159 There was conflicting evidence as to what a " one bedroom " apartment is. The opinion of Mrs Goltsman and that of Mr Peter Van Wyhe, an experienced real estate agent called in the plaintiff's case, was that apartment T1204 was not a one-bedroom apartment because it did not have a fixed wall. The opinion of Mr Cirillo and Mr Woods, real estate agents working for Colliers, was to the opposite effect.
160 The defendant tendered Internet advertisements for one-bedroom apartments in 2006 which indicated they had " sliding doors ", "sliding walls " and " glass partition sleeping area ". The defendant also tendered a survey of Internet advertisements in October 2006 for Elizabeth Bay and other inner city areas, which indicated that apartment T1204 was in the average size range of a one-bedroom apartment. However, the plaintiff in its submissions does not complain about the size of apartment T1204.
161 The plaintiff made the following submissions which I accept, with one qualification in relation to (i):
(a) the opinions of Messrs Cirillo and Wood were personal opinions unsubstantiated by evidence and should not be given significant weight;
(b) there is no industry practice as to how to describe an apartment which has sliding doors or walls separating the living area from the bedroom area;
(c) while Mr Cirillo said that the use of sliding doors or walls to separate a bedroom area from the living area was " innovative " but not a " first ", he could not provide specific examples of where they had been used previously;
(d) Mr Van Wyhe had never seen a unit with a sliding wall being marketed and sold as a one-bedroom unit;
(e) according to the evidence of Mr Cirillo, some studio apartments have a defined space, for example having a " half wall showing the boundaries of the bedroom area "; and according to the evidence of Mr Van Wyhe, some studio apartments have a partition with screening between the living area and the bedroom area;
(f) as a leasing consultant, Mrs Goltsman had not experienced apartments marketed as one-bedroom apartments having a division between the living area and the bedroom area defined by sliding or moveable walls;
(g) the defendant's survey of Internet advertisements in 2006 of apartments with sliding doors as one-bedroom apartments does not assist the defendant because they do not demonstrate an industry practice. The advertisements explicitly state that there are sliding doors. Use of sliding doors was said to be " innovative " in 2003, so advertisements in 2006 do not represent common use in 2003. Generally, all one-bedroom apartments with floor plans in the survey have fixed walls;
(h) in determining whether a representation of the apartment as a one-bedroom apartment was misleading or deceptive, one has to address the audience for that representation not what the makers of the representation may have thought; and
(i) it should be taken into consideration that the apartments were being sold off the plan; at the time of purchase the Goltsmans could not have inspected the apartment as built. I think that the description "off the plan" should be qualified. The existing hotel building was being redeveloped and therefore many of its features were observable prior to contract. However, the bedroom wall was not one of them.
162 The evidence of Mr Peter Van Wyhe, on which the plaintiff largely relies, included the following:
(a) in the real estate industry there is a well known and understood distinction between units that are described as " studio apartments " or " bedsitters " and those that are described as " one bedroom units ". The primary distinguishing feature is that one-bedroom apartments have a fixed wall from floor to ceiling that separates the living area from the bedroom area, whereas bed-sitter/studio units do not;
(b) whilst bed-sitters/studios often have an internal floor space of less than 50m2 this is not necessarily so. Apartments greater than this size are still described as bed-sitter/studio apartments if there is no fixed wall between the living area and the bedroom area;
(c) the distinction between bed-sitter/studio and one-bedroom units has an important effect on market price. In his experience and observation, in the current market a one-bedroom apartment in the high-rise residential areas of Elizabeth Bay and nearby areas typically sell for between $75,000 and $100,000 higher than a studio apartment of the same size;
(d) he could recall no instance where an apartment with sliding walls, such as were in apartment T1204, had been marketed and sold as a one-bedroom apartment; and
(d) in his opinion the market value of apartment T1204 as at September 2006 was $500,000 to $525,000 and as at November 2003 was $450,000 to $475,000 (if it had been constructed as at that date).
163 I give little weight to the views of Mr Van Wyhe for a number of reasons, substantially as submitted by the defendant. First, it was not disclosed until his cross-examination that he was a former employer as well as a friend and acquaintance of Mrs Goltsman. Where an expert has a pre-existing relationship with a party for whom the expert is giving evidence, a question arises as to whether the pre-existing relationship compromises the expert's objectivity. Non-disclosure of a pre-existing relationship by an expert witness is cause for concern. Secondly, Mr Van Wyhe's affidavit lacked exposure of assumptions or reasoning in coming to his conclusions. His estimate of value was unsupported by reference to any comparable sales, other data or analysis. He was not a valuer nor had he done any study of the methods used by valuers to value land. He disclosed in cross-examination that his affidavit had been dictated to him over the telephone by the plaintiff's solicitor and that the choice of words in the affidavit were not his own. Thirdly, his conduct in cross-examination suggested that he did not understand the role of an expert witness. He refused to answer some questions including questions which sought his opinion based on assumptions put to him.
164 Fourthly, Mr Van Wyhe's view was that the difference in price between a one-bedroom unit and a studio of the same size is between $75,000 and $100,000. In doing so, he propounded a view that if a prospective purchaser inspected an apartment advertised as " one bedroom " and discovered the dividing wall was sliding, they would discount what they would otherwise have been prepared to pay for that apartment by $75,000. This evidence is at odds with the evidence of Mr Fischer, a director of the defendant, that the inclusion of a sliding panel wall was significantly more expensive than would have been the case if the walls had merely been fixed with a standard door. Mr Fischer testified that to replace the sliding dividing wall with a fixed wall and door in apartment T1204 would cost only $2,656. I accept Mr Fischer's evidence. If Mr Van Wyhe's evidence is correct, the defendant or the plaintiff could increase the value of apartment T1204 by between $75,000 and $100,000 merely by replacing the sliding dividing wall with a fixed wall for $2,656 - a net gain of up to approximately $97, 000. In my view, this is implausible. When this logical consequence of his view was put to Mr Van Wyhe in cross-examination he denied, without adequate explanation, that it applied to apartment T1204.