Wang v Polaris Holdings Rosebery Pty Ltd

Events leading up to the making of the contract

1. The plaintiff deposed that she was introduced to the property at Dunning Avenue, Rosebery in about late July or early August 2015 by Mengyuan Zhou. Ms Zhou is a friend of one of the directors of the defendant, Yuan Han. It appears, however, that on about 2 May 2015 Ms Zhou sent a marketing brochure to the plaintiff, and the plaintiff paid a $5,000 holding deposit on about 26 May 2015 in relation to Lot 53 in the proposed development.
2. In any event, by no later than 13 August 2015, a draft contract for sale in respect of Lot 53 had been provided to the plaintiff, and the plaintiff had retained a solicitor, Seow Ching Phang, to act for her on the purchase.
3. The plaintiff deposed that her solicitors provided advice to her in conference about the provisions of the contract, and that one of the topics covered was the "draft stratum plan of subdivision including areas". The plaintiff gave no evidence of the details of the advice given on that topic. Ms Phang herself made an affidavit, but no mention is made in it of any advice given to the plaintiff, including on that topic.
4. The plaintiff deposed that the draft plan of Lot 53 "disclosed in this contract" showed areas of 109.1m2 for Basement Level & Below, 89.4m2 for Ground Level, 89.4m2 for Level 1, and 89.4m2 for Level 2 & Above. The plaintiff deposed that these were the only areas for Lot 53 noted in the contract.
5. The plaintiff gave various instructions to Ms Phang, including an instruction to request that a floor plan be provided. The plaintiff deposed that she gave that instruction because she was concerned that nothing in the contract showed the specific layout of Lot 53, including the number of bedrooms and bathrooms.
6. On 13 August 2015 Ms Phang sent an email to the defendant's solicitor, Angela Wang, in which certain amendments to the contract were requested and further information was sought. The email included the following: 11 Please provide us with a copy of the floor plan to be inserted into the contract. 12 Please provide us with a copy of your attachment 3, your proposed deposited plan, as the copy in the contract did not clearly indicate the area of the property. 13 Could you please provide us with a copy of the Development Consent.
7. Ms Wang sent an email in response later on 13 August 2015. This email included the following: 11 Not agreed; 12 Please see attached which shall be of better quality; 13 Currently the vendor has a stage 1 development consent which includes 51 lots; the vendor is in the process of making stage 2 development application which will include 3 additional lots. The attached annexure 3 being the subdivision plan has included both stage 1 development consent and stage 2 development application. Please see attached a copy of the stage 1 development consent (plans and drawings not included). Attached to the email was a further copy of the draft plan of subdivision (Issue 2, printed on 31 July 2015) that was, I infer, attachment 3 to the draft contract for sale.
8. Ms Phang gave evidence that she viewed the attachment "and noted the areas of each level of the property for lot 53".
9. On the morning of 17 August 2015 Ms Phang sent another email to Ms Wang. The email was in the following terms: We are instructed that our client will not agree to proceed with the exchange without inserting the floor plan into the contract. Please obtain further instructions and revert. Thank you again.
10. Ms Wang responded by email later that same morning in the following terms: We are instructed that the floor plan will not become part of the contract. If your client wishes not to proceed with the exchange, please advise us immediately so our client may start negotiating with other potential purchasers.
11. Later on 17 August 2015 Ms Phang sent an email to Ms Wang in the following terms: Thank you for your email. Should your client insist not to insert the floor place [sic], we propose to insert special condition 91: "The vendor must cause the subject property to contain three bedroom, two bathroom, one terrace, one metal roof, one courtyard, one balcony and garage. If not, the purchaser is entitled to rescind the contract and provisions in clause 19 of printed conditions shall apply." Please obtain instructions and revert.
12. Ms Wang responded by email on 24 August 2015 as follows: We are instructed to agree to insert special condition 91 as in your email below.
13. The plaintiff deposed that based at least in part upon the plan which formed part of the contract, she believed that the areas as set out in the contract "indicated either the internal or usable areas" of Lot 53. The plaintiff further deposed: The solicitors for the defendant agreed to specify in the Contract the number of bedrooms and bathrooms on the Property, and I formed the view that the property would have these rooms and the area as set out in the draft plan was the relevant floor areas [sic] including for Levels 1 & 2. Upon this basis and in the belief that the draft stratum plan of subdivision disclosed all relevant areas for the Contract, I entered into the Contract on 25 August 2015. I would not have entered into the Contract if I had thought it to be untrue.
