units and that they would sell themselves. It

appears to me probable McLeod could have sold the two floors in

question (12 and 13) to someone else without making any representations that they would be "bigger and better". However, Iam satisfied to the requisite standard that Mr. and Mrs. Byers would not have paid "holding deposits" on units inthe new building had they not been told that their additional price would be justified by their being "bigger and better"; nor would they have advised their daughter, the second applicant, to buy if they had known the truth, namely that the new units were to be significantly smaller in internal dimensions and (a matter which I find was quite important) had a lobby only a fraction of the size of that in Boulevard Towers. It 1s true that, because the site of the new building was much smaller, a representation of the kind made by McLeod could not have been taken to refer to land size. It could, however, have been and Iam satisfied was, taken to refer to the sizes of the units and the public areas of the

It was suggested that if I were satisfied, as I am, that the considerable increases in price were explained on the basis that the new units would be bigger and better, that was merely a

"puff". In other circumstances that might be so, but here the

statement was intended to, and did convey, a clear and wrong impression, namely that the new building was to be ona grander

scale than the old. See MacFarlane v. John Martin and Co. Ltd.

£19771 A.T.P.R. 40-034 ("top quality") and Charies Hunt Ltd. v. Palmer £19311 2 Ch. 287 ("valuable business premises"). It is true that a representation that new units are to be "bigger and better" than an existing building is not necessarily a statement

which is easily able to be said to be true or false. In the

particular circumstances of this case, however, that difficulty does not arise; it was not argued that in any sense the new units were bigger or better than the old. The first applicants intended to replace their units in the old building by those they proposed to purchase in the new one, at a much higher price; I am satisfied they would not have formed that intention had they not been induced to think that Boulevard North was to be markedly superior;

To this point, I have arrived at the conclusion that the applicants were misled insofar as there was a written representation that there was to be an indoor swimming pool, and an oral representation that the new units would be bigger and better than Boulevard Towers. I am satisfied that these representations helped to induce the applicants to pay, as they did, a "holding deposit" on the day in question, in respect of each of the three 13th-floor units. Ido not think there is anything worthy of discussion in the respondent's point that there

after the representations, and the question arises whether the

contracts were induced by the matters I have mentioned.

As to the pool, a point requiring consideration is that on some date, which cannot be precisely fixed, McLeod sent the applicant an altered brochure which had the reference to the indoor heated swimming pool crossed out. It was accompanied by a

letter (referred to above) reading in part: "Please note a change

to brochure, there will now be a full-sized tennis court." Mrs. Byers received the brochure, noted the change in the size of the court and told the second applicant about it. She also wrote the word "full" over the printed word "half" on the tennis. court

The reference to the pool was crossed out in the brochure in such away as to make it impossible to read the original print. Nevertheless, it was obvious that some feature had been omitted, and a comparison with the first brochure (which Mrs. Byers still had) would have disclosed that it was the pool which was gone. Further, the contracts themselves, on a careful examination, would have caused the applicants to conclude that

No explanation was advanced by the respondent as to how it came about that the brochure originally mentioned an indoor pool; it was admitted that there was never a proposal to have one. Nor was 1t explained why the letter accompanying the amended brochure drew specific attention to the increase in the size of the court, but not to the disappearance of the pool. On the whole, I am satisfied that the original representation in the first brochure continued to induce the applicants, who simply did

not notice the change. In Neilsen v. Hempston Holdings Pty. Ltd.

(1986) 65 A.L.R. 302 at p.308 et seq., the question whether a failure to detect that a statement made is misleading precludes the granting of relief is discussed; I adhere to what was there

There was some debate at the hearing as to what sort of connection must be shown between the statements complained of and the damage. In my view, that question is settled by the decision of the Full Court in Jones v. Acfold Investments Pty. Ltd. (1984) 6 F.C.R. 512 at pp.522, 523 - i.e. the applicants must show, as under the general law, that they acted upon the representations 'made. As to the onus in fraud cases, that view was reaffirmed by the High Court in Gould v. Vaggelas (1985) 157 C.L.R. 215. An important basis of the respondent's argument that the representation as to the pool could not have been inducing was that, as was alleged, a third brochure (Exhibit 5) was sent to the applicants with the draft contracts for execution. However, the evidence failed to show that, and I accept that the third brochure

did not come to hand until well after the contracts were signed;

The applicants were confronted with a = substantial obstacle in that they inspected the building as it progressed on a number of occasions, but did not complain to the respondent of any deficiency in it. Further, they asked for an extension of time to complete, but rescinded instead of doing so. It was argued that

in those circumstances, their rescission came too late.

