Tiplady, Murray Norton Tiplady & Anor v Gold Coast Carlton Pty Ltd Gold Coast Carlton Pty Ltd v Tiplady, Murray Norton & Anor [1984] FCA 306

entitlement to damages to be determined by reference to the terms

Trade Practices Act i974, 3s. 52, 53 Bu1rlding Act 1975-1984 (91d)

The Burlding Units and Group Titles Act 1989 \Qld), s.49

MURRAY NORTON TIPLADY and LAUREL KhOSF TIPLADY v. GOLD COAST

GOLD COAST CARLTON PTY LIMITED v. MURRAY ORTON TIPLADY and LAVREL ROSE TIPLADY (Qld G66 of 1984)

ON APPEAL FROM A JUDGE OF THE FFEDFRAL COURT OF AUSTRALIA

JUDGES MAKING ORDER: McGREGOR, LOCKHART AND SFENDER JJ.

The appeal cf Murray Norton riplady ani Laurel Pose Tiplady be 'lismissed.

The cross avgeal of Gald Coast Carlton Pty Limited be allowed.

Judgment he entered for Gold Coast Carlton Fty Limited ain the sum of $151,779.69 instead of 381,770.00.

Murray Norton Tiplady and Laurel Rose Tiplady pay the cost3 cf Gold Coast Carlton Pty Limited of the appeal and the cross appeal to be taxed.

ON APPFAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN : MURRAY NORTON TIPLADY AND LAUREL ROSE TIPLADY Appellants AND: GOLD COAST CARLTON PTY. "IMETED Respondent No. OLD. G. ¢. of 1984 BETWEEN: GaLD> COAST CARLTON FTY. LIMITED Cross-Appellant AND:

Coram: McGregor, Lockhart and Spender JJ. Date : 1 October 1984

McGregor and Spender Jd. MURRAY NORTON TIPLADY AND LAUREL

ROSE TIPLADY (applicants) have appealed against a aecision of a

Judge of this Court given on 19 June 1984 whereby their claim

against GOLD COAST CARLTON PTY. LTD. (respondent) for an alleged

contravention of s.52 of The Trade Practices Act 1974 ("the Act")

entitling them to a return of a deposit of $38,500 was dismissed and damages in the sum of $81,770 were awarded to the said

respondent on its cross claim against the applicants.

By a contract in writing dated 14 January 1981 the applicants agreed to purchase from the respondent unit No. 56, one of two penthouses each on both the 14th and 15th fioors of a building, "Ocean Royale", to be constructed on land at Old Burleigh Road, Broadbeach in the State of Queensland. The purchase price for the penthouse was $385,000, of which ten percent was payable by way of deposit. At the time the contract was entered into the construction had not commenced and plans in respect of the buiiding had not been approved by the local

It 18 useful to refer to the facts which are set out in the judgment of the primary Judge. The applicants had called at the office of the respondent's sales agent, St. George Real Estate of Broadbeach, in respect of "Ocean Royale" in about December 1980 or early January 1981. There they were shown a copy of the architect's plans for the proposed building anda preliminary copy of an advertising brochure and were givena photostat copy of the architect's floor plans with respect to unit 56. They were not told that the plans had not been approved

by the Council, or even that an application for a building permit had not then been submitted. By the end of that meeting the

applicants had formed an intention te buy penthouse unit 56.

The front cover of the advertising brochure bore an "Artists impression" of the proposed building which indicated a balcony on the north-eastern corner of the 15th floor, the upper level of penthouse unit 56, with a balustrade consisting of a horizontal rail and spaced vertical bars. Inside the brochure

"The apartments will be professionally managed by the Broadbeach International Hotel."

The floor plans for the penthouses which were given to the

applicants showed there was not to be a common lift lobby on the

14th floor in connection with the two lifts in the building; instead, one lift was to open directly into a private vestibule within one penthouse and the other -ento a similar vestibule within the other peninouse, there mre to me separate fire

stairs opening directly into these private vestibules.

applicants to the respondent copies cf the advertising brochure were printed anda copy sent to the applicants. The brochure

contained floor plans for each of the penthouses with the statement: "Measurements are approximate. Plans are subject to alterations". The "Artists impression" on the front cover of the advertising brochure did not accord with the engineering plans which the respondent had at all material times and which provided for a solid concrete balustrade around the north-eastern balcony on the upper level of penthouse unit No. 56. Though discussions

had taken place between the respondent and persons associated

'with Broadbeach International Hotel concerning the management of

"Ocean Royale", no agreement had been concluded and the matter

It was not possible to build the penthouses with the

private vestibules proposed consistently with the Building Act

1975-1984 (Queensland) or the Fire Safety Act 1974-1982

(Queensland) although initially this was not known to the

The contract, signed by the applicants, was received by the respondent with part of the deposit on or about 6 February

1981. The balance deposit, makina $38,500.00 in all, was received on 15 February 1981.

In the contract siqned by the parties the "Unit Sold"

"UNIT SOLD: No. 56 (Lot 56 in Proposed Building Units Plan No. )

FLOOR PLAN: In accordance substantially with the Plan in the Tenth Scnedule hereto and edged in blue. The said plan is

incorporated in this Agreement for indentification purposes only."

Clause 16(c) of the contract made provision for a statement "giving certain particulars in connection with the said unit..."

