y Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82
Gould v Vaggelas (1984) 157 CLR 215; [1984] HCA 68
Greene v West Cheshire Railway Co (1871) LR 13 Eq 44
Harrington v Greenwood Grove Estate Pty Ltd [2011] NSWSC 833
Hart v MacDonald (1910) 10 CLR 417; [1910] HCA 13
Henville v Walker (2001) 206 CLR 459; [2001] HCA 52
Higgins v Statewide Developments Pty Ltd [2010] NSWSC 183
Hissett v Reading Roofing Co Ltd [1970] 1 All ER 122; [1969] 1 WLR 1757
Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168
Hoyt's Proprietary Limited v Spencer (1919) 27 CLR 133; [1919] HCA 64
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54
Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206
International Air Transport Association v Ansett Australia Holdings Limited (2008) 234 CLR 151; [2008] HCA 3
Jireh International Pty Ltd v Western Export Services Inc [2011] NSWCA 137
Knight Sugar Company Ltd v The Alberta Railway & Irrigation Company [1938] 1 All ER 266
Lawrence v Cassel [1930] 2 KB 83
Longtom Pty Ltd v Oberon Shire Council (1996) 7 BPR 14,799
Lucantonio v Ciofuli [2002] NSWSC 509
Mark Bain Constructions Pty Ltd v Avis [2012] QCA 100
Marks v GIO Australia Holdings Limited (1998) 196 CLR 494; [1998] HCA 69
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357; [2010] HCA 31
Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104; [2015] HCA 37
Murphy v Overton Investments Pty Limited (2004) 216 CLR 388; [2004] HCA 3
Nassif v Caminer (2009) 74 NSWLR 276; [2009] NSWCA 45
North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60
Pallos v Munro [1970] 3 NSWR 110; (1970) 72 SR (NSW) 507
Palmer v Johnson (1884) 13 QBD 351
Pascon Pty Ltd v San Marco in Lamis Cooperative Social Club Ltd [1991] 2 VR 227
Redmond Family Holdings v CG Access Pty Ltd [2016] NSWSC 796
Secure Parking Pty Ltd v Woollahra Municipal Council [2016] NSWCA 154
Shepperd v Council of the Municipality of Ryde (1951-1952) 85 CLR 1; [1952] HCA 9
Silva v Tarval Pty Ltd [1990] ANZ ConvR 465; (1990) NSW ConvR 55-533
Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47
Smogurzewski v AIT Investment Group Pty Ltd [2020] NSWSC 490
SPAR Licensing Pty Ltd v MIS QLD Pty Ltd [2014] FCAFC 50
Sumy Pty Ltd v Southcorp Wines Pty Ltd [2004] NSWSC 1000
Svanosio v McNamara (1956) 96 CLR 186; [1956] HCA 55
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8
Tarval Pty Ltd v Stevens (1990) NSW ConvR 55-552
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165; [2004] HCA 52
Travinto Nominees Pty Limited v Vlattas (1973) 129 CLR 1; [1973] HCA 14
Vella v Ayshan [2008] NSWSC 84
Victorsen v Easy Living Holdings Pty Ltd [2019] NSWSC 1721
Wang v Polaris Holdings Rosebery Pty Ltd [2020] NSWSC 213
Watson v Foxman (1995) 49 NSWLR 315
Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189
Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177
Wilson v Meudon Pty Ltd [2005] NSWCA 448
Zaccardi v Caunt [2008] NSWCA 202
Texts Cited: J D Heydon, Heydon on Contract (1st ed, 2019, Thompson Reuters)
Category: Principal judgment
Parties: Lijun Xu (Plaintiff)
Lindsay Bennelong Developments Pty Limited (First Defendant)
Bennelong Developments Pty Ltd (Second Defendant)
TFM Rushcutters Bay Land Pty Ltd (Third Defendant)
Representation: Counsel:
M Cairns with A Cameron (Plaintiff)
S B Docker (First and Second Defendants)
D L Cook SC (Third Defendant)
[2]
Solicitors:
Dentons (Plaintiff)
Thomson Geer Law (First and Second Defendants)
H & H Lawyers (Third Defendant)
File Number(s): 2019/00364854
Publication restriction: Nil
[3]
Judgment
HER HONOUR: Before me for hearing from the Expedition List, in late September and early October this year, was a dispute concerning a car parking space (valued at somewhere between $100,000 and $125,000) in an apartment building in Rushcutters Bay (the Encore Development) that was developed by the third defendant (TFM Rushcutters Bay Land Pty Ltd, to which I will refer as TFM) on land purchased by TFM from the first and second defendants (Lindsay Bennelong Developments Pty Ltd and Bennelong Developments Pty Ltd), to whom I will refer collectively, unless the context otherwise requires, as Bennelong.
Bennelong sold TFM the undeveloped parcel of land by contract of sale dated 9 September 2016 (TFM Contract), completion of which occurred on 31 March 2017. Prior to the sale of the undeveloped land to TFM, the plaintiff (Ms Xu) and her husband (Mr Keqi Zhang), who is not a party to these proceedings, had entered into a contract (the Xu Contract) for the sale "off the plan" to them of a particular lot (Lot 36) which was to be created on registration of a strata plan once the development was completed. On the sale of the land to TFM, the parties entered into a Novation Deed dated 25 January 2017 (the Novation Deed) (see below). TFM was directed subsequently (in August 2017) that Ms Xu would be the sole purchaser.
The claims by Ms Xu in the present proceedings arise out of the fact that what TFM ultimately transferred to her (the title to which she accepted on completion of the conveyancing transaction, although expressly reserving her rights to make a claim such as is now before me) was an apartment (by then known as Apartment 40, being Lot 36 in the registered Strata Plan) with a single car parking space, instead of with a tandem car parking space (as had been shown on the draft strata plan annexed to the Xu Contract (the Draft Strata Plan)), or two car parking spaces (see the "2 parking" notation in the floor plan contained in the marketing brochure provided to Ms Xu and confirmed by email before her entry into the Xu Contract).
Ms Xu's primary case is that she is entitled to a second car parking space (or, in the alternative, damages) pursuant to the Xu Contract. Ms Xu contends that it was a fundamental term and the main purpose of the Xu Contract (on the proper construction of the contract as a whole, including the diagrams and plans describing the property to be sold) or, in the alternative, an implied term, that the property to be conveyed to her (Lot 36) would have four essential features or characteristics: that it be on the top floor of the building (in other words, a penthouse apartment); that it have three bedrooms; that it have two bathrooms; and that it have two car spaces (a mantra that was repeated numerous times throughout the hearing including by Ms Xu in cross-examination - see, for example, at T 81.36). However, Ms Xu says that the precise configuration of those car spaces was not an essential term of the Xu Contract (T 17.40ff).
[4]
Chronology
The relevant chronology of events may be summarised as follows.
[5]
Initial interest in the proposed Encore Development
Ms Xu first became aware of the proposed Encore Development in mid-2015, at a time when Bennelong had not yet obtained a development approval (see Ms Xu's first affidavit sworn 28 February 2020, to which I will refer as Ms Xu's first affidavit, at [16]). In May 2015, Ms Xu paid two $10,000 deposits for two proposed apartments, a one-bedroom apartment with no car space and a two-bedroom apartment with one car space. TFM says that this was apparently done by Ms Xu on the basis of an understanding that, if the development approval were granted, the developer would guarantee the same price on offer at that time. TFM points out that Ms Xu has said that at that time she was looking at purchasing the apartments purely as investments and was not concerned with car spaces.
Development approval for the proposed development was granted in about March 2016, but it appears that the development for which approval was granted differed from that which had been originally contemplated; in that only a development with 40 units (rather than a development with 47 units as had been proposed) was approved. It is said that this meant that the one-bedroom apartment that Ms Xu had wished to purchase, and for which she had paid a refundable deposit, was not part of the approved plan. TFM points to this as being the first occasion on which Ms Xu discovered, if she had not previously been aware of this (as to which there is some doubt given her involvement in another property development to which I refer in due course), the uncertainty of buying property "off the plan".
Ms Xu then asked the agent whether there were other apartments available and was told that the only apartments that were available were those on the top floor; and that Apartment 4B was available, which had three bedrooms and one car space. Ms Xu's response was that she was not interested in Apartment 4B because it only had one car space and she had to have two car spaces. The reason for the change in Ms Xu's position as to the necessity for two car spaces seems likely to be that by then Ms Xu was contemplating moving into the apartment at some stage as her family residence rather than it being an investment property.
[6]
16 May 2016 - Marketing Brochure and First alleged Pre-Contract Representation
On 16 May 2016, Ms Xu received a "Marketing Brochure" (Floor Plan) and covering email from Mr Joe Li of ACCE Investments Group Pty Ltd (ACCE), (the entity described as the vendor's agent on the coversheet of the Xu Contract). The email from Mr Li advised Ms Xu that a three bedroom unit with two car spaces was potentially available and at a price of $2.175 million; and that the apartment was the last penthouse with three bedrooms and two car spaces (this apartment was then shown as Apartment 4A, but ultimately became known as Apartment 40). The subject line of the email was "Information about another three-bedroom apartment - Joe", and in the email Mr Li gave information about how the proposed Apartment 40 came to have an extra parking space, and stated that there were two bedroom apartments in the building without parking downstairs.
Pausing here, Ms Xu says that this is the first Pre-Contract Representation - see as defined below - and that it was both a representation as to current fact (i.e., as to the description of Apartment 40 in the Xu Contract) and a representation as to a future matter (i.e., that when built, Apartment 40 would have those essential features, namely that it be on the top floor, and have three bedrooms, two bathrooms, and two car spaces) (see T 14.37ff).
The Floor Plan attached to Mr Li's email included disclaimers to the effect that the information it contained was not guaranteed, referred to areas on the Floor Plan varying from final strata areas, and stated that changes may be made in accordance with the contract without notice during construction.
[7]
Payment of deposit
On the same day (16 May 2016), Ms Xu told Mr Li that she wanted to buy the apartment and Ms Xu says that Mr Li told her that she needed to pay a 10% deposit (see Ms Xu's first affidavit, at [41]). Ms Xu then paid the deposit of $217,500.
[8]
Draft contract
On 17 May 2016, Bennelong, through its lawyers at a related company, Clarendon Residential Holdings Pty Ltd (Clarendon) (see the first affidavit of Bennelong's general manager, Mr David Flanagan affirmed 3 April 2020, at [8]) forwarded to Ms Xu's then lawyers (GE Legal & Migration Services, to whom I will refer as GE Legal) the draft contract for Apartment 40 (Lot 36).
Clarendon's letter of 17 May 2016 had the subject line "Lindsay Bennelong Developments Pty Ltd & Ors Sale to Zhang. Property: Apartment 40, Encore, 18-28 Neild Avenue, Darlinghurst". The letter enclosed a draft contract for consideration "and signature" by the purchasers, clearly expressed that no contract or obligation arose from the letter and no contractual obligation would be created until formal exchange of contracts, stated that Bennelong would require a certificate under s 66W of the Conveyancing Act 1919 (NSW) (Conveyancing Act) (a "cooling-off" certificate) on exchange, and asked for exchange to be arranged within the next 14 days. Clarendon's letter did not mention car spaces. That letter was placed into evidence without the draft attached (Ex C). However, during the hearing, an email of 19 May 2016 from GE Legal addressed to Ms Xu and her husband, complete with the attachment (which comprised of the first two pages of the draft Xu Contract, the Draft Strata Plan as it pertained to Lot 36, and the Floor Plan) was tendered (see Ex 3).
On the coversheet of the draft Xu Contract, which initially specified the purchaser's name as that of Ms Xu's husband (Mr Zhang) only, and which was in the standard form 2014 Law Society edition contract for sale of land entitled "Contract for the sale and purchase of land", the land for sale was identified as:
Apartment 40, "Encore" 18-28 Neild Avenue, Darlinghurst
Unregistered plan: Lot 36 in an unregistered plan as indicated on Draft Strata Plan (copy attached) which is part of Lot 4 in DP1136932
[Emphasis in original]
In the Improvements section, on the front page of the draft Xu Contract, the boxes next to "home unit", "car space" and "storage space" were checked (but there was no figure indicating the number of car spaces).
In the Draft Strata Plan, the apartment for sale is shown to be on level 4 (the top floor of the proposed development) with three bedrooms, two bathrooms and, in the basement car park, a tandem car space (i.e., a long bay with room for two cars parked end to end) marked "PT36" (meaning part of proposed Lot 36). The Floor Plan (which was identical to the "Marketing Brochure" that had been emailed to Ms Xu on 16 May 2016) identified Apartment 40 as an apartment on Level 4 with (again) three bedrooms, two bathrooms and "2 parking". I here note that Ms Xu maintains that the sending of the draft Xu Contract with the attached Floor Plan is the second time that the Pre-Contract Representation was made.
[9]
20 May 2016 "Confirmation Email" - Third Pre-Contract Representation
On 20 May 2016, Mr Yan sent an email to Clarendon seeking various amendments to the draft contract and, in respect of the front page, said:
a. Improvements: please confirm two (2) x Carspace included;
That same day (20 May 2016), Clarendon responded by email (referred to in submissions as "the Confirmation Email"), stating:
1. a. We confirm there are 2 carspaces and note it's tandem.
Ms Xu relies on the Confirmation Email as amounting to the third time that the Pre-Contract Representation was made to her, specifically in respect of the number of car spaces. In cross-examination, Ms Xu said that she understood Mr Yan to have confirmed that she has two car spaces (at T 88.21ff).
TFM points out that the first line of Mr Yan's email forwarding the Confirmation Email ("[t]he email below is the response of seeking amendments from the vendor's solicitor") suggests that the confirmation of the two car spaces was part of a broader request for changes to the draft contract and Bennelong points out that what Mr Yan asked for was "confirmation" about the "carspace" improvement on the front page of the draft contract; that he did not seek any amendment of the draft contract in respect to car spaces, or any representation or undertaking from Bennelong about how many car spaces Ms Xu would be provided with regardless of what the contract allowed the vendor to do in that regard. Ms Xu's evidence was that she was unsure whether she knew that her solicitor had been asking the developer's solicitor to make amendments to the draft Xu Contract (T 89.4ff).
In any event, TFM points to the content of the Confirmation Email as showing that, from the outset, Ms Xu was aware that the proposed parking to be allocated to Lot 36 was a tandem bay, not two car spaces.
Pausing here, I note that the copy of the Confirmation Email included as an exhibit to Ms Xu's first affidavit did not include the whole of the email, but Ms Xu accepted that it was part of what had been sent to her on 20 May 2016 (see T 92.29). Ms Xu could not recall whether she had read it at the time.
Relevantly, in the second page of that email exchange, Mr Yan had indeed requested certain amendments to the draft contract, one of which was to cl 38.2.1. Ms Xu at one stage in cross-examination appeared to give evidence that Mr Yan had mentioned to her a change to cl 38.2.1 but said she did not "understand it completely" (T 92.45); although she then could not recall whether Mr Yan had told her he was going to ask for a change to cl 38 (see T 93.10).
[10]
Execution of draft contract
On 24 May 2016, Ms Xu and her husband executed the draft contract in their lawyer's office (see Ms Xu's second affidavit sworn 24 July 2020, to which I will refer as Ms Xu's second affidavit, at [12]; and Ms Xu's first affidavit at [50]-[51], [53]). Ms Xu said that she asked her solicitor to show her the whole contract and said that "… what I remember is, before I signed the contract, I had to convince myself that there are actually two car spaces" (T 94.40).
There was some contention in the course of submissions as to what Ms Xu's evidence, properly understood, was in this regard (Counsel for Ms Xu had wished to clarify this in re-examination by, in effect, taking Ms Xu through the contract to determine what she had read - see below). However, what was abundantly clear in my opinion from the cross-examination was that Ms Xu did not read the whole contract "from page one to the last page" before she signed it (see T 98.16); and indeed I doubt whether her level of comprehension of written English would have permitted her to understand the whole of the contract even had she attempted to do so (which I say with no disrespect to Ms Xu, for whom English is not her first language). That was apparent from the occasions in cross-examination when Ms Xu was asked to read parts of documents out in English and when asked if she understood what the word "rescind" (in English) meant.
[11]
Exchange of Xu Contracts
On 26 May 2016, Clarendon wrote to Ms Xu's lawyers, acknowledging receipt of her counterpart contract, and sending by way of exchange Bennelong's counterpart (see the affidavit of Ms Christine Borg, Clarendon's Group Legal Counsel, sworn 1 May 2020, at [22]).
Thus, by 26 May 2016, Ms Xu and Mr Zhang had entered into an "off the plan" contract with Bennelong, under which Ms Xu and her husband contracted with Bennelong to purchase an apartment to be constructed as part of Encore Development in Rushcutters Bay (known as Apartment 40 and, later, Apartment 401), being Lot 36 in the Draft Strata Plan attached to the Xu Contract. The signed Xu Contract included handwritten amendments including to the name of the purchaser and to cl 38.2.1 (Ex 4).
[12]
Relevant terms of Xu Contract
The Xu Contract is in the form of the draft Xu Contract submitted to Ms Xu (but with handwritten amendment to certain of the terms, including an amendment to add Ms Xu's name as purchaser, and the handwritten amendment to cl 38.2 to which I have already referred - although I note that the copy of the executed copy ultimately stamped for duty has been amended to have Ms Xu's name typed).
As also already noted, the Xu Contract is in the standard Law Society form (2014 edition) with special conditions. The land is identified on the front page (as it was in the draft Xu Contract as, namely: "Apartment 40, 'Encore' 18-28 Neild Avenue, Darlinghurst. Unregistered plan: Lot 36 in an unregistered plan as indicated on Draft Strata Plan (copy attached)").
The Draft Strata Plan annexed to the Xu Contract depicts "Lot 36" as: a level 4 (top level) apartment; with two car spaces (in a tandem configuration); and a storage space. It is noted that those three features match the "home unit", "car space" and "storage space" check boxes on the front page of the Xu Contract (without a designated space, as such, to enter the number of car spaces - cf the standard form of contract subsequently used by Bennelong for other lots in the Encore Development where a number was included in the car space box on the cover sheet of the contract).
The Building Floor Plan (page 1 of which is identical to the Marketing Brochure emailed to Ms Xu by Mr Joe Li on 16 May 2016), at Annexure 6 of the Xu Contract, describes "Apartment 40" as being (these being the four essential characteristics here emphasised by Ms Xu): "Level: 4"; and "3 bedroom", "2 bathroom", "2 parking".
The special conditions specific to the Encore Development, entitled "Additional Clauses - Encore at Advanx" include cl 32.1, which requires the registered Strata Plan to be substantially similar to the Draft Strata Plan.
Relevantly, cl 38 of the special conditions provided:
38. STRATA PLAN
38.1 Registration of Strata Plan
38.1.1 Completion is subject to and conditional upon registration of the Strata Plan. Subject to this clause, the vendor must do everything reasonable to have the Strata Plan and the By-laws registered by the Sunset Date.
38.1.2 The vendor may elect to extend the Sunset Date once for a period of six (6) months form the Sunset Date (Further Sunset Date) by serving a notice on the purchaser at any time after the contract date but before the Sunset Date.
38.1.3 If the vendor does not extend the Sunset Date to the Further Sunset Date, and the Strata Plan is not registered by the Sunset Date, then, subject to clause 38.1.5, either party may rescind this contract by serving a notice on the other and clause 19 will apply.
38.1.4 If the vendor extends the Sunset Date to the Further Sunset Date, and the Strata Plan is not registered by the Further Sunset Date, then, subject to clause 38.1.5, either party may rescind this contract by serving a notice on the other and clause 19 will apply.
38.1.5 In the event that:
(a) the purchaser wishes to rescind this contract pursuant to clauses 38.1.3 or 38.1.4 (as applicable) then the purchaser must serve notice within 14 days after the Sunset Date (or Further Sunset Date, as the case may be); or
(b) the vendor wishes to rescind this contract under clauses 38.1.3 or 38.1.4 (as applicable) then the vendor must serve notice within 14 days after any of the conditions set out in section 66ZL(3) of the Conveyancing Act 1919 have been satisfied.
38.2 Variations to Strata Plan and By-laws
The purchaser acknowledges and agrees that the vendor may make alterations, additions, variations or deletions to the Draft Strata Plan and the Draft By-laws which are required by the local council, the NSW Department of Lands or which the vendor considers necessary or desirable. The purchaser cannot take any restricted action in respect of the following minor variations.
38.2.1 a variation affection the area of the property by less than 5%; in total pursuant to the draft strata plan annexed to the contract [the words after the semi-colon being a handwritten amendment].
38.2.2 any change to the lot or unit numbers;
38.2.3 any alteration, addition, variation or deletion required by the local council or the NSW Department of Lands;
38.2.4 any change to unit entitlements provided that the unit entitlements comply with the requirements of the Strata Titles (Freehold Development) Act 1973; or
38.2.5 any changes to the By-laws required by the strata manager or the vendor which do not detrimentally affect the purchaser's use and enjoyment of the property to a substantial extent,
(Minor Variations).
38.3 Purchaser's right to rescind
38.3.1 If there is a difference between the Draft Strata Plan and the Strata Plan or the Draft By-laws and the By-laws other than a Minor Variation which detrimentally affects the property to a substantial extent the purchaser may only rescind the contract by serving a notice on the vendor within 7 days (time of the essence) after notice of registration of the Strata Plan is served.
38.3.2 The purchaser acknowledges and agrees that its only right or remedy in respect of a difference between the Draft Strata Plan and the Strata Plan or the Draft By laws and the By-laws is the right of rescission in this clause and the purchaser cannot take any restricted action in respect of a difference between the Draft Strata Plan and the Strata Plan or the Draft By-laws and the By-laws.
38.4 Miscellaneous
38.4.1 The vendor and the purchaser must adjust on a unit entitlement basis any operating expenses usually payable from the administrative fund of an owners corporation paid by the vendor which have not been reimbursed to the vendor at the date of completion.
38.4.2 Clause 11 does not apply to any notice with which the owners corporation for the Strata Plan must comply and clause 14.8 is deleted.
[Emphasis in the original]
[13]
Decision by Bennelong not to proceed with the Encore Development
On 9 August 2016, Clarendon wrote to Ms Xu's lawyers, advising that Bennelong would not be proceeding with the Encore Development due to it being unviable following receipt of construction tenders. The letter conveyed Bennelong's offer to enter into a Deed of Rescission and refund the deposit plus interest. The letter enclosed a draft Deed of Rescission. Relevantly, under the terms of the Xu Contract, Bennelong could rescind after the Sunset Date if it served notice within 14 days after any of the conditions set out in s 66ZL(3) of the Conveyancing Act (as it then was) had been satisfied. In essence therefore, by this communication Bennelong was notifying its intention in due course to exercise that right and offering the purchasers (i.e., Ms Xu and Mr Zhang) the option to recover their deposit at an earlier time. Pausing here, Ms Xu's evidence now is that, had she known that a new vendor could choose less than two car spaces when constructed for her apartment, she would have rescinded in August 2016 and recovered her deposit (Ms Xu's first affidavit at [62]); though Ms Xu has disavowed any claim for loss of opportunity damages (see at T 59).
Ms Xu's evidence is to the effect that she decided not to rescind because she thought that a new developer was likely to buy the development and build it (see Ms Xu's first affidavit at [59]-[60]), following a conversation to which Ms Xu has deposed with Mr Li of ACCE, in or around August 2016 in which Mr Li told her that he was not intending to sign the deed for his own apartment in the development as a new developer would build the Encore Development. Ms Xu has deposed that she then decided not to sign the Deed of Rescission (see Ms Xu's first affidavit at [57], [60]).
Pausing here, for Bennelong it is contended (and I accept) that from this point Ms Xu cannot have been relying on any Pre-Contract Representation to the effect that Bennelong would do anything in relation to the development because Bennelong had now told her that it would not be proceeding with the development. TFM also points out that the conversation with Mr Li (as to another developer being likely to build) was in his capacity as another purchaser "off the plan", not as the vendor's agent as such. There is no suggestion that at any time Mr Li was TFM's agent.
At around this time, Ms Xu changed lawyers from GE Legal to Prudentia Lawyers (T 103). On 22 August 2016, Prudentia Lawyers informed Bennelong's lawyers that Bennelong's rescission offer was declined (making allegations as to anticipatory breach); and pressed for performance of the Xu Contract, asserting that what had been conveyed amounted to a repudiatory breach of the Xu Contract.
[14]
Involvement of TFM in the proposed development
In late July or August 2016, TFM was introduced to the proposed development; and on 9 September 2016 TFM entered into a contract with Bennelong (the TFM Contract) to acquire the land (I note that this contract for sale of land only completed on 25 January 2017) (see affidavit affirmed by Mr Leigh Robert Manser, Bennelong's Development Director, on 3 April 2020 at [14]).
In the period from 20 September 2016 to 20 January 2017, Bennelong provided TFM with various documents: a copy of the Draft Strata Plan and "Marketing Brochure" for Lot 36 (see Mr Flanagan's first affidavit at 44, (d)); architectural drawings for the Encore Development (see Mr Flanagan's first affidavit at 44); and a copy of the Xu Contract and Confirmation Email (see Mr Flanagan's first affidavit at 44).
[15]
Novation Deed
Meanwhile, on 19 September 2016, Ms Xu was informed that the Encore Development had been sold and that a Deed of Novation to the new vendor would be prepared (see Ms Xu's first affidavit at [66]).