14. At some time prior to exchange of contracts, Ms Phang handwrote the areas of each of the levels "next to the respective areas on the Draft Plan enclosed in the Contract". It seems that Ms Phang may have also added some hatching across the various parts of the plan designated as Lot 53. Ms Phang deposed that she showed these handwritten changes to the plaintiff, who then proceeded to place her initials on each page of the draft plan.
15. Contracts were in fact exchanged on about 25 August 2015.

The Contract for Sale

1. The contract consisted of the standard Law Society/Real Estate Institute form (2005 edition) as amended and supplemented by numerous Special Conditions. Some of the features of the contract are noted earlier in these reasons. Some of the salient Special Conditions which should be noted are: 46.1 The Purchaser acknowledges that this Contract constitutes the entire agreement of the parties about its subject matter and any previous agreements, understandings and negotiations on that subject matter cease to have any effect on and from the date of this Contract. 46.2 The Vendor discloses and the Purchaser acknowledges that any information or material or disclosure made in Marketing Material does not form part of this Contract. 46.3 The Vendor does not warrant the accuracy or correctness of any information or material or disclosure made in Marketing Material and the Purchaser warrants that it has not relied upon such Marketing Material in entering into this Contract. 46.4 In particular, the Vendor discloses and the Purchaser acknowledges that there may be discrepancies between the Marketing Material and this Contract with respect to the Property (including without limit with respect to the area of the Property, its configuration and the draft Subdivision Plan) in which case the disclosures in this Contract apply. 46.5 The Purchaser shall not be entitled to make any objection, requisition, claim or delay completion of or rescind or terminate this contract as a result of, or in relation to or arising out of the disclosures in this clause 46. (Property is defined in Special Condition 30 to mean a freehold interest in the Draft Subdivision Plan being the subject of this contract for the sale of land.) 61.1 The purchaser acknowledges that all matters disclosed or described in this contract are specifically disclosed and clearly described. 61.2 The vendor does not warrant the accuracy or completeness of the matters set out in the documents attached to this contract or referred to in this clause. 61.3 The purchaser warrants that in entering this contract, it is relying entirely on its own enquiries in relation to the Property and the documents attached to this contract. 61.4 The purchaser warrants that it has obtained appropriate independent advice on and is satisfied about: the purchaser's obligations and rights under this Contract; the nature of the Property and the purpose for which the Property may be lawfully used; the purchaser's entitlement (if any) to claim income tax deductions under the Income Tax Assessment Act 1936 for depreciation of any plant or equipment in the Building or in connection with the cost of construction of the Building; and the purchaser acknowledges that the vendor has entered into this Contract on the basis that the representations and warranties contained in this Special Condition are true and not misleading. 61.5 Subject to Part 1 of Schedule 3 of the Conveyancing (Sale of Land) Regulation 2010, the purchaser has not, in entering into this contract, relied on any warranty or representation about the subject matter of this Contract (including, without limitation, representations or warranties about the nature or the fitness or suitability for any purpose of the Property or about any financial return or income to be derived from the Property) made by or on behalf of, or any other conduct of or on behalf of, the vendor expect [sic] those expressly contained in this contract. 61.6 The purchaser cannot make any claim or requisition or rescind or terminate or delay completion because of any matter disclosed or described in this contract. … 72.1 The vendor must construct the building in a proper and workmanlike manner and in general accordance with: any development consent, building approval and construction certificate issued by the relevant consent authority for the development and constructions of the building, and any amendment to them; and the Schedule of Finishes, as amended in accordance with this contract. 72.2 If there is any discrepancy between the Schedule of Finishes and any marketing, architectural or other material, the Schedule of Finishes prevails. 72.3 The purchaser cannot delay completion by reason of any defect in the Property or require the vendor to make good the defect before completion, unless the defect makes the Property uninhabitable. 72.4 A certificate from the vendor's architect that the Property or the building has been constructed in accordance with clause 72.1 is conclusive evidence of that fact. (Building is defined to mean a building or buildings on the Development Site in general accordance with the Development Consent and the Building Approval. Development Site, Development Consent and Building Approval are each in turn defined in Special Condition 30.) 74.1 Completion of this contract is conditional on: registration of the Subdivision Plan; and obtaining the Occupation Certificate. … 75.1 Before registration the vendor can make any changes to the Subdivision Plan which the vendor considers necessary or desirable including changes to: the total number of lots; the numbering of lots; the dimensions or areas of lots; the location of lots; and the location of easements, from those shown on the Subdivision Plan or any other attachment to this contract; and any matters disclosed or noted in clauses 61 to 71. 