"an accordance with" 3.49 of The Building Units and Group Titles

Act 1980 as amended (Queensland), and provided that the statement

was "set out in the Twelfth Schedule to this Agreement". The

"IDENTIFICATION OF UNIT: Unit 56 on 14 & 15 Floor as identified ain sketch plan in subject agreement (where Bu1rlding Units Plan has been registered, Lot in Registered Building Units Plan No. yo

The sketch plan referred to in the Twelfth Schedule was the "Plan in the Tenth Schedule...edged in blue". The Tenth Schedule to the contract consisted of an indication as to the direction the building was to face and four floor plans, a "Ground Floor Plan",

a "Typical Floor Plan" and floor plans for the 14th and 15th

Az was noted in his Honour''s judgment, and as the evidence confirmed, the floor olan of the 14th floor in the Tenth Schedule was not as detailed as the architect's plans or the floor plan in the brochure, but did indicate both the private vestibules and the open staircases; a blue line was drawn around the northern sections of the floor plans including the private vestibule within the boundaries of penthouse unit 56. In the Reasons for Judgment of the learned primary Judge the recitals in

the contract are set out. We shall not repeat them.

Clauses 3(a), 6, 8(a) to (f), and 13 of the contract

3. (a) Settlement shall take place within thirty (30) days ...PROVIDED FURTHER that should the construction of the said building be delayed due in whole or in part to one or more of the following:-

(iii) on account of the delay of any local or other authority in giving any necessary approval provided the Vendor has taken all reasonable steps to obtain

6. If the Purchaser fails to comply with the conditions of sale herein set out or any of them then (in addition to any other remedy available to

(d) Without notice to the F'+chaser resell the said unit by public auct on or by private contract with pewer to vary or rescind any contract for sale and to hy in at any auction and the deficiency in vric® on such resale and the exrenze of snd incidental to repossession and to the present sale and such resale and any abortive attempt to resell together with all rates, taxes and other outgoings accrued due in respect of the said unit at the date of resale thereof which were payable by the Purchaser under the terms of this Agreement shall be paid to the Vendor by the present Purchaser and shall be recoverable as

The Purchaser will indemnify the Vendor against any loss which the Vendor sustains as a result of the Purchaser's default.

8. (a) The title to the said land described in the First Schedule will be, prior to settlement, under the Real Property Act of Queensland; the title to the said unit will be or is subject to the provisions of the 'Building Units and Group Titles Act 1980' as amended.

(b) The Purchaser or his Solicitors may within fourteen (14) days from the date of registration of the subject Building Units Plan deliver to the Vendor or 1ts Solicitors requisitions or objections (1f any) on or to the Vendor's title. All requisitions or objections not so delivered shall be deemed waived by the Purchaser.

(c) If the Purchaser shall within the said fourteen (14) days make any valid requisitions or objections on or to the Vendor's title which the Vendor shall be unable or unwilling to remove or comply with, the Vendor or its Solicitors (whether they shall have attempted to remove or comply with the same and notwithstanding any negotiation or litigation in respect thereof) may give to the Purchaser or his Solicitors notice in writing of the Vendor's intention to rescind the agreement at or before the expiration of seven (7) days without prejudice to any other rights which the Vendor may have. Unless such requisition or objection shall be withdrawn or waived within such seven (7) days the Contract shall thereupon be rescinded and the Vendor 3hall repay to the Purchaser all deposit and other moneys received by 1t or its Agent on account of the purchase money but without interest costs or damages and the same shall be accepted by the

Purchaser in full satisfaction of all claims. If the Purchaser withdraws or waiv's his objection or

requisition as aforementioned tien this Agreement shall remain in full force and operate as if such requisition or objection had not been made and the said written notice of rescission had not been given.

(d) (1) The Purchaser acknowledges that he has not relied on any representations by the Vendor, the Vendor's Agent or any other person or persons or corporation in and about entering into this Contract other than as set out herein and that the conditions and stipulations hereot constitute the only agreement between the Furchaser and the Vendor.

(ii) The Purchaser shall be entitled to premises with measurements and to a standard and specifications substantially in accordance with those set out in the said specifications and plans and the Schedule of Finishes

(e) Subject to the provisions of Clause 8&(f) hereof the Vendor warrants that the unit entitlement of the respective units in the said building as shown in the relevant Building Units Plan shall be as set out in the Second Schedule hereto.

(f) The Purchaser shall not be entitled to make any objection, requisition or claim for

(i) Any minor variations as regards the said unit between the Plan ag produced to the Purchaser and the Bulrlding Units Plan as registered by the Registrar of Titles;

(ii) Any alterations in the number, size, location or unit entitlement of the lot or lots in the Building Units Plan (other than the lot or lots hereby 301d) or in or to the common property provided that the unit entitlement of the lot or lots hereby soid and the aggregate unit

entitlement of all lots shall not thereby be varied.

(iii) Any alteration or variation in the said plans and specifications accordingly.

(iv) Any alteration or variation in the said plans and specifications and in the said Schedule of Finishes as' may become necessary during the course of construction by reason or ratters beyond the control of the Vendor which may result from, inter alia, the requirements and directions of any governmental or semi-governmental authority or as may be required by the practical exigencies of construction either py, but without limiting the generality of the foregoing, the dictates of good building practice and/or the availability of materials, PROVIDED HOWEVER that the Vendor = shall take all available and reasonable steps to adhere wherever vossible to the said plans and specifications and Schedule of Finishes.

13. If the Gold Coast City To tncil or other competent authority imposes any conditions on the granting of the Town Planning Permit or Building Permit for the land and building the subject of this Contract which the Vendor shall be unable or unwilling to comply with,

then the Vendor may cancel this Contract by written notice to the Purchaser or his

Solicitors and on caricellation all moneys paid by the Purchaser shall be refunded without

deduction together with any interest accrued in respect of the deposit, and neither party shall have any claim against the other by virtue of this Contract or 1ts cancellation as aforesaid.