An important aspect of this part of the case is to determine the dates of the various inspections and the stage at

which construction had arrived on those dates. The evidence is

fairly vague, but I derived considerable assistance from the

The first inspection, as I find, took place in November 1981 when Mr. and Mrs. Byers noticed that the rooms in the units appeared small, but were unable to observe the lobby area. They made a second inspection in 1982 when the building had advanced further; I think that took place about the middle of the year, and after it Mr. Byers consulted solicitors about the size of the units. They in turn spoke to Mr. McLeod, who gave approximate sizes. After that, on the instructions of the applicants, the solicitors engaged a surveyor, Mr. P.I. Karhula, who reported on

14 September 1982 as to the measured size of the three units.

There 1s some uncertainty as to whether there was a third inspection in 1982, but I think there was not. On 25 November 1982, the solicitors who had been engaged wrote to Mr. Byers asking for funds to obtain an opinion from senior counsel on the "changes in design features", which opinion Byers had requested. At that date, the solicitors for the respondent, as the correspondence shows, had no intimation that settlement was in doubt and were expecting it to occur on 20 December 1982. On 15 December 1982, the then solicitors for the applicants asked the solicitors for the respondent to forward the declarations in Form F (documents required by the Stamp Act) and the memoranda of transfer to enable them to be stamped prior to settlement, and the latter solicitors complied; on the same day, they set out the sums

to be paid on settlement, making adjustments for rates and so

On or about the due date of settlement, the solicitors for the applicants, on their clients' instructions, asked that the time for settlement be extended to 28 January 1983 on the basis that interest accrue at the rate of 16% per annum on the balance of settlement moneys. That was agreed to. On 7 January 1983 the then solicitors for the applicants wrote to the solicitors for the respondent a "without prejudice" letter informing them that the applicants would be prepared to settle the transaction at specified reduced prices; for example, the second applicant's unit was to be reduced in price from $93,000 to $73,000. That proposal was not accepted. On 20 January 1983, the solicitors for the respondent wrote to say that their client insisted on settlement of the matters on 28 danuary 1983. About that time, the applicants engaged new solicitors, who wrote on 26 January 1983 purporting to rescind. The grounds of rescission taken related only to the absence of the pool and the size of the foyer; however, the earlier correspondence clearly shows that the applicants had complained to their solicitor about the size of the

I find that, in accordance with the applicants' case, the ultimate decision to rescind was taken because on the final inspection of the then completed property Mr. and Mrs. Byers discovered that the foyer was very small - a point not previously noticed. It was the "last straw". Although the foyer is not itself a "unit", its very cramped design is one of the matters which falsifies the representation that "these units" were to be

It was argued on behalf of the respondent that the request for an extension of time amounted to an affirmation. There is authority in support of that proposition: Arvier v. Watson (1888) 14 V.L.R. 771; see also the notes to Stonham's

As I understand the evidence of Mrs. Byers on the point, the sequence of events was that the final inspection took place before the original due date for settlement (20 December 1982). A

decision was then made by the applicants to endeavour to "get out of the units" and the extension of time was requested to enable

investigation in that direction to be further pursued.

It is not suggested in the applicants' case that they gained any further knowledge after the extension was sought and obtained. In my view, under the general law, the request for extension would in those circumstances have amounted to an

affirmation, precluding a right of rescission. However, it is my

opinion that the right to grant relief under the Trade Practices

Act is not necessarily brought to an end by an affirmation of the contract. That point is further discussed at the conclusion of these reasons. I should add that I have not found it necessary to

It was argued for the applicants that, apart from the

Trade Practices Act, their rescission was good under the general

law. It appears to me desirable to determine that point, in case

the conclusion that there was an affirmation is erroneous.

