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

Federal Court of Australia|1986-12-16|Before: Pincus J

TRADE PRACTICES - misleading statements - whether "puffing" - affirmation not precluding relief - matters relevant to discretion in ordering return of deposit - clause precluding relief ineffective.

VENDOR AND PURCHASER - sale of home units - described as (in effect) architect-designed ~- effect of misdescription under common law and in equity - implied term that builder not legally prohibited from doing work - whether condition.

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

At a glance

Court

Decision date

Before

Catchwords

Source

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Judgment (310 paragraphs)

Cited By (2)