His Honour made various findings as to matters of fact and law which we will now proceed to set out insofar as they are relevant to this appeal. His Honour found that all of the principal actors were unreliable witnesses, none of whom "would score highly if rated for credibility". It appears from the Reasons that the persons so described included Mr. and Mrs. Tiplady; their son Warren who for part of the relevant time was employed as a salesman by St. George Real Estate; Mr. George Gauci, the respondent's managing director; and Mr. Quarmby, the estate agent's Sales Manager. His Honour said that he had not found it a useful exercise to try to establish an order of preference between these persons as witnesses but he had taken the evidence of each and his views concerning that evidence into account in arriving at what seemed to him on the evidence overall

About February 1981, following an inspection by a Building Inspector at the Gold Coast City Council and an officer of the South Coast Fire Brigade, the respondent was notified that what had been proposed in respect of the private vestibules on the 14th floor was not acceptable. The evidence did not establish that the respondent received that information prior to 1ts execution of the contract between it and the applicants; but

it knew goon afterwards. By early April 1981 1t had received

letters from the Gold Coast City Council and also the South Coast Fire Brigade oaiving formal notification that the private vestibules were not acceptable. Following the submission of amended plans, the respondent received, on or about 4 June 1981,

At about the same time, negotiations concerning the acquisition by Broadbeach International Hotel of the management rights in respect of "Qcean Royale" were terminated. Having regard possibly to a finding by his Honour, this matter forms no part of the respondent's argument before us now. We shall not

His Honour found that by the e ground has been taken nor argument presented that if was wrongly received into evidence. It would have supported the respondent's case. However, as his Honour did not rely upon it, it is not necessary in the circumstances here for this Court to consider what

The next argument for the applicants was that i1t was necessary for the respondent to show knowledge on the part of the applicants of the right to rescind the contract (as opposed to the facts entitling). On the question of onus, counsel referred

to Coastal Estates (supra) per Herring C.J. at p.437 (to which we

would add a reference to the decision of Adam J., ibid, p.454).

Assuming the proposition there stated to be sound, 1n our opinion

"there was evidence given by e.7 "-, Gauci to which we were referred indicating that the applicants, in this case the male applicant, Mr. Tiplady, had the requisite awareness. See also

O'Connor v. S.P. Bray Limited £1936] S.R.(N.S.W.) 248 at p.262,

263: Matthews v. Smallwood £1910] 1 Ch. 777: Fuller's Theatre and Vaudeville Company Limited v. Rofe £1323] A.C. 435 at p.443.

The evidence, in our view, justified a finding that at a time when the relevant changes in the building were known to the applicants, they elected to affirm the contract and did so with knowledge of an alternative, e.g. "rescission". However, we have not been persuaded that the authorities in circumstances such as these unequivocally support the view that in order to be held to an election the party to whom the election 15 attributed must be shown to have been aware of his or her alternative legal rights. We accept the aryuments that the onus of co showing is on the party, 1n tnis case the respondent, who «.ntends that an election has been made. In what 183 admittedly a different case, Jordan

C.J. in O'Connor v 5.P. Bray Limited (supra) said at p.263 -

"Tt has been urged that there must also be knowledge of the legal consequences of the facts and of the leqal rights involved; but this is not borne out by the authorities, and the contention

is, I think, based upon an attempt to import into ordinary cases of election rules which are peculiar to the equitable doctrine of election."

In our opinion, in Utldeéer's Trustee & Executor Company

Limited (supra) at p.618, tne Court was of the view that where the issue was whether an election had been made, 1t was not necessary to show there had been knowledge of the existence of

the legal right to elect and of the alternative. Coastal Estates

(supra) is distinguishable in that the contract there was induced

In Sargent's case (supra) at p.643, Stephen J. dealt in

some detail with Kammins Ballrooms Co. Ltd. v. Zenith Investments

(Torquay) Ltd. 019713 A.C. 850. He pointed out that Lord Reid and Lord Pearson concluded that the only knowledge which must he shown so as to bind the lessor, the party alleged to have made an election to waive, was knowledge of the relevant factors and not of the legal position resulting from them; and that Lord Diplock apparently came to the same view, though Viscount Dilhorne seemed to have regarded knowledge of the legal position as necessary. Stephen J., later at pp.643-644, after a consideration of the

judgment in Q'Connor v. S.P. Bray Lid. (supra) and Mr. J.S.

Ewart's work on the subject, both of which denied there existed a requirement for more than knowledge of the facts giving rise to the legal right, expressed a clear preference for the view of Lord Diplock in Kammins 1.e. one could be held to an election if he knew "of the facts which give rise in law to these alternative rights". His Honour, Stephen J's further reference to American authorities at p.644 led him to conclude that "the clear weight of opinion" appears to require knowledge only of the relevant

"Tf a party to a contract, aware of a breach going to the root of the contract, or of other

circumstances entitling him to terminate the contract, though unaware of the existence of the

right to terminate....exercises rights under the contract, he must be held to have made a binding election to affirm. ... The justification for

imputing to the affirming party a binding election in these circumstances, though he be unaware of his alternative right, is that, having a knowledge of the facts....,he has acted adversely to the other party and that, by so doing, he has' induced the other party to believe that performance of the contract is insisted upon."