An answer made to the applicants' claim, so far as it

relied upon misrepresentation, is clause 8(c)(i) of each contract:

on any representations by the Vendor, the Vendor's Agent or any other person or persons or corporation in and about entering into this Contract other than as set out herein, and that the conditions and stipulations hereof constitute the only agreement between the Purchaser and the Vendor."

It will be noted that the clause has two distinct parts:

the first 15 an admission of fact, and the second is an agreement

as to the content of the contract. The latter does not affect the present issue, as it 1s not contended by the applicants that the agreement includes any condition or stipulation not set out in the formal writing. The first part of the clause, however, poses a

There are decisions of the Queensland Supreme Court, mentioned below, which unequivocally favour the respondents. It was contended, however, that these decisions are incorrect and

In my opinion, the relevant defence is estoppel and that species of estoppel which is sometimes called estoppel by convention. In the well-known passage in Thompson v. Palmer (1933) 49 C.L.R. 507 at 547, Dixon J. referred to it as one of the

bases of estoppel in pais. His Honour began by explaining that:

"The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment."

One of the reasons his Honour gave for the estopped party's being "required to abide by the assumption" was "because it formed the conventional basis upon which the parties entered into contractual or other mutual relations ..." His Honour applied those remarks

in acase of alleged estoppel by convention, Grundt v. Great

Boulder Pty. Gold Mines Ltd. (1937) 59 C.L.R. 641 at 676, which

was mentioned by Lord Denning M.R. in Amalgamated Investment and

Property Co. Ltd. v. Texas Commerce International Bank Ltd. [£1982]

1Q.B. 84 at p.121. Lord Denning M.R. there emphasised that the doctrine 1s rooted in considerations of justice, as of course did Dixon J. Eveleigh L.d., at p.126, and Brandon L.J., at p.131, also treated the case before them as one of estoppel by

One thing which is clear about this sort of estoppel is that it is mot created by every admission in a_ contract. According to Lord Maugham in Greer v. Kettle £1938] A.C. 156 at 171, there is a "well known rule of the Chancery Court in regard to a receipt clause in a deed" that it does not effect an estoppel if the money has not in fact been paid. That rule has been applied by the High Court in Petersen v. Moloney (1951) 84 C.L.R.

91 and again in Mackay v. Brice (1979) 25 A.L.R. 597 at p.603.

In the judgment of Lord Maugham just referred to, there

is discussion of the doctrine of estoppel by deed, said in the

work by Spencer Bower and Turner, "Estoppel by Representation", (3rd Ed. p.158) to be a sub-class of estoppel by convention. Lord Maugham, speaking of the "principle that a solemn and unambiguous statement or engagement in a deed must be taken as binding between parties and privies" asserted that the position in equity 1s

different from that at law. He thought it clear that:

",.. in equity a party to a deed could not set up an

estoppel in reliance on a deed in relation to which there is an equitable right to rescission or in reliance on an untrue statement or an untrue recital induced by his own representation, whether innocent or otherwise, to the other party."

Lord Maugham treated the rule about the receipt clause in a deed, applied in the High Court cases just mentioned, as a "good

It appears to me that there is a significant difference in principle between an admission of fact in a contract relied on as creating an estoppel, and a contractual promise expressly excluding a particular defence, In the latter case, the excluded defence may not be given effect to by the Court without its sanctioning a breach of contract. It is partly for that reason

that I cannot accept that the decision of the High Court in Life Insurance Co. of Australia Ltd. v. Phillips (1925) 36 C.L.R. 60 is

decisive of the present point, although apparently thought to be so inthe Queensland Supreme Court decision referred to below,

Dorotea Pty. Ltd. v. Christos Doufas Nominees Pty. Utd. £19861

Qd.R. 91. In Phillips' case, a "canvassing agent" for an insurance company made a representation as to the effect of a

proposed transaction and two of the judges in the High Court

thought it could not be relied on against the insurance company

because of a clause in the proposal reading as follows:

"IT also agree that no statement, promises or information made by or given by the person canvassing for or taking this proposal, or by any other person, shall be binding on the Company or affect its rights in any way whatsoever, except insofar as such statements or promises are

contained in the printed tables of the Company or included in writing on this proposal."