On 7 November 2016, Clarendon sent a letter to Prudentia Legal, which stated that Bennelong had sold the site, referred to cl 47.1.2 of the Xu Contract, enclosed the draft Novation Deed for execution, and said it would be executed by the "new purchaser" on completion. It is noted that the draft Novation Deed is the same as the final except for the correction of the spelling of Ms Xu's name and of TFM's ACN (T 48.16).
Ms Xu has deposed that she was advised that the only change to Xu Contract by the Novation Deed was the identity of the vendor (Ms Xu's first affidavit at [68]); and she has deposed that it was on this understanding that she signed the Novation Deed (Ms Xu's first affidavit at [69]-[70], [72]). Mr Zhang also signed the Deed of Novation. (Mr Zhang did not give evidence in the proceedings and Bennelong raises an issue as to the lack of evidence as to what he relied on at the relevant time(s) - see below.)
On or about 25 January 2017, each of TFM, Bennelong, Ms Xu, and Mr Zhang entered into the Novation Deed.
Under the express terms of the Novation Deed, cl 1.1 and cl 1.4(c) impose a contractual obligation on TFM as the "Substituted Vendor" to perform, and be bound by, all of the vendor obligations under the Xu Contract. Those clauses provide as follows:
1.1. From the date of completion of the Site Contract [between Bennelong and TFM] (Completion Date), the Substituted Vendor [TFM] and the Purchaser [Ms Xu] covenant to perform and observe the terms and conditions of the Contract and to be bound by it as if the Substituted Vendor were a party to the Contract in lieu of the Original Vendor [Bennelong].
…
1.4. The parties agree that as from the Completion Date:
…
(c) the Substituted Vendor must duly and punctually observe and perform all the liabilities, obligations and stipulations on the part of the Original Vendor to be performed and observed under the Contract.
At the time of entering into the TFM Contract with Bennelong, it appears that TFM was provided with only the front page of the contracts of sale for the six units that had been pre-sold and in respect of which the purchasers had elected not to rescind their contracts (including the Xu Contract). A request was made by the conveyancing solicitors acting for TFM at the time, AHD Lawyers, on 20 January 2017 (five days before completion of the TRM Contract) for copies of the complete contracts. Those contracts were provided to TFM on that day, together with the correspondence between Ms Xu's solicitor and Bennelong's solicitor, which included the Confirmation Email.
[16]
Direction that Ms Xu would be sole purchaser
In August 2017, TFM was directed that Ms Xu would be the sole purchaser (Ms Xu's first affidavit at [76]).
[17]
Amendment to Draft Strata Plan
On 13 December 2018, TFM's project manager (Construction Consultants) provided a copy of the Basement Level Car Park page of the Draft Strata Plan with handwritten amendments to TFM's surveyors (ATS). ATS made changes, which included moving the tandem car space from Lot 36 to Lot 39.
The car park layout is similar in both the Draft Strata Plan and the Strata Plan with there being only one tandem (or double) space. In opening submissions, Ms Xu complained that no reason was given by TFM (or in the documents produced in the proceedings) as to why the tandem space was moved from Lot 36 to Lot 39. As I understand it, however, in effect there was something of an administrative mix-up in that the coversheet did not specify two car spaces and so only one was allocated.
It appears that TFM's practice in relation to the drafting of "off the plan" contracts in developments of this kind was to indicate on the cover page of the contract the number of car space(s) to be acquired under the contract and to allocate car spaces to lots according to the number of car spaces shown on the coverpage of the contract (see [16] of the affidavit sworn by Dr Yihao (Eric) Zhang, TFM's General Manager and formerly director and Chief Executive Officer, on 10 December 2019, which was tendered in evidence by Ms Xu as part of Ex B; and [41]; [45] of the affidavit sworn by Dr Zhang on 14 August 2020, also part of Ex B); and that the location of each space was "completely at our discretion" unless a purchaser had specifically requested the location of a bay at a particular position ([41] of Dr Zhang's 14 August 2020 affidavit). Dr Zhang had also deposed to a recollection that another purchaser (James, who I understand to be a reference to Mr James Zhang, the fourth defendant against whom no relief was ultimately pressed and whose contract (for Lot 39) was the one to which the tandem space was finally allocated) had asked to have his bays near the lift (as the tandem space was) (see [41] of Dr Zhang's affidavit).
Dr Zhang had also deposed to his opinion (based on his experience) that, "when selling property 'off-the-plan', it is necessary for developers to have unfettered discretion to vary or amend plans" as and where necessary in order to address unexpected issues which may arise from time to time, including Council restrictions, complications in construction, and "other financial and/or commercial issues" (see at [11] of his affidavit sworn 10 December 2019, which was also tendered by Ms Xu as part of Ex B); and of the value to TFM of having unattached car spaces with which to market the remaining apartments, especially where there are insufficient car spaces for each apartment to have one, as is the case for the Encore Development (see at [41]-[42] of his affidavit sworn 14 August 2020, part of Ex B).
[18]
Registration of Strata Plan and transfer of Lot 36 on completion of Xu Contract
Ms Xu's solicitor was served with notice of the registration of the Strata Plan on 9 July 2019. Under the terms of the Xu Contract (see cl 38.3.1), Ms Xu then had a period of seven days in which she could have raised a complaint as to the change to the Draft Strata Plan and rescinded if the change "detrimentally affect[ed] the property to a substantial effect" (but no avenue was available to her if the change was a "minor variation" under cl 38.2 of the special conditions). TFM here argues that the change in question was a minor variation but in any event nothing turns on this because no complaint was received from Ms Xu within the seven day period provided for by cl 38.3.1 as to any error or misdescription.
On 17 July 2019, Ms Xu inspected the premises. There was an issue (explored in the cross-examination of Ms Xu by TFM) as to when the appointment for that inspection was arranged (see at T 110ff). At [79] of Ms Xu's first affidavit, Ms Xu deposed to a conversation with TFM's office "on or before" 15 July 2019, in which she sought to make an appointment to inspect the premises. Ms Xu's evidence was that she said "[c]an I schedule an inspection for apartments 401 and 308 [that being her daughter's apartment] on 15 July, on the Monday". 15 July 2019 was itself a Monday. Hence, it is submitted by TFM that it is unlikely that the conversation occurred on that same Monday. (Pausing here, insofar as TFM's submission in this regard turns on any infelicity of expression in the sentence "on 15 July, on the Monday", I accept that one would not likely think it necessary to clarify with the other party to a conversation the day of the week on which the conversation was occurring and that it would be more likely to say "can I schedule an inspection today". However, I take into account that English is not Ms Xu's first language and there may well have been a clumsy use of English on her part or an error in translation in the affidavit.)
There was in evidence an email dated 16 July 2019 from Ms Yuchen (Serena) Gao of TFM, confirming the inspection appointment for 17 July 2019. It was suggested by TFM that it was more likely that this email was sent on the day of the conversation (though of course that depends on the timeliness of Ms Gao's response).
It was put to Ms Xu in cross-examination that it was more likely that the conversation to which she had deposed was one that had occurred on 16 July 2019 (i.e., on the same day as the email confirming the appointment time) but Ms Xu was adamant that the conversation had taken place on or before 15 July and not on 16 July 2019.
[19]
Commencement of proceedings
Ms Xu commenced these proceedings on 20 November 2019.
On 12 December 2019, an interlocutory dispute between the parties was resolved by TFM undertaking to the Court not to take any steps further to encumber, transfer or otherwise deal with Lots 41-43 (those being unsold car spaces). That undertaking was varied on 3 July 2020 to be limited to Lot 43 from that date. (The significance of the 12 December 2019, as I understand it, is that this was the "Final Repayment Date" under two registered mortgages over Lots 41-46.)
A potential priority issue as between a loan from ALS256 Pty Ltd (ALS256) to TFM with the registered mortgages as security and Ms Xu's equitable interest in one of Lots 41-46 has been resolved by an Undertaking to the Court filed on 28 August 2020 that ALS256 will facilitate the transfer of one of Lots 41-46 to Ms Xu if TFM is ordered by the Court so to do, and ALS256 is paid at least $125,000 (being the value of a single car space based on the expert report served by Ms Xu - see below).
[20]
Pleadings
In the second further amended statement of claim filed on 8 September 2020, Ms Xu broadly brings two kinds of claim: a claim in contract against TFM; and claims under the Australian Consumer Law against each of TFM and Bennelong. The claims against Bennelong, as noted above, are premised on the contract claim against Bennelong not succeeding.
I note that prior to the filing of the second further amended statement of claim, Ms Xu had brought a claim seeking relief against the fourth defendant (a company controlled by Mr James Zhang) in relation to the sale of Lot 39 (which was the Lot that ultimately included the tandem car parking space that had previously been allocated under the Draft Strata Plan to Lot 36) - the allegation being that this was not an arm's length sale and, in effect, that there was a conspiracy between TFM and Mr James Zhang giving rise to the fraud exception to indefeasibility.
The effect of the amendment to the pleadings for which Ms Xu was granted leave was to abandon the fraud claim against the fourth defendant.
TFM says that that claim ought never have been made, was unsupported by evidence and was abandoned only a week before the hearing. Sackar J, in granting the leave, reserved the question of costs thrown away by reason of the amendment (and insofar as the discontinuance of the proceedings against the fourth defendant). TFM says that it will seek that its costs thrown away by reason of the amendment be paid by Ms Xu on an indemnity basis. However, that and other costs issues are to be determined in due course.
For present purposes, however, TFM emphasises that the abandonment of those allegations (at [52]-[73]) of the second further amended statement of claim and of the relief sought by the prayers for relief at 3-4 and 6b) means that the case (or at least the primary case) against TFM is now confined to a narrow contract construction case.
As to the contract case, Ms Xu contends that it is a fundamental term, and the main purpose, of both the Xu Contract and the Novation Deed, for the vendor to sell to her a particular apartment in the Encore Development (north-east facing, with a view of the park) on the top level, with three bedrooms, two bathrooms, and two car spaces (those comprising the alleged four essential characteristics of the property to be acquired to which I have earlier referred). Ms Xu maintains that she is entitled to specific performance of the promise to convey to her a second car space.
[21]
Evidence
Ms Xu affirmed a number of affidavits in the proceedings and was cross-examined, with the assistance of an interpreter in the Mandarin language.
As adverted to above, Ms Xu also tendered (as admissions) various paragraphs from three affidavits that had been filed and served by TFM, but which were not ultimately read in its case (being part of three affidavits sworn by Dr Zhang, a former director of TFM, on 10 December 2019, 3 April 2020, and 14 August 2020, respectively). I note that TFM did not concede that the relevant paragraphs contained or amounted to admissions but did not oppose the tender and it is not necessary here to dwell on this.
Bennelong adduced evidence from three lay witnesses: its General Manager, Mr David Ian Flanagan, who affirmed affidavits on 3 April 2020 and 20 August 2020, respectively; its Development Director, Mr Leigh Manser, to whose affidavit affirmed 3 April 2020 I have already referred; and its Group Legal Counsel, Ms Christine Borg, to whose affidavit sworn 1 May 2020 I have also already referred. Neither Mr Manser nor Ms Borg was required for cross-examination.
As adverted to above, TFM adduced evidence from Ms Yuchen (Serena) Gao by way of an affidavit affirmed 14 August 2020. Ms Gao was not required for cross-examination.
Ms Xu adduced expert evidence by way of an expert report dated 25 June 2020 of Mr Fernando of Herron Todd White (the Fernando Report), in which Mr Fernando calculated the difference in value between a tandem car space and a single car space (as at 29 August 2019) at $125,000. In a second affidavit affirmed by Mr Fernando on 21 August 2020, Mr Fernando gave his opinion as to the limited availability of street parking near the Encore Development.
TFM tendered in response an expert report from Mr Cameron Hubbard of Civil MJD (annexed to his affidavit affirmed 27 July 2020), which calculated the difference in value between the tandem and a single car space (as at 26 May 2016), at $100,000.
Ultimately, there was no cross-examination of either of the expert witnesses. Sensibly, the parties proceeded on the basis that the value of a single car space was somewhat between $100,000 and $125,000.
I will consider in due course the issues raised as to the credibility or reliability of Ms Xu. No submissions were made adverse to Mr Flanagan's credit.
[22]
Factual and legal issues
In summary, in her submissions Ms Xu identified the issues set out below as the issues arising in the proceedings. TFM did not accept that all of those issues did indeed arise on the pleadings but, nevertheless, responded to them in its submissions. The issues so identified by Ms Xu were as follows:
1. Proper construction of the Xu Contract - its fundamental term and purpose
2. In the alternative to 1, implied term to same effect
3. Whether the Pre-Contract Representation and Pre-Novation Representation were made
4. Whether the said Representations were (in part) as to future matters; and did TFM/Bennelong have reasonable grounds therefor
5. Whether the said Representations were false or misleading in breach of s 30(1)(e) and/or s 18 of the Australian Consumer Law
6. Relief
7. Whether Ms Xu's remedy was limited to rescission under cl 38 of the Lot 36 Contract
8. The scope of the vendor's discretion under cll 38.2 or 42.1 to make changes to the plans that it considered "necessary or desirable"
9. Whether there was merger on settlement
10. Whether Ms Xu is estopped from seeking relief under the Australian Consumer Law by cll 50.1 or 57
11. Whether the defendants are entitled to have Ms Xu indemnify them for any damages or costs order they are ordered to pay
TFM also did not concede that it was open to Ms Xu to raise all of the above issues and maintained that Ms Xu should be held to her pleaded case. In particular, this complaint related to Issue 8. Ms Xu says that, contrary to Bennelong and TFM's contention (Issue 8), the ability to vary the Draft Strata Plan in cl 38.3 did not extend to changing the fundamental character of the property to be sold. TFM says this issue was not, and should have been, pleaded.
[23]
Credibility issues
There was much debate during the course of submissions as to the issue of Ms Xu's credibility and it is convenient to deal with this at this stage.
For Ms Xu, emphasis was placed on the well-recognised difficulties of a witness giving evidence through an interpreter (see from T 148ff), and a number of examples were given to illustrate this.
First, reference was made to a perceived issue of translation in relation to the word "involved" (see T 66.18). It was noted that the witness had clarified what was meant by this. In that regard, my impression at the time was not that this was a problem with translation (and indeed, in later answers the witness, albeit through the interpreter, herself used that word). Rather, the impression I had at the time was that Ms Xu was wanting to clarify not the meaning of the word "involved" as such but, rather, what the cross-examiner was suggesting amounted to involvement (i.e., when the witness asked "What do you mean 'involve'?" ). So, for example, when asked: "Have you been involved yourself in any property development in Australia?" my impression (as I explained in the course of submissions) was that the witness was asking for more specificity as to the role about which she was there being cross-examined (which rather shows that Ms Xu was being careful to understand what precisely she was being asked to admit, consistent with a cautious attitude to cross-examination). My impression on re-reading the transcript remains the same.
Second, I was taken to a number of examples which it was said displayed difficulty Ms Xu had clarifying questions of the interpreter (such as at T 91; T 102; T 103.11). It was submitted that there was some difficulty with the way that the interpreter was translating the evidence for Ms Xu and she was trying to understand and answer the question. I readily accept that there were occasions when my impression was that Ms Xu either took issue with, or did not understand, what the interpreter was saying or did not think the interpreter was accurately translating what she was saying (and there were occasions towards the end of her evidence when Ms Xu spoke directly in English in answering questions). There were a number of answers that Ms Xu gave where I noted that she had answered in English before I thought the question had been translated for her or where she answered in Chinese to the interpreter before the question had been translated. That may well have been borne out of a degree of frustration with the interpreter (or so it seemed to me at the time), but the most I can draw from this is to be cautious of placing too much weight on the phrasing of Ms Xu's answers insofar as they were translated by the interpreter. An example of that is where there was an answer that used the words "technical jargon", which I accept might well have been the interpreter's understanding of what Ms Xu had said rather than necessarily an accurate translation of it.
[24]
Contract claim (Issues 1 and 2 and Issue 8)
As the claim against Bennelong only arises if Ms Xu's contract claim fails against TFM, it is convenient to consider first the issues relating to that claim.
[25]
Issues 1 and 2 (Proper Construction and Implied Term), and Issue 8 (Discretion)
[26]
Issue 1: Proper construction of contract
Reliance is placed by Ms Xu on the statement of the plurality (comprising French CJ, Nettle and Gordon JJ) in Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104; [2015] HCA 37 (Mount Bruce Mining) (at [46]) that: "the rights and liabilities of parties under a provision of a contract are to be determined objectively, by reference to the contract's text, context and purpose (making clear that this means the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract)."
Ms Xu says (as might be thought self-evident) that when the sale is of property "off the plan", the "plan" in question is a pertinent document, noting that in the present case it is the Draft Strata Plan, read with the Floor Plan, which identifies or defines the property to be sold.
Ms Xu argues that the facts of Tarval Pty Ltd v Stevens (1990) NSW ConvR 55-552 (Tarval v Stevens) are analogous to the present case. There, the vendor developer had entered into several off-the-plan contracts for strata units in a residential building called "The Chelsea" and the Draft Strata Plan (Annexure D to the contract) showed a wholly residential building but, on registration, on the strata plan the lower 10 floors were shown as commercial offices.
Handley JA (with whom Clarke JA and Meagher JA agreed) (at 59,078-9) rejected the vendor's submission that there were no words in the contract to create an obligation to transfer a lot in a wholly residential building, on the basis that that interpretation failed to "give effect to the plain meaning of the contract read as whole", including the description of the property being sold in the Draft Strata Plan at Annexure D. His Honour held that the contractual description of the units sold which included "as per the draft strata plan", was as part of a wholly residential building; that that description was an essential term of the contract; and that the vendor's non-delivery of the property as described in the contract was a fundamental breach of those contracts.
Ms Xu notes that Tarval v Stevens applied the High Court decision in Shepperd v Council of the Municipality of Ryde (1951-1952) 85 CLR 1; [1952] HCA 9 (Shepperd v Ryde Corporation); but that, unlike Tarval v Stevens and the present case, Shepperd v Ryde Corporation involved a plan that was not part of the contract but was used in pre-contractual negotiations. It is noted that Handley JA (at 59,080) in Tarval v Stevens observed that the High Court in Shepperd v Ryde Corporation had attributed importance to the plan off which the purchaser was buying because that plan described the lot for sale, being "the foundation of the transaction", and "[u]nless the main features of the project were fixed [the contract] would be meaningless".
[27]
Issue 2: Implied term
As to the test for implication of a term in fact into a contract in writing, Ms Xu submits that the conditions set out in BP Refinery (Westernport) Pty Limited v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266 (BP Refinery) (at 282-3) are here satisfied. In particular, as to the second and third requirements (that it must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it; and that it must be so obvious that it goes without saying), Ms Xu says as follows.
First, that the implied term for which she contends is necessary to give business efficacy to payment of the purchase price (as, she says, it would be a nonsense to suggest that Ms Xu was paying $2.175 million for a "lucky dip" as to the number of bedrooms, bathrooms, or car spaces she would receive, or indeed as to whether her penthouse apartment would be on another floor).
Second, that such a term is so obvious that it goes without saying, because if one were to ask the officious bystander (at the time of entry into the Xu Contract or Novation Deed), what Ms Xu was paying $2,175,000 for, the answer would no doubt be "for a penthouse with 3 bedrooms, 2 bathrooms and 2 parking spaces, in the development in Rushcutters Bay" (albeit not that those car spaces must be in a tandem configuration). Ms Xu says that, by way of contrast a one-bedroom apartment on the ground floor with no car space would be priced very differently. Similarly, it is noted that the configuration of the layout of the bedrooms, or bathrooms on the Floor Plan had a disclaimer subject to change and would not form part of the implied term. Ms Xu says that she was buying more than "just a chance" to acquire the apartment depicted in the Draft Strata Plan.
Insofar as TFM (in its opening outline at [59] and [89.2]) asserts that the implied term contended for is contrary to the express terms of the Xu Contract, Ms Xu submits that none of the express terms is contrary to the implied term for which she contends (including: cl 57.1 "Entire agreement", cl 50.1 "Purchaser's warranties", cl 38.2 "Variations", cll 38.3 and 41.2 "Purchaser's right to rescind", and cl 42 "Replacement documents").
As to cl 57.1, Ms Xu says that, properly construed, this clause does not contradict the implied term which simply gives effect to the main purpose of the Xu Contract. Ms Xu points to what was said by Isaacs J in Hart v MacDonald (1910) 10 CLR 417 at 430; [1910] HCA 13, noting that the entire agreement clause in that case (like cl 57.1) did not in terms exclude implications arising on a fair construction of the agreement itself and that his Honour noted that "in the absence of definite exclusion, an implication is as much a part of a contract as any term couched in express words".
[28]
Issue 8: Scope of the vendor's discretion to make changes to the plans that it considered "necessary or desirable"
Insofar as the defendants contend that, under cll 38.2 and 42.1, the vendor had a broad discretion to make changes to the plans that it considered "necessary or desirable", Ms Xu says: first, that any exclusion clause or clause of limitation must be interpreted so as not to breach the fundamental term and main purpose of Ms Xu's Contract (and so she maintains that cll 38.2 and 42.1, except for cl 38.2.3, would not extend to permit the vendor to change the essential character of the property to be sold); second, that there is an implied duty of good faith in an arms' length contract precluding a party from exercising a contractual power capriciously or for an extraneous purpose, and that this applies to contractual powers arising under contracts for sale of land (so that the parties are, in the absence of very clear words to the contrary, required both in performing their contractual obligations and in exercising their contractual rights, to act in good faith and reasonably); and, third, that the cl 38.2 discretion when read in full, refers to changes "required by local council, the NSW Department of Lands or which the vendor considers necessary or desirable".
It is noted that cl 38 states that the vendor "must do everything reasonable to have the Strata Plan registered" which must be substantially similar to the Draft Strata Plan. It is submitted that this does not mean that the discretion was at large nor that it was large enough to derogate from the property to be sold under the plans in the Xu Contract.
In the context of the cl 41.2 discretion to register a Strata Plan that has differences to the Building Floor Plan, Ms Xu notes that this clause was immediately preceded by cl 41.1" Vendor's obligations", which provides that "[t]he vendor will construct the Building substantially in accordance with the Building Floor Plan". In the context of the Xu Contract, Ms Xu says this is referable to Lot 36 as set out on page 1 of the Floor Plan (which states "2 parking").
In oral submissions, Ms Xu argued that "necessary or desirable" is to be read as "necessary or desirable" at least with the vendor's "developer hat" on, not something for the vendor's own personal financial gain (a somewhat difficult proposition when one would assume, and Ms Xu appeared to accept, that a developer is always undertaking a development for financial gain).
[29]
Issue 7: Ms Xu's remedy was not limited to rescission under cll 38.3 and 41.2
Ms Xu says that specific language is needed for an exclusion or limitation clause to override primary contractual obligations (citing Darlington Futures Limited v Delco Australia Proprietary Limited (1986) 161 CLR 500; [1986] HCA 82 (Darlington Futures)).
Ms Xu accepts that, under the Xu Contract, the purchaser's remedy was limited to rescission "within 7 days" of notice of registration of the strata plan, where there is a difference between: the Draft Strata Plan and the Strata Plan (cl 38.3); or the Building Floor Plan and the property on the date the strata plan is registered (cl 41.2), which in either case "detrimentally affects the property to a substantial extent". Ms Xu also accepts that both cll 38.3.2 and 41.2 include an acknowledgment that her only right or remedy in respect of those differences is the right of rescission and that she cannot take any "restricted action" (as defined above).
However, Ms Xu says that a difference between the draft and registered strata plans, or the Building Floor Plan and the constructed building, that would engage the limitation on a purchaser's remedy in cll 38.3.2 and 41.2, is premised on the following express vendor obligations: the obligation to register a strata plan "substantially similar to the Draft Strata Plan" (see cl 32.1 definition of "strata plan"); and, under the heading "41.1 Vendor's obligations" (immediately preceding cl 42.1), the obligation to "construct the Building substantially in accordance with the Building Floor Plan".
Ms Xu says that, properly construed, cll 38.3 and 41.2 do not limit her remedy to rescission where the "difference" under those clauses (as a variation to the strata plan or property) is a breach of the contract's fundamental term and main purpose (that is, to convey to her the particular apartment she contracted to buy with its "four essential characteristics", including two car spaces).
Ms Xu contends (as adverted to above) that the reference in cl 38.2 to alterations to the Draft Strata Plan "which the vendor considers necessary or desirable" does not mean that the vendor in its absolute discretion may change Lot 36 "capriciously" to deny Ms Xu the benefit of the contract. Rather, it is said that when that right is properly construed it: exists in the context of the "Strata Plan" definition in Special Condition 32.1 so that the registered strata plan must be "substantially similar to the Draft Strata Plan"; and refers to alterations to the strata plan that TFM considers "desirable" in its position as developer, for the benefit of the overall construction of the development, and while still maintaining the four essential characteristics of Apartment 40 (Lot 36), so as not to deny Ms Xu the benefit of the contract.
[30]
Issue 9: No merger on settlement
TFM's defence (at [34]) refers to the Xu Contract having completed on the conveyance or transfer of Lot 36 to Ms Xu, and pleads that: all of the parties' rights under the contract merged at that time; and that, in completing the contract (as opposed to the conveyance), Ms Xu accepted the property "as is" (such that Ms Xu no longer has any rights under the Xu Contract to a remedy for the vendor's breach of the Novation Deed and Contract of Sale).
