Supreme Court of WA|2009-08-20|Before: Johnson J

BANKMIST HOLDINGS PTY LTD -v- AZINA HOLDINGS PTY LTD [2009] WASC 230 (20 August 2009)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : BANKMIST HOLDINGS PTY LTD -v- AZINA HOLDINGS PTY LTD [2009] WASC 230

MATTER : An application pursuant to s 69D of the Strata Titles Act 1985 (WA)

BETWEEN : BANKMIST HOLDINGS PTY LTD as Trustee For The W D ALEXANDER FAMILY TRUST

Notice of termination - Whether limited to ground stated in notice - Provision of full particulars of variation

Clegmere Pty Ltd v Samspring Pty Ltd [1983] 2 Qd R 399

Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693

Deming No 456 Pty Ltd v Brisbane Unit Development Corporation Pty Ltd [1983] HCA 44; (1983) 155 CLR 129

Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359

Sommer v Abatti Holdings Pty Ltd (1992) 1 Qd R 300

Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245

1 JOHNSON J: By notice of originating motion, the applicant seeks a declaration that it is entitled by s 69D of the Strata Titles Act 1985 (WA) (the Act) by notice in writing dated 19 February 2008 to terminate a contract dated 10 October 2006 made between the applicant and the respondent for the purchase of Lot 26 on Survey Strata Plan 49019.

2 On 10 October 2006 the applicant, as purchaser, entered into a contract with the respondent, as vendor, for the purchase of Lot 26 on Survey Strata Plan 49019 before the survey strata plan had registered (the Contract).

3 On 5 February 2008 the applicant received from the respondent a letter dated 1 February 2008 with attachments (the notice of variation). The letter identified certain changes to the survey strata plan including changes to the size, and hence the unit entitlement, of some of the lots on the plan. The letter also advised that the site manager's remuneration, which forms part of the budget to be passed by the strata company at its first annual general meeting, had increased from $50,000 to $75,000.

4 By notice dated 19 February 2008 the applicant terminated the Contract (the applicant's notice). The following paragraphs are part of the recitals set out in the applicant's notice:

(b) McKenzie Legal, purporting to act on behalf of the current owner of The Property, by a letter dated 1 February 2008, notified the Buyer (inter alia) that the unit entitlement of The Property would be reduced to 277 units of an aggregate of 10,000.

(c) The contract is one which is subject to the provisions of s 69, s 69A, s 69B, s 69C and s 69D of the Strata Titles Act 1985 as amended.

(d) The Buyer now has the right to avoid The Contract by notice to The Seller.

5 By notice of termination dated 29 February 2008, the respondent treated the applicant's notice of termination as a repudiation by the applicant of its obligations under the Contract, and elected to terminate the Contract and forfeit the deposit of $50,000 (the respondent's notice). The respondent's notice also advised of the respondent's intention to resell the property and to reserve its rights against the applicant to seek damages in the event of a shortfall in the sale price.

6 Clause 19.1 of the Contract required the respondent to arrange for the manufacture of furniture for the unit. At the request of the respondent, the applicant paid to the respondent the sum of $35,000, being 50% of the cost of furniture for the unit. Following the respondent's notice of termination, the respondent retained the $35,000 payment. This is relevant only to the consequences of either of the notices of termination being considered valid.

7 Two primary issues arise for resolution. The first is whether the applicant, in pressing its right to avoid the Contract, is now entitled to rely on grounds for termination not stated in the notice of termination. The second issue is whether the respondent failed to provide the applicant with full particulars of any notifiable variation as required by s 69C of the Act. In relation to this issue, the applicant does not allege that the respondent failed to provide any notification of the variations. The applicant alleges that the information provided did not constitute substantial compliance with the requirement under s 69C of the Act.

1. Whether applicant limited to ground stated in notice of termination

8 Counsel for the respondent submitted that the applicant's notice does not assert any relevant failure to give notice but instead treats the variation notice as being effective. This is said to be because the applicant's notice relies on information contained in the variation notice as the basis for termination.

9 This is a reference to the fact that the applicant's notice states that the owner of the property, by the notice of variation, 'notified the Buyer (inter alia) that the unit entitlement of the property would be reduced to 277 units of an aggregate of 10,000'. After reference to the statutory provisions including s 69D, the notice of termination then states that the buyer 'now has the right to avoid the Contract by notice to the seller'.

10 Counsel for the respondent maintains that it is clear from the applicant's notice that the applicant is relying on the provision of the information as justification for termination and not on the failure to provide the relevant information or a failure to adequately provide the information.

11 Further, counsel for the respondent submitted that the applicant should be kept to the grounds of its notice, particularly because the respondent's acceptance of the applicant's repudiation is based on the applicant's notice given by the applicant. Counsel also submitted that, if the applicant is kept to the sole ground specified in the notice, it is clear that the respondent did give sufficient notice of the variation to the unit entitlements as required under the Act and, therefore, no right to avoid the Contract arose.

12 In relation to its notice of termination, the applicant relies on the inclusion of the term 'inter alia' as indicating that the variation referred to was only one of a number of variations of which the purchaser was not adequately notified. Counsel for the applicant has drawn the Court's attention to a number of authorities that indicate that when terminating a contract, the purchaser is not limited to the ground stated in the notice: Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359; Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245; and Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693. These cases held that a party terminating a contract is not required to justify its termination on the stated ground provided that a valid ground had then existed. Counsel also referred to the decision in Rawson v Hobbs [1961] HCA 72; (1961) 107 CLR 466 which was said to hold that, where the termination notice does not state a ground, any available ground can be relied upon.

13 However, that was not, in fact, the circumstances or the decision in that case. The circumstances in Rawson v Hobbs were that the vendors/respondents contracted with the purchasers/appellants to sell a grazing property held under two conditional purchase leases from the Crown. Clause 12 of the agreement provided that the appellants should procure the consent of the Minister for Lands to the eventual transfer and that, in case the Minister refused to give such consent, either of the parties might at their option annul the sale. After going into possession the appellants became aware of a potential defect in their title having been advised by the Under-Secretary for Lands that the transfer of the two leasehold properties would not be approved by the Minister.

14 As a result, the appellant's solicitors wrote to the respondents advising them that they had been instructed to annul the sale on the grounds that the Minister for Lands would not consent to the necessary instruments of transfer. The letter further specifically advised that the exercise of the power for annulment was made pursuant to cl 12 of the agreement but was made without prejudice to any other rights which the purchasers might have to apply for rescission of the agreement. The High Court held (Dixon CJ (482); Windeyer J (491)) that the purchasers became discharged from the contract because the vendors were not in a position to give a good title to the land, a different reason from that identified in the notice. Kitto J also reached the same decision but relied on different reasoning. His Honour considered (489) that the consent referred to in cl 12 was the approval to the transfer which would complete the transaction and hence held that reliance on cl 12 was a proper basis for the rescission of the agreement.

15 Windeyer J dealt specifically with the proposition stated by the Full Court that the only express ground on which the plaintiffs proceeded was that they had effectively annulled the contract pursuant to cl 12: (491 - 492). He said at (492):

But the claim based on cl 12 was coupled with a statement that it was without prejudice to the plaintiffs' rights to rescind on other grounds. They were not there merely reserving their rights. They were asserting that the contract was at an end...In the circumstances, I agree in the conclusion of the Chief Justice that the Court was not precluded from giving relief according to equitable principles.

16 It can be seen that in Rawson v Hobbs there was reliance on a nominated breach of the agreement but the High Court held that, as a result of reference to a right to rescind on other grounds, the claim could succeed on another ground.

17 In Shepherd v Felt & Textiles of Australia, Rich J expressed that principle in the following terms (370 - 371):

The suggestion faintly made that, because the defendant was unaware of the plaintiff's misdeeds in this matter until after the termination of the contractual relationship, they could not constitute a defence, is an ancient heresy to which I am surprised to find any surviving adherent. In 1838 Tindal CJ expressed the view that when a party is discharged and a reason is assigned at the time, another reason may afterwards be proved (Baillie v Kell [1838] EngR 674; (1838) 4 Bing (NC) 638 at 650; [1838] EngR 674; 132 ER 934 at 939); and repeated statements to the like effect have been made, the latest of which is that of Greer J (as he then was) in Taylor v Oakes Roncoroni & Co (1922) 127 LT 267 at 269. The question is whether the defendant was entitled to do what it did, not whether the reason why it exercised the rights it in fact had was a good or a bad one...