Isaacs J. appeared to think that it was the inferior status of the

"T am far from saying that that clause would be read and applied so widely as to shield the Company if a superior responsible officer representing the Company misled the insured. But in such a case as the present, I think 1t fairly applies."

Starke J. at p.87 referred to the clause and to the fact that there was no fraud, but did not say anything as to the status of

the representor, nor refer his view to any wider principle.

It 1s thus seen, in my respectful opinion, that Life

Insurance Co. v. Phillips is not decisive of the point for two

reasons: Phillips' case dealt with a contractual promise and not amere admission of fact; secondly, the representor here was one

of the owners of the vendor company and not an inferior agent.

Were the matter free from direct authority, I would he inclined to hold that the clause constituted no defence to a claim to rescind based upon misrepresentation, fraudulent or otherwise.

Applying the test set out in Thompson v. Palmer and reiterated by

Dixon J. in Grundt's case, the part taken by the applicants in occasioning the adoption of the assumption was not such as to render a departure from it unjust. What the applicants did was to sign a standard printed form of contract prepared by the vendor containing the clause; as they were induced to do so by a misrepresentation, I find it difficult to see any injustice in

I note also the general unwillingness of courts exercising equitable jurisdiction to allow claims to rescind land sale contracts, based on innocent misrepresentation, to he

defeated by contractual provisions, exemplified by Laurence v.

Lexcourt Holdings Ltd. £19781 1 W.L.R. 1128 and Walker v. Boyle C1982] 1 All E.R. 634.

But the applicants were faced with a number of adverse decisions of the Queensland Supreme Court, of which the most

recent appears to be Dorotea Pty. Ltd. v. Christos Doufas Nominees

Pty. Ltd. £19861 2 Qd.R. 91. There Carter J. regarded himself as bound by a decision of the Full Court of the Supreme Court in

Brisbane Unit Development Corporation Pty. Ltd. v. Robertson

£1983] 2 Qd.R. 105. According to the judgment in that case, the point went by concession, but as Carter J. pointed out, the Full

Court clearly agreed that the concession was correctly made.

Although my mind has fluctuated, I have come, in the end, to the opinion that I should apply the views of the Queensland Supreme Court. It seems to me probable that the matter

is regarded as practically settled in this State, and it would he

inconvenient to act on a different opinion. Thus, while by no means convinced that it is in accordance with the principles laid down by Dixon J. and referred to above so to hold, I act on the basis that the clause is effective to defeat a claim based upon

It should be added that it is clear enough that the

Clause is ineffective against a claim under the Trade Practices

Act. For reasons akin to those discussed in Beckford Nominees

Pty. Ltd. v. The Shell Company of Australia Limited (unreported, 1

October 1986) the applicants cannot, in my view, be prevented by

estoppel by convention from asserting that there was a breach of

s.52 of the Trade Practices Act. See also Petera Pty. Ltd. v.

E.A.J. Pty. Ltd. £19851 A.T.P.R. 40-605 and Dibble v. Aidan Nominees Pty. Ltd. £19863 A.T.P.R. 40-693.

As a separate branch of their case, the applicants pleaded that there were terms of each contract that the building would be designed by an architect and 1t was not' so designed. That, it was said, was a sufficiently serious breach to justify

Although the contrary was argued, it seems to me fairly clear that the term pleaded can be extracted from the contract. The property sold is defined in clause 1 as being "the estate in fee simple in the said unit" and the expression "said unit" is

defined in recital (c) as being "that part of the said building

hereinbefore described as the unit sold". The expression "said building" is a reference back to recital (b) which mentions that the vendor intends "to construct a strata titled building ... on

the said land in accordance with plans and specifications prepared

Thus, tracing the matter through, the definition of "said unit" is seen to incorporate a description of a certain building, namely one constructed in accordance with plans and

If it matters, the contract also appears to contemplate

at least a degree of supervision by an architect: clause 3(a).