The primary Judge said that the evidence "contradicted

any suggestion that (applicants) vere agnorant of their legal

rights". In our opinion there was unequivocal evidence to the

effect that the applicants, though with knowledge of a legal

entitlement not to do so, intended >and did affirm the contract, thereafter communicating that aintention .to the respondent. The learned primary Judge was entitled to accept

We now turn to consider the appeal by the respondent on the cross-claim. The respondent contended that 1t relied on cl.6 of the contract; consequently as the sum awarded by the primary Judge was not calculated in accordance with that clause 1t was

inadequate. Clause 6(d) has already been set out above and need

The trial Judge treaved the matter on the basis that the respondent's claim was for common law (1.e. unliquidated) damages to which it became entitled on the repudiation of the applicants (purchasers). Thus, from the amount which he found would have been payable by the applicants on completion upon the date when the contract was terminated, his Honour deducted, inter alia, what he considered to be the value of the unit at the termination of the contract (which the respondent retained) rather than the price subsequently obtained on the resale. If the exercise was to examine only the trial Judge's conclusion as to value and as to the components of an award of common law damages, there was, in our opinion, no error by the trial Judge. See e.g. Berry v. Mahony (1933) V.L.R. 314 at pp.322-323. In an exercise where direct evidence or ovrecision in resp.ct of value was not available or was immocsib!2, there was ¢ ff-ciert to support his lonour's findings a3 to valu2. 2s Horcur's talevlation of the sum of unliguidated uamiges yould, we suggest, have been then

However, in our opinion, his Honour was in error in treating the matter as one for common law damages rather than the liquidated sum envisaged by ¢cl.6 of the contract. There are, we suggest, various aspects of this problem. First, one should determine which of the two alternatives (common law damages or cl.6 recovery) the respondent was pursuing. Reference might be made to counsel's opening of the cross-claim to the primary

...-As far ag the quantum 1s concerned, at this stage I think all items are admitted save for the item of legal costs, which may become subject to an admission. Tf not, Iwill call ny = solicitor to prove that item.

HIS HONOUR: I do not see it at the moment. COUNSEL: Legal costs, 16C; 313260.

HIS HONOUR: Would they not have been incurred in respect of the original sale?

COUNSEL: No. What that 1s is the mortgagee's costs on resale. Mr. Gauc1l will give evidence he borrowed money to put up the building and because of things that happened, he has come to default on

the mortgage and the mortgagee taok over the marketing of the units after the slump in the

market, and that is a price - that is the Law Society's Scale of Charges for the mortgagee's sale.

The quantum does not aive credit to the applicants for the agents commission that would have been payable on the first sale. The amount in 16B of just under $6900 is the agents commission on the resale, but a larger amount, of course, would have been paid to the agent on the «t1ginal sale and we should qive credit for that."

His address was, of course, consistent '2th the Particulars of the Cross-Claim as pleaded, which showed the price received on resale as a deduction from the respondent's entitlement. On this opening, there was no reference to the vaiue of the Unit; all the figures which were liquidated sums proved thcmselves though the liability was in issue. If this does not indicate what was the intention of the respondent as to the remedy 1t pursued, it would be appropriate to consider the "language and acts" of the respondent's legal advisers in their letter of 10 January 1983. See the quotation from the learned article of Mr. Piesse referred

to in R.R. Watts The Problem of the Defaulting Purchaser p.17,

the article itself, notably at p. 68 and authorities discussed

respondent point clearly to its claim as being an action relying on the contract, cl.6, and not one for unliquidated damages. The letter of 10 January 1983 has been the subject of argument and 13

relied on by both sides. Omitting formal parts, 1t reads -

"We refer to previous correspondence herein and note your client's continuing refusal to complete this transaction. We advise that our client does now accept your client's continuing refusal asa

repudiation of the Contract, thereby bringing the Contract to an end.

We further advise that our client will now be claiming damages against your client pursuant to Clause 6 of the subject Aqreement. It is expected that a Contract will be executed in the near future, and it is further expected that the sale

price of same will be in the vicinity of $250,000.00."

If one assumed, against ouc preferred view, that the phrase underlined in the first paragraph upon which the applicants' counsel relied could create ambiguity, then the reference in the second paragraph to cl.6 resolves that ambiguity, where, again,

It is, in our opinion, entirely consistent with the phrase underlined that the actions foreshadowed in the second paragraph of the letter would take place. The contract which was one of purchase by the applicants would, by the resale, so far as the contract was concerned with that object, be indeed brought to an end. The intention announced by the respondent vendor in that letter beyond doubt siagnalled an end to the transaction. It is

in harmony with authority that there may still be contractual

rights which may be invoked and relied upon by a party even though the contract so far as its main object is concerned is not

to be performed. See e.g. McDonald _v. Dennys Lascelles Ltd.

(1933) 48 C.L.R. 457 per Starke J. and Dixon J. (as he then was)

at pp.469-470, 476-477 respectively. Starke J. said (pp.469-470)

"The rescission of the contract....did not operate to extinguish it ab initio, but in futuro, go as to discharge obligations under it unperformed. (Salmond and Winfield, Law of Contracts, (1927), p.320)."

"When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further orrforrance of the eontract, but rights are not divested or discharged which have already been untond-tionally acquived. Riahts and obligations which ari,¢ from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. When a contract 1s rescinded because of matters which affect its formation, as in the case of fraud, the parties are to be rehabilitated and restored, so far as may be, to the position they occupied before the contract was made. But when a contract, which 1s not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for its breach." (Authorities cited).

This passage was accepted and quoted in full by Lord

Wilberforce in Johnson v. Agnew £19801 A.C. 367 at p.396.