18 Starke J considered (373) that the fact that the appellant's misconduct was unknown to the respondent at the time of the termination of the agreement was quite immaterial. His Honour concluded that, if there were, in fact, any circumstances in existence at the time of the termination of the agreement which could have justified the respondent in terminating the agreement, then it may justify the termination by subsequent proof of those circumstances. Dixon J stated (378) that it was a long-established rule of law that a contracting party, who, after he has become entitled to refuse performance of his contractual obligations, gives a wrong reason for his refusal, does not thereby deprive himself of a justification which in fact existed, whether he was aware of it or not.

19 Both Evatt and McTiernan JJ agreed with Dixon J: (391).

20 The decision in Shepherd v Felt & Textiles of Australia was applied in Sunbird Plaza Pty Ltd v Maloney (262) (Mason CJ, Deane, Dawson & Toohey JJ agreeing) (274 - 275) (Gaudron J); and in Concut Pty Ltd v Worrell [27] - [28] (Gleeson CJ, Gaudron & Gummow JJ) [42] (McHugh J).

21 Counsel for the applicant submitted that, by applying Shepherd v Felt & Textiles of Australia, the applicant was entitled to terminate the contract on the grounds relied on at the hearing, notwithstanding that the notice referred only to the reduction in the unit entitlement.

22 There can be no doubt that the principal enunciated by the court in these decisions applies to breaches of contract. It does not automatically follow that it applies to breaches of a statutory provision.

23 In support of its argument that the applicant should be kept to the ground set out in the notice, the respondent submitted that the authorities cited by the applicant have no application where, as in this case, no breach of contract is relied upon and where the party seeking to avoid by notice is doing so on the basis of the breach of a statutory right.

24 Counsel for the respondent relied on the decision in Clegmere Pty Ltd v Samspring Pty Ltd [1983] 2 Qd R 399 where the notice of rescission alleged that the vendor had failed to disclose the lot entitlement of every proposed lot in the building units plan; however, at trial, the purchaser added the ground that the vendor had failed to set out the proposed by-laws in respect of the proposed plan. The judge at first instance, Andrews SPJ, concluded, in relation to a Queensland provision of equivalent effect to s 69 of the Act, that the defence could not rely on a failure to comply of which they did not give notice: (405 - 406). In reaching that conclusion, his Honour observed:

I would not equate the right to avoid claimed here with the general right to rely upon any available ground to rescind an agreement notwithstanding failure to include it among grounds included in a notice of rescission. Reference is necessary to the terms of the Act by which the right to avoid in certain circumstances is created. It is a right to avoid the agreement by notice in writing given within 30 days after the purchaser first becomes aware of failure. Notwithstanding that it is a failure to give a statement in compliance in every respect with subsecs (1), (2) and (3) it seems to me that the right depends upon a notice given after becoming aware of the relevant failure. It seems to me unarguable that the awareness is to be equated here with knowledge which must relate to something specific namely a specific failure and I would so hold. Otherwise an unscrupulous purchaser could simply give notice of avoidance and wait Micawber-like for something to turn up without condescension upon a particular ground. I hold that the defendants may not now succeed upon a failure to set out the relevant by-laws. I am therefore of the view that the principle underlying the decisions in cases such as Shepherd v Felt and Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359 does not in the circumstances apply to enable the defendants to rely upon grounds provided in s 49 of the Act of which they have not given notice.

25 On appeal, the issue in Clegmere v Samspring was whether the knowledge of the solicitor of a failure to comply could be imputed to the client/purchaser. Only GN Williams J made reference to the issue of reliance on a failure to comply not included in the notice and noted that this was a question which it was not necessary for the Court to decide and considered that the question should be left open for further consideration: (410).

26 In Deming No 456 Pty Ltd v Brisbane Unit Development Corporation Pty Ltd [1983] HCA 44; (1983) 155 CLR 129, dealing again with the same section of the Queensland legislation s 49, neither the notice of avoidance, nor the accompanying correspondence, specified the alleged non-compliance although the notice did allege a breach of s 49. The evidence indicated that, at that time, the only suggested failure which had been identified by the purchaser was the absence of the vendor's address in the statement required under s 49. However, by the time the summons for summary judgment came on for hearing, a number of other alleged deficiencies in that statement had been identified. The majority of the High Court held that s 49 did not require a purchaser to state in a notice of avoidance all alleged grounds of non-compliance and because the purchaser had not yet specified any grounds, he was entitled to rely on any of the deficiencies that were identified at the hearing: (143) (Mason, Deane & Dawson JJ). The majority observed (143 - 144):

In that regard, there is nothing in s 49 which requires a purchaser to state in a notice of avoidance under s 49(5) all of the grounds upon which it is said that the vendor has failed to comply in every respect with sub-ss (1), (2) and (3). It is unnecessary to consider whether, in a case where a purported avoidance of a contract is specifically based upon and tied to an identified alleged failure which has, in fact, not occurred, a purchaser can subsequently seek to sustain the avoidance by reliance upon some other failure to which no reference has been made: cf Clegmere Pty Ltd v Samspring Pty Ltd and Shepherd v Felt and Textiles of Australia Ltd.

27 Counsel for the applicant submits that the effect of the finding of the majority in Deming is that the findings of Andrews SPJ in Clegmere v Samspring that a purchaser must condescend upon a particular ground, thereby distinguishing Shepherd v Felt & Textiles of Australia Ltd, should be considered no longer to be good law.

28 Consequently, the applicant submits that as the applicant's notice is neither tied nor limited to any one particular ground, the decision of the majority in Deming supports the applicant's entitlement at the hearing of this matter to rely on any failure of the respondent to give information that substantially complied with s 69C of the Act. I appreciate that the applicant's notice does include the words 'inter alia'. However, I do not consider that the inclusion of this expression changes the fact that the applicant's notice identifies only one ground. Consequently, it falls within that category of case which was said by the majority in Deming to be unnecessary for the court to consider. In any event, it does not conform to the factual circumstances in Deming which was a failure to identify any ground in support of the statement that the vendor in that case was in breach of the relevant provision.

29 As noted above, the respondent's position is that as Deming specifically declined to address the factual circumstances which applied in Clegmere v Samspring, that decision should be followed in this case.

30 However, some caution needs to be exercised in applying the decision in Clegmere v Samspring because of the difference in the relevant statutory provisions. Section 69D of the Act confers the right on a purchaser to avoid the contract by notice in writing before the settlement of the contract if the vendor fails to give the purchaser information that substantially complies with s 69 or s 69C. The equivalent Queensland provision requires the notice to be given within 30 days after the purchaser first becomes aware of the failure.

31 As Andrews SPJ observed in Clegmere v Samspring (405):

Notwithstanding that it is a failure to give a statement in compliance in every respect with subsecs. (1), (2) and (3) it seems to me that the right (to avoid the agreement) depends upon a notice given after becoming aware of the relevant failure.

32 In those circumstances, the difficulty with allowing reliance on a failure to comply not included in the notice is the requirement for there to be knowledge of the failure prior to issuing the notice. However, there is no such requirement in the Western Australian legislation. The Act simply provides for the notice to be given before settlement and has no requirement of being aware of a particular failure prior to issuing a notice. Yet the issue of there being knowledge of the failure was not considered or taken into account by the High Court in Deming, which calls into question that particular basis for distinguishing the decision in Clegmere v Samspring.

33 Despite the different factual basis, the reasoning in Deming would seem to apply also to the situation where there is reference to a particular ground of the alleged failure to comply. It is difficult to see why other grounds could be added where there was no mention of any ground but not where one ground or a number of grounds mentioned. Further, although the majority did add that because the purchaser had not yet identified any ground he was entitled to rely on any of the deficiencies, the basis of the decision was that s 49 did not require a purchaser to state in a notice of avoidance all alleged grounds of non-compliance.

34 Having considered the authorities, the conclusion I have drawn is that s 69D does not require a purchaser giving notice to state in the notice all alleged grounds of non-compliance and on that basis grounds may be added to those identified in the notice.

36 Counsel for the respondent also submitted that the only notice of termination given by the applicant does not assert any relevant failure to give notice but instead treats the variation notice as being effective. This is said to be because the notice of termination relies on information contained in the variation notice as the basis for termination. Irrespective of whether the applicant treated the variation notice as being effective, it is the case that the applicant's notice does not assert any relevant failure to provide the information required. That, in my view, is a significant difference from any of the authorities relied upon by the parties. Even in Deming, where there was no identification of the nature of the breach, there was a clear statement both in the notice and in the accompanying correspondence that there had been a breach of a nominated statutory provision.