It 1s no objection to the applicants' case that the definition of the property sold has to be filled out by reference to the recitals. The extent to which a recital may be used in ascertaining the terms of a contract depends upon what it says:

Joseph Read Pty. Limited v. Schultz (1949) 49 S.R.N.S.W. 231,

Ansett Transport Industries (Operations) Pty. Ltd. v. The

Commonwealth (1977) 139 C.L.R. 54 at pp.73, 101 and 102.

The respondent called an architect, Mr. G.R. Barnes, apparently to prove that he had prepared the plans and specifications. It turned out that he did not and McLeod gave evidence, which I accept, that the building was designed by "Ron Frankland and Associates", for a fee of one-and-a-half percent of the cost of the building. Mr. Barnes was perhaps embarrassed by

having signed the plans which went to the local authority, as

their author and seemed anxious to convince me that he had participated extensively in the building design. I find that his position in substance was that he acted principally as an architectural draftsman, working mainly in Frankland's office. The work which he did no doubt included some design, but it was Frankland who had the overall responsibility, as the superior of ane Hardy, who in turn oversaw the architect's work. A sign of the architect's status was that he did not have contact with the client but took his directions from Hardy. Another was that he was paid (by Frankland) remuneration which he thought was "in the order of $7,000 - $9,000". On the figure which was given to me as the cost of the building, then, Barnes was paid by his "client" Frankland about a fifth of one percent of the cost for the

drafting work which he did - clearly not an ordinary architect's

The proper construction of the contract is plainly not that the plans and specifications are to be prepared by an architect in the sense that he must do all the work himself. The expression "prepared by the vendor's architect", however, contemplates that the vendor will have engaged an architect by whom or under whose supervision the plans and specifications will

be prepared; that did not occur. I note that Exhibit 18, the

agreement for the construction of the building, and Exhibit 24, the minutes of a meeting of "unit-holders" - being apparently the syndicate which arranged the project - support the view just

provisions which may be generally described as escape clauses for the vendor. None of them is relied on by the respondent in connection with the term presently being discussed. Most of the relevant authorities in this area concern contracts in which there is a clause providing for compensation for misdescription;

unusually, here the point depends on the general law.

It has often been said that at common law, any difference between the land described ina contract of sale and

the land proffered entitled the purchaser to rescind: e.g.

Travinto Nominees Pty. Ltd. v. Vlattas (1973) 129 C.L.R. 1 at p.27

"Where there was only a slight difference, the Courts of Equity began to interfere and introduced the principle of compensation for deficiency ..."

On the other hand, authorities are to be found in which it is denied, expressly or otherwise, that there 1s any difference in this respect between contracts of sale of land and any other

contracts: e.g. Torr v. Harpur (1940) 40 S.R.(N.S.W.) 585 at

p.594. In the leading case of Flight v. Booth 131 E.R. 1160

itself, Tindal C.J. appeared to regard the rule he there laid

down, which would seem to require in this instance that the applicants show that they "might never have entered into the contract at all" but for the misdescription, as not depending on

the presence of the compensation clause which was present in the

However, the view that contracts for sale of land have special features, one of which is that "a purchaser may have a right to rescind ... extending to deficiencies between promise and performance which would not be, in the case of other contracts, such as to enable him to treat himself as discharged from the

contract has powerful authority behind it: see per Walsh

JA. in Beard v. Drummoyne Municipal Council (1969) 71

S.R.(N.S.W.) 250 at p.265; Mason J.A. at p.267 agreed with his Honour's reasons. It would perhaps be convenient if the rule were otherwise and if contracts for sale of land were, in this respect, assimilated to contracts of other kinds, but it appears to me that the weight of authority 1s in favour of the existence of the distinction: see also the discussion in the New Zealand Court of

Appeal in Southland Investments Limited v. Public Trustee [1943]

N.Z.L.R. 580, especially at pp.631, 632 per Smith J. and

Rutherford v. Acton-Adams £19151 A.C. 866 at p.870.