Ms Xu points in this context to the numerous letters sent by her lawyers to TFM's lawyers from 18 July 2019 to settlement of the conveyance on 29 August 2019, demanding a second car space and reserving her right to seek another car space after settlement. Ms Xu says that her right to receive the whole of the property she contracted to purchase did not merge on settlement of the conveyance on 29 August 2019 with a contract for only one car space.
Ms Xu says that the doctrine of merger is aimed at preventing courts "un-doing" the transfer of legal title to property except in very limited circumstances (such as fraud); but that in the present case she does not seek to undo her conveyance (rather she seeks the conveyance of a single car space lot still owned by TFM).
Ms Xu claims that, on its proper construction, the fundamental term to provide the land with its four key defining features (as identified above) was not intended to merge on the conveyance of an apartment without all four features.
Ms Xu notes the general principle as stated by the High Court in Svanosio v McNamara (1956) 96 CLR 186 (Svanosio v McNamara) at 206 per McTiernan, Williams and Webb JJ; [1956] HCA 55 (citing with approval Knight Sugar Company Ltd v The Alberta Railway & Irrigation Company [1938] 1 All ER 266 (Knight v Alberta Railway) at 269) that:
Upon the execution of the conveyance the rights and obligations of the parties under the contract are merged in the conveyance except in so far as the contract provides expressly or impliedly that merger shall not take place�for instance where it is intended that a right to compensation given by the contract may be exercised even after completion.
Reference is made to Clarence City Council v Howlin [2019] TASFC 1 (Clarence City Council v Howlin), where the Full Court of the Tasmanian Supreme Court, in a case involving a vendor's contractual promise to grant easements to purchasers of adjacent lots so that the purchasers' properties were not "land locked", and had access to a road said (at [78]), quoting the general principle from Knight v Alberta Railway:
78. In our view, however, there was no merger in relation to any of the relevant contracts because the parties did not intend the contractual provisions relating to the creation of easements to merge upon the registration of transfers of the purchased land, and because the granting of the relevant easements was not recorded on the certificate of title for the servient land, and the process of registering the easements has therefore never been completed.
[31]
Issue 6: Relief
I consider Ms Xu's submissions on relief at the conclusion of the submissions on the Australian Consumer Law claims.
[32]
TFM's submissions on contract claim
TFM contends that one must focus precisely on Ms Xu's complaint, which (insofar as Ms Xu's case in contract is concerned) is said by TFM to be that Ms Xu did not receive the only tandem bay depicted in the Draft Strata Plan in her contract, which described the tandem bay as being part of the proposed Lot 36 in the Encore Development. In particular, TFM says that, although Ms Xu has asserted that her complaint is that she only received one car space and not two car spaces, Ms Xu was never promised (under the Xu Contract) that Lot 36 would encompass two separate car spaces; rather, she was to receive a specific (tandem) car space which could accommodate two cars.
As to the legal nature of Ms Xu's complaint, TFM notes that where there is a contract for the sale of land not yet in existence and there is an "error or misdescription" (in the sense that what is offered at settlement differs from what was described in the contract) then (subject to the contract provisions) there is a defect in the title (here citing Dainford v Lam at 265 per Powell J).
TFM points out that, on the coversheet of the Xu Contract, all that was relevantly indicated was that Ms Xu (and Mr Zhang) were to receive a car space; there being no indication on the coversheet as to the number of car space(s) to be acquired. TFM accepts that the Floor Plan indicated that the purchaser was to have "2 parking" but emphasises that this does not state two car spaces, as such. TFM also points out that the Draft Strata Plan attached to the Xu Contract showed a parking space that was longer than the other spaces (not two car spaces as such).
TFM maintains that Ms Xu's case proceeds on the basis that she is entitled to "2 car spaces" but that Ms Xu was never promised two single car spaces. TFM accepts that at one point it was proposed that Ms Xu would receive a tandem parking space which would allow parking for two cars but it emphasises that a tandem parking space is not the same as having two single bays. It is noted, in this regard, that access to the posterior part of the tandem bay requires that any vehicle that occupies the anterior part of the bay be moved (which it is said limits the utility of the tandem bay, when compared to having two single bays).
TFM also emphasises that, at the time that Ms Xu and Mr Zhang entered into the Xu Contract in 2016, the land was owned by Bennelong and no building had begun. TFM says that before the Novation Deed was entered into on 25 January 2017, there was uncertainty as to whether the Encore Development would even proceed (pointing to Bennelong's offer to rescind the Xu Contract to which I have referred above) and that Prudentia Legal had advised Ms Xu in relation to the offer or rescission and the Novation Deed (and had continued to advise Ms Xu, including during the time that Ms Xu inspected the premises, until Dentons commenced acting for Ms Xu on 4 August 2019).
[33]
Determination re contract claims
I first set out various of the relevant legal principles.
The principles concerning the construction of contracts are well-known. One looks to the objective meaning of the contract, by reference to the contract's "text, context and purpose" (Mount Bruce Mining at [46]). The High Court has stressed on numerous occasions the need for such an assessment to be conducted on an objective basis (see, for example: Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165; [2004] HCA 52 at [40] per the Court; International Air Transport Association v Ansett Australia Holdings Limited (2008) 234 CLR 151; [2008] HCA 3 at [53] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ; Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 at [98] per Heydon and Crennan JJ; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] per French CJ, Hayne, Crennan and Kiefel JJ; Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [78] per Gageler, Nettle and Gordon JJ; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16] per Kiefel, Bell and Gordon JJ).
A court will strive to construct the contract so as to give it business efficacy, albeit not at the expense of the express language of the contract (Mount Bruce Mining at 117; Jireh International Pty Ltd v Western Export Services Inc [2011] NSWCA 137 at [55] per Macfarlan JA). It is not the role of the court to improve the contract. In Arnold v Britton [2016] 1 All ER 1; [2015] AC 1619, Lord Hodge said (at [76]):
76. The [court] is not there to re-write the parties' agreement because it was unwise to gamble on future economic circumstances in a long term contract or because subsequent events have shown that the natural meaning of the words has produced a bad bargain for one side. The question for the court is not whether a reasonable and properly informed [party] would enter into such an undertaking. That would involve the possibility of re-writing the parties' bargain the name of commercial good sense.
In relation to the construction of a contract for the sale of land where the standard form has been used, Barwick CJ in Travinto Nominees v Vlattas noted the following (at 13).
Of course, in every case the actual contract between the parties must be construed in order to decide whether the subject matter is land or some particular estate or interest in land. If a compensation clause such as cl. 8 makes error or misdescription of the property the criterion of its operation, what will satisfy its terms will depend primarily on what is the property sold. If it be land, the error or misdescription must, in my opinion, relate to the description of the land or to the improvements thereon. A statement as to the suitability of the land for some physical use may well form part of its relevant description. Again markings on plans may form part of that description. But where this is so, the error or misdescription still would relate to the description of the physical subject matter.
On the other hand, if the title to or an estate or interest in land be the subject matter of the contract, error or misdescription may relate to the title or the estate or interest rather than the land itself.
[34]
Australian Consumer Law claims
Turning then to the Australian Consumer Law claims, it is relevant first to set out the particular statutory provisions.
Section 30(1)(e) of the Australian Consumer Law provides that:
(1) A person must not, in trade or commerce, in connection with the sale or grant, or the possible sale or grant, of an interest in land …
(e) make a false or misleading representation concerning the characteristics of the land; or
…
Section 18(1) of the Australian Consumer Law provides that:
A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
I turn then to the particular issues raised in relation to these claims, and the parties' submissions thereto.
[35]
Issue 3: Were the Representation and Pre-Novation Representation made?
[36]
Pre-Novation Representation by TFM
Ms Xu says that if her construction of the Novation Deed (read with the Xu Contract) is accepted, then it should follow that TFM, by proffering the draft Novation Deed to her (identical to the executed version), read with the Xu Contract, made the Pre-Novation Representation that: "title to Apartment 40 (Lot 36) will include two car spaces" (see the second further amended statement of claim at [16]). Ms Xu says that that representation breached the Australian Consumer Law as only one car space was provided on settlement.
[37]
Pre-Contract Representation by Bennelong
The Pre-Contract Representation (pleaded in the second further amended statement of claim at [5]) is alleged to have been made by Bennelong expressly in words and in plans three times leading up to Ms Xu's execution of the Contract for Sale. It is said that the Pre-Contract Representation was a statement of current fact as to the operation of the Xu Contract (namely that Apartment 40 "had 3 bedrooms, 2 bathrooms and 2 car spaces" - see second further amended statement of claim at [5]).
It is noted that the Draft Strata Plan depicts a car space the length of two end-to-end car spaces with immediately above it marked "PT 24 + PT 17" and "PT 22 + PT 20". Ms Xu says that another way of testing whether or not the configuration was an essential characteristic is to ask whether, had she not received a tandem car space but instead had received two single spaces, would she have received something "which detrimentally affects the property to a substantial extent", engaging a right to rescind under exclusion cl 41.2.
Ms Xu says that there can be no real dispute that the Pre-Contract Representation was made (despite Bennelong's non-admission at [5]-[8]), pointing to the evidence of Ms Borg (Group Legal Counsel) in her affidavit at [17] and [19] to the effect that the Confirmation Email reflects her "understanding and instructions" that: Bennelong intended to allocate two car spaces in tandem formation to the proposed Apartment 40; and that such an allocation was "consistent with" what was "indicated in" the Draft Strata Plan, the Floor Plan and the Marketing Brochure for Apartment 40.
Ms Xu says that the Confirmation Email was calculated to induce her (including through her lawyer) to enter into the contract; and that there is a presumption of reliance, as stated by the plurality in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 (Campbell v Backoffice) at [142] (there citing Gould v Vaggelas (1984) 157 CLR 215 at 236 per Wilson J; [1984] HCA 68):
… [i]f a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation.
Insofar as Bennelong has submitted that Ms Xu relied on her own solicitors (see Bennelong's outline [61]), Ms Xu says this is irrelevant where one of the representations was a direct communication without her lawyer as intermediary and, on the other two occasions the Pre-Contract Representation was made about factual matters describing the property to Ms Xu's lawyer as her agent. It is submitted that the Pre-Contract Representation was as to the essential characteristics of the property being sold under the Xu Contract, a matter exclusively in the knowledge of Bennelong as the vendor developer of an "off-the-plan" property; and that Ms Xu's solicitors were not in a position to know (and in fact sought confirmation of) those characteristics. It is said that these were not matters the subject of legal advice.
[38]
Pre-Novation Representation by Bennelong and TFM
The Pre-Novation Representation is pleaded as being that "on completion, title to Apartment 40 (Lot 36) will include two car spaces". It is alleged that the Pre-Novation Representation was made by Bennelong and TFM expressly, in words and plans, by proffering the draft Novation Deed (read with the Xu Contract) to Ms Xu for her execution, by reference to: the plans attached to the Xu Contract that Ms Xu read in her lawyer's office (referring to T 94.39 where Ms Xu said "what I remember is, before I signed the contract, I had to convince myself that there are actually two car spaces"); and cll 1.1 and 1.4(c) of the Novation Deed, stating that TFM as the "substituted vendor" would meet the vendor obligations under the Xu Contract.
Ms Xu says that a reasonable person in her position would have understood cll 1.1 and 1.4(c) of the Novation Deed as representing that TFM would perform and be bound by all of the obligations that Bennelong would otherwise have had as "vendor" under the Xu Contract, which necessarily included the provision of a property with the essential characteristics.
Therefore, Ms Xu contends that the Pre-Novation Representation was made by TFM (and Bennelong) proffering the draft Novation Deed, understood with the Xu Contract being the subject of that deed. It is noted that French CJ in Campbell v Backoffice acknowledged (at [35]-[36]) that a representation can be made by the proffering of a contractual document, which in turn, is capable of constituting misleading conduct. Ms Xu says that the parties' subjective views of Bennelong's obligations under the Xu Contract are irrelevant to the issue of whether it made representations to Ms Xu on the contract's operation.
[39]
Misleading or deceptive conduct
It is not disputed that conduct, for the purposes of s 18 of the Australian Consumer Law, extends beyond "representations". Ms Xu says that, by making the Pre-Contract Representation and the Pre-Novation Representation (when the parties' conduct in the seven months between those representations is viewed as a whole), Bennelong engaged in "conduct" that was misleading under s 18 of the Australian Consumer Law (see the second further amended statement of claim at [40]). Reference is made to the statement by McHugh J in Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592; [2004] HCA 60 (Butcher v Lachlan Elder Realty) at [109] (cited with approval by the plurality in Campbell v Backoffice at [102]) that:
109. The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. ... the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the [person's] conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct.
Ms Xu points out that the Xu Contract was not only still on foot at the time the Pre-Novation Representation was made (by proffering the draft Novation Deed), but it was the subject of that Deed. It is said that the proposed Deed of Rescission does not alter that fact and that it would be artificial to consider the two representations in isolation of one another. It is said that, in practice, they were made in relatively short succession and in the context of other regular communications between Bennelong and Ms Xu, and yet the representation including two car spaces was never qualified. It is said that Bennelong's conduct from 16 May 2016 to 25 January 2017 should be viewed as a whole when considering whether it was because of that conduct that Ms Xu entered into the Novation Deed.
[40]
Issue 4: Were the Representations (in part) as to future matters; did TFM/Bennelong have reasonable grounds?
Ms Xu maintains that the Pre-Contract Representation was both a statement of current fact (being the description of the property sold to Ms Xu under the Xu Contract), and as to a future matter (being the description of the property Ms Xu would receive once built). Ms Xu says that it was not (as Bennelong submits at [18]-[19]) a promise or prediction.
Ms Xu says that the Pre-Novation Representation was as to what the property "will have" on completion according to the plans. It is submitted that it is not novel to sell property rights in a residential or commercial (or combination) development (it being submitted that agreements for lease are often entered into for a shopping centre yet to be developed, albeit that if not developed by the sunset date then the parties are released). Similarly, it is said, that once the development in this case was built before the Sunset Date, Ms Xu had a right to Apartment 40 with its essential features, and TFM's desire to have more car spaces with which to sell unsold apartments is irrelevant to its contractual obligations (or its obligations under consumer protection legislation) to Ms Xu.
Thus, Ms Xu says that the Representations were as to current matters and (in part) as to future matters (referring to the further amended statement of claim at [41], [46]; Bennelong [5]-[8]; TFM [46]) and that, to the extent that the representations were as to future matters, the presumption in s 4(2) of the Australian Consumer Law applies.
Ms Xu accepts that Bennelong has filed "state of mind" evidence to show its reasonable grounds in making the Pre-Novation Representation, and its intention that 2 car spaces (as the only tandem space) would be for Lot 36 (referring to Mr Flanagan's first affidavit affirmed 3 April 2020 at [21]; the affidavit affirmed 3 April 2020 by Mr Manser at [14]; and the affidavit sworn 1 May 2020 by Ms Borg at [17]); but Ms Xu says that TFM has not. Therefore, it is said that, if the Pre-Novation Representation is found to have been made by TFM as to a future matter, it is deemed to be misleading for the purposes of both ss 18 and 30 of the Australian Consumer Law. Ms Xu says that the fact that the car spaces were built (cf TFM's opening outline [86]) does not provide a "reasonable basis" where TFM reallocated those spaces.
[41]
Issue 5: Were the Representations false or misleading in breach of ss 30(1)(e) and/or 18 of the Australian Consumer Law
Ms Xu alleges that both Representations were false or misleading (amounting to "conduct that is misleading or deceptive, or likely to mislead or deceive"). It is not disputed that the subject acts were "in trade or commerce".
Ms Xu maintains that for her claim pursuant to s 30 of the Australian Consumer Law, the test is whether the representation is "false or misleading" at the time of settlement (and that no question as the representor's intention or belief at the time of making the representation arises). Ms Xu says that both Representations were to the effect that Apartment 40 (Lot 36) "had" or "will have" two car spaces, which Ms Xu maintains clearly "concerned the characteristics of the land' to be sold to Ms Xu.
It is said that, directly contrary to those Representations, at settlement Lot 36 had only a single car space and, therefore, that at settlement the representations proved to be false and misleading (since the tandem car space previously allocated to Lot 36 in the Draft Strata Plan had been re-allocated to Lot 39; and Lot 36 was instead allotted a single car space). As a result, it is said that the characteristics of the land transferred to Ms Xu on settlement were different from the Pre-Contract and Pre-Novation Representations made to her as to those characteristics (and, again, that any evidence of what Bennelong believed would be provided, or of what TFM believed it was obliged to provide, under the novated contract, is irrelevant).
In the circumstances, Ms Xu argues that both Representations as to the characteristics of Ms Xu's apartment were false or misleading in breach of s 30(1)(e) of the Australian Consumer Law.
As to the claim under s 18 of the Australian Consumer Law, Ms Xu notes that there must be consideration of the defendants' conduct as a whole to ascertain if the representations were made and if they had a tendency to lead Ms Xu into error; and that the test is necessarily objective but is to be approached from the position of Ms Xu. Reference is made to the observation by French CJ in Campbell v Backoffice (at [25]) that the test "involves consideration of a notional cause and effect relationship between the conduct and the state of mind of the relevant person … The test is necessarily objective."
[42]
Issue 10: whether Ms Xu is estopped or precluded from seeking relief under the Australian Consumer Law by cll 50.1 or 57
Ms Xu notes the authorities to the effect that a party cannot contract out of liability under the Australian Consumer Law (or its predecessor, the Trade Practices Act 1974 (Cth) (Trade Practices Act)) for false or misleading or deceptive conduct in breach of that legislation.
Reference is made to the observations of Wilcox J in Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd (1987) 72 ALR 601 (Henjo Investments) at 613-614, in respect of clauses such as the purchaser warranty in cl 50.1 and the entire agreement in cl 57:
These clauses contain an acknowledgement by the purchaser that it has not relied upon any statement, representation or warranty given on behalf of the vendor ... there is now abundant authority in this court that they do not operate to defeat a claim under s 52 ... The reason why an exclusion clause does not provide an answer to a claim under s 52 is that ... the clause "cannot operate so as to oust the effect of the Act ... or to deprive the applicant of its remedies under the Act". If in fact the misleading conduct of the respondent has induced an applicant to enter into an agreement, that inducement is not negated because, in the agreement itself, the applicant says to the contrary. Of course, the fact that the applicant so says may bear upon the question whether he or she should be believed in asserting that the misleading conduct was an inducement; although in the case of a printed exclusion clause this may be of little moment.
Ms Xu says that cll 50.1 and 57 are to be taken into account in consideration of the whole of the circumstances in ascertaining, what (if any) was the representation made, according to the Campbell v Backoffice principles.
Ms Xu's evidence is that she did in fact rely on the representations in entering into the Xu Contract and the Novation Deed, noting her evidence that: her family home "had to have" two car spaces for her and her husband (see Ms Xu's first affidavit at [21], [23], [24], [38]); she only decided to buy Apartment 40 after receiving confirmation that it definitely had two car spaces (see Ms Xu's first affidavit at [48]-[49], [50]-[51]); and she only signed the Novation Deed after receiving confirmation that the novated contract would be the same as the Xu Contract (see Ms Xu's first affidavit at [68]-[70]).
[43]
Issue 11: The defendants' claim to an indemnity from Ms Xu for any damages or costs order they are ordered to pay
By way of cross claim, Bennelong seeks an indemnity under cl 50.3 for Ms Xu's alleged breach of cl 50.1. Ms Xu says that, on the proper construction of that clause, if Ms Xu succeeds in her case then she is not required to indemnify the vendors under cl 50.3, for any "liability, loss or cost" arising from a breach of the cl 50.1 warranty, because any such breach was caused by Bennelong's and/or TFM's breach of the same Xu Contract, or their conduct in breach of the Australian Consumer Law.
Reference is made to the High Court's decision in Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; [2004] HCA 28 (Andar), in relation to the proper construction of indemnity clauses, where the majority (at [17]) applied the following principle from Ankar Proprietary Limited v National Westminster Finance (Australia) Limited (1986-1987) 162 CLR 549 (Ankar) at 561; [1987] HCA 15:
17. At law, as in equity, the traditional view is that the liability of the surety is strictissimi juris and that ambiguous contractual provisions should be construed in favour of the surety. ... A doubt as to the status of a provision in a guarantee should therefore be resolved in favour of the surety.
It is noted that in Bofinger v Kingsway Group Limited (2009) 239 CLR 269; [2009] HCA 44, the plurality in the High Court explained (at [53]), that Andar applied where there was ambiguity "not only from the uncertain meaning of a particular expression but from its apparent width of possible application".
In the present case, it is said that it is the width of possible application of special condition 50.3 that is ambiguous; and that, in light of that ambiguity, the clause must be interpreted in favour of Ms Xu.
Ms Xu submits that the proper interpretation of special condition 50.3 is to limit the scope of that indemnity to representations which do not amount to a breach of the Australian Consumer Law. It is said that any broader interpretation of that provision would amount to an invalid attempt to oust the operation of consumer protection legislation.
[44]
Bennelong's submissions as to Australian Consumer Law claims
It is relevant to deal with Bennelong's submissions first, as its involvement predates that of TFM and provides the foundation for much of what Ms Xu complains about in her misleading or deceptive conduct claim against TFM.
In this regard, Bennelong emphasises its lack of involvement in the development after 25 January 2017 and, specifically, in the allocation and transfer of a single car space to Ms Xu in 2018/2019.
Bennelong accepts that the Pre-Contract Representation of current fact was made but says that it was not misleading. It says that the Pre-Contract Representation as to future matters was not made. Reference is made in this regard at T 212, to two decisions of Darke J where his Honour said that a contract for sale of land is a sale by description and the description is the draft strata plan (Wang v Polaris Holdings Rosebery Pty Ltd [2020] NSWSC 213 at [41]-[44]; Smogurzewski v AIT Investment Group Pty Ltd [2020] NSWSC 490 at [42]). Reference is also made by Bennelong to Campbell v Backoffice at [32], where French CJ characterised statements as statements of historic or present fact, and statements of opinion (which include opinions as to future matters and predictions) (see at [32]-[33]). A prediction must be an opinion of the person giving it because it does not represent an existing fact, so the source of its content must be the person giving it. It is noted that his Honour pointed out (at [33]) that there may be overlap between opinions and statements of fact because opinions may carry with them implied representations according to the circumstances of the case.
Bennelong says that there is no reason why the approach to identifying the alleged representations in a claim under s 30(1)(e) of the Australian Consumer Law would be different. It is noted that the terms "misleading or deceptive" in s 52 of the Trade Practices Act and in s 18 of the Australian Consumer Law have been read as synonymous with "false or misleading" in s 53 of the Trade Practices Act, and s 29 of the Australian Consumer Law (which concerns false or misleading representations in connection with the supply or promotion of goods and services in similar terms to s 30 of the Australian Consumer Law) (see Australian Competition and Consumer Commission v Dukemaster Pty Ltd (ACN 050 275 226) [2009] FCA 682 at [14]-[15] per Gordon J; Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2014] FCA 634 at [40] per Allsop CJ).
[45]
Pre-contract Representation
Bennelong says that the Pre-Contract Representation is a promise or prediction and, insofar as it relates to Bennelong, the Pre-Novation Representation is a prediction. (It is said that the Pre-Novation Representation cannot be a promise because Bennelong was selling the development at that stage.) It is said that, properly characterised, they are opinions of Bennelong as to what will happen on settlement of the Xu Contract in respect of car spaces.
It is said that these are future matters because the building, the apartment, and the car spaces did not exist at the time of the representations (reference being made to Mark Bain Constructions Pty Ltd v Avis [2012] QCA 100 at [9] per Fraser JA, Chesterman JA and Fryberg J agreeing).
Accordingly, it is said that although the Pre-Contract Representation alleged at [5] of the further amended statement of claim uses the word "had", it must be construed as alleging a representation of Bennelong's opinion that the proposed Apartment 40 "will have" two car spaces on completion of the Xu Contract. It is said that the Pre-Novation Representation is in similar terms.
It is noted that, at [6] and [17] of the further amended statement of claim, Ms Xu alleges that the representations were continuing, in the sense of unlimited as to time, and were not retracted or limited otherwise; and, at [40] of the further amended statement of claim, Ms Xu alleges that the representations are false, misleading, or deceptive if she "is unsuccessful in her contract case (as to the proper construction of the Contract and Novation Deed and their implied terms)". Thus it is said by Bennelong that Ms Xu's claim is that Bennelong's promise or prediction as to what Apartment 40 would consist of on settlement continued indefinitely, was not qualified by the Xu Contract, or anything else that happened, and was misleading because it was wrong.
It is noted by Bennelong that Ms Xu has not pleaded or identified any implied representation Bennelong is said to have made with the Pre-Contract Representation or the Pre-Novation Representation.
Bennelong accepts that the process of characterising its conduct to identify the representations it made is objective and proceeds by reference to the circumstances and context of the conduct, which includes the knowledge of the person to whom it is directed in the context of commercial negotiations (see Campbell v Backoffice at [25]-[26] per French CJ; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357; [2010] HCA 31 (Miller & Associates) at [20], [22], [26] per French CJ and Kiefel J, as her Honour then was; and [85], [91], [96] per Heydon, Crennan and Bell JJ).