37 In my view, a party serving notice under s 69D can rely on grounds not identified in the notice. I also consider that, where no grounds are identified, but the notice identifies in general terms the nature of the notice by referring to a breach of the relevant statutory provision, the party serving the notice may rely on any grounds which can be established. However, neither of these situations applies in this case.

38 Whether or not, as the respondent asserts, it can be said that the applicant has treated the variation notice as being effective, in my opinion, the notice is defective because it does not rely on a failure to provide any relevant information, makes no assertion that the conduct of the respondent is deficient in any way and does not allege a breach of any statutory provision.

39 Indeed, on its face, the applicant's notice appears to be a notice under s 69D(2) which applies where there has been substantial compliance with the requirement to inform the purchaser of any notifiable variation. However, a notice under that section should have been provided within seven days of the information being given.

40 However, in the event that I am wrong in my conclusion as to the effect of the notice, I propose to consider whether the applicant has established a breach of the respondent's obligation to inform the applicant of full particulars of any notifiable variation.

2. Whether the respondent has provided full particulars of variation

41 Counsel for the applicant submitted that, in order to determine the scope of the requirement under s 69C to give full particulars of any notifiable variation, it is first necessary to consider the primary disclosure obligations under s 69A and s 69B. Indeed, counsel for both parties agreed that these provisions colour the nature and extent of the obligation under s 69C. These sections appear in pt V of the Act which bears the heading 'Protection of Purchasers'.

42 Section 69(1) of the Act entitles a purchaser of a lot or proposed lot in a scheme to be given the notifiable information, as provided for by s 69A and s 69B of the Act, before he or she signs a contract to buy the lot or proposed lot. Under s 69(2) the vendor is required to ensure that s 69(1) is complied with, either by giving the notifiable information to the purchaser on the form referred to in s 69(3) or by ensuring that the notifiable information forms part of the contract. Section 69(4) provides that the onus of proving that the notifiable information was duly given lies upon the vendor.

43 Section 69A identifies the notifiable information to be given under s 69 by every vendor. The following is a list of the notifiable information to be provided to the purchaser relevant to the circumstances of this case:

The name and address of the vendor and the purchase (s 69A(a));
A copy of the proposed survey strata plan particularly drawing attention to information that relates specifically to any proposed lot to which the Contract relates (s 69A(b));
The proposed unit entitlement of every lot in the proposed strata plan and the aggregate unit entitlement (s 69A(c));
The proposed by-laws that amend, repeal or add to the by-laws set out in sch 1 and 2 to the Act (s 69A(d)and (e)).

44 Section 69B applies only if a survey strata plan has not been registered and identifies further notifiable information required to be given by a vendor in addition to that required by s 69A: s 69B(1)(a); s 69B(2). The following is a list of the further notifiable information to be provided in the circumstances of this case:

details, including the terms and conditions, the consideration and the estimated costs to the proprietor of a lot, of every agreement for the provision of any amenity or service to the strata company or to any part of the parcel that the company or the originally proprietor has entered into and that is still in operation or the original proprietor in his own right or exercising the power of the company proposes to enter into: s 69B(2)(a);
particulars of any direct or indirect pecuniary interest the vendor has in any agreement referred to in s 69B(2)(a), other than as proprietor: s 69B(2)(b);
the estimated receipts and expenditure of the company for the period of 12 months starting with the day of registration of the survey strata plan: s 69B(2)(c);
the estimated contribution of the proprietor under s 36(1) (administration fund levy) and s 36(2) (reserve fund levy) of the Act: s 69B(2)(d);
details of every lease granted and still in operation or proposed to be granted to the purchaser or any other person in relation to the common property: s 69B(2)(e); and
details of every licence, right of exclusive use and enjoyment, or special privilege granted and still in operation or proposed to be granted to the purchaser or any other person in relation to the common property: s 69B(2)(f).

45 Whilst s 69A and 69B identify the notifiable information to be provided to a purchaser, s 69C identifies, in addition to the vendor's obligation to provide full particulars of any notifiable variation, the circumstances and the way in which the vendor is to inform the purchaser. As noted, s 69C(1) creates an obligation on the vendor under a contract to sell a proposed lot to inform the purchaser of full particulars of any notifiable variation by notice in writing.

46 However, the subsection does not apply if the vendor has informed the purchaser, by notice in writing, of any proposed action or matter that would be a notifiable variation under s 69C(3) and the action or matter, when completed, does not differ from that described in the notice: s 69C(4). Notice is to be given as soon as the vendor becomes aware of the variation: s 69C(2).

47 Section 69C(3) sets out the circumstances in which a notifiable variation occurs. A notifiable variation occurs if, before the registration of the purchaser as proprietor of the proposed lot, or earlier avoidance of the contract, the following occurs:

(a) the company or original proprietor in his own right or exercising the power of the company enters into an agreement for the provisions of any amenity or service to the strata company or that is otherwise likely to affect the rights of the purchaser, or varies any existing agreement of that kind whereby the rights of the purchaser are likely to be affected: s 69C(3)(a);

(b) the company or the original proprietor in his own right or exercising the power of the company makes, amends or repeals any by-law: s 69C(3)(b);

(c) the proposed survey strata plan is varied in a material particular or the registered strata plan differs in a material particular from the proposed strata plan: s 69C(3)(c);

(d) the unit entitlement of any lot or the aggregate unit entitlement is not the same as the unit entitlement or proposed unit entitlement or the aggregate entitlement or proposed aggregate unit entitlement that was notified under s 69A(c); and

(e) a lease, licence, right or privilege in relation to the common property is granted or varied: s 69C(3)(e)

These are the notifiable variations about which the vendor is to 'inform' the purchaser and with respect to which the vendor is to provide 'full particulars'.

48 It is clear that it is not a variation in every matter identified in s 69A or s 69B of which the purchaser is required to be given full particulars; it is only a variation in those matters identified in s 69C which result in that requirement.

49 Section 69D(1) of the Act entitles a purchaser to avoid the contract by notice in writing given to the vendor before the settlement of the contract, if the vendor has failed to give to the purchaser information that substantially complies with s 69 or s 69C and at the time required by that section. Under s 69D(2) if a vendor gives to a purchaser information that substantially complies with s 69C and at the time required by that section and the purchaser has been materially prejudiced by any matter referred to in the notice and has not agreed to be bound by that matter, the purchaser has a right to avoid the contract by notice in writing given to the vendor within seven working days after that information is given.

50 Proof of material prejudice lies on the purchaser: s 69D(2)(b). Note that under s 69D(3) it is not necessary to identify any material prejudice.

51 It can be seen that under s 69D(1), (2) and (3) a purchaser can avoid the contract in one of three circumstances:

(1) The first is where the vendor has failed to give the purchaser the necessary variation information. In that circumstance, notice in writing of the intention to avoid the contract is to be given by the purchaser to the vendor at any time before the settlement of the contract.

(2) The second circumstance is where the vendor has given the necessary variation information. In that circumstance, notice in writing of the intention to avoid the contract must be given within seven days of receipt of the information. However, the purchaser must be able to establish that the variation has caused material prejudice.

(3) The third circumstance is where, as in (1), the purchaser has a right to avoid the contract but before notice of avoidance is given the variation information is provided. In that circumstance, notice in writing of the intention to avoid the contract is to be given by the purchaser to the vendor within seven days of receipt of the information but there is no longer a need to establish that the variation has caused material prejudice.

52 The respondent accepts that it did not give a notice of variation within the terms of the Act; that is, 'as soon as the vendor becomes aware of the variation': s 69C(2). Once given out of time, as in this case, Parliament does allow for a penalty for the vendor in that, once the information is given, the purchaser does not have to establish a material prejudice. They can terminate for any reason whatsoever they might choose but still within seven working days.

53 In the circumstances of this case, the applicant relies on the third circumstance for avoiding the Contract.

54 However, counsel for the applicant relies on the seven-day time period in the second circumstances as evidencing a need for the written notice of the notifiable variation to include the effect or impact of any change on the information previously provided. The applicant submits that, if the effect of the variation is not identified, it would be extremely difficult, if not impossible, for the average purchaser to identify within seven days that material prejudice has been caused.

(b) Information to be provided under s 69A, s 69B and s 69C

55 An understanding of the nature and extent, as well as the form, of the information contained in the Contract, and provided under the primary notification provisions of s 69A and s 69B, provides the background against which the requirement in s 69C falls to be considered.