In Chan v. Dainford Ltd. (1985) 58 A.L.R. 623 at p.625,

the High Court pointed out that in such a case as this there is at the date of contract "no land which could be the subject of an immediate sale". But it was there held that the expression "a contract for the sale of land" within the meaning of the definition of "instalment contract" in s.71 of the Property Law Act 1974 (Q.) includes a contract for the sale of a unit made before construction of the building - i.e. includes such a

Although this sort of contract, if completed, involves a

dealing with those rights which are defined by the Building Units

and Group Titles Act and not with rights known to the general law,

and although the High Court decision I have mentioned dealt with the meaning of "contract of sale of land" in the context of another statute, it is in my view consistent with the Court's decision to treat the contract in question here as if it were one for the sale of land under the general law. On that basis, the description of the unit sold as being (in substance) one in an

architect-designed building must be taken to be a difference in

description of such a kind as would, under the common law, have entitled the purchaser to rescind. That principle 1s said by Menzies J. to have applied to "any difference, however trivial", see Travinto Nominees at p.27; here the difference is by no means trivial, as may be deduced from the fact that real estate agents commonly trouble to include, in brief descriptions of property offered for sale, the fact that a building is architect-designed. Purchasers may think that in an architect-designed building there is a lessened risk of its being such as to contain features of the kind which attracted vigorous criticism from Mr. Kirkegaard in this case. It 1s no doubt possible to treat the plans, not the building, as having been described; in my opinion that 1s too

The next question is whether the equitable principle under which deficiencies of this sort would not necessarily debar a decree of specific performance can apply in favour of the respondent. It would be practically impossible to assess an amount of compensation; cf. Rudd v. Lascelles £1900] 1 Ch. 815. Further, it does not appear that the equitable principle can apply where "the misdescription has been wilfully introduced into the

contract by the vendor in an attempt to make the land appear more valuable than it is": see Mr. Butt's article in 57 A.L.J. 93 at p.97. Here, as it seems to me, there is no reason to assume that R.H. Frankland and Associates Pty. Ltd., which was engaged by the vendor to, and did, design the building, was thought by it to be an architectural company. The forms of contract were apparently

In exercising its discretion to determine whether to grant a decree of specific performance despite the misdescription,

a court would, in my view, be entitled to take into account other circumstances disclosed by the evidence and connected with the same point. The pretence as to the source of the design was carried through to what, from the practical point of view, is a

more critical matter. Under the Building Units and Group Titles

Act, s.9(8)(b), it was necessary that "an architect within the Meaning of the Architects' Act 1962-1971" certify that "the building has been substantially completed in accordance with plans and specifications approved by the local authority, or a designated officer of the local authority, or, where the building has not been constructed under the supervision of an architect, of a building surveyor ..."; the implication appears to be that the architect cannot certify unless he has supervised. Where such a certificate 1s to be given in respect of a reinforced concrete building, an architect could not give it unless he had made himself aware, for example, whether the steel was placed as specified. Although Mr. G.R. Barnes, the architect I have

mentioned, faintly suggested that he did some supervision, he

plainly had no such knowledge of the construction of the building

as to be able to give the requisite certificate; he merely made an assumption. McLeod gave evidence that the construction was supervised by "Ron Frankland and Associates" for a fee which was, he thought, three-quarters of a percent of the cost. Presumably the (unidentified) person who did that work, had he been an architect, would have been able to give the requisite certificate. Perhaps to save cost, neither the contractual requirement that the

plans and specification be prepared by an architect, nor the

statutory requirement as to certification by an architect, has in

I am conscious of the fact that a degree of deception as to the extent of involvement of qualified architects or engineers is sometames said to have become almost accepted practice in relation to buildings of this sort. However, 1t was not suggested to these applicants that they were aware of what was afoot in this