[46]
Pre-Novation Representation
Bennelong says that the Pre-Novation Representation concerns the effect of the Novation Deed read with the Xu Contract, namely that the effect is the same as the Xu Contract except that the vendor had been changed. Bennelong says that this characterisation of the effect of the Novation Deed is correct. It is said that Ms Xu only complains about the Novation Deed if her construction of the Xu Contract is incorrect (see further amended statement of claim at [40]). Bennelong says that this raises the question as to what, if anything, was represented by Bennelong to Ms Xu about the effect of the Xu Contract; and it maintains that nothing was said by it in that regard.
Bennelong says that it did not make the alleged Pre-Novation Representation because the Novation Deed does not contain any representation by Bennelong about what it or TFM would do. Further, it is noted that Bennelong does not necessarily make any representation by entry into the Novation Deed as to its subjective understanding of the Xu Contract, because it is bound regardless of its subjective understanding (referring to Secure Parking Pty Ltd v Woollahra Municipal Council [2016] NSWCA 154 (Secure Parking v Woollahra Municipal Council) at [98] per Meagher JA, with whom Beazley P, as Her Excellency then was, and I agreed). Bennelong says that it did not make any such representation because it promised nothing in the Novation Deed; alternatively, the Pre-Novation Representation was not misleading, as it correctly described the effect of the Novation Deed.
[47]
Cumulative conduct allegation
As to the "cumulative conduct" allegation, Bennelong says that this depends on Ms Xu establishing that Bennelong's conduct objectively gave someone in Ms Xu's position the impression that she would obtain two car spaces on completion after TFM bought and developed the site.
Bennelong notes that in closing submissions (at T 172.7-12), it was submitted for Ms Xu that the statement in the 19 September 2016 email from Prudentia Legal to Ms Xu that Prudentia Legal had received written confirmation from Bennelong that "the new developer has agreed to take on the original contract you have entered into with the Vendors and be bound by the same terms as in the original contract" is relevant to considering the representations together as misleading conduct. Bennelong points out that this was a representation by Prudentia Legal to Ms Xu, not by Bennelong, and that Ms Xu has not pointed to the written communication to which Prudentia Legal was referring. In any event, Bennelong notes that Prudentia Legal correctly predicted the effect of the Novation Deed.
Bennelong says that the cumulative conduct allegation cannot succeed unless the Pre-Contract Representation as to future matters (i.e., that Ms Xu will be provided with two car spaces on completion) is established. It is said that, with the exception of Clarendon's reference to cl 47.1.2 (which provided for novation if the registered proprietor changed), in its 7 November 2016 letter to Prudentia, Bennelong said nothing in correspondence or in the Novation Deed about car spaces or any term of the Xu Contract after the Confirmation Email on 20 May 2016. Bennelong says that it follows that there could not be any misleading impression from Bennelong's cumulative conduct as of 25 January 2017 without the Pre-Contract Representation as to future matters continuing.
Bennelong says that it would not be expected to tell Ms Xu its own views of what the Xu Contract allowed in respect of provision of less than two car spaces on completion, given the commercial nature of the relations between the parties, their commercial experience, and that they were both represented (citing Miller & Associates at [20], [22], [26] per French CJ and Kiefel J, as her Honour then was, and [85], [91], [96] per Heydon, Crennan and Bell JJ; Secure Parking v Woollahra Municipal Council at [98] (see above). It is submitted that, as Ms Xu and Mr Zhang had a solicitor for both the Xu Contract and the Novation Deed, any communication about the Xu Contract and Novation Deed must be viewed in this light, such that if Bennelong's subjective understanding was sought or given it would be expected to be explicit.
[48]
Issues 4 and 5: did Bennelong contravene ss 30(1)(e) or 18 of the Australian Consumer Law?
[49]
Section 30(1)(e) Australian Consumer Law claim
Bennelong notes that Ms Xu puts her case under the Australian Consumer Law primarily under s 30(1)(e) of the Australian Consumer Law, and under s 18 of the Australian Consumer Law in the alternative (referring to her submissions at [67]-[72]); and that a claim for damages under s 236 of the Australian Consumer Law for contravention of s 30(1)(e) of the Australian Consumer Law has advantages over such a claim based on s 18 of the Australian Consumer Law because it is not subject to apportionment or contributory negligence (see Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177 at [55], [61]-[62] and [64] per Emmett JA). It is said that, for this reason, the representations need to be identified precisely because a representation about the effect of the Xu Contract may not concern the characteristics of the land, whereas a representation about what would be included with Apartment 40 would do so.
Insofar as Ms Xu asserts that whether a representation caught by s 30(1) of the Australian Consumer Law is false or misleading is assessed at the time of settlement of the sale of land contract, not at the time the representation was made (see Ms Xu's submissions at [67]), Bennelong says that the false or misleading nature of a representation falling within s 30(1)(e) of the Australian Consumer Law is determined at the date of settlement of the contract rather than the date of the representation. Bennelong says that simply because representations do not come to pass do not make them false or misleading.
It is noted that, generally, the same approach is taken to ss 52 and 53A of the Trade Practices Act as to ss 18 and 30 of the Australian Consumer Law. Reference is made to Demagogue Pty Ltd v Ramensky at 36 per Gummow J, as his Honour then was; Bowler v Hilda Pty Ltd (1998) 80 FCR 191 (Bowler v Hilda Pty Ltd) at 222 per Cooper J, and the cases there cited.
Bennelong says that the proposition that the mere fact that representations as to future matters do not come to pass does not make them misleading or deceptive is well established (citing Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 (Global Sportsman v Mirror Newspapers) at 88 per the Full Court; Bill Acceptance Corporation Ltd v GWA Ltd (1983) 78 FLR 171 (Bill Acceptance Corporation v GWA) at 179 per Lockhart J). It is noted that this is because, as Lockhart J explained, the question whether representations are misleading or deceptive must be answered at the time they are made, although later events may assist to determine this question (see Bill Acceptance Corporation v GWA at 179 per Lockhart J). Similarly, the question whether a person has reasonable grounds for making a representation as to a future matter is assessed at the date of the representation (see Redmond Family Holdings v CG Access Pty Ltd [2016] NSWSC 796 (Redmond Family Holdings v CG Access) at [52] per Black J).
[50]
TFM's submissions as to Australian Consumer Law claims
TFM says that any claim against TFM on the basis of misleading and deceptive conduct requires focus on the conduct of TFM and not the conduct of Bennelong. It is submitted that it is in error to suggest that TFM steps into the shoes of Bennelong by reason of the Novation Deed; rather that, by the Novation Deed, all that TFM promised was to perform the obligations in the Xu Contract which were ascribed to Bennelong. It is said that TFM was not the successor of Bennelong, nor was Bennelong its agent; and it is said that what the Australian Consumer Law regulates is conduct in trade or commerce, whereas here, the only conduct of TFM relevant to this dispute is the entry into the Novation Deed.
TFM says that the conduct alleged by Ms Xu constitutes the making of the Pre-Novation Representation (the Representation is the conduct of Bennelong alone), but that the only evidence of making the Pre-Novation Representation by TFM is the entry into the Novation Deed by TFM. It is said that if the Novation Deed, and by incorporation, the Xu Contract, is construed as TFM contends, then that conduct could not give rise to the pleaded representation because there is no conduct on the part of TFM outside of acceptance of the terms of the Novation Deed to which Ms Xu can point.
It is said that the only conduct pleaded against TFM in this context is entering into the Novation Deed and not informing Ms Xu that the effect of the contract was that she might not get two car spaces. It is said that there is no evidence that TFM was aware that Ms Xu misunderstood the Xu contract such that it could be argued that a duty to speak arose; and that this leaves only an argument that, by entering into the Novation Deed, TFM was making a representation that it had reasonable grounds to promise to do the things its undertook to do under the Novation Deed. It is submitted that it can comfortably be inferred that TFM had reasonable grounds for making that representation at the time from the fact that it in fact built the development and the development had a tandem space in it. It is said that the fact that the tandem space was allocated to Lot 39 rather than Lot 36 does not disturb that inference. Further, TFM says that the fact that, shortly before the Novation Deed and the sale from Bennelong to TFM completed, the chain of emails constituting the Confirmation Email was forwarded to TFM's then conveyancers does not add anything (in that TFM is taken to have known what was in the Draft Strata Plan annexed to the Xu Contract).
[51]
Determination of Australian Consumer Law claims
As for the principles concerning claims under the Australian Consumer Law for misleading and deceptive conduct, these are again well-known. There must be relevant "conduct", which can and often does include representations, in trade or commerce, which (per s 18 of the Australian Consumer Law) are "misleading or deceptive or [are] likely to mislead and deceive", or (per s 30(e) of the Australian Consumer Law), "false or misleading" concerning the characteristics of land. A relevant representation may be as to present fact, or be as to a future matter. Where the representation is as to a future matter, s 4 of the Australian Consumer Law applies, which raises the presumption that a representation with respect to any future matter without reasonable grounds is misleading (and that evidence must be adduced to establish reasonable grounds). Nonetheless, this does not place an onus on any person to prove that the person who made the representation had reasonable grounds; nor, if there were reasonable grounds, does that mean that the representation is, or was, necessarily not misleading (s 4(3)(b), 4(4) of the Australian Consumer Law).
The relevant time for assessment of the representation (both for present and future matters) is at the time of the making of the representation (see Global Sportsman v Mirror Newspapers at 88 per the Court; Redmond Family Holdings v CG Access at [52] per Black J). A representation concerning a future matter will not be false, misleading or deceptive where a promise, or prediction, or opinion does not eventuate, provided that at the time of their making, the maker had reasonable grounds for so expressing the promise, prediction or opinion (see, for example, Bill Acceptance Corp v GWA at 178-179 per Lockhart J; and SPAR Licensing Pty Ltd v MIS QLD Pty Ltd [2014] FCAFC 50 at [18]-[21] per Buchanan J).
In determining whether the conduct is "misleading or deceptive", French CJ noted the following in Campbell v Backoffice (at [25]-[26]):
25. Characterisation is a task that generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error. It may be undertaken by reference to the public or a relevant section of the public. In cases of misleading or deceptive conduct analogous to passing off and involving reputational issues, the relevant section of the public may be defined, according to the nature of the conduct, by geographical distribution, age or some other common attribute or interest. On the other hand, characterisation may be undertaken in the context of commercial negotiations between individuals. In either case it involves consideration of a notional cause and effect relationship between the conduct and the state of mind of the relevant person or class of persons. The test is necessarily objective.
26. This Court has drawn a practical distinction between the approach to characterisation of conduct as misleading or deceptive when the public is involved, on the one hand, and where the conduct occurs in dealings between individuals on the other. In the former case, the sufficiency of the connection between the conduct and the misleading or deception of prospective purchasers "is to be approached at a level of abstraction not present where the case is one involving an express untrue representation allegedly made only to identified individuals". Where the conduct is directed to members of a class in a general sense, then the characterisation inquiry is to be made with respect to a hypothetical individual "isolate[d] by some criterion" as a "representative member of that class". In the case of an individual it is not necessary that he or she be reconstructed into a hypothetical, "ordinary" person. Characterisation may proceed by reference to the circumstances and context of the questioned conduct. The state of knowledge of the person to whom the conduct is directed may be relevant, at least in so far as it relates to the content and circumstances of the conduct.
[Emphasis added; citations omitted]
[52]
Issue 6: Relief
The issue of relief does not arise as the claims for relief have not been made good. However, for completeness, I address issue 6 as follows.
[53]
Ms Xu's submissions as to transfer of single car space under ss 237, 243 of the Australian Consumer Law or specific performance
As noted already, Ms Xu seeks an order under ss 237 and 243 of the Australian Consumer Law that TFM transfer title to her of an unsold parking space, or specific performance.
It is noted that ss 237 and 243 of the Australian Consumer Law permit the Court to make such orders as it thinks appropriate on the facts against the person engaged in contravening conduct because of which the plaintiff has suffered loss or damage; and that s 243(h) of the Australian Consumer Law includes transfer of an interest in land (which would encompass the transfer of one of the car parking Lots). It is noted that s 237 of the Australian Consumer Law (which is a broad discretionary power) provides that the court may "make such order or orders as the court thinks appropriate against the person who engaged in the [contravening] conduct"; and that order must be an order that, relevantly, the Court considers will compensate the injured person in whole or in part for the loss or damage; and that the power under s 237 of the Australian Consumer Law must be approached by reference to the facts of the particular case, the policy underpinning of the legislation and the evaluative assessment of what is the appropriate relief to compensate for, or to prevent the likely suffering of, loss or damage "by" the conduct.
Ms Xu says that, if her argument as to either the correct construction of the Xu Contract and Novation Deed or as to the implied term is accepted, then it follows that she contracted to purchase Apartment 40 with two car spaces and not for that apartment with a single car space; and she says that it also follows that the Pre-Novation Representation by TFM was misleading. Ms Xu says that the appropriate relief in those circumstances is the transfer to Ms Xu of one of the car spaces owned by TFM.
Reference is made to Dougan v Ley (1946) 71 CLR 142; [1946] HCA 3, where Dixon J, as his Honour then was, stated (at 150) that, "[t]he Court gives specific performance instead of damages, only when it can by that means do more perfect and complete justice", and then went on to refer to a contract regarding land as one "which has always been considered a proper subject of specific performance"; andreference is also made to the observations in Heydon on Contract (1st ed, 2019, Thomson Reuters) as to specific performance being decreed of a contract for land "because damages at law, which must be calculated on the general money value of land, may not be a complete remedy to the purchaser, to whom the land may have a peculiar and special value" (at [27.240]).
[54]
Ms Xu's submissions as to damages for breach of contract or under s 236 of the Australian Consumer Law
It is only if Ms Xu cannot be provided with a second car space that she seeks damages at law or under s 236 of the Australian Consumer Law.
Section 236 of the Australian Consumer Law provides that, "[if] a person (the claimant) suffers loss or damage because of the conduct of another person" and the conduct contravened a provision of Chapter 2 or 3, then "the claimant may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention".
The property valuation expert retained by Ms Xu (Mr Fernando) has assessed the difference in value between her apartment with the two car spaces depicted in the Draft Strata Plan (in tandem configuration) and the (slightly wider) disabled access space in the registered Strata Plan, at $125,000. It is noted that individual car spaces are not for sale in her building and that street parking in the vicinity is limited (see Mr Fernando's second affidavit at [4]).
Ms Xu says that cl 52, which provides that Ms Xu is not eligible to participate in any on-street resident parking schemes, is also relevant. It is said that the time and effort it would take for Ms Xu to find another three bedroom penthouse in the Rushcutters Bay area with two car spaces, in a building in which she could also find a smaller apartment for her adult daughter (not to mention selling their current apartments in a market now affected by COVID-19), shows "how woefully inadequate" $125,000 (or the midpoint between that amount and the amount as valued by TPM's expert, Mr Hubbard, of $100,000) would be to compensate Ms Xu for TPM's breach of contract and misleading conduct.
Ms Xu says that (contrary to TPM's submissions - see its outline at [89.6.4]), it is incorrect to say that the decision by her temporarily to rent out the apartment (until the defects are fixed, and she receives a second car space) (see Ms Xu's first affidavit at [105]), makes damages the "only remedy" that Ms Xu can seek; and that this would be contrary to the above authorities. It is noted that Ms Xu's evidence is that she intends to live in the property once the defects are fixed and the second car space is provided (see Ms Xu's first affidavit at [108]).
Ms Xu says that use of the words "because of" in ss 236 and 237 of the Australian Consumer Law (as was the case with the word "by" in former s 82 of the Trade Practices Act) should be understood to import the common law "practical" or "common-sense" concept of causation, which is a question of fact that must be determined by applying "common-sense" (also phrased as determining the cause as a matter of ordinary language or common sense).
[55]
Bennelong's submissions as to relief
Bennelong notes that, by letter dated 6 July 2020, Ms Xu's loss was particularised as: $125,000, being the difference in value between the apartment with a single car space and the tandem car space; her legal fees in the amount of $265,734.96 up to 6 July 2020; and, late completion interest of $18,770.55.
Bennelong says that each head of loss is based on the difference between Ms Xu's position after completing the Xu Contract (i.e., acquiring the apartment with a single car space and suing to vindicate her rights) and the Xu Contract being completed with Ms Xu being provided with the tandem car space, not incurring legal fees and not incurring late completion interest (i.e., what she says should have happened). Bennelong says that this approach is consistent with damages for breach of contract, which are to put the plaintiff in the position she would have been in had the contract been performed (citing Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8 at [13] per French CJ, Gummow, Heydon, Crennan and Kiefel JJ).
As to the submission by Ms Xu that her damages against Bennelong should be measured by the breach of contract approach not the tort approach, so that Ms Xu will be put in the position she would have been in had TFM kept its bargain (Ms Xu citing Henville Henville at [18] per Gleeson CJ; Murphy v Overton Investments Pty Limited (2004) 216 CLR 388; [2004] HCA 3 (Murphy v Overton Investments) at [44]-[45] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ; Cummins Generator Technologies Germany GmbH v Johnson Controls Australia Pty Limited [2015] NSWCA 264 (Cummins Generator) at [133]-[136] per Beazley P, as Her Excellency then was, Gleeson and Leeming JJA agreeing, where it was found that there is no strict requirement for a plaintiff to prove "no transaction" or "different transaction" to prove loss; and, closing submissions at T 209.16-41) Bennelong says the following.
Bennelong says that the general proposition from Henville is not in contest, but that it does not follow that a plaintiff can elect for contract or tort damages under s 236 of the Australian Consumer Law. It is noted that a plaintiff must establish a causal link between the impugned conduct and the loss that is claimed (see Butcher v Lachlan Elder Realty at [37] per Gleeson CJ, Hayne and Heydon JJ) and that in Marks v GIO Australia Holdings Limited (1998) 196 CLR 494; [1998] HCA 69 (Marks) at [42], McHugh, Hayne and Callinan JJ said that a comparison must be made between the position in which the party that allegedly suffered loss or damage is in, and the position in which that party would have been in but for the contravening conduct. Their Honours also said that a plaintiff must demonstrate some alternative course of greater benefit or lesser detriment, and the advantage the plaintiff thought it would obtain by the transaction is not to the point (see at [47]-[48], [52]-[53]). It is noted that Marks at [42] is cited in Cummins Generator at [128]-[129].
[56]
TFM's submissions as to relief
As noted above, TFM emphasises that the Xu Contract contemplated that TFM would transfer one title in land to Ms Xu, being the title to a proposed Lot 36; the description of which lot included the land which was to be used as a car space. TFM says that that obligation has been performed, such that the title to Lot 36 has been transferred to Ms Xu; consequently, TFM says that the Xu Contract has been performed and it cannot be ordered to be performed again. (Indeed, TFM says that if it were to be ordered to be performed again, the same outcome would eventuate in that the only title to Lot 36 is a title to a piece of land that has a single car space.)
TFM argues that even if the tandem car space were still owned by TFM, an order for TFM to transfer the tandem car space to Ms Xu "under the guise of ordering specific performance" of the Xu Contract would not be available because the title to Lot 36 (in its ultimate form) has been transferred, and the promise to give a title to Lot 36 discharged. It is said that the same conclusion is reached using the language of merger - that the contractual right, enforceable under equity by an order for specific performance, has merged into the conveyance of a legal title so that there is no longer a right to enforce.
TFM says that the cases dealing with the difference between specific performance in the strict sense (whereby the Court ordered that an instrument be executed so as to cause a legal relationship which does not presently exist to arise), and specific performance of executed contracts (in the sense that the parties have already bound themselves to a contract) by injunction so as to cause promises in the contract to be performed, do not suggest that the Court can order a party to re-perform an obligation under a contract already performed.
TFM says that where a purchaser completes the contract for the sale of land and obtains a conveyance or transfer, that purchaser cannot then sue for damages at law in respect of a breach by the vendor relying upon some error or misdescription in the contract (citing Beard v Drummoyne Municipal Council at 266 per Walsh JA, Mason JA (as his Honour then was) concurring). TFM says that this is a logical outcome because in such a case, the condition in the contract has been met (in that the title to the land has been transferred), and to suggest that the performance has been defective is to ignore the binary nature of the obligation which is to transfer a title in specific land. It is said that there is no "defective performance" of the obligation to transfer a title in Lot 36; rather, that title has been indefeasibly transferred to Ms Xu. It is accepted that the title may be to a lot which Ms Xu expected would be different to what it is, but it is said that that is not a matter that detracts from the fact that the title to Lot 36 has been transferred to Ms Xu.
[57]
Determination as to issue of relief
As the claims for relief are not made good, it is not necessary to spend much time on the issue as to what relief should be granted had Ms Xu succeeded on her primary claim.
Had Ms Xu succeeded in her contract claim, and the issue had then been open as to whether specific performance ought be ordered, I would have concluded that such relief did not lie in circumstances where what had been promised to be conveyed as depicted in the Draft Strata Plan (the tandem car space) was no longer able to be conveyed. With that said, I would not have concluded that the relief should be refused on the grounds of hardship (since, if that issue had arisen, it would have been the commercial decision of TFM not to convey an alternative car space and I would not have concluded that the hardship to it outweighed the prejudice to Ms Xu of not enforcing the, on this hypothesis, contractual promise).
As to the damages claims based on breaches of the Australian Consumer Law, it has been said that the amount of the loss or damage suffered is measured (for the purposes of the statutory remedy under the Trade Practices Act and now under the Australian Consumer Law) by reference to the measure of damages that properly conforms to the remedial purpose of the statute and does justice and equity in the circumstances of the case (see Henville at [18] per Gleeson CJ; Choo v Zhang [2016] NSWCA 193). It has been said that the Court must compensate the claimant with that amount of damages which will most fairly compensate for the wrong suffered (North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60 at [125] per the Court).
Insofar as there was a contest as to the basis (i.e., in contract or tort) on which damages under the Australian Consumer Law are assessed and awarded on a claim such as the present, I note it is also unnecessary for me to express a concluded view on this point. Nonetheless, I note the following conclusions expressed by Gleeson CJ, Gaudron, Gummow and Hayne JJ in Henville at [14] and [18] (albeit there considering the former provisions in the Trade Practices Act).
14. For there to be the necessary causal relationship between a contravention of s 52, and loss or damage, so as to satisfy the requirements of s 82(1), it is not essential that the contravention be the sole cause of the loss or damage. As Brennan J pointed out in Sellars v Adelaide Petroleum NL, where the making of a false representation induces a person to act in a certain manner, loss or damage may flow directly from the act and only indirectly from the making of the representation; but in such a case the act "is a link - not a break - in the chain of causation". In the present case there were two concurrent causes of the imprudent decision to buy the land and undertake the development project. The conduct of the respondents was one of those causes. That is enough.
…
18. Section 82 of the Act is the statutory source of the appellants' entitlement to damages. The only express guidance given as to the measure of those damages is to be found in the concept of causation in the word "by". The task is to select a measure of damages which conforms to the remedial purpose of the statute and to the justice and equity of the case. The purpose of the statute, so far as presently relevant, is to establish a standard of behaviour in business by proscribing misleading and deceptive conduct, whether or not the misleading or deception is deliberate, and by providing a remedy in damages. The principles of common law, relevant to assessing damages in contract or tort, are not directly in point. But they may provide useful guidance, for the reason that they have had to respond to problems of the same nature as the problems which arise in the application of the Act. They are not controlling, but they represent an accumulation of valuable insight and experience which may well be useful in applying the Act. (There the Court was considering issues similar to those when there was an assessment of damages for deceit, or for negligent misstatement, has confronted courts.)
[58]
Contributory negligence and proportionate liability
Bennelong relies on the following defences if Ms Xu succeeds on her claim under s 18 of the Australian Consumer Law (defence at [55]-[56]).
It is said that if Ms Xu suffered loss because she relied on Bennelong and did not seek or follow advice from her solicitors about the Xu Contract, or because she decided to complete the Xu Contract and sue instead of rescinding it, her loss arises mostly from her failure to take reasonable care of her own interests, and Bennelong's liability must be reduced accordingly under s 137B of the Competition and Consumer Act.
Further, it is said that if Ms Xu's solicitors (GE Legal and Prudentia Legal) failed to advise her as to the proper construction of the Xu Contract or of the Novation Deed and as to the possibilities and contingencies, they are partly responsible for her loss, and Bennelong's liability must be reduced having regard to their responsibility under s 87CD of the Competition and Consumer Act. Finally, it is said that if TFM also caused her loss it is also a concurrent wrongdoer (see Bennelong's defence at [56b]).
Both arguments are in principle available. It is not necessary here to quantify the deduction that might be made to reflect success on those defences.
[59]
Bennelong's cross claim against Ms Xu
Bennelong cross claims against Ms Xu for damages for her breach of cll 50.1 and 57.1.2 of the Xu Contract where she warranted she did not rely on any representation outside the Xu Contract, and for misleading or deceptive conduct based on representations in the same clauses, and a failure to disclose her reliance on Bennelong's representations before entering into the Novation Deed (see amended cross claim at [13]-[16]). Bennelong's witnesses gave evidence of reliance on these representations none of which evidence was challenged (see Mr Flanagan's first affidavit at [64]-[73]; Ms Borg's affidavit at [24]-[27]).