56 Annexure 3 to the Contract is identified as a Form 28 Disclosure Statement and is stated to be pursuant to s 69 of the Act. Part 1 of the Form 28 is described as the 'Compulsory Disclosure of Information by Every Vendor'. Apart from describing the lot to be sold, the name and address of both the purchaser and vendor are set out in the document in accordance with s 69A(a). The Form 28 refers to a number of attachments. Attachment 3B is identified as a copy of the registered or proposed strata/survey-site plan: s 69A(b). Attachment 3C is said to be a statement of unit entitlement or proposed unit entitlement and the aggregate or proposed aggregate unit entitlement: s 69A(c). Attachment 3D is described as a copy of all non-standard strata company by-laws including, where applicable, a sch 2A Management Statement: s 69A(d) and (e).

57 Part 2 of the Form 28 is described as 'Disclosure By Original Proprietor When Strata Lot Sold for First Time'. Attachments 3E and 3H are copies of the Site Management Agreement and the Strata Management Agreement: s 69B(2)(a). Attachment 3E must also identify whether the original proprietor has any direct or indirect pecuniary interest, other than as a proprietor of a lot, in either the Site Management Agreement or the Strata Management Agreement: s 69B(2)(b). Attachment 3F is a copy of the estimated strata company receipts and expenditures for the 12-month period to the annual general meeting: s 69B(2)(c). Attachment 3G is a copy of a document entitled Proposed Administrative Fund Estimated Levies For The First Year. This last document is required by s 69B(2)(d) to be provided to the purchaser. Section 69B(2)(d) refers specifically to s 36(1) and s 36(2). Section 36(1) requires a strata company to establish an administrative fund, to determine the amounts to be raised for the purposes of the fund and to levy contributions on proprietors in proportion to the unit entitlement of their respective lots. Section 36(2) requires a strata company to establish a reserve fund, to determine the amounts to be raised for the purposes of the fund, and to levy contributions on proprietors in proportion to the unit entitlements of their respective lots.

58 It is apparent that Annexure 3, the Form 29 disclosure statement, includes all the relevant notifiable information referred to in s 69A and s 69B.

59 In this case, Attachment 3C, the schedule of unit entitlements, indicates that the unit entitlement for Lot 26 is 57 out of an aggregate of 2,000. Attachment 3F is the first year strata budget with an estimated total amount of $230,000. Of that total sum, $55,000 is said to be the cost related to the site manager. Attachment 3G identifies the proposed estimated administrative and reserve fund levies. The administrative fund levy is said to total $230,000 between 35 lot owners, being $6,572 per lot per annum or $1,643 per lot per quarter. The proposed reserve fund levy for Lot 26 is $570 where the unit entitlement is 57 and hence the levy is $10 per unit entitlement. The aggregate levy is $20,000.

60 Annexure 4 to the Contract is a site plan. Section 69A and s 69B do not require a site plan to be provided and hence this document does not form part of the disclosures contained in Annexure 3. Consequently, any failure to notify of a variation to the site plan may constitute a breach of the Contract but could not form the basis of the statutory right to avoid the Contract.

61 The notice of variation identifies the lot number and has a heading of 'Additional Disclosure Section 69C Strata Titles Act 1985 (WA)'. Item 1 refers to changes to the survey strata plan and unit entitlements. The letter advises that, as a result of changes to the size of some of the lots, the unit entitlement of Lot 26 has changed 'from that which was shown in the proposed survey strata plan in your sale contract for the property'. A copy of the registered survey strata plan is attached to the letter. The letter then refers to the attached Form 3 for the unit entitlements rather than stating what the registered unit entitlements are. The Form 3 attached to the letter identifies the unit entitlement per lot number although it does not specifically identify the aggregate unit entitlement. However, the aggregate unit entitlement can readily be calculated by adding together the unit entitlements. Further, it is apparent from the inclusion in the applicant's notice of the aggregate unit entitlement that at least the applicant's solicitors had been able to make that calculation.

62 Item 2 in the letter refers to the change to the site manager's remuneration. The letter refers to the fact that the proposed remuneration in the draft site management agreement next to the Contract was $50,000 for the first year. The letter also refers specifically to the clause, page and attachment number of the Contract where the sum of $50,000 is set out as the site manager's remuneration. The Contract identifies the site manager as the respondent, Azina Holdings Pty Ltd. I note in passing that in Attachment 3F the estimated cost of the site manager for the first year is identified as $55,000. Nothing seems to turn on this discrepancy. The letter advises that the developer has arranged for Mantra Management Pty Ltd (Mantra) to operate as the site manager and the company has advised that the amount required to employ a person on site as manager/caretaker needs to be increased to $75,000. The letter further advises that this sum forms part of the revised budget to be passed by the strata company at its first annual general meeting. This is the information which the applicant alleges does not amount to full particulars of the notifiable variations.

63 The difference between the parties is said by counsel for the applicant to lie in what is required to satisfy the vendor's obligation under s 69C. In asserting that, under s 69C, more is required to fulfill a vendor's obligation than merely to provide a statement of the changed information, counsel for the applicant relies on the inclusion in s 69C of the term 'full particulars' which it is said requires a vendor to identify the effect or impact of any variation. However, that proposition must be considered in the context of the reference in s 69D(1) and (2) to the vendors failure to give information that 'substantially complies' with the requirement in s 69C.

64 On behalf of the applicant it is said that the information provided by the respondent did not bring to the applicant's attention:

(1) how the appointment of Mantra as site manager would vary the information notified in the disclosure Form 28 and Attachment 3G to the Contract;

(2) how the registered survey strata plan differed in a material particular to the plan included in the Contract;

(3) how the unit and aggregate entitlements differed from that notified in the Contract.

65 The applicant submitted that the appointment of Mantra required the respondent to provide the applicant with a further estimate of income and expenditure and to mark thereon the variance, including GST, caused by the appointment of Mantra. Further, it was submitted that the respondent was also required to provide the applicant with a further proposed administrative fund levy estimate and to mark thereon how the appointment of Mantra varied the administrative fund estimate.

66 The applicant also submitted that the variation in lot entitlements required the respondent to provide the applicant with a further Form 28 disclosure statement showing the amount of the proposed administrative and reserve fund levies. According to the applicant, it also required the respondent to provide to the applicant a further estimated reserve fund levy as the method of calculation of the reserve fund in Attachment 3G was based on a unit entitlement of 57 being multiplied by $10.

67 Counsel for the applicant relied on a number of factors in support of a wide interpretation of the requirement in s 69C. Emphasis may placed on the protective nature of the statutory provisions as well as the varied backgrounds of people who purchase strata units off the plan, some of whom may have no formal education at all and would have difficulties making the basic calculations which would be readily available to the vendors. Indeed, counsel submitted that the vendors would automatically know the impact of the changes.

68 Counsel for the applicant also relied on the terminology used in s 69C. In particular, counsel relied on the use of the term 'full particulars' in describing the extent of the information provided in relation to the variations. In addition, emphasis was placed on the requirement for the vendor to 'inform' the purchaser of the variations rather than simply notify of the variations.

69 Counsel's submission was that the words 'full particulars' require the vendor to show how or the extent to which the information differs from that previously provided. Similarly, the term 'inform' is said to mean to provide the purchaser with the information that impacts on his or her decision to purchase or to continue with the purchase. This is said to include the percentage increase or decrease in size or cost of any aspect of the purchase.

70 Counsel for the applicant stated that, if all the vendor had to do was simply provide the information and nothing more, then it was up to the purchaser within seven working days to ascertain the difference and to identify any material prejudice. The applicant's submission was that, in order for the purchaser to benefit from the protection intended by the Act, in view of the short time frame allowed by the legislature, 'full particulars of any notifiable variation' must mean more than simply providing the basic information and extends to identifying the difference between the original information and any variation.

71 Consequently, the applicant's position was that the notice of variation did not discharge the respondent's obligations under s 69C(1) and hence the respondent did not substantially comply with the obligation to give full particulars of any notifiable variation. This was said to have then entitled the applicant under s 69D(1), at any time before settlement, to terminate the Contract.

72 In summary, in support of this wider interpretation of s 69C, the applicant relied on the following factors:

(1) the protective nature of the statutory provisions;

(2) the varied backgrounds and abilities of the purchasers;

(3) the specific wording of the relevant section including the terms 'full particulars' and 'inform'; and

(4) that seven days would be insufficient time to determine the consequences of the notifiable variations and identify any material prejudice.