75.2 The purchaser acknowledges and agrees that the internal area of the car space or car spaces (if any) forming part of the Property is not known at the contract date. 75.3 Subject to the purchaser's rights under clause 75 and 76, the purchaser cannot make a claim or requisition or rescind or terminate in respect of any changes to the Subdivision Plan or any other plans attached to this contract or by reason of the area of the car space or car spaces allocated to the Property on registration of the Subdivision Plan. 75.4 Before registration, the vendor can make any changes to the Building Management Statement or the Section 88B Instruction which the vendor, in its total discretion, considers necessary or desirable to effect registration of the Subdivision Plan. … 77.1 If the difference is as a result of a change to the laws or conditions imposed as a result of Development Consent or required by the LPI to obtain the registration or any Subdivision Document, the purchaser is not entitled to make a claim, requisition, objection, rescind or terminate, delay completion of or refuse to complete this Contract because there is a difference between the draft Subdivision Documents and the registered Subdivision Documents. 77.2 If the difference is not as a result of a change to the laws or conditions imposed as a result of Development Consent or required by the LPI to obtain the registration of any subdivision Document, the purchaser is not entitled to make a claim, requisition, objection, rescind or terminate, delay completion of or refuse to complete this Contract because there is a difference between the draft Subdivision Documents and the registered Subdivision Documents unless the difference detrimentally affects the value of the Property to an extent that is substantial. … 77.4 The purchaser can only rescind this contract in accordance with clause 77.2 when there is a difference between the draft subdivision documents and the registered subdivision documents which results in the total area of the Property being reduced by more than 5% and also such reduction substantially materially affects the physical characteristics of the Property. In this case, the purchaser will become entitled to rescind the contract by written notice within 5 Business Days after the day the vendor serves a written notice. If the purchaser fails to rescind this Contract within this 5 Business Day period, the purchaser is deemed to have voluntarily and irrevocably accepted any difference and have permanently given up the right of rescission. The purchaser agrees that the purchaser's right of rescission is only limited to the right as specified in accordance with this clause 77.4. This is an essential term of the contract. … 91. The vendor must cause the subject property to contain three bedroom, two bathroom, one terrace, one metal roof, one court yard, one balcony, and garage. If not, the purchaser is entitled to rescind the contract and provisions in clause 19 of printed conditions shall apply.
2. As already noted, a draft plan of subdivision was attached to the contract (attachment 3). The draft plan was described as Issue 2, printed on 31 July 2015. Apart from the handwriting added to it by Ms Phang and the plaintiff, as described above, it is in the same form as the draft plan that was attached to Ms Wang's email to Ms Phang on 13 August 2015. It should be noted that the draft plan provided for the creation of various easements, including easements that would apparently affect Lot 53. Furthermore, the draft plan contained various measurements, including in relation to Lot 53. The measurements are in small type but are generally able to be read.
3. Lot 53 is depicted on four sheets of the draft plan, namely, sheets headed "Basement Level & Below", "Ground Level", "Level 1" and "Level 2 & Above". Each of those sheets contains a printed figure for an area, expressed in m2, in relation to Lot 53. The areas printed on those sheets in respect of Lot 53 are, respectively, 109.1m2, 89.4m2, 89.4m2 and 89.4m2. The same figures appear on each sheet in the handwriting of Ms Phang. Ms Phang is likely to have added the hatching that was placed across the various parts of the plan that were designated as Lot 53. The plaintiff's initials appear on each of the sheets above those areas.

Events leading up to the termination of the contract

1. The subdivision plan in respect of the development was registered on 3 December 2018 as Deposited Plan 1231887. Late on that day, a solicitor for the defendant (Mellissa Chhour) sent an email to Ms Phang. The email attached a letter that gave notice of the registration of the plan, and enclosed a Final Occupation Certificate dated 27 November 2018. Ms Chhour stated in the email that the attached correspondence would be taken to have been served on 4 December 2018, such that settlement of the contract would be due on 27 December 2018.
2. Lot 53 is depicted on three sheets in the registered plan, namely, sheets headed "Basement Level & Below", "Ground Level" and "Level 1 & Above". Each of those sheets contains a printed figure for an area, expressed in m2 in relation to Lot 53. The areas printed on those sheets in respect of Lot 53 are, respectively, 108.6m2, 88.1m2 and 89.5m2.
3. It was explained in the evidence that there was no need for another sheet specifically in relation to Level 2 because its area at the stratum level was the same as that for Level 1, and the Land Registry Service do not want superfluous information shown in the Register.