Bennelong says these claims are not raised in defence of Ms Xu's claim, they constitute a cross claim by Bennelong against Ms Xu, so there is no question of contracting out of the Australian Consumer Law (cf Henjo Investments at 561 per Lockhart J). It is noted that warranties of no reliance on representations and entire agreement clauses (such as cll 50.1 and 57.1.2 in the Xu Contract) are common. Bennelong says that such clauses are not contrary to public policy; rather, they are designed to avoid disputes by confining the parties to the contract in question, not to exclude the operation of the Australian Consumer Law. It is noted that if Ms Xu did rely on representations outside the Xu Contract, then she is in breach of these clauses and she has engaged in misleading or deceptive conduct, upon which Bennelong has relied to its loss. It is said that Bennelong's loss is its liability to Ms Xu for any judgment and costs as well as its own costs (see amended cross claim at [17]-[18]).
Insofar as Ms Xu submits (at [81]-[88]) that Bennelong's cross-claim under the Australian Consumer Law must fail because Ms Xu's conduct was not in trade or commerce (citing Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177 at [38] per Emmett AJA, Bathurst CJ and McColl JA agreeing), Bennelong accepts that Bennelong's cross-claim against Ms Xu under the Australian Consumer Law must fail. However, it says that this does not affect Bennelong's claim for damages in the amended cross claim against Ms Xu for breach of contract.
I have concluded that, had Ms Xu made good her primary claims, then reliance on the clauses to sustain the estoppel or indemnity defences would not have been made good.
[60]
Summary of conclusions as to the particular issues identified by Ms Xu
For completeness, as to the particular issues as itemised by Ms Xu I have concluded as follows.
[61]
Proper construction of the Xu Contract - its fundamental term and purpose (Issue 1)
As noted above, I have concluded that the fundamental term of the Xu Contract was not as contended for by Ms Xu but, rather, was for the transfer to her of an apartment to be built substantially in accordance with the Draft Strata Plan (including with a car space that would accommodate parking for two cars) but subject to amendment of the Draft Strata Plan (as considered necessary or desirable by the vendor developer).
[62]
In the alternative to 1, implied term to same effect (Issue 2)
I consider that no term to the effect contended for should be implied.
[63]
Whether the Pre-Contract Representation and Pre-Novation Representation were made (Issue 3)
I accept that there was a Pre-Contract Representation that the Property to be transferred would include space for two cars; and that there was a Pre-Novation Representation that TFM would assume the obligations of the vendor under the Xu Contract (as Substitute Vendor).
[64]
Whether the said Representations were (in part) as to future matters; and whether TFM/Bennelong had reasonable grounds therefor (Issue 4)
I accept that the Pre-Contract Representation was in part as to a future matter, being a prediction or opinion that the building as built would (substantially) have the features indicated in the Draft Strata Plan. However, as noted above, I consider that Bennelong and TFM made the representations on reasonable grounds.
[65]
Whether the said Representations were false or misleading in breach of s 30(1)(e) and/or s 18 of the Australian Consumer Law (Issue 5)
Neither of the Representations was false or misleading at the time it was made (as per my reasons above).
[66]
Relief (Issue 6)
This issue does not arise. Had it arisen, I would have concluded that specific performance of the obligation to convey property under the Xu Contract was no longer available, the conveyance under that contract having been completed and there being no contractual obligation to convey a second (separate) car space. As to the appropriate measure of damages for a "no transaction" case (as this was put on the misleading or deceptive contract claim), had relief been granted, I would have held that no loss had been established (and that even if the expectation interest should be the appropriate measure it would be limited to the monetary value of the car space (namely, between $100,000 - $125,000). However, given my findings above, it is not necessary to fix the sum here.
[67]
Whether Ms Xu's remedy was limited to rescission under cl 38 of the Xu Contract (Issue 7)
In the circumstances, I consider that Ms Xu's remedy was limited to rescission under cl 38 of the Xu Contract. I accept that a claim for damages for misleading or deceptive conduct might have arisen, but I do not accept that it was made good in this case.
[68]
The scope of the vendor's discretion under cll 38.2 or 42.1 to make changes to the plans that it considered "necessary or desirable" (Issue 8)
This issue does not arise for consideration as it was not pleaded, but, in any event, I do not accept that it is permissible as a matter of construction of the Xu Contract to read such a limitation into the clauses as that for which Ms Xu contends.
[69]
Whether there was merger on settlement (Issue 9)
Again, this issue does not arise in light of the findings I have made on the contract claim. However, for the reasons set out earlier I have concluded that the promise to convey the property, as properly construed, did merge on completion.
[70]
Whether Ms Xu is estopped from seeking relief under the Australian Consumer Law by cll 50.1 or 57 (Issue 10)
It is not necessary here to explore the authorities dealing with the circumstances on which reliance can (or conversely cannot) be placed on representations as to the entirety of the contract or the like. Suffice it to note that, had I concluded that there was an actionable cause of action for misleading or deceptive conduct I would not have considered that it was barred or ousted by cll 50.1 or 57. Hence the cross-claim by Bennelong against Ms Xu would not succeed.
[71]
Whether the defendants are entitled to have Ms Xu indemnify them for any damages or costs order they are ordered to pay (Issue 11)
This follows from my conclusion in relation to issue 10.
[72]
Contributory negligence and proportionate liability
As I have not found in favour of Ms Xu, it is unnecessary for me to make concluded findings on the defences of contributory negligence and proportionate liability raised by Bennelong. Suffice it to say that there may well have been a basis for a finding that there was a proportionate liability claim (as to the drafting of the relevant contract or as to the advice given in relation thereto - in particular the fact that there was not an express covenant to transfer two separate car spaces; and as to the obligations of TFM under the Novation Deed); contributory negligence is more problematic when Ms Xu appears to have been acting at all times with the benefit of advice from legal practitioners.
[73]
Costs
All parties have sought to be heard on costs following judgment, including costs as to the abandonment in the claims against the fourth defendant. I will make directions for that to occur. I do not understand there to be a need to make any orders in relation to any undertakings that were proffered in relation to the alternative car space (which would seem to me now to be spent).
[74]
Conclusion and orders
For the above reasons I make the following orders:
1. Dismiss the plaintiff's claim against both defendants.
2. Dismiss the first and second defendants' cross-claim against the plaintiff/first cross-defendant.
3. Reserve the question of costs.
When these reasons are published, I will list the matter for directions as to a hearing on costs on a date to be fixed.
[75]
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: 27 November 2020
In these proceedings, Ms Xu seeks specific performance of the Novation Deed, by an order that TFM transfer a second car space to her (there is at least one that would still be available for that purpose - namely, Lot 43, which is the subject of an undertaking to the Court to which I will refer in due course (see the orders of Sackar J on 3 July 2020)) or an order akin to such specific performance under ss 237 and 243 of sch 2 of the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law).
Ms Xu's alternative case is that TFM and Bennelong engaged in misleading or deceptive conduct or made a false representation in contravention of ss 18 or 30(1)(e) of the Australian Consumer Law. On her alternative case, Ms Xu seeks damages at law or under s 236 and/or s 237 of the Australian Consumer Law, from either TFM or Bennelong. (I note that the defendants plead that the damages claim under s 236 of the Australian Consumer Law is an apportionable claim.)
Bennelong cross-claimed both against TFM and against Ms Xu but, at the hearing, explained that its cross-claim against TFM was not pressed if (as Ms Xu made clear was the case - see at T 51.42ff) Ms Xu's claim against Bennelong was premised only on her primary contract claim against TFM not being successful. Accordingly, at the outset of the hearing, by consent, I dismissed Bennelong's cross-claim against TFM (leaving the issue of costs to be dealt with in due course).
As against Ms Xu, Bennelong cross-claims for damages for breach of special condition 50.1 and special condition 57.1.2 of the Xu Contract (under which clauses Ms Xu warranted that she did not rely on any representation outside the Xu Contract and that the Xu Contract represented the entirety of the agreement between the parties), and for misleading or deceptive conduct based on representations in the same clauses and a failure to disclose her reliance on Bennelong's representations before entering into the Novation Deed (see Bennelong's cross-claim at [13]-[16]). Bennelong says its loss is its liability to Ms Xu for any judgment and costs and its own costs (see Bennelong's cross-claim at [17]-[18]). (It is noted that these claims are not raised in defence of Ms Xu's claim, as such.)
Ms Xu's evidence as to the time at which Ms Xu first saw the whole of the draft contract for sale was inconsistent. In her first affidavit, Ms Xu deposed (at [43]-[44]) that she received a copy of the draft contract on 19 May 2016 (under cover of an email that she could no longer find), and that she read a copy of the contract. There was nothing there to suggest that Ms Xu received less than the whole contract or that she had read some but not all of the document. In fact, as emerged in the course of cross-examination (following the production in answer to a notice to produce of an email of 19 May 2016 - see Ex 3), what Ms Xu received by email on 19 May 2016 from her then solicitor at GE Legal (Mr Stanley Yan) were five pages (not the whole contract), one of which was the cover page of the draft Xu Contract (showing only Ms Xu's husband as the purchaser); another of which was a page headed "Basement level diagram".
Ms Xu's evidence in cross-examination was that she did not read the document "in whole"; and there was the following exchange (see at T 85.25ff):
Q. If you look at the next box, it's got a box checked next to a word, can you read that word?
A. WITNESS: Car space.
Q. You can see that there's no number next to "Car space" can't you?
A. WITNESS: Yes.
Q. You saw that at the time you read this document in May 2016, is that correct?
A. WITNESS: Yes.
Q. Is it correct that you were reading the five pages that came with the email because you wanted to check that what it showed was the apartment and the car space that you were going to buy, is that right?
A. INTERPRETER: I did not read the document in whole.
Q. Why were you looking at this document in May 2016?
A. INTERPRETER: The lawyer just sent the document to me, and I pay attention to, to the prices. And then the, the diagram that show what level it was on. Yeah, and then again, the, the floorspace of the apartment, how many bedrooms. Yeah, how many bathroom, toilet, parking spaces. I'm more focus on the location.
Ms Xu's evidence is that having two car spaces with Apartment 40 (Lot 36) was important to her. Her evidence is that, on seeing the Lot 36 car space as one long space in the Draft Strata Plan, she asked her lawyers to "double-check that the 'long space' [in the Draft Strata Plan] … fits two car spaces and belongs to Apartment 40" (see Ms Xu's first affidavit at [45]-[47]). In cross-examination, Ms Xu's evidence was that she saw a larger space with "36" on it and understood it to be a car parking area (T 87.13), and she saw a small box with "36" on it that did not look like a car space (that smaller area was, as I understand it, a storage space referable to Lot 36); and she could not tell by looking at the plan whether the larger space was for two cars or one (see T 87.21-30). Ms Xu accepted that she asked her solicitor to check "whether I have two space or not" because she could not tell by looking at the plan (T 87.30). The "blow-up" plan to which reference was made in the course of cross-examination had green shading or highlighting on it, but Ms Xu was not aware who had made that (T 86.23).
Ms Xu did accept that Mr Yan had told her that the developer could change the Draft Strata Plan under cl 38 (T 92.50), and her evidence was quite firm to the effect that she did not leave it to Mr Yan to decide for himself what changes to ask for (T 93.23), and she expected him to follow her instructions.
"Sunset Date" was defined in cl 32.1 as 30 June 2019.
The special conditions go on to provide, in cl 41, the following concerning "construction, fitout and inclusions":
…
41.2 Purchaser's right to rescind
If on the registration of the Strata Plan (as far as it relates to the property) and the property at the date of registration of the Strata Plan; or
41.2.1 the Building Floor Plan (as far as it relates to the property) and the property at the date of registration of the Strata Plan; or
41.2.2 the Finishes Schedule and the finish of the property,
which detrimentally affects the property to a substantial extent the purchaser may only rescind the contract by serving a notice on the vendor within 7 days (time of the essence) after notice of registration of the Strata Plan is served. The purchaser acknowledges and agrees that its only right or remedy in respect of these differences is the right of rescission in this clause and the purchaser cannot otherwise take any restricted action in respect of these differences.
The term "restricted action" is defined in cl 31.2.3 to include: a claim for compensation (under cl 6.1), rescission, delay, or termination; but not referring to an action for specific performance or damages.
Bennelong says that this implied that there might be differences between the Building Floor Plan (which are architectural plans) and the registered Strata Plan. Clause 42.1 then went on to set out that, "the purchaser acknowledges and agrees that the vendor may, from time to time if it considers it necessary or desirable" vary the Building Floor Plan and vary the Draft Strata Plan, and cl 42.2 similarly restricts a purchaser's remedy for a change which detrimentally affects the property to a substantial extent to rescission.
Clause 50 provides, relevantly, as follows:
50.1 Purchaser's warranties
The purchaser represents and warrants that:
50.1.1 the purchaser has not relied on or been induced to enter into this contract by any representation or warranty (including those concerning the potential or present use or development of the property or the Building [sic] (made by the vendor, its agent or solicitor);
…
50.3 Indemnity
The purchaser indemnifies and keeps indemnified the vendor against all liability, loss or cost arising out of any breach of warranties in this clause.
The special conditions also contain an entire agreement clause (cl 57.1), in standard and uncontroversial terms.
It is also relevant to note the following standard conditions in the Xu Contract:
6 Error or misdescription
6.1 The purchaser can (but only before completion) claim compensation for an error or misdescription in this contract (as to the property, the title or anything else and whether substantial or not).
6.2 The clause applies even if the purchaser did not take notice of or rely on anything in this contract containing or giving rise to the error or misdescription.
6.3 However, this clause does not apply to the extent the purchaser knows the true position.
7 Claims by purchaser
The purchaser can make a claim (including a claim under clause 6) before completion only by serving it with a statement of the amount claimed, and if the purchaser makes one or more claims before completion -
7.1 the vendor can rescind if in the case of claims that are not claims for delay -
7.1.1 the total amount claimed exceeds 5% of the price;
7.1.2 the vendor serves notice of intention to rescind; and
7.1.3 the purchaser does not serve notice waiving the claims within 14 days after that service; and
7.2 If the vendor does not rescind, the parties must complete and if this contract is completed -
7.2.1 the lesser of the total amount claimed and 10% of the price must be paid out of the price to and held by the depositholder until the claims are finalised or lapse;
7.2.2 the amount held is to be invested in accordance with clause 2.9;
7.2.3 the claims must be finalised by a arbitrator appointed by the parties or, if an appointment is not made within 1 month of completion, by an arbitrator appointed by the President of the Law Society at the request of a party (in the latter case the parties are bound by the terms of the Conveyancing Arbitration Rules approved by the Law Society as at the date of the appointment);
7.2.4 the purchaser is not entitled, in respect of the claims, to more than the total amount claimed and the costs of the purchaser;
7.2.5 net interest on the amount held must be paid to the parties in the same proportion as the amount held; and
7.2.6 if the parties do not appoint an arbitrator and neither party requests the President to appoint an arbitrator within 3 months after completion, the claims lapse.
…
Clause 19 provides:
19. Rescission of contract
19.1 If this contract expressly gives a party a right to rescind, the party can exercise the right -
19.1.1 only by serving a notice before completion; and
19.1.2 in spite of any making of a claim or requisition, any attempt to satisfy a claim or requisition, any arbitration, litigation, mediation or negotiation or any giving or taking of possession.
19.2 Normally, if a party exercises a right to rescind expressly given by this contract or any legislation -
19.2.1 the deposit and any other money paid by the purchaser under this contract must be refunded;
19.2.2 a party can claim for a reasonable adjustment if the purchaser has been in possession;
19.2.3 a party can claim for damages, costs or expenses arising out of a breach of this contract; and
19.2.4 a party will not otherwise be liable to pay the other party any damages, costs or expenses.
[Emphasis in the original]
As I understand it, Lot 36 had been designated an "adaptable unit" (as a condition of the development approval) (an "adaptable unit" being a unit that can be adapted, if required, to cater for a disabled person to occupy the unit). As adverted to above, the allocation of the tandem car space on the Draft Strata Plan was changed before it was lodged for registration in order to allocate the tandem space to Lot 39 instead of Lot 36; and only a single (disabled) car space was allocated to Lot 36.
The significance of the timing of the conversation can only go to credit (or the reliability of Ms Xu's recollection) since there has been no claim that TFM did anything to frustrate Ms Xu's ability to make a claim in relation to the apartment or the change in the Draft Strata Plan within the seven days allowed under the Xu Contract. After a number of objections to the cross-examination (at T 110-T 112), it nevertheless seemed to me that Ms Xu had quite readily accepted that she knew, by the time she swore her first affidavit, that she had only seven days after she had been told that the final Strata Plan had been lodged to complain about a change to the Draft Strata Plan (T 110.49). (I address in due course the submissions made as to this evidence in terms of Ms Xu's credit but, as noted, other than so far as this gave rise to a credit submission, nothing turns on when the appointment for inspection was made.)
Returning to the chronology of events, at Ms Xu's inspection of the apartment she apparently raised a number of complaints, one of which was that she had been allocated a "disabled" parking space and not two car spaces. Ms Xu says that she immediately raised this as an issue with TFM at the inspection; and that she then went straight from that inspection to her lawyers' office (see inspection report translation; and Ms Xu's first affidavit at [86]-[91]).
On 18 July 2019, Ms Xu's solicitors wrote to TFM's solicitors, referring to the Draft Strata Plan and demanding confirmation that Ms Xu would receive two car spaces. The letter also indicated that Ms Xu would provide TFM with a "detailed list of the major defects and discrepancies in the finishes of the property". That same day, a further letter was written by Ms Xu's solicitors indicating that Ms Xu would not settle unless there was "full rectification of the said errors"; and referring to rectification by provision of a second car space.
On 26 July 2019, Ms Xu's solicitors demanded that TFM allocate two car spaces and renovate the property within 14 days; and indicated that she would not complete until her demands were met.
On 2 August 2019, TFM served a notice to complete. That notice to complete was (admittedly) defective. On 13 August 2019, Ms Xu's present solicitors (Dentons) wrote to point out deficiencies in TFM's notice to complete. On 13 August 2019, TFM served a further notice to complete.
Unbeknownst to TFM at the time, Ms Xu, through her solicitors, then lodged a caveat over Lot 46 (which was an unsold car space) on 14 August 2019.
On 23 August 2019, Ms Xu's solicitors demanded that TFM transfer a second car space to her and rectify defects in the property and said that if the demands were not met, Ms Xu would commence proceedings in the District Court of New South Wales.
On 27 August 2019, Ms Xu's solicitors indicated that, whilst reserving her rights to bring proceedings, Ms Xu would at that stage proceed with settlement.
On 28 August 2019, having by then discovered the caveat, TFM, through its then solicitors, demanded that Ms Xu withdraw the caveat, asserting that the Xu Contract did not give Ms Xu, on any view, a caveatable interest in Lot 46.
On 29 August 2019, Ms Xu's solicitors informed TFM's then solicitors that the caveat would be withdrawn. Completion of the sale of Lot 36 (with one car space) then took place on 29 August 2019. Ms Xu's evidence is that, rather than lose her apartment (and faced with a Notice to Complete and TFM's refusal to settle the sale of Lot 36 until Ms Xu removed her caveat), Ms Xu withdrew the Lot 46 caveat, reserving her right to bring proceedings for a second car space, and settled the conveyance of Lot 36.
In the alternative to her proper construction argument, Ms Xu pleads an implied term in fact, namely (at [14] of the second further amended statement of claim):
… that the essential character of the property being sold was a 3 bedroom apartment on level 4 (the top level) of the Development with 2 bathrooms and 2 parking spaces, and that this essential character would not change in the Registered Strata Plan.
As to the Australian Consumer Law claims, Ms Xu alleges that Bennelong made the following representations to her: first, in May 2016, that Apartment 40 had two car spaces (the Pre-Contract Representation) (see second further amended statement of claim at [5]-[8]); and, second, between 19 September 2016 and 25 January 2017, that on completion, title to Apartment 40 would include two car spaces (the Pre-Novation Representation) (see second further amended statement of claim at [16]).
The Pre-Contract Representation is alleged to have been made on three occasions between 16 and 20 May 2016: first, in the 16 May 2016 email from Mr Li to Ms Xu (see above at [13]) (see second further amended statement of claim at [5]), in which Mr Li refers to a three bedroom apartment that has two parking spaces and the attached Floor Plan which says "2 parking"; second, by the letter dated 17 May 2016 from Clarendon to GE Legal, enclosing the draft Xu Contract, which included the Draft Strata Plan showing a tandem car space in annexure 4 and the Floor Plan (see above at [21]) (see second further amended statement of claim at [7]); and third, in the Confirmation Email (see above at [27]), confirming that "there are 2 carspaces and note it's tandem" (see second further amended statement of claim at [8]).
The Pre-Contract Representation is alleged to have been a continuing representation because: it was repeated; it was not expressly or impliedly limited as to its duration; and, at all material times, no retractions or limitations were made to it (see second further amended statement of claim at [6]).
The Pre-Novation Representation is alleged to have been made by Ms Xu's lawyers receiving a draft of the Novation Deed before 25 January 2017, read with the Xu Contract (see second further amended statement of claim at [16]; Ms Xu's first affidavit at [68]).
The Pre-Novation Representation is alleged to have been a continuing representation because: it was not expressly or impliedly limited as to its duration; and, at all material times, no retractions or limitations were made to it (see second further amended statement of claim at [17]).
Both Representations are alleged to be with respect to a future matter within the meaning of s 4 of the Australian Consumer Law (see second further amended statement of claim at [41], [46]); and both Representations are said to be false or misleading concerning the characteristics of land in contravention of s 30(1)(e) of the Australian Consumer Law, because they were to the effect that Apartment 40 would have two car spaces and they concerned the characteristics of the land sold to Ms Xu (whereas Apartment 40 only had a single car space on settlement) (see second further amended statement of claim at [40], [45]). Bennelong complains that neither the second further amended statement of claim (at [40]) nor the plaintiffs' submission at [73]-[79] says why the Pre-Contract Representation or the Pre-Novation Representation by Bennelong is misleading or deceptive in contravention of s 18 of the Australian Consumer Law.
In Ms Xu's submissions (at [76]) it is asserted that the Pre-Contract Representation led Ms Xu to believe that she would be provided with two car spaces (a future matter), which she relied upon to enter into the Xu Contract and the Novation Deed. In Ms Xu's submissions (at [79]), the Pre-Novation Representation is said to be a representation to Ms Xu that TFM would provide Apartment 40 in accordance with the Draft Strata Plan in the Xu Contract and TFM which TFM failed to qualify by expressly referring to its absolute discretion to change features of proposed Apartment 40 including the number of car spaces.
At [43] of the second further amended statement of claim, it is alleged that if Ms Xu had known that the vendor "may not, or would not, provide her with" two car spaces then she: would have entered into the Deed of Rescission that Bennelong offered her in August 2016; would not have entered into the Novation Deed in its terms; or would have entered into the Novation Deed for a lesser price.
In Ms Xu's first affidavit (at [77] and [99]-[101]), Ms Xu deposed to how she was looking forward to moving into her new apartment and what she valued about the apartment in its inner city Eastern suburb location. Ms Xu also deposed to steps taken by her and a friend to choose the colour scheme for her apartment (Ms Xu's first affidavit at [54]-[55]), as a matter going to reliance. Ms Xu's evidence is that, from 2016 to 2019, she had visited the Encore Development at least twenty times from her home on the upper North Shore to see how the construction was progressing, and to explore the surrounding area; and that she was looking forward to moving into her new home (Ms Xu's first affidavit at [77], [99]-[100]).
More relevantly on the issue of reliance is Ms Xu's evidence that, had she understood (at any of the stages between May 2016 and January 2017) that Lot 36 "may not have" two car spaces, then: she would not have signed the Xu Contract in May 2016 (Ms Xu's first affidavit at [49]; [51]-[52]); she would have signed the Deed of Rescission that Bennelong offered to enter into in August 2016, and obtained a full refund of her deposit (Ms Xu's first affidavit at [62]); and, she would not have signed the current form of Novation Deed in January 2017 (Ms Xu's first affidavit at [72]).
At [42] of the second further amended statement of claim, it is alleged that Ms Xu has suffered loss and damage as a result of Bennelong's conduct; and at [44] of the second further amended statement of claim, it is alleged that Bennelong is liable to pay the amount of loss and damage she suffered by entering into the Novation Deed and/or the Contract in reliance on such conduct.
On 30 June 2020, Bennelong sought particulars of the allegations at [42] and [44] of the (then) further amended statement of claim. By letter dated 6 July 2020, particulars of those allegations were given, being: (i) the difference in value of Apartment 40 as is (with a single car space) compared to if it had a tandem space, which Mr Fernando (Ms Xu's expert) says is $125,000; (ii) legal fees in the amount of $265,734.96 to date; and (iii) late completion interest in the amount of $18,770.55. (It is noted that there was no mention of a loss of opportunity claim - and this was expressly disavowed in oral submissions - nor of the difference between the amount paid and the value of Apartment 40.)
However, Ms Xu's primary claim for relief is against TFM (both in contract and under the Australian Consumer Law, because of the broad discretion under ss 237 and 243 of the Australian Consumer Law to make such orders) for the transfer to her of title of an unsold car space lot.
As to the issue of mistranslation, I was taken to the question at T 109.28ff where there was a correction by the witness of "before" and "after". That, of course, was an instance where the witness herself corrected the interpreter but the submission is made that we do not know how many times an error was made that the witness did not "pick up" (a submission that suffers from the problem that it simply invites speculation). Another example of correction by Ms Xu of the interpreter was at T 104.30ff.
Third, I was cautioned against attributing weight to the tone of voice used by the interpreter. It was submitted that the interpreter's tone was more forceful and loud, such that it could appear argumentative. Apart from the fact that demeanour is an unsafe guide in most cases in any event, I do not place any weight on the manner in which the interpreter spoke when translating Ms Xu's evidence.