(e) The respondent's interpretation of s 69C

73 The respondent's position was that the applicant's submission stands or falls on whether there has been substantial compliance because, if there has been, the seven-day period applied and the applicant terminated the Contract out of time.

(1) the Act does not require the detail asserted by the applicant to be required; and

(2) there has been substantial compliance with s 69C.

75 As to the first proposition, counsel for the respondent submitted that the requirement under s 69C is to give full particulars of any notifiable variations. Counsel further submitted that the meaning of 'full particulars' should be considered in light of the information required to be provided at first instance in light of the specific head of notifiable information relied upon. Counsel submitted that the information provided concerning any variation to the matters identified in s 69C is not required to be provided in any greater detail than the original information was required under s 69A or s 69B. As counsel for the respondent observed, the applicant's case requires the degree of particularity to be provided with respect to variations to exceed the particularity required at or before the Contract being entered into.

76 Further, in order to determine whether there has been substantial compliance, it was said to be necessary to look at what is intended by the relevant provisions. The respondent's submission was that there is no doubt that the provisions provide for the protection of purchasers, as identified by the heading to pt V. However, they are said by counsel not to be consumer protection provisions in the same sense as found, for example, in the Consumer Credit Act (Western Australia) Act 1996, the provisions of which set out in greater detail the type of information that must be provided. Counsel submitted that with respect to pt V of the Act, the actual decision to purchase property is left with the purchaser provided the purchaser is provided with the information identified in s 69A, s 69B and s 69C. Further, Form 28 is the form that is required to be provided as part of the regulations. It is the form that the government has considered is the appropriate form to provide the relevant information to the purchaser. Once the information is provided, it is then for the purchaser to decide, based on all the information, including that provided under s 69A and s 69B, whether it is appropriate in all the circumstances to purchase the lot.

77 Therefore, the respondent's primary argument is that, notwithstanding that these provisions are called 'purchaser protection provisions', they operate in this way: they require the provision of certain information to the purchaser in order for the purchaser to make his or her own assessment of whether or not to purchase the property.

78 The respondent emphasised the fact that, essentially, the purchaser has a composite set of rights. The purchaser has rights under the Contract including the right to terminate for the breach of any contractual obligation. Further, the purchaser has a statutory right to terminate. However, as counsel for the respondent observed, the statutory right to terminate operates in very limited or specific circumstances. The approach of the legislature in this case was said to be to not interfere too much in contractual relations between individuals, other than to provide a right of avoidance of the contract in particular limited circumstances.

79 That such is the approach was said by counsel for the respondent to be evident from the second reading speech of the 1995 amendment to the Act which included provision for survey strata schemes and the extension of the disclosure provisions to vendors other than original proprietors. The Honourable George Cash stated (4957):

To put some teeth into this requirement, the Bill provides that, if the compulsory material is not provided to the purchaser before the purchaser enters the contract, the contract will be voidable by the purchaser until settlement or, if disclosure is given, for a limited period after disclosure. The aim of the requirement for disclosure is to alert a purchaser to the fact that the lot is within a strata scheme and that some preliminary inquiries are desirable.

80 It would appear, therefore, that the disclosure contemplated by the Act, as amended, was designed to ensure that the purchaser was given sufficient information to know that enquiries are desirable. Further, the reading speech also indicates that the statutory right to terminate was intended to be 'for a limited period after disclosure'. Indeed, one change implemented by the 1995 amendment was to change the time in which the right to terminate was to be exercised which was reduced from 30 days to seven days and from after settlement to before settlement.

81 With respect to the applicant's proposition that seven days would be insufficient time to determine the impact of any notifiable variations and, where necessary, to identify any material prejudice, counsel for the respondent observed that the purchaser would have already decided what it is about the property that is appealing and their reasons for deciding to purchase it. Although there may be a number of matters that contributed to that decision, and whilst the purchaser may be interested in changes other than those referred to in s 69D, as counsel observed, Parliament has not conferred a right to have all variations brought to the purchaser's attention. Counsel submitted that this underlines a recognition by Parliament that they are interfering in contractual relations. In any event, as noted above, the statutory right to terminate was intended to be 'for a limited period after disclosure'.

82 Counsel for the respondent maintained that the vendor is only required to provide the details of the variation, not to provide percentage differences or to advise how the new information differs from that originally provided. The vendor is not required to provide any flow on information. As the respondent submitted, Parliament has seen fit to provide only a minimum standard of disclosure. It does not attempt to make the vendor responsible for providing advice with respect to the variation information provided to the purchaser, which is essentially what the applicant asserts is required. Counsel for the respondent noted that, curiously, if purchasing 'off the plan' but not purchasing a strata title property 'off the plan', there is no legislative protection provided to purchasers.

83 The applicant submitted that what is required is that the information should be put in a form that makes the change easily identifiable and that this is not an onerous obligation. The respondent's response is that, irrespective of whether the provision of such advice would be onerous, there is simply no statutory requirement to provide it. As counsel observed, there is an element of caveat emptor in all real estate purchases and the legislation is not designed to remove that.

84 In conclusion, counsel for the respondent submitted that there is nothing in the requirement to provide the initial information, or the requirement to advise of variations, which require the implication of the variation to be conveyed.

(f) Whether the vendor has substantially complied with s 69C

85 In support of its position that there has not been substantial compliance, counsel for the applicant took the Court to the first page of the proposed survey strata plan attached to the Contract. On that plan, Lot 22 has an area of 795 sqm. Counsel for the applicant submitted that it was common ground that Lot 22 is the manager's unit. However, on page 1 of the registered survey strata plan, Lot 22 is in two parts. The first part is in the original location of Lot 22 on the proposed survey strata plan but is 791 sqm, a minor variation of 4 sqm. However, the other part of Lot 22 is located in an area which under the proposed survey strata plan was identified as common property and has an area of 533 sqm.

86 Counsel for the applicant identified the differences between the registered survey strata plan and the proposed survey strata plan included in the Contract as follows:

(1) the area of Lot 1 varied from 322 sqm to 626 sqm by adding thereto 304 sqm of common property;

(2) the area of Lot 22 was varied from 795 sqm to 1,324 sqm by adding thereto 533 sqm of common property; and

(3) the area of common property formally known as CP36 was reduced from either 8,098 sqm or 8,401 sqm to 7,257 sqm.

87 The submission of counsel for the applicant was that these variations required the respondent to do more than simply provide a copy of the registered survey strata plan. Provision of only the registered survey strata plan would require the purchaser to conduct a comparison with the proposed survey strata plan and the registered survey strata plan in order to understand the effect of the changes. Counsel for the applicant submitted that the respondent was required to carry out that comparison and bring to the applicant's attention the way in which the registered survey strata plan differed from the proposed survey strata plan. Counsel noted that the respondent in the notice of variation did nothing more than advise that there were changes and that, as a result of changes to the size of some of the lots, the unit entitlement of Lot 26 had changed from the figure shown in the proposed survey strata plan. However, the Form 3 attached to the letter and specifically referred to in the letter did identify the new unit entitlements per lot number, including the applicant's lot number, although the new Form 3 does not itself indicate the aggregate unit entitlement.

88 Counsel noted that it was not until Mr Hays, the respondent's sole director, filed his affidavit in these proceedings that an explanation was proffered for the alteration in the manager's unit, Lot 22. The explanation provided was this:

Further, part of the CP36 on the proposed plan had the area which was designated for the café. However, during the planning approval stages the strata manager requested that the café be moved from the common property area, CP36, as the café may become a burden for all the strata owners if it operated at a loss. Accordingly, the area of the cafe was moved to Lot 22 which already contained the manager's residence, shop, resort office and day lounge.

89 In his submissions, counsel for the applicant observed that the 'draft plan' included in the Contract does not depict the use of any part of the common property as a café. However, the only draft plan which in any way identifies areas as being for particular purposes, such as a café, as opposed to simply identifying lot numbers, is the site plan, which is Annexure 4 to the Contract. In the site plan there is an area designated as 'Café/Gourmet Shop' which is next to the resort manager's area, both areas being within that area of the draft survey strata plan described as Lot 22. Neither the proposed survey strata plan nor the registered survey strata plan makes any reference to a café or any other area identified by purpose.

90 Counsel for the respondent explained, with reference to the site plan, that the café was still going to be in the same position but now formed part of Lot 22 and was no longer part of the common property. Counsel for the respondent referred the Court to the site plan which indicates that in the area in which the café is shown on the registered survey strata plan there was already a structure or group of structures described as communal buildings.

