"Let out" means expansion of the size in order to accommodate services. Block "c" was where the subject unit was situated. The minutes then continued:
"3.3 MA (that is Mr Armstrong) advised these units have been signed off by client but feedback is awaited from Real Estate/Marketing people."
35 The vendors had set up a marketing office close to the premises and it was well-known to them that the agents, including City Project Marketing Pty Ltd, were marketing the units to members of the public, and that they were using a brochure with an orange cover. That brochure is in evidence as AX5 and following.
36 Page 2 of the brochure is headed "Reclaim the Metropolis". The buildings are called Metro and it reads:
"Metro hits the style accelerator. For the first time in living memory, cutting edge design and intelligent architecture burst onto the scene in what will soon be the city's fastest growth location, Roseberry.
Bringing together the considerable talents of Sydney's own ARC architects and Melbourne's most talked-about designers, SJB Interior Designs, Metro unveils a style of living that is not afraid of the metropolis. Presenting a collection of one and two bedroom apartments with single and multi-layered configurations, Metro uses clean rectilinear design to reclaim and define open space."
37 There was obviously hyperbole in that statement, but I accept the submission of Mr Robinson that there is a focus on not only the position of the units, but their inner design. They are said to be designed, and that surely can only refer to the interior design, by Melbourne's most talked-about designers. I interpolate that Mr Armstrong said that, as far as he knew, SJB Interior Designs were not Melbourne's most talked-about designers, but that particular misrepresentation does not feature further in the case.
38 The focus is, however, on the open space and the interior design of the units. Now, Mr Warren's cross-examination, especially of the male plaintiff, concentrated on the open space. Of course, it is quite easy to build open space; one just does not build a wall, and Mr Verus said in effect that, yes, it has open space, but that's really not the main problem. The main problem is the way in which the initial plan that was given to the plaintiffs and which they relied on, they would not have signed the contract without it. Indeed they waited for the plans before signing the contract and now everything is completely altered.
39 Now, I can't see any reason for disbelieving that. Not only did the plaintiffs present well, their demeanour did not show any reluctance to meet the questions of Mr Warren head on. He cross-examined without any padding for just under half an hour. The answers that were given by the plaintiffs appeared to be reasonable. There was no evidence called from Mrs Yeates, or anybody else, which would tend to contradict it and, accordingly, in my view, I should accept the plaintiffs' evidence that the reason why they did not proceed with the contract was because of the representations which were made in the brochure, and on the plan that they were given, that that was the configuration of the unit, and that was a vital matter to them.
40 I suppose one has to look now to technicalities under the Trade Practices Act. Section 52 of the Act provides that:
"(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."
41 There is no doubt the vendors are a corporation and they are in trade and commerce. There is also no doubt that where a vendor employs an agent and arms the agent with brochures, that the conduct of the agent is able to be attributed to the vendors, and is an a fortiori case, as in the present, when the vendors have on-site selling offices armed with the material.
42 The question is whether this is a representation of an existing fact, or whether it is a representation of future intention.
43 A representation of existing fact would be as at this point in time we intend to build the units like this and to have this internal configuration. On the evidence of Mr McNamara and Mr Armstrong this would be a mis-statement of existing fact because they all knew that there would be many alterations made from the time of that plan until the time of the final building. If, on the other hand, it is evidence of future intention, then one must look at s 51A(2) that:
"… in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation".
44 There was no evidence on the part of the defendants on this issue. The conduct referred to in s 52 of the Trade Practices Act includes misrepresentation. It includes innocent misrepresentation, and, indeed, it includes conduct which under the general law would not be a representation at all.
45 It seems to me that in all the circumstances of this case the conduct in issuing the brochure and in issuing the plans, was conduct which was misleading within the meaning of the section.
46 One then has to work out whether it was relied on by the plaintiffs, and on the facts, as I have found them already, the answer to that question must be yes. One then has to work out under s 87 of the Act whether there should be relief given as to rescission and/or compensation.
47 Before, however, I deal with that I must deal with the defence that cl 31 of the contract, which I have set out earlier, means that the plaintiffs cannot rely on the representation, or, alternatively, that I must discount the evidence because of it.
48 There have been a number of cases in which courts, mainly the Federal Court, have had to consider the effect of a clause such as cl 31. Clause 31, it must be noted, is not in the usual strong form, in that it is not, strictly speaking, a sole contract clause. Furthermore it might also be construed as not covering a matter which was not included in the contract because it is clear that there were matters other than in the contract which were relevant to the parties' intention. But putting that aside, such a condition is not a bar to a claim under the Trade Practices Act; see for instance Waltip Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 11 ATPR 40-975, referred with approval recently by the High Court in Butcher v Lachlan Elder Realty Pty Ltd (2004) 79 ALJR 308 at 320. In IOOF Australia Trustees (NSW) Ltd v Tantipech (1998) 156 ALR 470 at 480 the Full Federal Court said that although an exculpatory clause, such as cl 31, cannot be relied on to answer a claim based on s 52, the fact that an applicant states that he was not induced to enter an agreement in reliance on representations may bear upon the question whether he should be believed when he asserts that the representations were an inducement. I have taken that into account.
49 The first thing to be said is that Miss Detmold said that she left the reading and the understanding of the contract to Mr Gibson, so that there was no evidence that this particular clause was ever brought to her attention and, secondly, the whole of the evidence, which I have accepted, shows that the representation did induce, no matter what cl 31 might have said.