Fourth, there was complaint that no one had clarified with Ms Xu when she shook her head in the witness box whether that meant no or whether it may have meant "I don't understand". It was said that the witness was at a disadvantage because she was not in control. In that regard, one might say that most witnesses are under a similar disadvantage of not being in control (as evidenced by the response most commonly given when a witness poses a question of his or her cross-examiner). Apart from the observation I made at the time of the submissions that, generally, when Ms Xu shook her head she tended to follow that with a "No", and when she nodded her head she generally followed up with a "Yes", I have not drawn anything one way or another from such gestures in the witness box. I simply note that if it was considered that there was an answer that needed to be clarified in that regard, then surely re-examination was the time to do it.
Counsel for Ms Xu was quite critical of the manner in which questions were asked of Ms Xu: namely, that there were some long questions; that neither counsel spoke simply; that questions were asked with double negatives; and double‑barrelled and indirect questions were asked. I was urged to take that into account (and I have). Nevertheless, I must put on record that I did not consider any of the cross-examination to be unfair to the witness.
Next there was an example of what was said to be Ms Xu's frustration at not being able to understand what about a particular document she was being asked (see at T 105-106) - an ASIC request for correction form. It seemed to me that in relation to that evidence, the confusion on the part of the witness (not helped by similar confusion on the part of the interpreter) was as to whether Ms Xu was being asked to translate it, or (as I understood the question to be) whether she was being asked about the purpose of the document.
As to other exchanges of that ilk, where Ms Xu was pressing for clarification of matters about which she was being asked (in particular, the exchange at T 89.47-T 90.49), my impression at the time was not that there was confusion about the question Ms Xu was being asked, as such, but, rather, that Ms Xu had diverted herself onto an enquiry as to the identity of the person named in the document - Ms Monica Bourne - rather than focussing on the question, which was whether the second page of an email chain had been attached to the document referred to in her own affidavit (see at T 90-T 91). I say this with no criticism of the witness (or the cross-examiner), but just to explain that the issue seemed to me that the cross-examiner and the witness were there at cross-purposes.
Next, my attention was drawn to the fact that the interpreter had not once asked for a break during the course of the task of translation and it was said that the interpreter would just write a note of a question that sometimes took a minute to ask and then recount it back "to the best of his memory". I am not in a position to draw any conclusion from the fact that the interpreter did not ask for a pause in the course of translation as a whole (some translators do; many more do not); nor do I have any idea of the extent of the particular interpreter's note-taking ability or its accuracy. I accept that there seemed to be difficulties with some of the interpreter's translation in that Ms Xu did not agree with some of it (and spoke up when that was the case), and I can understand that she may well have been frustrated at some points with his translation; but, again, that was something out of my control. Apart from the fact that it demonstrated that Ms Xu was able to understand some English (as was not suggested otherwise), it led me to conclude that Ms Xu was being careful in the giving of her evidence (which goes to her credit not against it). Had I considered the situation unfair to the witness I would have raised concerns at the time (as it was I sought to enlist the assistance of the witness' Chinese speaking solicitor at one stage but to no avail - which I say without criticism of the solicitor). As it was, I considered that, while not ideal, Ms Xu was able to cope with the cross-examination under the prevailing conditions and that it was not in the interests of the just, quick and cheap resolution of the real issues in dispute to take any other step (such as adjourning the proceedings to enable another interpreter to be engaged), nor was I asked to do so.
The nub of the lengthy submissions made on behalf of Ms Xu in closing as to the difficulties of giving evidence through an interpreter (and not inconsiderable time was spent on this) seemed to me to be that I should not draw the conclusion that Ms Xu was being argumentative or unco-operative or non-responsive in her evidence. The submission made was that Ms Xu was inhibited in her ability to read and understand English (which I accept), but that despite these difficulties Ms Xu presented as an earnest, honest witness trying genuinely to give her evidence.
It was also said that, in assessing her credibility, it was significant that Ms Xu made concessions that she would have understood were potentially against her interests (by reference to T 78.15 for example, where Ms Xu admitted that the emails to which she had referred in her first affidavit at [44] did not attach the whole of the draft Xu Contract). Reference was also made to the exchange at T 87.19 about the same document where Ms Xu accepted that when she was looking at the large space depicted as "PT 36", she could not tell whether that space was for two cars or for one. Ultimately, for Ms Xu, reference was made to the caution in Watson v Foxman (1995) 49 NSWLR 315 as to the fallibility of human memory and it was said that her case turned on the contemporary documents to which more weight should be given.
Pausing here, of the various examples here given, the most relevant in terms of Ms Xu's reliability of recollection and/or credit as a witness seemed to me to be the cross-examination by Senior Counsel for TFM as to the seven day period within which Ms Xu had the ability to make complaint following registration of the strata plan. Ms Xu (at T 111.35) answered immediately (indeed mid-question) "yes" to a question as to whether she had seven days to do something. I accept that the answer (coming before the question was completed) might have been open to different interpretations, and that there was obvious scope for confusion because the answer came in the middle of the question. However, the question was quite fairly clarified (see at T 112), and my impression was that Ms Xu was firm in her acceptance of the proposition that she knew that she had had seven days to complain about the strata plan once it had been registered. In re-examination, there was a further exchange (T 122.3-9), which I was urged to take into account when considering the earlier evidence (at T 111.29-33 and T 112.20-24), in which Ms Xu was unable to explain the significance of the seven day period about which she had been questioned ("I don't know is seven important"). I accept that from that answer there is doubt as to the significance of the evidence as to when Ms Xu first called to arrange the inspection of her apartment (which itself was only of any relevance insofar as it was relied upon for an adverse credit submission by TFM - see below).
The submission for Bennelong as to Ms Xu's evidence was that it should be found that Ms Xu is a commercially sophisticated person; a careful and intelligent person; and that she demonstrated those attributes in the witness box ( see at T 214).
Bennelong submits that Ms Xu was "careful to the point of cagey" at times, referring to the questions as to her shareholding in Jiangki Australia Pty Ltd (which it was suggested that Ms Xu had downplayed - see T 69, cf Ex 7 p 6)) and the questions as to what "involved" meant; as well as the evidence as to her signing of the strata plan (at T 70).
Bennelong submits that Ms Xu was prepared to volunteer information that she thought would assist her (giving as an example what were said to be non-responsive answers at T 81.25; T 81.36; T 89). Criticism was also made as to the fact that Ms Xu's First affidavit at [44] deposed to receipt of the draft Xu Contract on 19 May 2016 and that she could no longer find the email but that she had read the draft Xu Contract; whereas when the email was produced (Ex 3) it did not attach the draft Xu Contract - rather the 19 May email contained five pages as an attachment, and Ms Xu admitted that she knew at the time that it was not the whole contract (see T 78.41-79.34; T 80.40-50). As to Ms Xu's commercial sophistication, reference was made to her involvement in a development at Little Bay and to her running her own fruit and vegetable business with a number of employees.
For TFM, it was similarly submitted that the evidence from Ms Xu should be treated with some caution. Complaint was made as to a lack of candour in Ms Xu not giving evidence that at the time she had recently been involved in a property development (at Little Bay) which was said was remarkably similar to this venture, in a case where she was complaining that she misunderstood the effect of a contract of this nature. Second, complaint is made that Ms Xu's response to questions generally was at time combative but always guarded and cautious in how she answered the questions, and it was said that this could not be explained away by difficulties with the interpreter.
Third, reference was made to the circumstances in which Ms Xu's affidavit had been prepared. Ms Xu's solicitor had affirmed an affidavit of 11 September 2020 deposing to the process involved, namely (see at [24]) that the English affidavit was not a direct translation of the Chinese affidavit but the end product of a six hour conference in which Ms Xu and her 24 year old university educated daughter had been involved together in the preparation of the Chinese affidavit and amending the English affidavit paragraph by paragraph with a group of people to get to a final version of the English affidavit. Emphasis was placed on the fact that nothing is said in the affidavit about the input of Ms Xu's daughter in that conference, but that in cross-examination (asked about whether her daughter attended conferences with the solicitors and counsel) Ms Xu had indicated on each occasion that she either was present, or on telephone calls, that she had heard and translated.
TFM placed weight on the implausibility of the evidence as to when Ms Xu had sought to make an appointment for inspection of the property on the basis that it was a matter going to credit. It was submitted that the only forensic purpose for that evidence was to suggest that TFM had sought to avoid Ms Xu inspecting the property within the seven day period (see at T 223), and that this showed either an unwillingness of Ms Xu to accept that she might have a false recollection of events or that she insisted on a version that was not true. Thus it was submitted that caution should be shown unless her evidence was adverse to her interests or supported by contemporaneous documents.
The response to this for Ms Xu was that the explanation for the seven day period and her complaint as to the timing of the appointment for inspection was that Mr Zhang was leaving for Melbourne that week, and Ms Xu wanted him to be there to inspect before he left. It was also said that criticism of the drafting of the affidavit did not take into account the evidence of Ms Xu directly in response which was to deny that her daughter had helped her to draft the affidavit (see at T 115-116).
In re-examination, Ms Xu's Counsel wanted to ask what parts of the Xu Contract Ms Xu did read (T 116) (having said in cross-examination that she did not read the whole contract from the first page to the last page). There was vehement objection to this on the basis that this should have been led in examination in chief, and by TFM on the basis that cross-examination Ms Xu had said that she did not remember reading the Xu Contract before she signed it and that it could not be tested (and that "read" would not necessarily mean understood and comprehended). I was not prepared to entertain an exercise of Ms Xu leafing through (or more likely having to have it all translated to her) a lengthy contract (particularly at the end of a long day for Ms Xu in the witness box) in order for her to identify what parts she may have seen or been taken to at the time and what parts she had not. This was particularly when I thought her evidence was quite clear that she had not read the whole Xu Contract, and that she could not recall reading cll 38.2, 50 or 57.1 (see T 96-98). My clear impression was that if it was not related to something particular or special, then Ms Xu would not have read it and her evidence was that her solicitor did not mention it. Her Counsel anticipated that what Ms Xu would point to would be the plans or diagrams in the Xu Contact. I am prepared to accept on the evidence that Ms Xu gave that she would have been likely to look at the plans or diagrams to satisfy herself as to the apartment's characteristics. And I have no difficulty accepting that she considered it important to have two car spaces.
My impression of Ms Xu as a witness was that she was careful to ensure that she understood what was being asked, and that this explained her clarification of a number of questions. Mr Xu presented as an intelligent, careful and co-operative witness. I accept that there would be an obvious incongruity in Ms Xu having a lack of understanding of the possibility that the final strata plan might differ from a draft plan on registration and her involvement in another commercial property development where "off the plan" contracts were involved (as was the case in the Little Bay development), but ultimately it is not necessary to make any finding as to whether Ms Xu downplayed her involvement in that development or not. It would appear that Ms Xu had a level of commercial sophistication at least commensurate with her involvement in other property development and management of a retail business.
I can readily accept that Ms Xu wanted to obtain an apartment with two car spaces and that she focussed on this (and the other essential characteristics) when looking at the documents; and that she thought that this was what she was getting. I do not accept that Ms Xu's understanding was that there was no ability on the part of the developer to exercise contractual rights under the contract to change the Draft Strata Plan. The real difficulty as I see it for Ms Xu is that although she thought she was getting (and was promised in the Marketing Brochure and Confirmation Email) two car spaces, that is not what the contract ultimately permitted because the Xu Contract permitted changes that were considered necessary or desirable and hence there was always the element of risk as to whether she would have the car space that was allocated to her in the Draft Strata Plan (i.e., the tandem car space that would effectively give her the promised two car spaces).
Therefore, I make no adverse credit finding, but I do note that, as in most cases, I place weight on the contemporaneous documents over recollection of oral conversations.
Ms Xu emphasises that these statements were made in respect of a plan that was not there part of the contract, yet the High Court still found that the land for sale was described in the plan. It is said that in the present case (as in Tarval v Stevens) there is no doubt that the bargain struck for the purchase price was purchase of a particular apartment lot as depicted in the Draft Strata Plan in the Xu Contract. It is noted that, in Tarval v Stevens, Handley JA said that there was there was "every reason for treating [the] description as a condition and a fundamental one in the contract of sale" and held that the vendor's non-delivery of the property as described in the contract was a fundamental breach of those contracts.
Ms Xu says that a similar conclusion was reached by Powell J in Dainford Ltd v Lam (1985) 3 NSWLR 255 (Dainford v Lam), which involved a contract for sale of an "off the plan" apartment described in two plans annexed to the contract, depicting two areas marked "ledge" of about 10 square metres that were not included in the registered strata plan (see at 257). There, after accepting that the "Description of property" in the contract was far from ideal, Powell J expressed the opinion (see at 264) that the subject-matter of the contract was a proposed lot and car space "which lot was to have the physical features, and was to be in the location, depicted upon the annexed plans".
Ms Xu emphasises the approach taken to construction by Powell J in Dainford v Lam (at 263), namely that the first task to be undertaken was to construe the contract in order to determine its subject matter:
… for, unless, and until, this be done, one cannot determine the extent of the operation, [of the subject non-essential term in that case], or whether Dainford committed some breach of its obligations…
It is noted that such an approach to construction of a contract for sale of land (namely, that one must first consider the subject-matter of the contract), is supported by Travinto Nominees Pty Limited v Vlattas (1973) 129 CLR 1; [1973] HCA 14 (Travinto Nominees v Vlattas), where Menzies J referred to the then Standard NSW Contract for Sale of Land and stated (at 27):
The printed conditions ... do not attempt to state the main rights and duties of the parties but merely modify these rights and duties in certain particular respects. The rights and obligations of the parties still largely depend upon the common law, as tempered by the rules of equity. It is necessary to understand these before applying these conditions.
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.
Ms Xu says that in the present case (as in Tarval v Stevens), there is no doubt that the bargain struck for the purchase price, was for a particular apartment as depicted in the Draft Strata Plan and the Floor Plan, in the Contract. It is said that where (as in Dainford v Lam) the absences of "ledges" was a substantial change, here there can be no doubt that a failure to deliver the number of car spaces contracted for is a fundamental breach.
As adverted to above, Ms Xu says that the configuration of those two car spaces (as end-to-end or tandem) was not an essential characteristic nor part of the fundamental term describing the property to be sold. Ms Xu accepts that she would have no remedy if her Apartment 40 was exactly the same but with (any) two single car spaces.
Insofar as TFM (in its opening outline of submissions at [61]-[69]) distinguishes Tarval v Stevens and Dainford v Lam because the purchasers there sought to terminate or rescind (rather than to seek specific performance), Ms Xu points to the distinction between questions of liability and of relief.
Ms Xu says that under the Novation Deed, as TFM replaced Bennelong as vendor, the vendor's obligations under the Xu Contract fall on TFM and that TFM was obliged to provide Ms Xu with the particular apartment she had contracted to buy and that TFM had contracted to sell to her, with the four essential characteristics referred to above. Ms Xu submits that, in light of the principles referred to in Mount Bruce Mining, the Novation Deed must be read with the Xu Contract and that, when read together, the fundamental term and main purpose of the latter is also that of the Novation Deed.
As to cl 42, Ms Xu says that it does not apply in this case because there was no updated Draft Strata Plan, Building Floor Plan, or other document replacing documents in the Xu Contract.
Insofar as TFM (in its opening outline at [47]-[49]) asserts that exclusion cll 38, 40, 41 and 42 are "risk-sharing" clauses which give the vendor a "wide discretion", and allow the purchaser to rescind if adverse changes are made to the property being transferred to the purchaser, Ms Xu says that this approach is the opposite of the approach by Menzies J in Travinto Nominees v Vlattas, where his Honour first ascertained the description of the property to be sold before construing clauses of exclusion or limitation. Further, Ms Xu says that it is not correct to "bundle together" exclusion clauses and attribute a collective meaning (and title) thereto. It is noted that the Xu Contract is not structured in this way. Ms Xu says that the exact words and context for each of, for example, cl 38 (Strata Plan) and cl 42 (Replacement Documents), as extracted above, are relevant.
It was submitted that the words "which the vendor considers necessary or desirable" in cl 38.2 must be construed by reference to the perspective of someone wearing a "developer's hat" and as meaning, in effect, "which the vendor considers necessary or desirable in order to complete the development substantially in accordance with the Draft Strata Plan and building floor plan, including the marketing brochures in everybody's contract" (noting that the marketing brochure is the first page of the building floor plan, being a defined term of the contract). In the alternative, it is said that the exclusions cannot cut across the fundamental term unless they are in very clear and precise language.
It is convenient at this juncture also to consider Ms Xu's submissions in relation to issues 7 and 9 (relating to rescission and merger, respectively).
Ms Xu points out that there was no change in the basement car park layout; that the car park and the tandem space were constructed according to the Draft Strata Plan and Floor Plan; and that what happened was simply that TFM reallocated that space in late 2018 from Ms Xu's Lot 36 to Lot 39 (and it is noted that TFM now submits that the reallocation was "necessary" given the scarcity of bays).
Ms Xu invokes the implied duty of good faith in an arms' length contract that precludes a party from exercising any contractual power capriciously or for an extraneous purpose. Ms Xu maintains that the parties are (in the absence of clear and prominently featured words to the contrary in their contract) required, both in performing their contractual obligations and exercising their contractual rights, to act in good faith and reasonably. (There is, however, no claim in the pleading of breach of any obligation to act in good faith.)
Reference is made to the distinction recognised by Powell J in Dainford v Lam between: breach of the fundamental term in a contract for sale of an apartment "off the plan" (that term being the apartment's description in words and as shown in the Draft Strata Plan annexed to the contract); and, a less substantial difference between the draft and registered strata plans, giving the plaintiff a limited right of rescission.
Ms Xu says that, for example, changing a penthouse apartment to the basement, or an apartment with two car spaces to one car space, undermines the fundamental purpose of the "off-the-plan sale" of the particular apartment as described in the "plan" with its essential characteristics.
Ms Xu refers also in this context to: Pallos v Munro [1970] 3 NSWR 110; (1970) 72 SR (NSW) 507 (Pallos v Munro), concerning a clause obliging the vendor to comply with a council notice to perform work on the property as at the contract date, which it was held did not merge on completion; Gaut v Patterson (1931) 31 SR (NSW) 612 (Gaut v Patterson), concerning a contract for sale of land obliging the vendor to erect a building before completion in accordance with a memorandum annexed to the contract that required the buildings to be of proper workmanship, which obligation was not extinguished by the conveyance; and Sumy Pty Ltd v Southcorp Wines Pty Ltd [2004] NSWSC 1000 (Sumy v Southcorp), concerning a contract for the sale of land where the "land" being sold was described on the front of the contract by reference to an unregistered plan with copy attached, and it was held that there was a breach of warranty as to the area of land being transferred.
Ms Xu contends that purchase of her apartment with "2 parking" did not merge on settlement of the conveyance on 29 August 2019. Ms Xu notes that the issue of merger only arises if either of Ms Xu's contentions as to the proper construction of the contract or the implication of the alleged implied term is accepted (i.e., issues 1 or 2); and says that, in that case, she cannot be taken (on an objective view) to have intended that the conveyance with one car space would merge her right to seek a second car space. It is said that this is particularly the case where, on the contract's terms, Ms Xu would lose the apartment altogether if she failed to comply with a notice to complete.
Further, it is said that TFM was on notice of Ms Xu's claim to a second car space before settlement, and from the day she found out that Lot 36 had been allotted only one car space at her pre-settlement inspection on 17 July 2019 (referring to Ms Xu's first affidavit at [87]; Ms Xu's second affidavit at [17]).
TFM says that the relevant contract in establishing the contractual nexus between it and Ms Xu is the Novation Deed, not the Xu Contract. TFM points out that it came as a "stranger" to the Encore Development; i.e., it was entirely reliant upon the written terms of the Xu Contract to understand the rights and obligations it was acquiring under the Novation Deed. It is noted that TFM had never dealt with Ms Xu or her husband before the Novation Deed and that TFM was not privy to whatever dealings Bennelong may have had with Ms Xu that might have given rise to expectations on her part (albeit that it had received the Confirmation Email as part of the documents provided to it prior to completion of the TFM Contract). TFM points out that it did not, as a matter of fact or law, inherit the knowledge of Bennelong in so far as it related to the development as a whole, or in so far as Ms Xu's involvement with the development specifically.
As to the Confirmation Email, TFM points out that there is no evidence that this was brought to the attention of anyone within TFM (nor any evidence that Ms Xu assumed or was told that her communications with Bennelong had been provided to TFM). TFM says that, even if the knowledge of TFM's then solicitors of that email were to be attributed to TFM, that knowledge rose no higher than that which appeared from the Xu Contract itself, which contained the Draft Strata Plan (which, in turn, depicted that the tandem bay had been allocated to Lot 36).
In this regard, TFM attaches significance to the fact that there was no indication given by Ms Xu prior to entering into the Novation Deed that the terms of her agreement with Bennelong were not precisely in accordance with the Xu Contract; nor was there any attempt by Ms Xu to seek the same confirmation she had sought from Bennelong in relation to the car spaces.
TFM emphasises that it was known to both parties, at the time of entry into the Novation Deed, that the Encore Development had not commenced and that the original proposer of the development had chosen not to proceed with the development.
TFM argues that the Xu Contract provided for a high degree of flexibility on the part of the developer, as the vendor, as to what needed to be transferred at completion. It emphasises that a contract for the sale of a strata unit involves a sale of property that legally (and factually, when concerned with apartments) does not exist; and that, not only does the property not exist, but the contract contemplates that a building will be erected. TFM says that those matters introduce uncertainty into the property transaction: first, that the precise nature and extent of a strata unit is not known until the final strata plan is registered (a matter not within the control of the vendor or the purchaser); and, second, that there are inevitably differences between the plan of a building and what is finally built, particularly when the building is a complex exercise, such as that contemplated in the Xu Contract.
TFM says that the form of contract used by Bennelong for its "off the plan" sales confers a wide discretion to the vendor to vary what is to be transferred under the contract to the purchaser, balanced by the safeguard for the purchaser that the contract allows for the purchaser to rescind the contract if changes adverse (to the purchaser) are made.
Reference is made to: cl. 38.2, which allows for variations to the Draft Strata Plan (and cl 38.3, a right to rescind); cl 40, which allows the vendor to create an easement (and cl 40.3, a right to rescind); cl 41, which allows changes to the Building Floor Plan or the Finishes Schedule (and cl 41.2, a right to rescind); cl 42, which allows changes to the Building Floor Plan, the Draft Strata Plan, the DA and the Finishes Schedule (and cl 42.2, a right to rescind).
TFM says that it is of some significance that, in each instance where the contract gives a right to rescind, the Xu Contract makes it clear that the only right or remedy that the purchaser has as a result of the variation is the right to rescind the contract (see cl 38.3.2, cl 40.3.2, and cl 42.2.2). TFM notes that there is an express restraint upon the purchaser from taking any "restricted action", which is defined in cl 31.2.3 as including an objection or claim for compensation or any delay in completion.
Insofar as Ms Xu contends that a "fundamental term and [a] main purpose" of the Xu Contract was that the vendor deliver a specific 3-bedroom apartment with 2 parking spaces, this led to submissions by TFM (and in response by Ms Xu) as to the rule in Flight v Booth (1834) 1 Bing (NC) 370; (1834) 131 ER 1160 (Flight v Booth) (TFM pointing to the explanation of the operation of that rule by Darke J in Victorsen v Easy Living Holdings Pty Ltd [2019] NSWSC 1721 (Victorsen v Easy Living Holdings) at [62]-[65]). However, as emerged in the course of the submissions, both TFM and Ms Xu are in furious agreement that the rule in Flight v Booth actually has no application in the present case so it is not necessary here to consider it in any detail. Suffice it to note that TFM says that the rule does not apply because Ms Xu chose to complete the Xu Contract after discovering the defect in the title (assuming it to be one) and paid the purchase price, such that there is no need for TFM to hold her to a contract for something "entirely different" to that for which the Xu Contract provided (those being the circumstances in which the rule might otherwise have applied). TFM further says that the Xu Contract expressly contemplates the application of the rule and arguably goes further than it (giving Ms Xu a wider right of rescission if what is sought to be transferred differs from the description in the Xu Contract).
TFM says that what the Xu Contract does is expressly to confine the remedy (and rights) of the purchaser if a rescission right arises, to the exercise of that right of rescission, and precludes any other remedies or rights arising. TFM maintains that this a sensible and reasonable bargain to be struck between developer and purchaser in an "off the plan" sale of land, since the developer cannot guarantee what it will be able to deliver when the plan is finally approved and the building finally built and does not want to be exposed to any liability if, what was contemplated, in some cases (and in this case), years before the development is completed, turns out to be different in the final result; and purchasers receive the protection that, if changes are made that adversely affect their expectations under the contract, they can choose to exit the contract.
TFM argues that such a clause exposes both parties to the risk of the market moving: if the market collapses after the contract is executed, then every time that the developer is required to make changes to the strata plan or the building, it is exposed to the risk that it will lose its sale to the purchaser who can buy cheaper elsewhere; conversely, if the market rises, and changes are made which adversely affect the purchaser, the purchaser may have to accept those changes (and receive no compensation) because the purchase price is above that for which a comparable unit then sells.
Further, TFM says that there is no evidence that the change in the Draft Strata Plan was done for any other reason that would attract the opprobrium of equity.