91 However, according to counsel for the applicant, although there were always going to be buildings in the area in which the café is shown on the registered survey strata plan, they were to be communal facilities owned by the proprietors in proportion to their lot entitlement. It is said that, in those circumstances, the effect of the variation is that the buildings would now become part of the manager's unit, an area to which the proprietors will no longer have any entitlement. Counsel submitted that the consequence is that the proprietors lose common property.

92 Counsel further submitted that, when a purchaser looks at the price paid for a unit, he looks at all of the common property structures because each proprietor owns the common property in proportion to each proprietor's unit entitlement. The cafe was initially disclosed as being part of what was being acquired by the applicant but on registration it was no longer part of the applicant's acquisition. As counsel for the applicant observed, no explanation for that variation was offered when the registered strata plan was sent out.

93 Counsel for the applicant conceded that the variation may or may not impact on the value of the property and further conceded that the information was obtainable from the documents received. However, counsel emphasised that obtaining the information would involve the applicant having to retrieve the Contract and compare the two survey strata plans. Further, if the applicant wished to avoid the Contract on the basis that it was materially prejudiced by this change, it would have had to identify the loss of common property, determine whether it was materially prejudiced by such loss and give notice in writing to the vendor, all within seven days. The short time frame is relied upon by counsel for the applicant as evidence of a legislative intention that the impact of the variation is to be identified by the respondent so that all that is required of the applicant is to identify the material prejudice and notify the vendor, something more easily achievable within that time frame. Of course, it must be noted that this time frame would apply only if the applicant were relying on the statutory right to avoid the Contract and not if relying on any right arising from the contractual relationship.

94 Counsel for the applicant noted that the management statement included in the Contract has no by-laws dealing with the use of any part of the common property as a café. Further, the applicant submitted that, if any part of the common property had been intended to be used as a café, then the operation of such a café would have been conducted by the site manager, who as at the date of the Contract was the respondent. It was also said that for part of the common property to be used as a café, there would need to exist a lease, licence, right of exclusive use or special privilege that upon payment of money to the strata company would allow a defined portion of the common property to be used as a café. According to counsel, where a right to use common property exists, there needs to be disclosure by the respondent to the applicant under s 69B of the Act. Of course no disclosure would be required where the reference to a café was included as a potential use rather than a contracted use

95 It is then said that, given the absence of any form of disclosure in the Contract that part of the common property was to be used as a café, the explanation by Mr Hays in his affidavit as to why Lot 22 increased in size to accommodate a café, is disingenuous.

96 The applicant asserts that by not disclosing in the Contract the use of the common property as a café, coupled with a significant portion of common property being added to Lot 22 purportedly for use as a café, the respondent has not substantially complied with its obligations under s 69B of the Act, entitling the applicant to avoid the Contract at any time before settlement.

97 Another example given by counsel for the applicant of a variation of which the applicant was not fully informed, is that, on the site plan, there is a service compound together with a six-metre wide service access road and a six-metre wide by eight-metre long reversing area. That area appears on the proposed survey strata plan as an area of common property between Lot 1 and the roadway and a 10-metre wide easement running down the entire side of the development. In the registered survey strata plan Lot 1 has been increased in size from 322 sqm to 626 sqm to include the area of common property up to the roadway. The easement or reversing area is described as CP37 (another area of common property) and as being 1372 sqm. The explanation provided in Mr Hays' affidavit is this:

Further, CP36 on the proposed plan was reduced by a further 304 sqm because the original bin area was located as part of CP36 in accordance with the Shire of Broome's requirements. However, because the bin area was originally located near the front entrance of the resort, the shire requested that the bin area be moved. This resulted in the original bin area being incorporated into Lot 1 so that Lot 1 on the proposed plan was increased.

It is the case, however, that a bin area is not identified on either the proposed survey strata plan or the registered survey strata plan, only on the site plan.

98 On behalf of the applicant it was noted that, in the proposed survey strata plan, the area of common property (CP36) has an area of 8098 sqm. However, in sheets 2 and 3 of the proposed survey strata plan the common property has an area of 8401 m. In his affidavit, Mr Hays points out that, under the registered survey strata plan, the area of common property is the addition of the areas of CP36 and CP37, which is 7,257 sqm, a reduction in area of 841 sqm. The reduction is achieved by adding 533 sqm to Lot 22 (the manager's unit) and 304 sqm to Lot 1, leaving 4 sqm unaccounted for.

99 Counsel for the applicant asserts that there was a failure to bring to its attention how the registered survey strata plan differed to the proposed survey strata plan. The applicant alleges that the difference is that the area of the common property, CP36, changed from 8,401 sqm to 5,885 sqm.

100 According to counsel for the respondent, in order to respond to the applicant's submission on the extent of the particulars of notifiable variation which must be provided to a purchaser in relation to a change in the survey strata plan, it is necessary to understand the nature of the material actually provided under s 69A and s 69B.

101 Under s 69A the purchaser of a proposed lot in a scheme must at the outset be given a copy of the proposed survey strata plan which is essentially a document that sets out the size of each of the lots and the configuration of the lots within the greater area of the strata titled land. In essence, the survey strata plan simply demonstrates the way in which the land is subdivided. To ascertain the purchaser's rights concerning those parts of the land, the purchaser would have to look at other material, including the specific terms of the Contract.

102 As counsel for the respondent observed, it is impossible for the vendor to know the facts or assumptions on which the purchaser's decision was based. In some cases, proximity to the swimming pool may be a decisive factor. However, as was submitted by counsel for the respondent, the Act does not require the vendor to provide a site plan, which is the only document which indicates where certain amenities are located, or the purpose for which certain areas of the scheme are identified.

103 Counsel for the respondent submitted that it is apparent from the relevant provisions that Parliament was only concerned with ensuring that the configuration and size and shape of land in a survey strata development are disclosed. That is said by counsel to be the purpose of the survey strata plan. That view is supported by reference to s 69A(b) which requires the vendor to provide a copy of the proposed survey strata plan and s 69C(c) which requires the vendor to give notice where the proposed survey strata plan is varied in a material particular.

104 According to counsel, Parliament has left the issue of what is to be built, and to what purposes various areas will be put, to the Contract between the parties. The Contract identifies a site plan and creates promises that the buildings will be built in accordance with the site plan, in accordance with the specifications for the buildings and in relation to other matters identified in the site plan. However, as counsel for the respondent submitted, they are contractual promises which are outside the scope of pt V of the Act.

105 Counsel submitted that, on receiving a copy of the registered survey strata plan the purchaser simply has to get out their Contract and compare the registered survey strata plan with the proposed survey strata plan. Any change will be to the configuration of the land and that configuration is obvious from the revised survey strata plan. According to counsel, what Parliament was concerned with, was that, if the purchaser was told about a changed configuration in the makeup of the land, the purchaser should be able to choose to avoid the Contract. All that is required of the purchaser in such limited circumstances is to look at the plans, consider any change in configuration of the lots and to given notice within time.

106 It is also the case that, although purchasers may be very interested in where certain common areas are located or where certain facilities are located, Parliament has not conferred a right to have such variations brought to their attention.

107 According to counsel, when changes to the survey strata plan were made, a copy of the registered survey strata plan was supplied to the plaintiff by the notice of variation. It is said that provision of the registered survey strata plan must of itself provide 'full particulars of the variation' as it is the survey strata plan that sets out in detail the layout and size of lots, including common property. This is particularly so where the initial obligation on the vendor was to simply provide the purchaser a copy of the proposed survey strata plan: s 69A(b).

108 It is clear that on comparing the proposed survey strata plan and the registered survey strata plan that the area of CP36 has changed from 8,401 sqm to 5,885 sqm. That being said, according to counsel for the respondent, only a variation in a 'material particular' is obliged to be disclosed: s 69C(3)(c). According to counsel, none of the variations relied on by the applicant are variations in a material particular. This is said to be because:

(a) there was no variation to the size, shape or position of the lot in question;

(b) the proposed survey strata plan showed common property of 8,401 sqm inclusive of a 10 m wide easement, a café and an area for rubbish bins to be stored. Each of the easement, the café and the rubbish bin area have been retained but not as part of the original common property lot. However, the easement, café and the bin area has been retained and the purchaser is entitled to use these facilities. The overall area by which the area open to use by the owners of units has been reduced is by 311 sqm, a variation of 3.7%

Counsel for the respondent maintained that, accordingly, there has been no change to a material particular in the strata plan.