It is my opinion that in the circumstances of this case, including that just mentioned, the respondent would have been denied specific performance on the ground of misdescription - i.e. that they contracted to sell a unit ina building said to be architect-designed, knowing that it was not. I should add that even if the statement that "any difference, however trivial" was fatal at law is incorrect, the misdescription here would have been too substantial to permit of the granting of relief under the

The applicants say that the building in question had to be constructed, under the contract, by a registered builder and it was not so constructed. The implication sought to be made was one

of law; under s.53(2) of the Builders' Registration and

"(2) A person who 1s not a registered builder shall not -

(b) perform building construction work for another whether pursuant to a contract or not;

(c) tender for or offer to perform building construction for another;

(d) enter into a contract to perform building construction for another ..."

There follows an exemption which appears irrelevant. Exhibit 18, an undated "construction management agreement", was tendered without objection "to establish that White Industries Limited is the builder" and JI infer from the absence of objection that the work was done under that document; it was not contended to the contrary and the case was argued on the basis that White Industries Limited had been engaged to erect the building. By the agreement, White Industries Limited, a Sydney company, undertook to perform various services such as calling tenders, directing contractors and so forth. However, it does not appear to have been contemplated by Exhibit 18 that White Industries Limited would by its own servants do any physical construction work. The

essence of its obligations may be derived from clause 3.01, under

which White Industries Limited was to enter into "direct contracts or agreements with direct contractors or suppliers as agent for its disclosed principal the Project Manager". That is, the intention appears to have been that White Industries Limited would fulfil the ordinary role of head contractor, but merely as agent.

"For the purposes of subsections (2) and (3) of section 53... a person who causes the performance of building construction shall be deemed to have

performed such construction unless 1t is shown that the building construction is or was performed by another under a contract other than a contract of service made by such person."

Although this is primarily an evidentiary provision, it throws light upon the intended meaning of the word "perform" in s.53(2). Prima facie, one who "causes the performance of building construction" is taken to have performed it. Here, I unfer that White Industries Limited, acting under Exhibit 18, caused the performance of the building work; it is not taken outside s.55(1) by the circumstance that, as between itself and the respondent, White Industries Limited acted merely as an agent. There isa reason for a lack of complete confidence in the inference; neither

side troubled to lead any evidence on the point (other than Exhibit 18) but I take into account that the precise course of

events was known to the respondent but not to the applicants.

Putting my interpretation in more practical terms, in my view s.53(2) catches a company performing what would ordinarily be

regarded as the functions of the head contractor, even if all the

"sub-contracts" it makes are made as agent for the owner of the

The evidence shows that White Industries Limited became registered under the relevant Act on 1 January 1984, and I infer

Mr. Harrison Q.C., senior counsel for the applicants, argued that it makes a practical difference whether the builder is

registered, because the Board established under the Builders'

Registration and Home-Owners Protection Act 1979 is given no power

to act in respect of unsatisfactory work unless the builder is

registered or relevantly exempted: see s.59. That appears to be

The contract expressly contemplates the construction of a building and the interest acquired by the purchaser is a unit in

the building to be constructed. In Staunton v. Wellington

Education Board (1909) 28N.Z.L.R. 449, Cooper 9g. implied a similar term to that contended for, in a building contract. That

case seems to have been approved by Monahan J. in Dean v. Gibson

C19587 V.R. 563 at p.571, in which his Honour suggested that a term that a necessary permit be obtained should be implied ina

contract to sell land and construct a building on it.