The respondent's (vendor's) rights here are accurately described as "causes of action which accrued from its breach" and which "continue unaffected" per Dixon J. (1bid) pp.476-477. The letter of 10 January 1983 announces specifically that the cl.6 remedy is to be pursued. The wording of the Amended Defence and Cross-Claim reflected the respondent's intention (as we have interpreted it) to claim the liquidated sum as cl.6 envisaged. Paragraphs upon which counsel for the applicants relied, viz. paragraphs 15, 16 and 17 of the cross-claim, though they may well have been differently phrased, are, in our opinion, a suitable form of expression for a cl.6 claim. Some significance is attached to "rescind" in para.15. This word has not always been

used in the same sense or to convey the same meaning. As to the

different senses in which it can be used +e Buckland v. Farmer &

Mocdy (a firm) £19781 3 All E.R. 929 re Goff L.J. at p.943:

Johnson _v. Aqnew, supra, at pp.392-393. Authorities are also

collected in Voumard's The Sale of Land 3rd ed. at p.410 et seq;

and see also the reference in The Prohiem of the Defaulting Purchaser at p.16 and the cases yveferred to inMr. Piesse's article at p.62 (see also 6 ALJ 255,291). Its use here is

similar to that discussed with reference to the clause considered in Ward v. Ellerton (1927) V.L.R. 494 and Berry v. Mahony, supra.

Referring to the former case, Mann A.C.J. in Berry said at ».320

"It was there decided amongst other things that the word 'rescind' in this condition meant no more than determining the contract, and was not used in the sense in which it is used in a Court of equity when giving appropriate relief in the form of a complete restitution of the parties to their original position. Following the decision of the Court in that case, we have here therefore a notice from the vendor that because of the breach the vendor puts an end to the contract."

"We think that the provision as to resale and as to the recovery of the difference between what 15 obtained by resale and what was contracted to be paid is a provision in the vendor's favour to enable him to determine, 1f he so desires, ina simple and convenient way the amount of his damages, instead of having recourse to a Court of law to ascertain them."

We note also that in Ward v. Ellerton the clause 6 was similar to

In our view the respondent vendor was entitled by the

applicants' default to put an end to the contract so as to discharge it from any future obligation it might have had; but to rely on the contract as subsistira for the purpose of

enforcing an acquired right; see McDor:la v. Denrvs Lascelles

Further, the particulars of the cross-claim to which we have already referred follow the scneme of cl.6, 1.e. in calculating the deficiency on the resale, then adding any rates paid by the vendor from the contractual date of completion to 3 May 1983 the latter date being expressed to be the "date of settlement of the resrle", AS finally furticularised the respondent's claim for damages for "breacn of contract" was as

Contract price of unit $385,000.00 Less deposit paid 38,500.00 Less agents commission 2,875.00

$336,625.00 Less price at which unit resold 225,000.00

settlement of resale) 338.46 Plus maintenance levy paid by cross-

settlement of resale) . 2,857.18 Plus legal costs in respect of resale 1,316.00 Plus agents commission on resale 5,875.00

$122,011.64 Plus interest at twelve percentum per annum (12%) on $336,625.00 from 23/7/92 to 3/5/83 31,430.63

Plus interest at twelve vercentum per annum (12%) on $122,011.64 from 3/5/83 to 16/5/84 15,203.00

c1.6 entitlement though 1t seems v%ome items were finally not

s Honour. He said, and, ce nape, siqnificantly - bs 9 y

"Neither party seemed particuiarly concerned by the questions raised by the respondent's formulation of its clain. Notwithstanding the Court's Rules, the applicants were content to leave their plea in answer to the relevant elements of the respondent's cross-claim to be caught up by a general denial."

party was influenced in the conduct of its case by ary misapprehension eccasloned by the other's

He referred to the "unsatisfactory" nature of the manner in which

the quantification of the respondent's damages was approached. Maybe that which was thought "unsatisfactory" would not have been if it had been recognized as a cl.6 calculation. It 13 further to be noticed that neither party called evidence referrable to the assessment of a claim for unliquidated damages. The respondent did not need to do so because its damages claim was calculated for it by cl.6; and the applicants, again

significantly we suggest, did not offer any alternative.

This is a case where none of the facts are in dispute

as intimated in the respondent's counsel's opening. This Court is in as good a position now es was the primary Judge properly to

work out the damages and, in our view, sh-uld do so.

In our opinion the respondent's arguments should succeed. The correct order should have been to award a figure to the respondent calculated by deducting the resale price, viz.

$225,000, not the value of the Unit. This would increase the

amount of the respondent's verdict by $20,600 to $101,770.00.

Tussqmenh be sphere }ofle s lid Toxet Warlbore ots met. LO Fam i Sl oL, eT ta cnebeg et a SB Lea

Pepaady opav tree --f2 1° Gold Coat Dagiton Bre Tompbest oof the appeal ard fo Se orcte AE EAL re a a i oe a

38 preceding pages are a true copy of the Reasons for Judgment herein of their Honours

iN' THE FEDERAL COUPT OF AUSTRALIA | OUFENSLAND DISTRICT PRUE TRY. : GENERAL DIVISION ' ON APEEAL TPOM A JONGE OF THE PRDEPAL CourT oP AUSTPALTA No OLD. ue% 32) 94 EDTRTE MU"RAY NOFTON TIPLADY AND PAUREL FOS5n TIPLADY Arvellants SNQ GOLD COAST "ALTON PTY. "TMITED respondent 'lo, OLD. 3. "A or 1994 HET UETE T+ aa COPAM: McGREGCe, LOTKFARY » sPENDE® 17. DATE: 1 OCTORS+ Lie

matter Io nave had the advantige uf reading the reasons for judgment rrerared by Mcureqor and Seender JI. I net rmeed to veveat rhe account of tne tarts and of oroceedings pere:s the rearnet crial furaqde vhieh my be struers have riven I fand - .8@l1f in aregtcmert vw th there cecrelusiens on all yeestiens, butt gn ro awd same reese yahr yg ct ou ar

It was common aground before us that Murray Norton Tiplady and Laurel Rose Tiplady ("the appellants") were entitled to rescind the aqreement for their purchase of a unit in the building "Ocean Rovale" by reason of the respondent's failure to construct the unit in accordance with the terms of the aqreement. The appellants araued, however, that the trial Judqve erred in finding that the appellants had lost their right to rescind the agreement bv electing to affirm it.