4. It can be seen that the areas of the levels as shown on the registered plan differ from those shown on the draft plan that was annexed to the contract. Basement Level & Below went from 109.1m2 to 108.6m2; Ground Level went from 89.4m2 to 88.1m2; Level 1 went from 89.4m2 to 89.5m2; and Level 2 (now included as part of Level 1 & Above) went from 89.4m2 to 89.5m2. Mr Graham, a surveyor called to give evidence by the plaintiff, agreed that there was no material difference between the areas shown for Lot 53 as between the draft plan and the registered plan.
5. However, the plaintiff deposed that on about 3 December 2018, Ms Phang told her that the registered plan showed that "there is one less level and the total area shown on the plan is much smaller", and suggested that she undertake an inspection of the property. The plaintiff deposed that she arranged for a friend to conduct a "videotaped walk-through inspection" of the property, and that after viewing the video she observed that whilst there was a physical Level 2, each of Level 1 and Level 2 appeared far smaller than 89.5 m2. The plaintiff further deposed that, on that basis, she instructed her solicitors to issue a Notice of Termination of the contract. The plaintiff stated that she did that because, in her view, the property as constructed was significantly different from the draft plans pursuant to the contract, and that this was a matter of importance to her in entering into the contract.
6. On 6 December 2018 Ms Phang sent an email to Ms Chhour in which it was stated that the plaintiff would need additional time to finalise her finance and, accordingly, a request was made to extend the settlement date to 11 January 2019.
7. On 10 December 2018 Ms Phang sent an email to Ms Chhour which attached a letter which enclosed a Notice of Rescission/Termination of the contract. The notice was based upon alleged discrepancies between the draft subdivision plan that was annexed to the contract, and the subdivision plan as registered (Deposited Plan 1231887). It was alleged that there had been a decrease in the area of Lot 53 of some 91.1m2 (or 24%), with the consequence that the plaintiff was entitled to terminate the contract for breaches of essential terms on the part of the defendant, or otherwise exercise a right of rescission pursuant to Special Condition 77 of the contract. The notice seems to proceed on the erroneous basis that there was no Level 2. The notice does not, in terms, suggest that each of Level 1 and Level 2 were far smaller than 89.5 m2. The notice does not, therefore, accurately reflect the instructions the plaintiff says that she gave to her solicitors. In any event, as noted earlier, the plaintiff no longer relies upon the grounds set forth in the Notice of Rescission/Termination.
8. On 11 December 2018 Ms Chhour sent an email to Ms Phang which contained a rebuttal of the assertion that the area of the property the subject of the contract had been reduced by 24%. Ms Chhour denied that the defendant had breached the contract as alleged by the plaintiff, and stated that the plaintiff was thus not entitled to rescind or terminate the contract. Later on 11 December 2018, Ms Chhour sent an email in response to Ms Phang's email of 6 December 2018. Ms Chhour's email stated that the defendant would agree to extend the time for completion to 11 January 2019 upon certain conditions. However, no agreement was subsequently reached. The defendant continued to press for completion of the contract.
9. Completion did not take place by the Completion Date of 27 December 2018. On 28 December 2018 the defendant served a Notice to Complete upon the plaintiff. The notice called for completion to occur by 3:30pm on 14 January 2019. The defendant made arrangements for a settlement to occur on that date, and on 10 January 2019 provided a Settlement Adjustment Sheet for that purpose. However, the plaintiff failed to complete the contract as called for by the Notice to Complete.
10. On 15 January 2019 the defendant served a notice upon the plaintiff which, despite its erroneous title of Notice to Complete, was plainly in its terms a Notice of Termination of the contract based upon the plaintiff's failure to comply with the Notice to Complete. The plaintiff denies the validity of the defendant's termination of the contract, maintaining that she had validly rescinded or terminated the contract on 10 December 2018.
11. The plaintiff commenced these proceedings by Summons filed on 25 January 2019. On that day, the plaintiff obtained an ex parte injunction restraining the defendant from dealing with the deposit. That order has remained in effect.

Determination

1. The plaintiff claims that she is entitled to the return of the deposit on three grounds, as set out in [5] above. The three grounds are related in as much as each relies to an extent upon the contention that the contract provides or represents that Levels 1 and 2 of Lot 53 would each have a floor space of 89.4m2.
2. I will deal first with the claim that the plaintiff was entitled to rescind or terminate the contract in accordance with the rule in Flight v Booth (supra). This claim does not clearly emerge from the plaintiff's pleading. However, the plaintiff opened the case on it, and no objection was raised by the defendant.