Here, in my opinion, it "went without saying" that the builder engaged by the respondent was to have the requisite legal

authority to perform the work, or, at least, was not to be

positively prohibited by law from doing so. It seemed to be

suggested in the course of argument that the point was a pedantic one because a registered subsidiary of the builder, P.D.C. Constructions (Queensland) Pty. Ltd., could lawfully have performed the work. The answers are two: there was no evidence that it had performed the work and the subsidiary was not itself

registered at the relevant time, as may be seen from an

examination of Exhibit 26. It is my opinion that there is to be implied the term contended for and that the matter is of sufficient importance to

Exercise of Discretion under the Trade Practices Act

For the reasons set out above, I have concluded that the respondent, through the agency of McLeod, has breached s.52 of the

Trade Practices Act by making statements which induced the

applicants to enter into the contracts. I have also concluded, however, that under the general law the applicants' rescission, regarded as being based on innocent misrepresentation, would be held unlawful, by reason that the applicants affirmed the contracts and also by reason of cl.8(c)(i) of each contract. I deferred consideration of the question whether, in exercise of the Court's jurisdiction under s.87 of the Trade Practices Act, that affirmation is fatal. In case I am in error in the conclusions

reached under the last two headings, I return to that point.

In my opinion, the power given by s.87 is wide enough to

justify an order that the deposits be returned. I am of the view

that in determining what relief, if any, should be granted on account of a breach of s.52 which has caused loss, the Court is not necessarily precluded by an affirmation. Here, the factual circumstances discussed under the last two headings may, in my view, be taken into account in determining whether, on the whole, 1t is fair to require the deposits to be returned on the ground of

Another consideration which points in the same direction 1s that, on the findings, the applicants would have been entitled

to damages for the breaches of s.52 of the Trade Practices Act, on

the basis indicated in Gates v. City Mutual Life Assurance Society

Ltd. (1986) 63 A.L.R. 600 at pp.607 and 609 - i.e. on the basis of the difference between the prices to be paid and the value of the units. It 1s true that not only has no such claim been made, but there 1s no evidence on which the damages could be assessed with absolute precision. But the units were resold very shortly after the settlement date, for losses of (respectively) $45,545.05, $40,268.10 and $18,751.11. If the contracts which I have held to have been induced by misleading statements had been completed, then approximately those sums would have had to be paid by the

respondent as damages, instead of being recoverable by it.

It remains to be added that the applicants have claimed interest on the deposits. There was some discussion as to my

power to award interest. While I am satisfied, for the reasons

given in Neilsen v. Hempston Holdings Pty. Ltd. (1986) 65 A.L.R.

302 at pp.311, 312, that I have power to award interest under 3.72

of the Common Law Practice Act 1867 (Q.), I do not propose to do

so. The principal reason is that a great deal of the considerable delay which has occurred between the occurrence of the matters complained of and their resolution may be laid at the door of the applicants; not only was there delay before they rescinded in 1983, but much additional delay occurred because they originally chose to litigate the matter in the Supreme Court and then changed the1r minds. I appreciate that these delays were, for reasons I do not trouble to set out, able to some extent to be excused, but nevertheless it appears to me that this is not a case in which

1. The applicants are entitled to succeed on the bases that -

(a) They were induced to enter into the contracts by misleading statements made in breach of s.52 of the

(b) The properties sold were misdescribed; no remedy would, therefore, have been available to the vendor under the common law, nor, in the circumstances of this particular

case, would the remedy of specific performance have been

(c) There was an implied condition that the builder, White

Industries Limited, would be legally entitled to perform

2. The applicants' case cannot succeed on the basis of innocent misrepresentation, both because of an exclusion clause in the contract and because the applicants affirmed with knowledge of the misrepresentation; however, it is open to the Court to order repayment of the deposits for breach of the Trade

(1) To the first applicants the sum of seventeen thousand eight

(ii) To the second applicant the sum of nine thousand three

(iii) To the third applicant the sum of fourteen thousand six

It will also be ordered that the cross-claim be dismissed and that the respondent pay the applicants' costs of and

1 certify thar this and the 34 preceding pages are a true copy of the reasons for

Mr Justice Pincus . yo 2 fo, Associate Dated 16 chlecer Ler 1996

x 36. Counsel for the Applicants: L.F. Harrison Q.C. with J.C. Sheahan Solicitors for the Applicants: Varro Clarke & Co. Counsel for the Respondent: E.J. Lennon Q.C. with C. Newton Solicitors for the Respondent: McDonald Balanda & Chesters Dates of Hearing: 8, 9, 10 October, 19, 20