50 I should add that it is another significant matter that the brochure did not contain any disclaimer. Indeed, at no stage did any of the plans contain any disclaimer, or any indication that things might be different to what was said to be the case by the marketing people. In that context, cases like Butcher are to be put to one side.
51 Accordingly, the Trade Practices count is made out.
52 What should be the consequences? The answer is that the plaintiffs are entitled to have the contract rescinded, if it has not already been rescinded, and are entitled to compensation for loss.
53 I should go back to the facts as at January 2004.
54 On 27 January 2004 the agent indicated that the strata plan had been registered and that the units could be inspected between 2 and 4pm on 31 January 2004. This was not suitable to either of the plaintiffs who were working on that day and arrangements were made to inspect on 5 February. NOT Lawyers made requisitions and these were answered by the solicitor purporting to act for the vendors on 29 January. A transfer was submitted on 30 January. This again indicates that before the inspection the purchasers were ready, willing and able to complete.
55 On 4 February Summit Law indicated that completion was to take place before the expiration of 14 days from the notification of registration of the strata plan, and they expected completion by 6 February.
56 On 6 February NOT Lawyers wrote that:
"Following a number of requests from our clients and delays on the part of your clients in acquiescing, our clients were finally able to inspect the property yesterday."
57 The solicitors indicated their surprise as to the state of the premises. Not only were there defects, but also problems with the configuration.
58 On 7 February Summit Law wrote saying:
"We have forwarded your letter to our clients for their urgent instructions."
59 On 12 February there was a reply from Summit Law as to the defects. On 20 February NOT Lawyers said to the effect that, "yes, you have answered the defects, but you haven't addressed the issue of the reconfiguration of the floor plan" and pointed out that the plaintiffs had gone to considerable trouble prior to exchange to obtain a copy of the floor plan and they had purchased it as their home and wanted it the way it was, and noted that they were considering rescinding the contract under s 87 of the Trade Practices Act.
60 On 24 February in a piece of paper headed "Without Prejudice" the vendors' solicitors referred to cl 31 of the contract, and said, "We are of the view that your client has no ground to rescind this contract … ."
61 On 26 February NOT Lawyers forwarded a copy of the original plan and pointed out the problems. However, the vendors' solicitors showed no interest in this whatsoever, and it would appear that this was on direct instructions from the vendors not to reply to these allegations.
62 On 9 March 2004 Ms Maitland, who signed herself as solicitor for the vendors, purported to give a notice to complete. I think there were a number of matters wrong with that notice to complete, but that does not matter very much because it was not followed up.
63 On 5 April NOT Lawyers pointed out that the vendors had simply ignored the requests of the purchasers and they said:
"As a result of the misleading and deceptive conduct engaged in by your client, our clients are exercising their right to treat the contract as voidable on their election and this letter serves as notice of that election."
64 Nothing happened and on 6 May 2004 Ms Maitland wrote to NOT Lawyers enclosing a notice to complete and saying without prejudice she reserved the clients' rights in respect of damages. The notice to complete suffered from the same defects as the earlier one.
65 The purchasers' solicitors wrote saying:
"Your client appears not to have accepted that election and has issued a Notice to Complete."
66 The notice to complete provided for completion at 3pm on 21 May but at the settlement room of Summit law. At 3pm the purchasers did not attend, but the evidence is that the vendors at that stage would have been unable to have provided a discharge of the mortgages, though they would have been able to do so within a quarter of an hour afterwards. Of course, under the authority of cases such as Re Ronim Pty Ltd [1999] 2 Qd R 172, this would not have been sufficient.
67 The deposit under the contract was secured by a deposit bond issued by the third defendant in the sum of $40,500. On 21 June 2004 Ms Maitland wrote to the issuers of the bond enclosing a notice of termination of the contract for sale, advising that the deposit had not been paid and demanding payment.
68 On 25 June that $40,500 was paid to Oldtex Pty Ltd. On 25 June the issuers of the bond claimed on the plaintiffs, pursuant to the indemnity agreement which they had signed, $40,500, and in due course claimed interest as well.
69 On 28 May Ms Maitland wrote to NOT Lawyers:
"We refer to the above matter and to your letter dated 19 May 2004 and confirm that our client terminates the contract. Our client is entitled by reason of such termination to call upon the deposit bond."
70 It is odd that this letter talks about confirming the termination. There does not appear to have been any actual termination. However, for all intents and purposes certainly after May 2004 each party recognised that the contract was no longer on foot.
71 So then there has been, on the part of the purchasers, a rescission of the contract, as they were entitled to do. They were entitled to do this either in equity, under the doctrine of innocent misrepresentation (see eg Redgrave v Hurd (1881) 20 Ch D 1) or under the Trade Practices Act. Rescission basically is an act of the parties, provided that the contract is executory, and there is no need to make any restitution, as appears to be this case (see eg Kramer v McMahon [1970] 1 NSWR 194).
72 As the parties have indicated, both parties have accepted the contract is at an end, so I do not see any need to make any further order. However, the plaintiffs are out of pocket by the conveyancing costs, which they have incurred, and they are also possibly liable to the issuers of the bond. Accordingly, they must be compensated for these amounts, and I think also a small amount for what might be called Jarvis v Swans Tours Ltd ([1973] QB 233) damages. However, all of that is a relatively modest sum.