First. the appellants asserted that the trial Judae should not have found that the appellants were aware of the alterations to the unit by late December 1981 or narly January 1982. It was the appellants' case at the trial that they sere not aware of those chanqges until April-June 1982. There i3 a dearee of conflict of evidence on this question. The appellant. Murrav Norton Tiplady ("Mr. Tipladyv"), aave evidence that. althouqdh he was on the site of the buildina in earlv January 1982. it was then 1apossible to observe any of the matters that were later observable as substantial variations to the construction of the unit as it was provided for Ly the aqreement. The appellants submitted that this evidence of Mc. Tipladv was supported by Mr. Richards. the architect. whose evidence was accepted bv the trial Judqe. Other evidence was aiven touching this question by the appellant Laurel Rose Tipladv ("Mrs. Tipladv"). Mr. Gauci who is the manaqing director of Gold Coast Carlton Pty, Limited ("the respondent"), Mr. Ouarmby, the sales manager of St. Georae Real Estate

of Broadbeach which 1s the respondent s adqent for sale of "Ocean

Rovale", and Mr. Warren Tipladv, the son of the appellants who. for part of the relevant time, was emploved as a salesman by St. George Real Estate. More than one conclusion was open on this evidence to the trial Judae. It was doubtless open for him to find that Mr. Tipladv knew early in January 1982, havina then visited the site. that the building was well advanced, and therefore that he should have been alerted to the fact that there were or would be substantial changes to the unit, but that he did not realise the true effect of this until April 1982. However, his Honour was not very impressed by the

"It was a feature of this case that all of the principal actors were unreliable witnesses. Those who agave evidence included Mr. and Mrs. Tipladv, their son Warren. who for part of the relevant time, was employed as a salesman by S*, George Real Estate, Mr. George Gauci. the respondent's manaqing director and Mr. Quarmbv. None would score hichly if rated for credibilitv. I have not tound it a useful exercise to trv to establish an order of preference between these persons as witnesses but have taken the evidence of each and my views concerning it into account in arriving at what seems to me on the evidence overall tec have been the probable order of events."

There was ample evidence before his Honour to support the

conclusion to which he «ame namelv. that the appellants were aware of

all the relevant chanacs to the building by late December 1981 or earlv Januarv 1982. It has not been established that iis Honour erred

The second respect in which 1t was submitted that his Honour erred on the question of election was in his Honour's acceptance of certain conduct of the appellants namelv, the listing of the unit for cale and statements of Mr. Tipladv that the appellants would complete their purchase of the unit, as constituting their election to affirm that purchase of the unit. It was submitted that the evidence did not entitle the trial Judae to conclude that the appellants had listed the unit for sale; all that it established was that thev had the capacity to do so, so that they merelv recoaqnised the existence of the contract

The trial Judae found that on 14 Januarv 1982 Mr. Tiplady had been in touch with a real estate aqency at Surfers Paradise and said to the aaencv that the arpvellants' unif in "Ocean Rovale"" was available for resale. H13 Honour found also that the appellants had been in touch with other agents and that further attempts were made to sell the unit. We were referred in araument to the evidence bearing on this finding in support of the assertion that the appellants had done no more than take steps to make preliminarv inquiries of real estate aqents as to whether the unit could be listed for sale. However, in mv opinion there was sufficient evidence to support the

findina of the trial Judae which in essence was that the appellants

The evidence relatina to the question whether Mr. Tiplady had said that the appellants would settle their purchase of the unit from

the respondent is somewhat uncertain and = sparse. The principal

"On this occasion in Januarv, where did 'ou see Mr. Tipladv: in what part of the buildina?--In the fover, he come up in the lift.

What was said?--I asked him about how the sale was qoing and he said there was no one interested at that staqe.

Was anything else said?--That there was also a discussion made reaardina work when I was overseas and Kamahi would be interested in buying his penthouse, too.

What was vour concern?--Myv concern was whether he could sell.

What did vou sav and what did he 3av?--fle said he could settle - 1f he did not sell it, he could not sell it.

Did you see Mr. Tiplady on the site on one "ther occasion?~--Yes, I had seen them «on another occasion. I had seen Mr. Tipladv quite a few times. not everv time I had seen him did I

speak to him, on the times [ made contact with him - - -

Did you ever see Mr. Tipladv on the site - -?---In April - - -

Did vou see him in April?---Yes Of what vear?---1982. Did you speak to him then?---Yes.

That is a bit crvptic. Tell me what vou said and tell me what he said?---I asked him whether he was going to settle, had he heen in contact with Kamahl, and so forth, and he had not. and I asked him when was he qoina to settle, if he could afford to settle.

"And what about the conversation with Mr. Tiplady when the question of his Listindg the unit for sale came up - what about those conversations?---That concerned me, and this is why I did ask Mr. Tiplady whether he was sellina the penthouse, because that is what I had heard.

And vou have had those conversations pretty much in mind throuqhout?---Yes, vory much, because when Mr. Tipladv said to me. ves, he is selling 1¢, ani then telling me hen fhe market was quiet he had no interest on it. and then tellina me he would be tall.ina to Kamahl when Kamahl came back, to see if he wanted to

buv his as well - vou would not rordqet that, would vou?

You did not fust think of those conversaticns recentlv?---No, sir; no, 31r.