109 Reference was also made by counsel for the respondent to the fact that the applicant now also complains with respect to the location of the amenities. There was no 'lease, licence or privilege' in relation to the common property granted as at the time of entry into the Contract. It is said that, therefore, s 69C(3)(e) does not apply. Further, no complaint is made by the applicant with respect to the information disclosed by the vendor in the Contract as to the provisions of the proposed survey strata plan which did not include any detail of the location of any amenities. The fact that the location of these amenities were changed in the planning process is said to have no bearing on the vendor's obligations under the Act.

110 Counsel for the applicant also submitted that the proposed unit entitlement for Lot 26 was 57 out of an aggregate entitlement of 2,000. This is apparent from Attachment 3C to the Contract which contains a schedule of unit entitlements for all the units and identifies the aggregate. Counsel for the applicant stated that, according to the variation information attachment to the notice of variation, the unit entitlement under the registered survey strata plan was 277 out of 10,000, a reduction, albeit a very small one, of eight entitlements. The concern expressed by counsel for the applicant was that the variation information required the purchaser to do the calculations rather than being told the change in entitlement between the proposed and the registered survey strata plan.

111 Counsel for the respondent noted that the change in unit entitlement represented a change from 2.85% of the aggregate unit entitlement to 2.77% of the aggregate unit entitlement; in other words, a change of 0.08%.

112 Counsel for the applicant conceded that this does not impact on administrative levies because the proposed method of levy is simply to treat all owners equally and not to look at lot entitlements. However, that is not the position in relation to reserve fund levies where contribution is levied at $10 per unit entitlement and therefore $570 was disclosed as being the reserve fund levy for Lot 26. Counsel submitted that the applicant has not been advised as to how the reserve fund would be treated under the registered survey strata plan; that is, will it be $2,770 or will the basis of the calculation change from $10 per unit?

113 Counsel for the respondent stated that, before the Contract is entered into or, by way of inclusion in the Contract, the vendor is obliged to provide the unit entitlement of each lot within the scheme and the aggregate unit entitlement (or if the scheme is not then registered, the proposed entitlement): s 69A. As is common practice, and about which there has been no complaint in this case, this was done by supplying a schedule of unit entitlements to the applicant: Attachment 3C to the Contract.

114 By the notice of variation the plaintiff was informed that:

[A]s a result of the changes to the size of some lots, the unit entitlement has changed from that which was shown in the proposed survey-strata plan in your sale contract for the Property (Contract). Refer to the attached Form 3 for unit entitlements.

115 Therefore, it was submitted, a change was specifically brought to the attention of the purchaser by the notice and the particulars of the new entitlements were set out in exactly the same form as the original information relating to unit entitlements was given. It was said that the requirement to give full particulars is satisfied by this approach. It was further pointed out that the unit entitlement changes by only 0.1% of the aggregate unit entitlement. Counsel for the respondent submitted that, therefore, no right to avoid arises as a consequence of the change in the unit entitlement.

116 It is also the case that, whilst s 69B(2)(d) provides for the vendor to provide the estimated contributions of the proprietor under s 36(1) and (2) of the Act, which establishes funds and determines levies, s 69C does not require notice to be given of any change to any proposed levy.

117 Counsel for the applicant also raised the issue of the effect on the administrative fund levy of the change in the site manager's fee. It was said that, before the Contract was entered into, the administrative levy was disclosed at some $6,572 per annum, being calculated on a budget of $230,000 divided equally between the 35 lot owners. The budget estimate of $230,000 includes a site manager fee of $55,000. The covering letter notifying the variations, the following statement was made:

The developer has arranged for Mantra Management Pty Ltd (Mantra) to operate as the site manager for the survey-strata scheme and, based on advice from Mantra, had determined that the amount required to employ a person on site as manager/caretaker needs to be increased to $75,000. The site manager's remuneration is paid for by the strata company and forms part of the revised budget to be passed by the strata company at its first annual general meeting.

As counsel noted, that change would bring the budget to $255,000 and the administrative levy for each lot owner to $7,285.71, an increase of $713.71 per annum per lot owner. However, counsel for the applicant noted that the vendor did not provide a revised budget or a revised estimate of the administrative levy.

118 Counsel also noted that the estimate of income and expenditure for the strata company included in the Contract makes no reference to either income or expenditure from a café. Issues relating to the café referred to in the site plan and other documentation have been addressed above.

119 Counsel for the applicant referred to s 69C(3) and noted that there are two limbs to the subsection. Section 69C(3)(i) refers to entering into an agreement and s 69C(3)(ii) refers to varying an existing agreement. The significant part is said to be the last part of both those subsections where the first subsection says 'likely to affect the rights of the purchaser' and the second one says 'whereby the rights of the purchaser are likely to be affected'. The submission made was that the two expressions are the same. I would accept that to be the case. It was further submitted that, if an agreement is entered into that requires the payment of an extra $20,000 plus GST, the rights of the purchaser are reflected in the budgets. The applicant's position is that, if providing full particulars is required, the vendor must address how the purchaser is affected by the variation.

120 Therefore, according to counsel for the applicant, if one of the variations is an agreement that is likely to affect the rights of the purchaser then full particulars of the variation will include the full amount of the change. The only right that is said by counsel to affect the purchaser is his obligation to contribute to the increase.

121 In summary, the applicant's submission is that the notifiable variation is not just the fact that the site manager's contract has changed, the notifiable variation is the impact of that on the estimate of income and expenditure. Counsel noted that the vendor is required when it provides the Form 28 to give an estimate of the two significant ongoing costs to the development: the estimate of income and expenditure and the proposed administrative levy. The full particulars, then, of the notifiable variation are said to be the change in the estimates in the budget.

122 In response to that specific point, counsel for the respondent again referred to the information to be provided under s 69B which refers specifically to an estimate of income and expenditure and to specific levies. As counsel observed, in s 69C there is no reference to either of these items. The variation of which notification is required is said to be the variation to the document (ie, the budget). Counsel for the respondent submitted that, if Parliament intended a vendor to bring to the attention of a purchaser any change at all in the material that is required to be provided at first instance, then the section would simply refer to providing notice of any change to that material. The respondent's position is that when considering the purchaser's rights, these rights do not include potential obligations to pay in the future. Counsel maintained that the legislation is talking about contracts or agreements or changes that might affect the use of the property and the entitlements associated with it by the purchaser. The reference to the rights of the purchaser is not a reference to the information the purchaser is entitled to have, it describes the type of agreement of which notice is required.

123 Counsel for the respondent accepted that the vendor is obliged to advise if it enters into an agreement for the provisions of any amenity or service to the strata company or that is otherwise likely to affect the rights of the purchaser which is why advice of the entry into the agreement was given in the letter. The purchaser was advised of the fact of the service contract, the name of managing company and the changed cost. However, counsel for the respondent submitted that there is nothing in s 69C which requires the vendor to otherwise vary the budget information that was provided. Counsel maintained that the vendor has provided more information than was required under the Act and there is no suggestion that the information provided was incorrect in any way.

124 With respect to the applicant's assertion that there was a failure to provide proper particulars of how the appointment of Mantra would vary the information disclosed in Attachment 3G to the Contract, counsel for the respondent observed that Attachment 3G concerns the contributions that purchasers would be estimated to make to the strata company for the first year of operation for administrative fund levies and reserve fund levies. Before the Contract was entered into or, by way of inclusion in the Contract, the vendor was obliged to provide the estimated receipts and expenditure of the strata company for the period of 12 months after registration of the strata company or of the last AGM or of settlement, whichever is the later: s 69B(2)(c) and estimated contributions of strata levies by the purchaser: s 69B(2)(d) of the Act: Attachments 3F and 3G. This information was provided by the vendor to the purchaser.

125 Further, the vendor was then obliged to provide details of every agreement for the provision of any amenity or service to the strata company already entered into: s 69B(2). In this case, no site manager's contract had been concluded at the time of Contract, however, a draft contract was provided (Attachment 3E) and the estimated costs were budgeted for (Attachment 3F).

126 The vendor was required to advise of the entry into an agreement for the provision of any amenity or service to the strata company: s 69C(3)(a). Advice of the entry into a site manager's agreement with Mantra was given in the variation notice. According to counsel, this was all that was required by the Act. As counsel observed, pursuant to s 69C, the notifiable variations do not include the requirements to provide a new estimate of income, expenses or proposed contributions. The fact that the site manager's remuneration stated in Attachment 3E of the Contract has changed did not require the vendor to notify of the change. However, the vendor did notify of the change in the remuneration.