Insofar as Ms Xu's case is founded upon the construction of the Xu Contract as being for the sale of Lot 36 as described in the Draft Strata Plan, TFM does not cavil with the proposition stated in Tarval v Stevens that the description of the subject matter requires consideration of the Draft Strata Plan. However, TFM emphasises that the Xu Contract expressly provided that the subject matter of the sale (which was not at that time yet in existence, legally or factually) could be varied in final form (referring to cl 38.2 and cl 1.2). As a matter of construction, TFM maintains that Ms Xu has no basis for complaining that there was in fact a defect in the title offered and ultimately conveyed.
As to the weight placed by Ms Xu on the decision in Tarval v Stevens, TFM says the following. First, that Tarval v Stevens was a case where both the vendor and the various purchasers had claimed to have validly terminated the contract. The purchaser had previously (and unsuccessfully) attempted to argue that the contracts had been frustrated before Needham J. Kearney J found that the purchasers had validly terminated the contracts (but noted that since the finding that the breach was based upon a want of title, the rule in Bain v Fothergill (1874) LR 7 HL 158 (Bain v Fothergill), might prevent an award of damages, but ultimately left the matter undecided), citing Silva v Tarval Pty Ltd [1990] ANZ ConvR 465; (1990) NSW ConvR 55-533. Second, that the issue on appeal was the true construction of Special Conditions 2 and 3 (see as extracted below). It is noted that the vendor developer argued that there was nothing in the contract that created an obligation to transfer a lot in the strata plan "in a wholly residential flat building". TFM points in this regard to the wording of Special Conditions 2 and 3 in that case. TFM notes that the Court of Appeal held that it was clear that what was contemplated by the parties was the transfer of a lot in a wholly residential luxury building, not a building where the lower ten floors of the eighteen storey building were zoned for commercial use.
TFM says that Tarval v Stevens does not assist Ms Xu in the present case because it was not in issue in Tarval v Stevens that the changes in the strata plan were contemplated by Special Condition 2 such that the purchaser's rights were limited to exercising a right of rescission. Rather, TFM says that that in Tarval v Stevens the case was argued, and decided, both at first instance and on appeal, on the question of the true construction of the contract, namely whether it was open to the vendor to deliver a unit in a wholly residential building or a building where the first ten floors were zoned for commercial use.
As to the reliance placed by Ms Xu on Dainford v Lam, again it is said that this does not assist Ms Xu. There, the purchaser bought "off the plan" an apartment on the eighth floor of a proposed strata building in Artarmon, the plan showing that it included a "ledge" of some 10 square metres; but on completion what was proposed to be transferred did not include the "ledge". It is noted that Powell J there rejected a submission that cl 5 of the standard contract (1972 edition) applied (being a clause that provided for errors and misdescription of the property) on the basis that this clause only applied if the property was physically in existence at the time (which it was not) and was misdescribed. Rather, his Honour approached the matter on the basis that what had occurred was that what the vendor had promised to deliver differed from what was proposed to be transferred, such that the matter was one where there was a want of title (because the vendor could not offer a property with a ledge).
Emphasis is placed by TFM on the fact that Powell J found (at 265) that the vendor could not rely upon cl 14(d) (which provided a similar restraint to that for which cl 38 provides in this case) because that clause only provided protection where the alteration was required because of a requirement of a statutory authority or the Registrar-General and his Honour said that "[t]here being no other provision of the contract which appears to bear upon the matter, one must, thus, look to the general law to determine what are the consequences which flow from the omission of 'the ledges' from lot 47. Those consequences, so it seems to me, vary according as one looks at the matter from-the [sic] point of view of the Common Law or of Equity"; his Honour then dealing with the rules in Bain v Fothergill and Flight v Booth.
TFM says that in this case, and in contrast to the position in Dainford v Lam, there are clauses in the Xu Contract that deal specifically with differences in what was described in the contract and what was offered for transfer (and which are not constrained as cl 14(d) was), such that the consequences of the common law do not arise.
It is noted that in each of the cases referred to by Ms Xu, the purchaser refused to complete the contract (none of those being a case where a purchaser has complained that what was offered for a transfer was not the same as what was promised in the contract, but has nonetheless taken a transfer and then claimed a right to specific performance or damages).
TFM does not dispute the following propositions: first, that, despite the front page of the contract reflecting only a description of the property as having "carspace" (singular), the Draft Strata Plan, when read with the Floor Plan, which were both annexed to the Xu Contract, identified the car space in the Contract as the tandem car space, next to the lifts, as depicted in the Draft Strata Plan; second, that the registered strata plan is different from the Draft Strata Plan in that, instead of the (tandem) bay at the lift, the property sought to be transferred had a (single) bay located in a different part of the basement; and, third, that the difference in the two plans detrimentally affects the property in that a tandem car space is of greater utility and value than a single car space.
However, TFM emphasises that it was not part of the description of the property in the Xu Contract that the property have two separate car spaces. It says that Ms Xu was promised one title (to Lot 36, which included the tandem car space); not title in an apartment and then two separate lots to be used as car spaces.
Further, TFM does not concede that a change between a tandem car space and a single car space "detrimentally affects the property to a substantial extent" (though it says that, even assuming for present purposes that the change does detrimentally affect the property to a substantial extent, then cl 38.3.1 of the Xu Contract is enlivened). In that regard, TFM does not accept that, despite the subjective importance to Ms Xu of having two car spaces, the Lot 36 acquired by Ms Xu is something entirely different to what the Xu Contract contemplated. TFM accepts that, on the objective basis, the use of a tandem car space arguably provides greater utility than a single car space (though it says this would be of significantly less utility than 2 separate car spaces) but it is noted that, on Ms Xu's own evidence, the difference in value of the lot with a tandem is only $125,000 (and $100,000 according to TFM's expert)).
TFM says that if the variation is a Minor Variation then it falls within cl 38.2.1, which meant that Ms Xu had a right to rescind the Xu Contract pursuant to cl 38.3.1 (but that his right was never exercised). TFM further says that, whether or not there was a right of rescission, cl 38.3.2 makes it clear that Ms Xu had no remedy other than that right of rescission; noting that Ms Xu promised not to take any restricted action, which included delaying completion or making any claims for compensation.
It is said that the operation of cl 41.2 leads to a similar result insofar as the Floor Plan annexed to the Xu Contract, which referred to two car spaces, was different to the final Building Floor Plan. Again, it is said that even assuming in favour of Ms Xu that the variation "detrimentally affects the property to a substantial extent", the remedy, and only remedy, was a right of rescission (and Ms Xu promised not to take any restricted action).
As to cl 42, TFM accepts that cl 42 may not have been invoked (because, although Ms Xu's solicitor was notified of the registration of the strata plan, it accepts that it is not clear whether it can be said that the registered strata plan was "served" on Ms Xu). However, it is said that, even if it is not invoked, cl 42 makes it clear that there is no room for the implied term for which Ms Xu contends (nor for Ms Xu's construction of the fundamental term) in circumstances where it was always open to TFM to serve a different strata plan with the effect that the existing strata plan became a Replaced Document and the new strata plan the Replacement Document (such that it was to be treated as attached to the Xu Contract and the Replaced Document removed from the contract).
If the variation is considered not to be a Minor Variation, then TFM says that the effect of cl 38.2 is to deny that there is any error or misdescription in the subject-matter of the contract because Ms Xu agreed that the vendor could make changes to the Draft Strata Plan (but accepts that if the offer to convey a title to Ms Xu of a Lot 36 which had a single car space rather than the only tandem car space in the development was something entirely different to what the Xu Contract described, then the clause would not apply to preclude rescission because of the rule in Flight v Booth).
TFM points out that if the change was one which "detrimentally affects the property to a substantial extent", as Ms Xu claims, then cl 38.3 is applicable. It is noted that Ms Xu in those circumstances was given, consistently with the rule in Flight v Booth, a right to rescind within seven days (time being of the essence) after notice of the registration of the Strata Plan was served (which Ms Xu accepts was served both on her and then given to her by her solicitor on 9 July 2019, and thus required a notice of rescission to be served on TFM by 16 July 2019). It is noted that Ms Xu did not serve a notice of rescission and has not sought to rescind or terminate the contract.
Accordingly, TFM's position is that Ms Xu's claim in contract against it cannot succeed because what she now seeks to do is contrary to what she agreed (namely, that her remedy was limited to rescission) and promised (namely, that she would not seek compensation).
Finally, on the contract issue, insofar as Ms Xu raises an issue (not pleaded) as to whether cl 38.2 gives TFM an entitlement to make changes to the plans that it considered "(in its absolute discretion) to be necessary or 'desirable' (cl 38.2)", TFM points out that cl 38.2 makes no mention of any "absolute discretion" and notes that it is not Ms Xu's pleaded case that any discretion had been exercised improperly by TFM or "capriciously". TFM says that Ms Xu cannot now run a case that any discretion or power or duty of good faith under the Xu Contract was exercised improperly (since it was not pleaded) but that, even assuming that the change in the Draft Strata Plan is not one that is "necessary or desirable" (such that the discretion under cl 38.2 did not allow the changes to the Draft Strata Plan) and assuming that the further obligation under cl 38.2 not to take any "restricted action" only applies to alterations that are "necessary or desirable", or the change falls outside of anything permitted by cl 41.2, then the matter is governed by cl 6 of the standard contract terms (noting that no claim for compensation was made as contemplated by cl 7).
TFM says that to the extent that it was open to Ms Xu to rely upon cl 6 (subject to the possible operation of cl 38.3.2) and to claim compensation, then because Ms Xu did not make a claim for compensation before completion she cannot now do so (first, because her contractual right to claim compensation was limited to making a claim before completion; and, second, because to allow her to do so now would be to deprive TFM of its right to consider whether it would rescind the contract in light of such a claim - TFM here citing Lucantonio v Ciofuli [2002] NSWSC 509 (Lucantonio) at [34]-[36] per Austin J).
It is said that cl 38.3.2, on its face, carves out from cl 6 errors or misdescriptions arising from any difference between the Draft Strata Plan and the Strata Plan so as to limit Ms Xu's right to any remedy to the right to rescind the contract and it is submitted that that there is nothing wrong with having a clause such as cl 38.3.2 which limits the rights of the parties if such an event arises (provided that the rule in Flight v Booth is not offended) and that effect will be given to what the parties have agreed (referring to Lucantonio at [39]; Batey v Gifford (1997) 42 NSWLR 710 at 718 per Handley JA, Priestley JA and Clarke AJA concurring; Nassif v Caminer (2009) 74 NSWLR 276; [2009] NSWCA 45 at [51] per Macfarlan JA).
TFM says that a similar outcome is achieved if one treats Ms Xu's complaint as a change to the Floor Plan annexed to the Xu Contract which referred to "2 parking". TFM says that one should not do so because the proper construction of the Xu Contract would treat the change as the reallocation in the Draft Strata Plan of the parking area from the tandem car space to the car space ultimately allotted to Lot 36. It is said that the reference to "2 parking" in the Floor Plan merely reflects that the area in the Draft Strata Plan is a tandem car space which allows for "2 parking"; that it does not indicate that the plaintiff would receive two single car spaces. In any event, it is said that even if this submission is not accepted, cl 41.2 has the same effect as cl 38.3.2.
Insofar as Ms Xu's "fundamental term and main purpose" case is concerned, TFM says that even if it is accepted that the Xu Contract did not allow TFM to change the Draft Strata Plan, contrary to cl 38.2 (and cl 41), the outcome for Ms Xu is the same in that it was also a term of the Xu Contract that if such a breach occurred, the parties would proceed on the basis, and only on the basis, that Ms Xu's remedy was limited to a right of rescission. It is said that there is no reason (or basis), for the Court to order that the parties do something other than what they agreed.
TFM relies on the proposition that where a purchaser completes the contract for the sale of land and obtains a conveyance or transfer, that purchaser cannot then sue for damages at law in respect of a breach by the vendor relying upon some error or misdescription in the contract (referring to Beard v Drummoyne Municipal Council [1970] 1 NSWR 432; (1969) 71 SR (NSW) 250 (Beard v Drummoyne Municipal Council) at 266 per Walsh JA, Mason JA (as his Honour then was) concurring). TFM says that, once title to the land has been transferred, to suggest that the performance has been defective ignores the binary nature of the obligation (which is to transfer a title in specific land).
As to the implied term contended for by Ms Xu, TFM says that this cannot arise because it conflicts with the express terms of the Xu Contract (and cannot meet the requirements of BP Refinery) but that, even if it did, the outcome is the same as that for the fundamental term argument.
As to the question of merger (Ms Xu's issue 9), TFM says that (as adverted to above) to the extent that Ms Xu claims a right to specific performance, that right has merged in the transfer of a legal estate. As to issue 9, insofar as Ms Xu relies upon the decision of Sumy v Southcorp (where the Court found that the size of the subject land had been warranted such that a claim for damages for breach of that warranty did not merge on completion), TFM notes that no case of warranty was pleaded by Ms Xu. TFM says that it could not sensibly have been pleaded that there was a warranty that Lot 36 would have a final shape and form as set out in the Draft Strata Plan, not only because all warranties were excluded under the Special Conditions, but also because such a warranty would have been inconsistent with cl 38.2.
TFM maintains that the other cases cited by Ms Xu on this issue are also distinguishable. It is noted that Pallos v Munro was a case where the obligation to comply with a council notice and to indemnify the vendor in respect of such a notice was held not to merge with completion of the contract and that the Court (per Herron CJ, Jacobs and Manning JJA) held at 111 that "[t]here is no part of the memorandum of transfer in a Real Property Act transaction which deals with the subject matter of cl.13. The transfer in no way performs the obligations of that clause"; and that Gaut v Patterson involved an obligation to complete a building on the land sold, which was found not to have merged with the transfer of the land.
As to issue 7 of the issues raised by Ms Xu, it is said that, although framing the issue in terms of "remedy", this incorrectly presupposes a breach on the part of TFM.
The principles concerning the implication of terms are also well-established, and for present purposes it is sufficient to note the statement of principle in BP Refinery. At 283 (per Lord Simon of Glaisdale, Viscount Dilhorne and Lord Keith of Kinkel), it was said that:
… for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.
The same may be said for the construction of an exclusion or limitation clause. In Darlington Futures, the High Court said (at 510):
These decisions clearly establish that the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity.
On the issues arising in relation to the contract claim, I find as follows.
It is clear that the Xu Contract was a contract for sale of a lot in a building that was then yet to be constructed (i.e., "off the plan") and that that lot was to have the characteristics there identified, but subject to the ability of the vendor (developer) to make changes thereto (and to the rights of the purchaser if changes were made to the strata plan when registered either to rescind the contract or to claim compensation in accordance with the terms of the contract).
In Victorsen v Easy Living Holdings, to which TFM has here referred (see above at [199]), Darke J described the obligation of the vendor under an "off the plan" contract (at [67]), in the context of determining that the defendant's obligation to construct "the building" (where the term was not defined) should be construed as a reference to the approved Development Consent plans and the approved Construction Certificate plans attached to the contract, as follows:
65. … The contract was an "off-the-plan" contract for the sale of a lot in a proposed strata development that was in the course of construction. The contract was entered into after the relevant Development Consent had been obtained and after the necessary Construction Certificate had been obtained. The defendant was obliged to proceed towards registration of the draft strata plan (see cl 28 and Special Condition 1), and was plainly bound to construct "the building" accordingly. In the absence of more precise prescription of the attributes of "the building", the obligation ought be taken to be one to construct the building described in the approved plans.
In Vella v Ayshan [2008] NSWSC 84, White J (as his Honour then was) discussed the authorities regarding the construction of the description of the subject matter for sale (at [77]). His Honour ultimately held that the "subject property" in that case was the residence (comprising of land, house and landscaped gardens) erected in accordance with the terms and specifications in the approved plans annexed to the contract.
In Higgins v Statewide Developments Pty Ltd [2010] NSWSC 183, Barrett J (as his Honour then was) made the following observations as to the determination of the subject matter of the contract (at [52]):
52. The focus is upon what the purchaser contracted for, that is, the subject matter of the sale as described in the contract. Determination of what the purchaser did or did not "mean to have" (Fletcher v Manton) or whether the subject matter available to be conveyed makes the purchase "altogether useless for the purposes for which it was made" (Dykes v Blake) directs an inquiry into what is involved in due performance of the contract. It is a matter not of what the purchaser thinks in his own mind he is buying or what he would like to be buying but of what the contract requires him to take. It is that that must be compared with what the vendor proposes to convey by way of completion of the contract.
In that case, it was not controversial that the defendant vendor was obliged to convey a property in accordance with the draft plan attached to the contract.
Darke J considered the subject matter of the property to be conveyed in two recent cases, Wang v Polaris Holdings Roseberry Pty Ltd [2020] NSWSC 213 and Smogurzewski v AIT Investment Group Pty Ltd [2020] NSWSC 490. In the former case, the defendant promised to convey the lot in an unregistered plan of subdivision attached to the contract. His Honour considered that it was clear that, under the contract, the defendant was obliged to construct a building generally in accordance with the development consent (as defined) and the Building Approval (as defined) (see at [41]). In the latter case, the defendant had promised to convey a home unit and car space in an unregistered strata scheme in accordance with draft plans annexed to the contract (at [10]). In both cases, his Honour considered that the subject matter was clear from the terms of the contract.
In Harrington v Greenwood Grove Estate Pty Ltd [2011] NSWSC 833, Slattery J considered the contractual effect of a Management Plan given to purchasers of "off-the-plan" lots by the defendant developer. The proceeding arose out of differences between the Management Plan, which was annexed to the contract, and the defendant's proposals for the development. Slattery J stated (at [93]) that the contractual force of the Management Plan was not well described; it was not clear that the defendant was bound. However, given that the Management Plan placed certain "requirements" on both the defendant and the plaintiffs in relation to its subject matter, his Honour found that the parties intended that an agreement in the form of the Management Plan would operate to effect those requirements, and the defendant was thus bound (see [89]-[97]).
Earlier, in Wilson v Meudon Pty Ltd [2005] NSWCA 448, the Court of Appeal (Handley, Hodgson and Bryson JJA) considered the rights of shareholders in a home unit company. While the case did not concern the purchase of an "off-the-plan" lot, their Honours considered the application of the principles regarding the effect of a contract for the sale of land by reference to a project identified in a plan as discussed in Shepperd v Ryde Corporation and Tarval v Stevens. The Court held that, on the proper construction of the shareholder rights conferred under the Articles of Association, the shareholders who were entitled to occupation of unit 17, which was located almost entirely underneath an area designated "roof garden for penthouse", were entitled to oppose the proposed extension of the penthouse into that area. Handley JA (agreeing with Bryson JA, who gave the lead judgment) applied Shepperd v Ryde Corporation and Tarval v Stevens, stating (at [6]-[9]):
6. This construction of Art 6 is supported by cases dealing with the sale of land by reference to a plan showing the proposed development of the area. In Shepperd v Ryde Corporation (1952) 85 CLR 1 the High Court considered the effect of a contract for the sale of land by reference to a project identified in a plan. The joint judgment of four of the Judges stated at 12-13:
The plan records in diagrammatic form the features of the project of which the subdivision into lots is only a part. When a prospective purchaser was invited to buy a lot with a home erected upon it, it was upon the footing of the project, the existence and effectiveness of which was, as it appears to us, an assumption from which the transaction was intended to proceed. The allocation of an individual lot to the purchaser, his acceptance of the allocation and the execution of a contract for the purchase of that lot necessarily supposed the prior formulation of Housing Project No 4 as the foundation of the transaction. Unless the main features of the project were fixed, it would be meaningless. It is, we think, a reasonable construction of the Council's action in putting forward the project as the basis upon which the intending purchaser could proceed, if it is treated as amounting to or involving an undertaking or promise by the Council to him that they would adhere to and maintain the project, if he would become a purchaser of a lot …
7. The joint judgment continued at 17-18:
But the cardinal question is the meaning and effect of the description, in the contract, of the allotment of land sold as part of the vendor's Housing Project No 4 and being allotment No 85 … The reference to the project makes it both legitimate and necessary to resort to evidence to ascertain what is the project and what are its constituent parts or features … The evidence before us as to the nature and identity of Ryde Council Housing Scheme No 4 is restricted to the plan … once the plan is scrutinized, enough appears to show that the project is a planned development of a housing area according to an entire design with parks reserved as an amenity for the common advantage of the purchasers. For the protection of the purchasers against the destruction of the amenities or diversion of the advantages nothing will suffice short of an obligation to use the land only as parks …
8. In Tarval Pty Ltd v Stevens (1990) NSW ConvR 55-552 this Court applied the decision in Shepperd v Ryde Corporation to a contract for the sale off the plan of a strata unit in a building described in the contract as an apartment building, a flat building, and a home unit building of 68 home units on 18 residential levels. A copy of the draft strata plan showing such a building was annexed to the contract. The vendor changed the lower 10 residential floors to commercial offices, and the purchaser rescinded. In my judgment, which was concurred in by Clarke and Meagher JJA, I said at 59-080:
The approach in Shepperd v Ryde Corporation … dealing, as it did, with implications from economical language in the contract where the relevant plan was not annexed in my view require the description in Annexure A and the plan, Annexure D, in the present case to be given contractual force. Thus it was, in my opinion, part of the contractual description of the home unit contracted to be sold to the Silvas that it would be a home unit in a wholly residential building.
9. Likewise, in my judgment, the description of unit 17 by reference to the plan as being situated below a roof garden for the penthouse, must also be given contractual force as part of the rights conferred by Art 6 on the group 17 shareholders. The roof garden formed part of the amenity of unit 17 and the group 17 shareholders were entitled to equitable protection, to borrow the language of the High Court in Shepperd's case, "against the destruction of the amenity or diversion of the advantages".
In the present case, I have had regard to the Xu Contract's objective meaning, by reference to its "text, context and purpose" (Mount Bruce Mining at [46]). I accept TFM's submission that the contract was not for the sale of a property (namely a penthouse, three bedroom, two bathroom apartment) with two "separate" car spaces, as such, but, rather, was for the sale of a property (yet to be built) as depicted in a Draft Strata Plan (yet to be registered), that Draft Strata Plan depicting a single (albeit tandem) car space with room for two cars. I consider that the difference between those two propositions is significant. Further, though I also note the reference in the Marketing Brochure to "2 parking", this can be read conformably with the Draft Strata Plan in that the tandem car space there allocated to Lot 36 allowed room for two cars.
I consider that the cases of Tarval v Stevens and Dainford v Lam (said to be analogous by Ms Xu) are distinguishable from the present instance on the following bases.
Tarval v Stevens was a case where the relevant special conditions stipulated that:
Special Condition 2: Subject to the provisions of Special Condition 3 completion of the Contract is conditional upon due completion of the construction of a home unit building complex … comprising two and a half levels of basement car parking and services, one upper level of car parking and services and eighteen residential levels above plus plant and lift motor rooms substantially in accordance with the Development Consent granted ... and the registration of the Strata Plan …The Vendor reserves the right to make such alterations to the building plans and the Strata Plan as the Vendor may deem necessary to complete the building and register the Strata Plan …
Special Condition 3: Notwithstanding anything aforesaid: (a)the draft Strata Plan annexed hereto has been prepared on the basis that the building will contain sixty six (66) home units in accordance with the Development Consent granted by the Council of the City of Sydney. The Purchaser hereby acknowledges that it is aware that it is the intention of the Vendor to apply to the Council of the City of Sydney to vary the Development Consent or obtain a new Development Consent permitting the conversion of the two bedroom unit in the centre of each of the floors 14-19 inclusive into two (2) one bedroom units. In the event that such application is granted wholly or in part no objection shall be raised for shall any requisition or claim for compensation be made by the Purchaser …
Critically, the variation in the completed building from the plans that occurred was that the first 10 floors of the building became commercial, rather than residential. Where the contract itself explicitly made completion conditional on the completion of construction of the complex in accordance with specific features set out (i.e., "home unit building complex", "eighteen residential levels", "contain sixty six (66) home units"), and noted the variation to those features as being limited to the conversion of some units from a two bedroom, to two one bedroom, units, it cannot be said that it was within the contemplation of the parties in making their bargain that they intended a change unnecessary to complete the building and register the strata plan, and which was not specified in the notation of a contemplated change, but which was nonetheless a fundamental change to the character of the building. This is not the case in the present instance, where, while the Xu Contract did indicate that Lot 36 would have a car space, it did not make the completion of the Xu Contract conditional on the completion of the building specific to features set out in the special conditions.
In Dainford v Lam, the facts more closely approximate those in the present case. There, as referred to above, Powell J concluded that the subject-matter of the contract was the proposed lot (a unit and car space) which was to have the physical features and be in the location depicted upon the annexed plans, and to which lot was to be attached the statutory interest in the common property (the land which was to comprise part of the common property being that depicted as enclosed by the "proposed boundaries"). His Honour concluded that there had been no error or misdescription of the subject matter of the sale since the subject matter of the sale was not in existence at the time of the contract; rather, what had occurred was that there had been an accurate description of something to which, when the time for completion arrived, the vendor was not in a position to give complete title (see at 265).
Relevantly, however, his Honour turned to consider the consequences of the deficiency in the title because the contract provisions did not deal with those consequences; and did so in circumstances where the operation of clauses such as cl 5 of that contract would not protect a vendor if an error or misdescription was substantial and material (referring inter alia to the rule in Flight v Booth).