Mr. Tiplady denied in substance that he had ever said that the appellants would complete their purchase of the unit. Although the evidence is unsatisfactory in some respects, it must be remembered that the trial dudae had the benefit of seeing the witnesses and assessing their answers in the light of the evidence as a whole. In my view it has not been established that his Honour erred in concluding that Mr. Tipladv told Mr. Gauci that the appellanrs

intended to complete the aqreement if they did not resell the unit

before the time for completion fell due. It has not been established

that the trial Judae erred in concluding that the acts of the

appellants constituted an election to affirm the aqreement.

The third respect in which it was submitted that his Honour fell into error on the question of election lav in his finding that the appellants knew. at the time of their election to affirm the aqreement, of the existence of the right to rescind it. This branch of the appellants' arqument involves two elements: first. whether the case is one wherein knowledae of the existence of the riqght to rescind

is necessary in law and, second, whether there was anv evidence of

such knowledge at the time of the election. I do not find it necessarv to consider the first question because I am satisfied that no case has been established for interfering sith the trial Juddae's finding that the appellants knew of their riaht to rescind at the time

The appellants submitted that the trial Judae made inconsistent findinas which were critical to the question whether anv knowledge could be imputed to the appellants of their right to rescind the contract. Having found that the appellants made attempts to sell the unit in Januarv 19A2 and that thev were confident they would be able to resell the unit at a profit "and did not wish any complications to be introduced into their transaction with the

"There was no basis for optimism. The downturn in the market accelerated and grew more severe, prices fell, and 1t became increasingly difficult to find purchasers for units."

The applicants changed their minds and decided to strive to escape from the contract. They consulted their solicitors. I find that they did so shortly before a notice dated 2 June 1982 was forwarded to the respondent purporting to avoid the contract. Considerable inaenuity and imaqination were employed in the drafting of the grounds relied upon which, however, failed to make any identifiable reference to the alterations to the unit which the applicants had contracted to purchase.

Nonetheless, I am satisfied that the applicants did inform their solicitors of those alterations and,

in the same month. an architect was enaaged on behalf of the applicants to inspect the unit and report..."

Later in his reasons for tludagment his Honour found:

"In view of the absence of any wider suggestion in the respondent's defence I have consiiered only the

doctrine of election. On even the most technical and restrictive view of its ambit, there does not seem any doubt that the applicants lost their right to rescind. They knew the facts upon which their rights to rescind depended. Even if they were not deemed to know the terms of the contract ... the evidence contradicted any suqgestion that they were lanorant of their leqal rights. Although I do not accept critical aspects of the applicants' version, their own case was that they went to their solicitor immediatelv on discoverv of changes to the unit. (The solicitor was not called.) The applicants were not required to elect as soon as they knew what the respondent was constructing and why, but they did not merely stand idle; and the respondent's allegation of election is not founded merely on the applicants delay ..."

It was submitted that the inconsistency lay between the trial

Judge's finding that the appellants consulted their solicitors shortly

2 June 1982 and then told them of the alterations to

building and his later finding that the appellants' own case was that they went toa solicitor immediately they discovered the changes to the unit. In these circumstances it was said that the Judge's finding that the evidence contradicted anv suaqqestion that they were iqnorant

of their legal riqahts in about January 1982 could not stand.

In mv opinion his Honour was expressing the opinion, in the passages cited above, that the appellants informed their solicitors shortlv before 2 June 1982 of the changes that had been made to the unit, and that they did so in the context of a consultation whereby thev soudht to escape from the contract. It does not seem to me to be a fair readina of his Honour's reasons to sav that he in substance found that this was the first and only occasion on which the appellants told their solicitors of the ctanges to the unit. I recoanise, however, that there 1s no positive finding made bv his Honour that the appellants consulted their solicitors on this subiect in or about Januarv 1982 immediately after thev discovered the changes to the unit. I think what his Honour was) saving was that, from whatever source they aleaned it. the appellants knew in or about Januacy 1982 - after they had discovered the changes to the unit - of their riaht either to rescind or to affirm the contract. Whether that knowledge was aained bv them from consultations with their solicitor or otherwise is not clear. Nevertheless, his Honour was satisfied on the whole of the evidence that, whatever mav have been the source, the

The respondent cross appealed from the trial Judae's award of damaqes to the respondent in the sum of $81,770.00. His Honour treated the respondent's claim as one for damages for breach of contract and not a claim under clause 6 of the aaqreement. The appellants souaht to uphold this approach to the question of damaqes, but the respondent arqued that its claim should have been determined as a claim under clause 6. It was common around before us in araqument that this was the only point presentlv in issue between the parties on the question of damages and that, if his Honour correctly treated the claim as one for damages for breach of contract, then he correctlv awarded the sum of $81,770.00 as damages: but that. if the claim should be treated as one under clause 6, then the respondent's damages

The respondent's cross-claim, so far as it is presently

"14. In breach of the said contract the cross-respondents did not pav the cross-claimant anv part of the balance purchase price on the due date for settlement and did not otherwise settle the contract.