3. The statement of the rule in Flight v Booth (supra) was made in that case by Tindal CJ in the following terms: In this state of discrepancy between the decided cases, we think it is, at all events, a safe rule to adopt, that where the misdescription, although not proceeding from fraud, is in a material and substantial point, so far affecting the subject-matter of the contract that it may reasonably be supposed that, but for such misdescription, the purchaser might never have entered into the contract at all, in such case the contract is avoided altogether, and the purchaser is not bound to resort to the clause of compensation. Under such a state of facts, the purchaser may be considered as not having purchased the thing which was really the subject of the sale…
4. I recently discussed the operation of the rule in Victorsen v Easy Living Holdings Pty Ltd [2019] NSWSC 1721 at [62]-[65] as follows: [62] The manner in which the principle operates as part of the law relating to contracts for the sale of land is illustrated by the authorities collected by White J (as his Honour then was) in Vella v Ayshan [2008] NSWSC 84 at [73]-[75] where his Honour stated: [73] However, there is the more fundamental question of what is the subject matter of the contract. It is of first importance that the contract is one for the sale of land. As Walsh JA (as his Honour then was) said in Beard v Drummoyne Municipal Council (1969) 71 SR (NSW) 250 at 265: "... apart from any relevant special provision, a purchaser [of land] may have a right to rescind, or at his option to go on with the contract, extending to deficiencies between promise and performance which would not be, in the case of other contracts, such as to enable him to treat himself as discharged from the contract, but which would 'sound in damages'." [74] In Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1, Menzies J said (at 27-28): "Williams on Vendor and Purchaser, 4th ed. (1936), at pp. 34-37 sets out the chief duties of a vendor at common law: 1. To show a good title to the property sold; 2. To produce land corresponding substantially in all respects with the description contained in the contract and available to be transferred to the purchaser in fulfilment of the contract; and 3. To hand over to the purchaser on completion all deeds and other muniments of title relating solely to the property purchased. This case concerns the second of these duties. At common law, any difference, however trivial, between the land described in the contract and the land produced constituted a defect which entitled the purchaser to rescind. Where there was only a slight difference, the Courts of Equity began to interfere and introduced the principle of compensation for deficiency: see Erskine L.C. in Halsey v. Grant (1806) 13 Ves. Jun. 73 at 76-9; [1806] EngR 290; 33 ER 222 at 223-224. Unless the deficiency was so substantial as to give the purchaser something entirely different from what he had contracted, equity would order specific performance on giving compensation for the deficiency." [75] In Batey v Gifford (1997) 42 NSWLR 710, Handley JA said (at 716) that: "The vendor's obligation at law under a contract for the sale of real estate by description was similar to that of a seller under a contract for the sale of goods by description. The description was an essential term of the contract and the purchaser could reject the goods if there was any difference, other than trifling, between the goods tendered and the contractual description." See also Dainford Ltd v Lam (1985) 3 NSWLR 255 at 265-266; Tarval Pty Ltd v Stevens & Ors (1990) NSW ConvR 55-552. [63] As noted by his Honour at [81], "substantial" in this context does not mean large; it means of substance rather than merely nominal. [64] In Higgins v Statewide Developments Pty Ltd (2010) 14 BPR 27,293; [2010] NSWSC 183 Barrett J (as his Honour then was) stated at [45] that the principle is concerned with a "discrepancy between the subject matter of the contract for sale and what is available to be conveyed in satisfaction of the vendor's obligation". Questions sometimes arise, and did so in that case, as to whether particular provisions of the contract cut down or oust the operation of the principle. However, as Barrett J stated (at [46]), the principle will not be ousted except by very clear words or very clear implication….. [65] The starting point in applying these principles is the ascertainment of the subject matter of the contract; that is to say, the identification of that which the vendor has promised to convey.
5. In the present case, the defendant promised to convey a stratum lot (Lot 53) in a plan of subdivision (referred to as the Subdivision Plan in the contract) that, at the time of contract, was unregistered. A draft of the Subdivision Plan was attachment 3 to the contract. Completion of the contract was conditional upon registration of the Subdivision Plan and the obtaining of an Occupation Certificate in relation to the property (see Special Condition 74.1). By Special Condition 72.1, the defendant was obliged to construct a building generally in accordance with the Development Consent (as defined) and the Building Approval (as defined). By Special Condition 75, the defendant was permitted to make certain changes to the Subdivision Plan prior to registration, and Special Condition 77 provided that differences between, inter alia, the draft Subdivision Plan and the registered Subdivision Plan may in certain circumstances give the plaintiff the right to rescind the contract.