127 Notwithstanding that the entry into the agreement was disclosed, the defendant also provided details of how the purchaser could obtain further information about the manager and how the estimated expenditure would be affected, which was more than it was required to do. According to the respondent, it cannot be the case that any right to avoid the Contract will arise where correct information additional to that required to be given is proffered by the vendor.

128 As noted above, the first conclusion I have drawn is that, provided a purchaser giving notice under s 69D alleges a breach of s 69D, there is no requirement to state in the notice all or any alleged grounds of non-compliance and grounds may be identified or added at a later time. However, in this case, I find that the applicant's notice was defective in that it did not rely on a failure to provide any relevant information, contained no assertion that the conduct of the respondent was deficient in any way and did not refer to a breach of any statutory provision. Nevertheless, I decided to address the primary issue of whether the respondent provided full particulars of each variation by considering the specific allegations of non-compliance relied upon by the applicant.

129 Before considering the competing proposition relied upon by the parties, it should be noted that, with regard to the specific wording of s 69C, that section does not require notice to be given of a variation to every matter of which a purchaser is required to be informed under s 69A and s 69B. Section 69C refers only to variations with respect to agreements for the provision of amenity or service to the strata company, the making, amending or repealing of any by-law, variations to the proposed strata plan, the unit entitlement or the aggregate unit entitlement, and to leases or licences in relation to the common property. For there to exist a right to be provided with variation information with respect to matters set out in s 69A or s 69B, but not identified in s 69C, the court would need to be persuaded of a different interpretation arising from the wording of the relevant sections.

130 In asserting that, under s 69C, more is required to fulfill a vendor's obligation than merely to provide a statement of the changed information, counsel for the applicant relies on the following:

The protective nature of the statutory provisions;
The varied backgrounds and abilities of the purchasers;
The specific wording of the relevant section including the terms 'full particulars' and 'inform'; and
That seven days would be insufficient time to determine the consequences of the notifiable variations and identify any material prejudice.

131 In considering the first matter raised, there is no doubt that pt V of the Act was intended to have a protective purpose. The title alone, 'Protection of Purchasers', is evidence of that fact. However, it is the extent to which protection is provided which is in issue. For example, counsel for the respondent submitted that the provisions are not intended to be complete consumer protection provisions as can be found on certain legislation. In pt V, provided the purchaser is provided with the information identified in s 69A and s 69B, the actual decision to purchase the property is left with the purchaser. Therefore, the provisions are purchaser protection provisions only in that limited sense.

132 Of course, that is not the extent of the rights held by a purchaser of a strata title property. As counsel for the respondent submitted, and which is, in my view, an accurate description of the situation, a purchaser has a composite set out rights; rights under the Contract including the right to terminate for the breach of any contractual obligation and a statutory right to terminate under s 69D. Therefore, the scope of the rights conferred under pt V must be considered in light of the fact that the party also retains contractual rights to terminate. The submission of counsel for the respondent was that the Parliament has chosen not to interfere to much of an extent in contractual relations between parties other than to provide a right of avoidance of the Contract in particular limited circumstances. I accept that to be the case.

133 Counsel for the respondent alleged that the majority in Deming (145 - 146) discussed the applicable approach to statutory construction to be applied to the equivalent provisions of the Queensland legislation and concluded that, where, as here the consequences of any minor breach could give rise to a right to terminate a contract the correct approach was to construe the legislation in favour of the vendor notwithstanding the element of purchaser protection contained in the legislation.

134 In relation to the grounds of attack on the sufficiency of the statements provided by the vendor, the majority in Deming (145) referred to the penal character of the provision and observed:

That being so, the prima facie construction of those parts of the section which impose obligations is that any real ambiguity persisting after the application of the ordinary rules of construction is to be resolved in favour of the most lenient construction.

135 In response to the proposition advanced on behalf of the purchaser, that any ambiguity in the obligations imposed by the section was to be resolved in favour of a construction which will most effectively meet the evil which the legislation is designed to remedy, the majority in Deming (145 - 146) stated:

Although the provisions of the section were intended to afford meaningful protection to a purchaser in a case where the requirements which the section imposes are not satisfied, the difficulty in identifying the mischief aimed at in the section of the requirements of a notice in writing under sub-s (1) makes it inappropriate to approach the construction of those requirement otherwise than on the basis that, if there be ambiguity, the most lenient construction is to be preferred.

136 The reference to the 'difficulty in identifying the mischief aimed at in the section' is a reference to the observation made by the majority (145) that s 49 required the vendor to include in the statement in writing to be given to a purchaser, a variety of information, ranging from the significant such as lot entitlement and applicable by-laws to information which would ordinarily only be obtainable from the purchaser himself such as the purchaser's own address. However, this observation was concluded by, and should be considered in the context of, express reference to the fact that a breach of the obligation to provide any of the required information would result in an offence under the Act.

137 Whilst counsel for the applicant did acknowledge that the Queensland legislation also included a penalty provision, whereas the Western Australian legislation does not, in my view, insufficient consideration has been given to the impact of that factor when submitting that the majority's decision in Deming supports a construction of the relevant provision in favour of the vendor. In my view, those observations are predicated on the inclusion in the legislation of a penal provision and do not, necessarily reflect the approach to be taken when considering this state's legislation.

138 The only authority which addresses the issue under consideration was identified by counsel for the respondent after the hearing of the present case. Counsel for the applicant requested that the court not consider that part of the respondent's submissions which includes the reference to the decision in Sommer v Abatti Holdings Pty Ltd (1992) 1 Qd R 300 and to the Second Reading Speech of the amending Act which made changes to the relevant provisions. Counsel for the applicant filed responsive submissions to the respondent's supplementary submissions and could have addressed this decision if he had chosen to. In my opinion, the court should not disregard a relevant authority, particularly one which could as easily have been identified by the court's own research. Further, where there are competing interpretations of the same provision, it is open to the court to consider supplementary information such as Reading Speeches. That is something that the court was entitled to consider of its own volition and commonly does. For that reason I was not prepared to accede to the applicant's request.

139 In Sommer v Abatti Holdings, a decision of Derrington J, the defendants agreed to purchase 'off the plan' two home units (with garages) from the plaintiffs. When the building unit plan was registered, however, garages were assigned to these units which were different from those specified in the agreement. The plaintiffs served upon the defendants rectification notices which purported to issue under s 49(4) of the Building Units and Group Titles Act 1980 (Qld). These notices contained express reference to the change in garages, but did not restate all the information originally contained in the original notice issued under s 49 of that Act. The defendants purported to rescind the agreements. The plaintiffs sought specific performance of the agreements. An application for summary judgment was resisted by the defendants on two main grounds. The first was that material prejudice was suffered, an issue not relevant to the present case. The second ground related to the absence of notice under s 21 and s 22 of the Land Sales Act 1984 (Qld), legislation which applied equally to the sale of proposed building units as much as to the sale of proposed subdivision of land, even though to a large extent it duplicates the provisions of the Building Units and Group Titles Act. Section 21 of the Land Sales Act requires a notice containing certain information to be served by the vendor on the purchaser and by s 22 that a rectification notice be served to correct any error which may appear in the original notice: (303).

140 The plaintiffs had not served on the defendant a notice under s 21 but a notice headed as referring to s 49 was included in the contract documents and that contained all the information required by s 21. The rectification notice which was given was headed only with a reference to s 49 of the Building Units and Group Titles Act. The defendants contend that such a notice of rectification must contain a full restatement in rectified form of all the information to be contained in a s 21 notice, and as the notice given did not do this and was not expressed to be given under the Land Sales Act, it did not conform with what was required: (304).

141 Derrington J stated (304) that it should first be noted that there is no requirement that a notice under s 22 should be contained in a separate document and there is no requirement that any specific reference be made to the Land Sales Act. His Honour further noted (305) the impracticality of being required, when providing particulars of the variation, to also include all of the original information which has already been given. The impracticality of such a course was said by Derrington J (305) to be an immediate factor against such a construction.

Clegmere Pty Ltd v Samspring Pty Ltd

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (226 paragraphs)

BANKMIST HOLDINGS PTY LTD -v- AZINA HOLDINGS PTY LTD [2009] WASC 230 (20 August 2009)

(b) Information to be provided under s 69A, s 69B and s 69C

(e) The respondent's interpretation of s 69C

(f) Whether the vendor has substantially complied with s 69C

Parties

Legislation Cited (4)

Cases Cited (6)