15. The cross-respondents persisted in their refusal to complete the said contract and by letter dated 10th Januarv 1983 from the cross-clatmaint's solicitors to the cross-respondents' solicitors the cross-claimant accepted the said refusal as a

16. As a result of the cross-respondents' repudiation of the said contract the

cross-claimant has suffered loss and damaae, particulars of which are:-

(a) Contract price of unit $385,000.00 (b) Less deposit paid . 38,500.00 (c) Less aqents_commission 9,875.00 $336,625.00 (d) Less price at which unit resold 225,000.00 (e) Plus rates paid bv cross-claimant from 23/7/82 to 3/5/83 (date of settlement of resale) 338.46 (f) Plus maintenance levy paid by cross-claimant from 23/7/82 to 3/5/83 (date of settlement of resale) 2,857.18 (a) Plus leaal costs in respect of resale 1,316.00 (h) Plus aaents commission on resale 5,875.00 $122,011.64 (1) Plus interest at twelve percentum per_annum (12%) on $33,625.00 from 23/7/82 to 3/5/83 _ 31,430.63 (4) Plus_interest at twelve percentum per_annuum (12%) on $122,011.64 from 3/5/R3 to 16/5/84 15,203.00 $148,645.27 17. And the cross-claimant cross-claims aqainst the cross-respondents for ONE_ HUNDRED SIXTY-EIGHT THOUSAND ST HUNDRED AND FORTY-FIVE DOLLARS AND TWENTY-SEVEN CENTS ($168,645.27) damages for breach of contract." The letter dated 10 January 1983 from the respondent's

the cross-claim is in the following terms, omitting formal parts:

now accept your client's continuing refusal as a repudiation of the Contract, thercby brinaing the

claimina damaqes aqainst vour client pursuant to It is expected

Clause 6 of the subiect Aareement. that a Contract will be executed in the near

price of same will be in the vicinity of $250,000.00."

Paragraph 15 of the cross-claim and the first paragraph of the letter of 10 January 1983 lend force to the submission of the

appellants that the true nature of the respondent's claim is one for

general damages for breach of contract. But the correspondence between the solicitors. culminating in the letter of 10 January 1983, must all be examined to determine the true nature of the respondent's cross-clain. Paraqraph 16 of the cross-claim was relied on by both the appellants and the respondents in support of their respective submissions. In my opinion paraaraph 16, which details the particulars by which the respondent fashioned its claim for damages, is neutral on the question of the true nature of the claim itself. Paragraph 17 was also relied 'ipon bv the appel_ants and the respondent in support of their respective contentions: but it too seems to me to

In their letter of 4 June 1982 the solicitors for the

respondent said to the solicitors for the appellants:

By letter of 22 June 1982 the respondent's solicitors purported to fix Fridav 23 Julv 1982 as the date for settlement following the reaistration of the Building Units Plan on 22 June 1982.

"This letter is to serve as notice pursuant to the provisions of clause 3(a) of the subiect Aqreement."

Other correspondence was exchanged between the solicitors for the parties, but the letters from the respondent's solicitors were all written, it seems to me. on the footina that completion was to take place on 23 Julv 1982. In their letter of 26 July 1982 the solicitors for the respondent wrote to the solicitors for the appellants statina in effect that, as settlement did not take place on 23 July 1982 when the respondent was readv willing and able to settle the agreement, the appellants were therefore in breach of their "obliaations pursuant to

the said Agreement". The last paraqraph of that letter said:

"We hereby qive notice that our client requires completion of the Contract strictlv in accordance with the terms thereof. We have received instructions from our client to prepare and file Writs seeking the specific performance of the Contract and damages in lieu of or in substitution for specific performances, or in the alternative, damaqes for breach of the Contract."

On 13 December 1982 the solicitors for the respondent wrote

to the solicitors for the appellants noting that the appellants had:

».. breached such Contract by not completing on that dav and at the present time vou remain in breach of the said Contract. We write to inquire whether vou now intend to fulfil vour obligations and complete settlement of the said Contract, or whether vou still persist in vour refusal to do so. Please let us have vour replv setting out vour intention within five (5) davs of the date hereof. If we do not hear from you within that time we will assume that vou do in fact continue in vour refusal

to perform your obliaations pursuant to the said Contract."

Clause 6 of the Contract is in the following terms:

then (in addition to any other remedv available to the Vendor) the Vendor may:-

(a) Forfeit to the Vendor the monevs paid on account of the purchase price by the Purchaser to the extent of ten per centum (10%) of the total purchase price.

(b) Without notice to the Purchaser cancel this Contract and resume possession of the said unit.

(d) Without notice to the Purchaser resell the said unit bv public auction or bv private contract with power to vary or rescind any contract for sale and to bid at any auction and the deficiency in price on such resale and the expense of and incidental to repossession and to the present sale and such resale and any abortive attempt to resell together with all rates, taxes and other outgoings accrued due in respect of the said unit at the date of resale thereof which were payable by the Purchaser under the terms of this Aqreement shall be paid to the Vendor by the present Purchaser and shall be recoverable as liquidated damages.

{e) Do all or any of the above thinas at its option.

The Purchaser will indemnify the Vendor against any

I note that clause 6, when defining the riahts of "the vendor", upon "the purchaser's" failure to comply with the conditions of sale, specificallv confers the riaht upon the vendor, without

notice to the purchaser, to "cancel this Contract": also to "Sue the

Purchaser for breach of Contract". These words aive, I think, some

clue to the true construction to be aiven to the letter of 10 January 1983. As I said earlier. the first paraqraph of that letter uses the lanauage traditionally associated with a vendor's election to rescind an agreement followina the repudiation by the purchaser of his contractual obligations. But the second paraqraph makes it plain that the respondent is purporting to claim damages pursuant to clause 6 of the aaqreement and the reference to the expected sale price. upon the resale of the unit, of $250,000.00 obviouslv relates to the right of the respondent as vendor to resell the unit to recover the deficiency

in price on resale pursuant to sub-clause 6(d) of the aaqreement.

These considerations outweigh in my view the lanquage of the first paraqraph of the letter of 10 January 1983. Notwithstanding paraqraph 15 of the cross-claim, I think the better view is that the claim for damaqes brought bv the respondent should be treated as one under clause 6 of the aqreement and not for unliquidated damages for

breach of contract following the repudiation bv the appellants of

I would dismiss the appeal, but allow the cross appeal. I

aqree with the orders proposed by the other members of the Court.