6. As emphasised by the defendant in submissions, it is important to note that the contract was for the sale of a stratum lot within the meaning of Division 3B of Part 23 of the Conveyancing Act (ss 196B-196L), which Division applies only to land under the provisions of the Real Property Act 1900 (NSW). Section 196C of the Conveyancing Act defines "stratum lot" as a lot that is limited in height or depth (or both) by reference to Australian Height Datum or another datum approved by the Surveyor-General, but does not include a lot within the meaning of the Strata Schemes Development Act 2015. (When the contract was entered into, the definition of "stratum lot" referred to earlier strata schemes legislation, namely, the Strata Schemes (Freehold Development) Act 1973 (NSW) and the Strata Schemes (Leasehold Development) Act 1986 (NSW), but was to the same effect.)
7. Unlike a lot within the meaning of the strata schemes legislation, a stratum lot is not defined by reference to a floor plan (cf the definitions of "lot" and "floor plan" in s 4 of the Strata Schemes Development Act). The dimensions of a stratum lot are discerned from the contents of the relevant subdivision plan, including notations as to limitations in heights and/or depths. An essential function of a subdivision plan in relation to a stratum lot is the identification of the boundaries of the stratum lot.
8. Subject to the possibility of changes occurring between the date of contract and registration of the Subdivision Plan, the essential function of the draft plan attached to the contract was the same. That is to say, it served to identify the boundaries of the proposed lot the subject of the contract. This is confirmed by the evidence Mr Graham, who wrote in a letter dated 3 May 2019: Further to the issue of my report dated 15 April 2019, I confirm that the Draft Plan of Torrens Title Subdivision by Stratum prepared by Mr. Surveyor Mark John Andrew attached to the Contract for Sale illustrates the area of the Torrens Lot at each stratum level as described and not the area of the constructed dwelling erected upon the lot. The Draft Plan of Subdivision does not provide any information in relation to the size of the dwelling constructed onsite as it has been prepared in accordance with Land Registry Service NSW guidelines.
9. That seems to me to be the case even though, as stated by Mr Andrew (at Transcript 68.30), the draft plan he prepared also shows the "approved structure underneath" in relation to the boundaries of the lots. The draft plan prepared by Mr Andrew, which was attached to the contract, faintly shows the approved building in relation to the darker lines that show the boundaries of the lots. Mr Andrew explained that the depiction of the building in accordance with the approved plans is intended to assist the process of obtaining Council approval for the subdivision boundaries.
10. The areas shown on the draft plan in relation to the various levels of Lot 53 should thus be understood as expressions of the areas of the lot at those levels. They should not be understood as expressions of the areas of any floor space within the boundaries of the lot. These conclusions are reinforced by the dimensions that are shown on the draft plan in respect of the various levels. It is readily apparent, from a simple multiplication exercise using the dimensions, that the stated areas concern the entirety of the lot at the relevant level. These conclusions are further reinforced by the presence on the draft plan of proposed easements, including an easement for light and air that affects Lot 53 at Level 1 and at Level 2 & Above. It follows that the figures of 89.4m2 shown in respect of each of Level 1 and Level 2 & Above cannot reasonably be considered to provide that the lot the defendant would convey would have, at each of those levels, a floor space of 89.4m2.
11. There is no suggestion that the building as ultimately constructed differs from that which the defendant promised to construct. As it turned out, there were some changes made to the dimensions of Lot 53 from those shown on the draft plan to those shown on the registered plan. However, changes of that nature are expressly contemplated by the terms of the contract, and the changes are in any event only slight or trivial, certainly not such as would result in the plaintiff receiving something different in substance from that which she contracted to purchase.
12. In these circumstances, it seems to me that the plaintiff has not shown that there was such a discrepancy between the subject matter of the sale and what was available to be conveyed that a right of rescission arose in accordance with the rule in Flight v Booth (supra). In my opinion, the plaintiff's rescission or termination of the contract on 10 December 2018 was invalid. The contract remained on foot, and the defendant was entitled to serve the Notice to Complete on 28 December 2018. There is no suggestion that the Notice to Complete was not valid. When the plaintiff failed to complete the contract by 14 January 2019, the defendant was entitled to terminate the contract due to the plaintiff being in breach of the contract in an essential respect (see cl 9). It follows that upon the defendant's termination of the contract on 15 January 2019, the defendant was entitled to recover the deposit (see cl 9.1).
13. I turn now to consider whether the plaintiff is nonetheless entitled to orders to the effect that the deposit be returned to her. The plaintiff's claims for such relief rest upon the contention that the defendant represented that each of the first and second floors of Lot 53 would have a "floorplan area" (or floor space) of 89.4m2. The representation is said to have been contained in or conveyed by the draft subdivision plan that became attachment 3 to the contract for sale. The making of that representation is the fundamental basis of the plaintiff's claims for the return of the deposit, whether pursuant to an order under s 55(2A) of the Conveyancing Act, or pursuant to an order in respect of a contravention of s 18 of the Australian Consumer Law.
14. The question whether any such representation was made is to be considered objectively, in light of the circumstances in which the contract came to be made. I have referred above (at [8]-[22]) to the events leading up to the making of the contract, including the evidence of the communications between the parties in relation to the insertion into the contract of a floor plan, the provision of a clearer copy of the draft plan, and the inclusion of Special Condition 91. It is also relevant to consider the nature of the proposed transaction, being a conveyancing transaction involving the acquisition of a stratum lot in a proposed subdivision plan, where it would be expected that both parties would retain solicitors with conveyancing experience.
15. I have already concluded, in the context of identifying the subject matter of the sale, that the areas shown on the draft plan in relation to the various levels of Lot 53 should not be understood as expressions of the areas of any floor space within the boundaries of the lot (see at [46] above). That reasoning can be applied to the present question, but it is not determinative, as the question whether a representation was made (or whether the defendant engaged in conduct that was misleading or deceptive or likely to mislead or deceive) may depend upon a wider range of circumstances. Nevertheless, it seems to me that a consideration of all the circumstances in which the draft plan came to be included in the contract eventually made leads to the same conclusion.
16. Viewed objectively, the inclusion of the draft plan in the contract for the acquisition of a stratum lot in a proposed subdivision plan did not convey that the figures shown in respect of areas were areas of "floorplan area" or floor space. I do not think that a reasonable prospective purchaser in the position of the plaintiff would have considered that the draft plan areas were concerned with floor space as opposed to the area of the proposed lot.
17. It is noteworthy that the plaintiff herself sought to have a floor plan inserted into the contract. That tends to suggest that the plaintiff did not regard the draft plan as serving that purpose, either at all or at least adequately. The defendant rebuffed the plaintiff's request in that regard. The plaintiff conceded in cross-examination that there were no floor plans in the contract and, further, that the plan that was in the contract was not a floor plan.
18. It was suggested in submissions for the plaintiff that she was evidently concerned about the floor areas, and the defendant had the opportunity, in the communications between the parties prior to exchange, to "clarify the matter". However, the communications made on behalf of the plaintiff did not suggest that there was any particular matter that required clarification. The defendant rejected the suggested inclusion of a floor plan, and provided a clearer copy of the draft plan. The plaintiff's solicitors did not suggest that the draft plan supplied could not be properly read, and did not make any statement that would suggest that they were labouring under some misunderstanding in relation to the draft plan. The pre-contractual communications ended with agreement on the form of an additional Special Condition that was concerned with the features of the building to be constructed on Lot 53.
19. I am not persuaded that the defendant made the representation as alleged by the plaintiff. I am also not persuaded that the conduct of the defendant in relation to the making of the contract that contained the draft plan was misleading or deceptive or likely to mislead or deceive within the meaning of s 18 of the Australian Consumer Law (see Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [102]). Considered objectively, and in the commercial context in which it occurred, the defendant's conduct did not have any tendency to lead the plaintiff, or her solicitors, into error (see Campbell v Backoffice Investments Pty Ltd (supra) at [25]).
20. If, as the plaintiff claims, she believed that the areas set out on the draft plan "indicated either the internal or usable areas" of Lot 53, or were the relevant floor areas for each level, she was mistaken. I am prepared to accept her evidence that she in fact held those erroneous beliefs. However, I do not accept that her mistake or misunderstanding was relevantly caused by any misrepresentation made by the defendant, or conduct of the defendant that contravened s 18 of the Australian Consumer Law.
21. Neither the plaintiff nor Ms Phang gave evidence of the content of the advice that was given on the topic of the "draft stratum plan of subdivision including areas". It may be that the advice given was erroneous in some way. An inference to that effect might be open having regard to the content of the advice apparently given by Ms Phang in December 2018 after the subdivision plan was registered. It is not necessary to make any findings in that regard. Regardless of whether the plaintiff's misunderstanding was to some extent brought about by erroneous advice, it has not been shown that it was brought about by any conduct on the part of the defendant.
22. It follows from the above that the plaintiff has failed to make out the grounds for her claims for orders under the Conveyancing Act or the Australian Consumer Law for the return of the deposit. The defendant remains entitled to recover the deposit in accordance with cl 9.1 of the contract.
23. The conclusions I have reached are sufficient to determine that the plaintiff's Statement of Claim should be dismissed.
24. The final matter to consider is whether the defendant, in addition to its claim for the amount of the deposit, is able to claim $250 as "agreed additional costs" pursuant to Special Condition 51.6, and interest on the purchase price pursuant to Special Condition 52, such interest being calculated as $5,496.46.
25. Special Condition 51.6 provides: 51.6 Where the vendor issues a notice to complete, the purchaser must in addition to any other money payable under this Contract pay the vendor's solicitor a GST inclusive fee of $250.00 on completion as agreed additional costs arising from the issue of the notice to complete.
26. Special Condition 52 provides: 52.1 If the purchaser (not due to any default by the vendor) does not complete by the completion date: the purchaser must pay interest on: iii. the balance of the price; iv. any other amount payable by the purchaser to the vendor; and v. half of the deposit at the Interest Rate calculated daily from and including the completion date to but excluding the actual day of completion. 52.2 It is an essential term of this contract that the interest must be paid on and as a condition of completion. 52.3 The purchaser need not pay interest under this clause as long as the purchaser is ready, willing and able to complete. 52.4 Interest payable under this clause is a genuine pre-estimate of the vendor's loss as a result of the purchaser's failure to complete in accordance with this contract. 52.5 The right to interest does not limit any other rights the vendor may have as a result of the purchaser's failure to complete in accordance with this contract.
27. The defendant submitted that whilst the contract stipulated that the time for payment of the agreed additional costs and interest was on completion, which never occurred, the defendant had a right to payment of the amounts and such rights accrued to it prior to the termination of the contract.
28. It seems to me, however, that neither Special Condition 51.6 nor Special Condition 52 should be construed as giving rise to any accrued right prior to actual completion of the contract. Put another way, neither condition created a present debt payable in the future upon the completion of the contract.
29. In relation to Special Condition 51.6, the language suggests that the obligation to pay the agreed additional costs of $250 arises only if and when completion occurs, in which case the purchaser becomes obliged to pay the sum in addition to any other money that is payable under the contract.
30. Similarly, the language of Special Condition 52 suggests that the obligation to pay the interest arises only if and when completion occurs. By Special Condition 52.1, the amount of interest is calculated by reference to a period that assumes that completion of the contract actually takes place. Special Condition 52.3 then operates to exclude interest "as long as the purchaser is ready, willing and able to complete". By Special Condition 52.4 the parties evinced an intention that the amount of interest is to compensate for the vendor's loss as a result of the purchaser's failure to complete in accordance with the contract. The manner in which the interest is calculated shows that the "failure to complete in accordance with the contract" should be understood as the purchaser's failure to complete within the time stipulated in the contract. The evident purpose of Special Condition 52 is to compensate the vendor where actual completion of the contract is delayed by the purchaser.
31. For these reasons, I do not think that, prior to termination of the contract on 15 January 2019, the defendant had an accrued right to either the agreed additional costs of $250 or the interest of $5,496.46. The defendant is not entitled to recover either of those amounts from the plaintiff.

Conclusion

1. On the defendant's Cross-Claim, the Court will make declarations to the effect: 1. that the defendant validly terminated the contract for sale by notice on 15 January 2019; 2. that the defendant thereby became entitled to recover the amount of the deposit payable under the contract; and 3. that the defendant is entitled to call upon the bank guarantee that was provided by the plaintiff for the deposit under the contract.
2. Judgment should be entered for the defendant against the plaintiff in the sum of $154,800 plus pre-judgment interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW). As the defendant's entitlement to the deposit arose on 15 January 2019, upon the termination of the contract, the interest should run from that date. Interest from 15 January 2019 to today, calculated in accordance with General Practice Note 16, is about $9,399.33. Accordingly, judgment will be entered in favour of the defendant in the sum of $164,199.33. Of course, the judgment debt will be taken to be satisfied to the extent that the defendant recovers pursuant to the bank guarantee.
3. As stated earlier, the plaintiff's Statement of Claim must be dismissed. It is also appropriate that the ex parte injunction that was granted on 25 January 2019 be discharged.
4. As for costs, there seems to be no reason why costs should not follow the event. Accordingly, the Court will also order that the plaintiff/cross-defendant pay the defendant/cross-claimant's costs of the proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 March 2020