Here, Ms Xu does not say that the configuration of the car space (as a tandem space) was an essential or fundamental term of the contract (in fact she is adamant that it was not); rather she contends for a term obliging TFM to transfer two car spaces to her (contrary, in my opinion, to the express terms of the contract). Moreover, the relevant clauses in the Xu Contract (unlike those in the contract in Dainford v Lam) do, in my opinion, deal with the rights as between the parties in the event that the property to be conveyed (as depicted in the Draft Strata Plan) is different to a substantial effect from that which TFM is now in a position (following registration of the Strata Plan) to convey. I do not see that the issue of what rights flow contractually from the change to the Draft Strata Plan can be divorced from the consideration of what liability, if any, TFM now has to Ms Xu under the Xu Contract.
I accept the submission for TFM that, at best for Ms Xu, the Xu Contract as properly construed provided (subject to the rights of the vendor to amend the Draft Stata Plan as considered necessary or desirable) for the sale to her of a unit which had allocated to it, at the time of the contract, a single tandem car space (near the lifts).
The submission for Ms Xu (to the effect that, if one were not to read "2 parking" as an essential characteristic of the property there being promised to be conveyed, this would be akin to the purchase of a property "off the plan" being no more than a "lucky dip") seems to me rather to beg the question as to whether that was an essential characteristic of the property to be conveyed. In circumstances where the Xu Contract made clear that the vendor could make changes to the Draft Strata Plan prior to its registration (which changes, it appears to be conceded, could include the configuration of the car spaces) and in circumstances where the Xu Contract did not on the coversheet specify that the lot being conveyed included two car spaces as such, I am not persuaded that it was a fundamental term of the Xu Contract that there be two car spaces conveyed to Ms Xu (though I accept that the pre-contract material and communications certainly represented to Ms Xu that she would obtain sufficient space for the parking of two cars).
I accept the commonsense of the proposition put by TFM that there is a commercial logic for developers to have a degree of latitude in relation to the amendment of strata plans or the like when entering into "off the plan" contracts for properties yet to be developed. At the time of the draft plans (often being pre-construction), the vendor developer cannot necessarily assume each detail of development, especially as the final plans are subject to external requirements and approval (such as by the local Council). Both parties thus shoulder some risk in entering into contracts of this kind prior to the completion of the development. That risk is reflected in clauses such as cll 38 and 41 in the special conditions to the Xu Contract. This forms part of the understanding of the purpose of the Xu Contract.
I do not accept Ms Xu's alternative argument that a term as to the essential characteristics of the apartment including two car spaces can properly be implied, having regard to the applicable principles on the implication of contractual terms. I consider that such a term would be inconsistent with the express terms of the contract, namely cl 50.1 (purchaser's warranties), cl 57.1 (entire agreement clause), cl 38.2 (variations), cl 38.3 and cl 41.2 (purchaser's right to rescind), and cl 42 (replacement documents). Furthermore, I do not see it as so necessary that it would go without saying. The abovementioned clauses indicate that the parties intended that the Xu Contract should govern their relationship, and had made explicit provision for the sharing of risk as to what precisely would be built. The fact that this was an arms' length transaction where both parties were legally represented (regardless of how commercially sophisticated or otherwise Ms Xu may in fact be) fortifies this conclusion.
Indeed, to my mind, what Ms Xu contracted to buy (and what the vendor, first Bennelong, and then following the novation of the contract, TFM, contracted to convey) was a three bedroom, two bathroom apartment on the penthouse level, with a car space to be built substantially as depicted on the Draft Strata Plan (namely, one that was a tandem bay with space for two cars); but, crucially for present purposes, what the officious bystander would understand (and what Ms Xu herself accepted she understood) was that the Draft Strata Plan was subject to change (albeit that Ms Xu would be able to rescind if the Strata Plan as finally registered was different from the Draft Strata Plan to a substantial effect in a detrimental way). In that regard, I do not accept the submission for TFM that the loss of room for one additional car to park in the allocated car space would be a minor variation (particularly having regard to the evidence that there is limited street parking in the area).
Issue 8 does not arise because it was not pleaded and it is clear that the issues are to be framed by the pleadings (see Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206 at [424] per Ipp JA). However, even if it did arise, I do not consider that I can read into the Xu Contract the qualifications or limitations on the ability of the vendor developer to amend the draft Stata Plan for which Ms Xu here contends. That would in my opinion involve impermissibly reading words into the Xu Contract.
Further, insofar as Ms Xu argues that the contractual powers must be exercised in "good faith", and not "capriciously", there is no pleaded case to that effect (and, as I understand it, any such issue appears to have been abandoned with the fraud allegations concerning the allocation of the tandem spot to Lot 39, which was acquired by the fourth defendant). Whether or not TFM reallocated the car spaces for financial gain (as opposed to it being an administrative mix up, as Dr Zhang's affidavit evidence suggests) is not to the point.
I have every sympathy for the position of Ms Xu, namely that she wanted a penthouse three bedroom, two bathroom apartment overlooking the park with the car spaces and she did not obtain all of what she contracted to buy. However, the fact is that she entered into an "off the plan" contract that permitted changes, if considered necessary or desirable by the vendor. Her protection was her ability to rescind and/or claim compensation if the final development was different from that depicted in the contract. The risk that Ms Xu would not be able to obtain the property with the four essential characteristics that she apparently prized above all others was a risk inherent in buying "off the plan" as she must have understood (having been involved in at least one other such development in a different capacity - in particular, the Little Bay development about which Ms Xu was cross-examined by Bennelong).
The difficulty in this case arises because of the novation of the Xu Contract, as I explain below, and the fact that Ms Xu chose to complete the Xu Contract in circumstances where she had the ability to rescind or to make a claim for compensation (that might have led the vendor developer to rescind).
In view of the above, issues such as merger and the like do not arise. However, for completeness I address those issues briefly below.
As to the issue of merger, I note the following authorities. In Fu v Bucasia Pty Ltd [2014] NSWSC 325 (Fu v Bucasia Pty Ltd) concerned the sale of an "off-the-plan" property which gave the purchaser a right to a price adjustment on completion in the event that the area of the lot was different to that described in the draft plans annexed to the contract (cl 64). The area of the lot was in fact smaller than that described in the draft plans; however, the purchaser only indicated that he intended to exercise this right after completion. Stevenson J held that the right to a price adjustment merged on completion (see [68]-[72]). His Honour noted (at [63]) that clauses that have been held not to have merged on completion have dealt with those obligations "collateral to the main duties of proving title, conveyance, and payment" (there citing: Pallos v Munro [1970] 3 NSWR 110; (1970) 72 SR (NSW) 507 (Pallos v Munro) at 511 per the Court; Pascon Pty Ltd v San Marco in Lamis Cooperative Social Club Ltd [1991] 2 VR 227 (Pascon Pty Ltd v San Marco) at 229-30 per Brooking J; and Christopoulos v Angelos (1996) 41 NSWLR 700 at 706 per Powell JA).
Stevenson J held that cl 64 could not be described as a "collateral" obligation as it concerned a fundamental matter (being the price payable on completion) (at [68]). His Honour stated (at [69]) that the parties intended for the variation to take place "on completion", and that cl 64 was not intended to endure beyond completion. It was relevant to his Honour's findings that the plaintiff sought to reserve his right to a price adjustment only after settlement had taken place (at [71]) (cf the present case in which the plaintiff by her lawyers sent numerous letters to TFM's lawyers before settlement demanding a second car space and reserving her right to seek another car space after settlement).
In Pascon Pty Ltd v San Marco, the Court of Appeal in Victoria held that the purchaser's obligation to pay the full amount of the purchase price did not merge on completion. The purchaser failed to pay the full amount because he was inadvertently informed by the vendor that the balance of the purchase price was 50% less than that agreed. The vendor sued five years later to recover the purchase price. Brooking J (at 229) stated that "[m]erger depends on intention, and it is clear that the parties did not intend that the purchaser's obligation to pay the balance of the price should be satisfied by the transfer".
In the course of discussion regarding a material change to counterpart contracts, the Court of Appeal in Zaccardi v Caunt [2008] NSWCA 202 (Allsop P, as his Honour then was, Campbell JA and Barr J) considered whether an indemnity clause against any claim against the vendor, expressly stated not to merge on completion, would have survived completion. The Court did not answer that question; however, Campbell JA gave several examples of obligations that have been held not to have merged, including: Palmer v Johnson (1884) 13 QBD 351 (purchaser's right to compensation surviving transfer); Lawrence v Cassel [1930] 2 KB 83 (vendor's covenant to build house in workmanlike manner survives completion); and Hissett v Reading Roofing Co Ltd [1970] 1 All ER 122; [1969] 1 WLR 1757 (vendor's covenant to give vacant possession survives completion).
In the present case, the provision for a right of rescission and the restricted action clause to my mind indicate an intention that the obligations under the Xu Contract in relation to the transfer of the property were to merge on completion.
Thus, I have concluded that Ms Xu fails on her contract claim against TFM, largely for the reasons set out by TFM in its submissions.
Here, it is said that Ms Xu relied on the representations in entering into the Xu Contract and Novation Deed, respectively. It is said that those representations led her to believe that she would be provided with two car spaces, which have not been provided to her; and that, in the context of the defendants' conduct as a whole, it was reasonable for her to rely on those representations regardless of the entire agreement clause in the contract (cl 57.1) or the disclaimer as to reliance (in cl 50.1).
Ms Xu says that proffering the draft Novation Deed with cll 1.1 and 1.4(c) amounted to a representation to Ms Xu that TFM would provide Apartment 40 (Lot 36) in accordance with the Draft Strata Plan in the Xu Contract, and this was done to induce Ms Xu to enter into the Novation Deed. It is submitted that, had TFM put in a covering letter that, under cl 38.2, TFM had an absolute discretion to change the features of the apartment it was contracting to sell Ms Xu, including the number of car spaces, then no doubt Ms Xu would not have signed it.
Ms Xu argues that part of the relevant context in the present case is that the representors are vendor developers charged with building the Encore Development "substantially" in accordance with the Draft Strata Plan and the Floor Plan, and the representee is a purchaser buying "off the plan" by reference to those two plans.
Here, Ms Xu gives evidence that she relied on the Representations in entering into the Xu Contract and Novation Deed, respectively. It is said that the Representations led her to believe that under the terms of the Xu Contract the vendor would provide her with two car spaces and that, in the context of the defendants' conduct as a whole, it was reasonable for Ms Xu to rely on those representations. This is said to be the case regardless of the entire agreement clause (cl 57.1), or the disclaimer as to reliance (cl 50.1).
Ms Xu says that the contractual disclaimer was not prominently made (it is said that it was "buried in cl 50.1 of a lengthy contract"), and it is noted that there is no evidence that it was drawn to Ms Xu's attention by either of the defendants before the proceedings. It is noted that Ms Xu's evidence in cross-examination was that she did not read these words.
In those circumstances, it is submitted that cl 50.1 of the Xu Contract does not give rise to a break in the chain of causation or deny Ms Xu a reasonable basis for relying on the Pre-Contract Representation.
It is noted that in this case, the relevant persons were Ms Xu, her husband, and her solicitor (Mr Yan of GE Legal) in the context of negotiations with Bennelong's conveyancers over a purchase of land for over $2 million. It is said that there is no suggestion that Ms Xu and Mr Zhang were commercially unsophisticated, and Bennelong notes that they had a solicitor to negotiate on their behalf. Bennelong says that this is relevant when identifying what was conveyed by Bennelong's communications and whether it was misleading or deceptive or false or misleading in contravention of ss 18 or 30(1)(e) of the Australian Consumer Law.
Bennelong submits that any proposition that Bennelong had made a promise or prediction that Apartment 40 would have two car spaces on settlement (unqualified by the Xu Contract or anything else at the time Ms Xu and Mr Zhang entered into the Contract on 26 May 2016) must be rejected because, for the Pre-Contract Representation not to be qualified by the Xu Contract, its effect must be that Bennelong represented that Apartment 40 would have a tandem car space whatever the contract allowed the vendor to do or not do in that regard. It is noted that there is no express representation to that effect and it is said that such an unqualified representation should not be implied in circumstances where the draft Xu Contract terms expressly negatived such a representation. It is noted that a representee has to make realistic allowances for uncertainties and contingencies in the future (referring to Awad v Twin Creeks Properties Pty Limited [2012] NSWCA 200 (Awad v Twin Creeks Properties) at [18] per Allsop P, as his Honour then was, Macfarlan JA and Sackville AJA agreeing).
Bennelong points out that the ordinary position is that a vendor is at liberty to act in its own commercial interests. Thus it is said that, subject to the Xu Contract in respect of matters with which the contract dealt including car spaces, there was nothing to suggest that Bennelong would not act in its own commercial interests (Bennelong here citing Harrington v Greenwood Grove Estate Pty Ltd [2011] NSWSC 833 (Harrington v Greenwood Grove Estate) at [125] per Slattery J). Bennelong says that the present case is not like Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 (Demagogue Pty Ltd v Ramensky) where there was anything unusual in connection with the land the subject of the sale.
As to 16 May 2016 communication from Mr Li to Ms Xu, Bennelong points out that Mr Li was not an employee of Bennelong and says that there is no evidence about his relationship with ACCE, the selling agent (though I note that on the coversheet of the contract his details are noted). Bennelong says that the 16 May 2016 email attached the Floor Plan and did not represent that Ms Xu would be provided with two car spaces "whatever the Contract provided". It is said that the context and surrounding circumstances of this email included that: Ms Xu knew Mr Li and knew that the development approval had recently been granted to Bennelong by the Land and Environment Court (Ms Xu's first affidavit at [21]; and Mr Flanagan's first affidavit at [14]); that construction of the development had not commenced (Mr Flanagan's first affidavit at [7]); and that Mr Yan of GE Legal was already acting for Ms Xu on the purchase of a proposed two bedroom apartment in the same development and that he had corresponded with Clarendon on 5 and 13 May 2016 about its draft contract (Ms Xu's first affidavit at [34]).
It is noted that the second and third communications by Bennelong on which Ms Xu relies were made by its conveyancer (Clarendon) to Mr Yan of GE Legal on 17 and 20 May 2016; and that, in both communications, the subject matter was the draft Xu Contract. It is said that, in these circumstances, communications to Ms Xu and Mr Zhang via Mr Yan must be characterised in the context that, objectively, they must have appreciated that the Xu Contract would govern the rights of the parties to its subject matter, which included car spaces.
Bennelong emphasises that Mr Li's representations about car spaces (even if they are attributed to Bennelong) were subject to the Xu Contract, subject to discussions between solicitors and/or conveyancers, and subject to change.
Bennelong says that any representations by Mr Li on 16 May 2016 were also modified by the provision of the draft Xu Contract by Clarendon to GE Legal under a cover letter dated 17 May 2016 which contained provisions which modified any representation that Mr Li made such that it became subject to the draft Xu Contract (Bennelong referring to Harrington v Greenwood Grove Estate at [125]-[127], where a representation made in a document provided by a vendor to a purchaser was modified by the draft contract provided later that contained the document). The draft Xu Contract is thus said to have modified any representation of Mr Li about two car spaces to a tandem car space.
Bennelong says that the draft Xu Contract also modified and reinforced the disclaimers in the Floor Plan that the areas it contained may vary from strata areas and that changes may be made in accordance with the Xu Contract without notice during construction. Bennelong points to clauses such as cll 38.2, 41.2, 42.2 and 57.1, and says that these are inconsistent with the alleged unqualified Pre-Contract Representation about two car spaces being implied. It is noted that in the Draft Strata Plan the "carspace" part of the improvements section on the front page is noted to be subject to change under the draft Xu Contract. It is noted that the other places in the draft Xu Contract that car spaces were referred to were also subject to change. The Basement Level of the Floor Plan showed a tandem car space with "40" printed at each end (meaning proposed Apartment 40), and was subject to change under the draft Xu Contract, and the Floor Plan which referred to "2 parking" had a disclaimer to the same effect. It is noted that representations with disclaimers should be considered together as conduct (citing Butcher v Lachlan Elder Realty at [39] per Gleeson CJ, Hayne and Heydon JJ).
Bennelong says that the 20 May 2016 email from Mr Yan to Clarendon seeking various amendments to the draft Xu Contract and confirmation in respect of the Front Page "Improvements" is important context to the third document on which Ms Xu relies, namely the Confirmation Email sent the same day. Bennelong says that in the Confirmation Email, Clarendon agreed (or conditionally agreed) to all of Mr Yan's requested amendments to the draft Xu Contract, which included an amendment to cl 38.2.1, which restricted the purchaser's rights in the event the vendor made alterations, additions, variations, or deletions to the Draft Strata Plan under cl 38.2; noting the response to Mr Yan's enquiry about the car space "Improvement".
In the context of the contract terms, which included cl 57.1.1, it is said that Clarendon's response did not vary the draft Xu Contract, or the understanding of the parties in respect to its subject matter. It is said that it could not have been an unqualified representation about what Ms Xu would be provided in respect of car spaces as the email says nothing about that, and that would be inconsistent with the context in which Clarendon's response was made (including that in the same email exchange the parties' representatives agreed on a modified form of cl 38.2).
Bennelong says that Clarendon's response confirmed something that was already the case, namely the "carspace" in the improvements section on the front page of the draft Xu Contract was a reference to the tandem car space in the Draft Strata Plan. Bennelong says that this representation was correct; and that it said nothing about the vendor's rights under the Contract, which included altering those plans under cll 38.2 and 42.1, or what Bennelong or any other vendor would do in respect of providing car spaces.
Insofar as it is important to Ms Xu's case against it that the Pre-Contract Representation is said to be continuing (in the sense it was not limited or retracted - see second further amended statement of claim at [6]), because Ms Xu alleges she relied upon the Pre-Contract Representation in not entering into the Deed of Rescission offered to her on about 9 August 2016, and in entering into the Novation Deed on 25 January 2017, Bennelong says that the effect of Clarendon's 9 August 2016 letter was to retract any Pre-Contract Representation. In particular, it is said that what was retracted was Bennelong's promise or prediction about what car spaces would be included with Apartment 40 on settlement, a prediction made at a time when Bennelong was the vendor and developer; and that it was retracted because there would be no development by Bennelong and no settlement of the Xu Contract between Bennelong and Ms Xu and Mr Zhang.
Bennelong says that it follows that the alleged Pre-Contract Representation was no longer in existence when Ms Xu decided not to enter into the Deed of Rescission on 9 August 2016 (or when she decided to enter into the Novation Deed on 25 January 2017).
Relevantly, Bennelong says that Ms Xu has pointed to nothing in the Pre-Contract or Pre-Novation Deed communications where Bennelong expresses its subjective understanding of the effect of the Xu Contract or the Pre-Novation Deed, or where it was requested to do so. It is noted that, on the contrary, Prudentia Legal's letter to Clarendon dated 22 August 2016 asserted a construction of the Xu Contract which was contrary to Bennelong's position (CB pp 932-933) and Ms Xu took advice from Prudentia about the effect of the Novation Deed (see Ms Xu's first affidavit at [68]-[69]).
Bennelong further says that even if Bennelong were expected to correct any impression it gave Ms Xu that she would be provided with two car spaces on completion, Bennelong had no information that suggested otherwise.
Thus Bennelong says that, even if it made the Pre-Contract Representation as to future matters, there should not be a finding that the representation survived the following events: Bennelong's notice on 9 August 2016 that it would not develop the site and offer to rescind the Xu Contract; the communications between Prudentia Legal and Clarendon concerning the "dispute" about the Xu Contract; and TFM's intervention. (I accept that submission.)
Bennelong says that the evidence does not support a finding that Bennelong's conduct conveyed an impression as at 25 January 2017 that Ms Xu would receive two car spaces on completion, either as a matter of what the Xu Contract required, or as to what would in fact happen on completion. It is said that if Ms Xu thought she would be provided with two car spaces on completion, it was not Bennelong's fault. Pausing here, it is difficult to suggest that, following the Confirmation Email, Ms Xu did not have the understanding that she would receive on completion space for two cars to park. That is clearly what she expected. However I accept that the evidence does not support a finding that when Ms Xu entered into the Novation Deed she did so in reliance on any representation made by Bennelong in 2016. It was clear from 9 August 2016 that Bennelong was no longer proposing itself to develop the site.
Bennelong contends that causation becomes more difficult for Ms Xu to establish at each later stage in the chronology. (I agree.) It is said that, with the passing of time, it becomes objectively less likely that Ms Xu relied on what she understood Bennelong had represented before the Xu Contract or continued to represent after she knew Bennelong was ceasing involvement in the development. Bennelong says that if there is not a finding that the Pre-Contract Representation caused Ms Xu to enter into the Xu Contract on 24 May 2016 and not to enter into the Deed of Rescission in about August 2016, then it is even less likely that the Pre-Contract Representation or any continuing such representation caused Ms Xu entry into the Deed of Novation on 25 January 2017. Bennelong submits that if there is no such finding based on the earlier events, then the chain of causation will have been broken such that it cannot be found that the Pre-Contract Representation was causative of Ms Xu's entry into the Novation Deed.
It is noted that in her first affidavit at [72], Ms Xu says that if she had known prior to signing the Novation Deed that Apartment 40 would not have two car spaces, then she would not have entered into the Novation Deed (see also at [62]); and that at [73], Ms Xu says that because Bennelong or TFM did not inform her before she signed the Novation Deed that on completion Apartment 40 may not have two car spaces, she "believed that by signing the Novation Deed, TFM stepped into Bennelong's shoes and would fulfil its obligation to provide me with the apartment described in the Contract being … 2 car spaces". Bennelong says that this evidence shows that, by the time of the Novation Deed, the basis on which Ms Xu understood she would be provided with two car spaces on completion was that this was required by the Xu Contract. It is noted that Ms Xu does not say that Bennelong gave her that understanding of the Xu Contract (and it is said that it would be unusual if it had, referring to Secure Parking v Woollahra Municipal Council at [101]).
It is noted that at [68]-[69] of her first affidavit, Ms Xu said she received advice in about January 2017 (but before 25 January 2017) from Prudentia Legal that under the Novation Deed, everything was going to be the same as under the Xu Contract except the vendor developer, which she believed. Insofar as Ms Xu suggests that she expected to be told if there was a proposal to change the number of car spaces she would be provided with, Bennelong says it had no information to give her in that regard, so that any reliance by Ms Xu on Bennelong's silence was not reliance on misleading conduct.
Bennelong says that the alleged Pre-Contract Representation concerned what would be included with Apartment 40 on settlement, regardless of the Xu Contract; that it did not concern the effect of the Xu Contract; and that it was said not to be qualified by the Xu Contract.
Insofar as Ms Xu (in her submissions at [79]) submits that the provision of the draft Novation Deed represented that TFM would provide Apartment 40 in accordance with the Draft Strata Plan, Bennelong says that it is not clear how this alleged representation was made, and in any event, it does not concern Bennelong.
In Bowler v Hilda Pty Ltd at 221 (the authority cited by Ms Xu for the proposition about when a representation must be false or misleading), Cooper J said in respect of s 53A(1)(b) of the Trade Practices Act that the falsity or misleading nature of a representation must exist at the time the representation is made. It is said that Heerey J did not disagree with Cooper J in this respect, and it is submitted that, properly construed, what his Honour said at 207 is not to the contrary. Bennelong says that this issue was obiter as the appeal was decided on the absence of reasonable grounds for a representation as to future matters, and Black CJ did not consider the issue. At 205-206, Heerey J discussed the remarks of Lee J in Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189 (Wheeler Grace) at 201-202, where his Honour referred to misleading or deceptive conduct under s 52 of the Trade Practices Act arising from an unqualified prediction where there is a failure to qualify the statement or disclose a risk of non-fulfilment, evidence of the subsequent non-fulfilment of the prediction raises the inference that the risk existed or that qualification was required. In such a case, the state of mind of the representor does not matter because the test is objective. Heerey J found that the representation in Bowler v Hilda Pty Ltd was an unqualified prediction. His Honour applied the principle from Wheeler Grace that evidence of what happens afterwards may be used to determine whether a representation was misleading at the time it was made, and emphasising that the relevant time in respect of such evidence will be on settlement because the predictions concern the position on settlement.
Bennelong says that Heerey J was not asserting that for s 53A(1)(b) of the Trade Practices Act, the time when a representation must be false or misleading is a different time than for s 52 of the Trade Practices Act, or that it was on settlement, not when it was made. It is submitted that such a finding would produce many unfair results, including in this case, and would overturn well-established law that a prediction is not misleading merely because it does not come to pass. Accordingly, it is submitted that Ms Xu's argument on s 30(1)(e) of the Australian Consumer Law must fail.
In any event, Bennelong says that the principle from Wheeler Grace does not apply here to Bennelong because it made no unqualified representation at all (and certainly none after 9 August 2016) and it had no information it could give to qualify any such unqualified representation.
Bennelong accepts that s 4(2) of the Australian Consumer Law imposes an evidentiary onus on Bennelong to adduce "evidence to the contrary" to the proposition that it had no reasonable grounds for making the representation (see Australian Competition and Consumer Commission v Woolworths Limited [2019] FCA 1039 (ACCC v Woolworths) (at [90]-[91]) per Mortimer J) but notes that relatively little evidence is required to discharge the evidential burden (if applicable) (see Redmond Family Holdings v CG Access at [52] per Black J). Bennelong further points out that whether there were reasonable grounds for making a representation as to a future matter must be assessed at the date the representation is made (Redmond Family Holdings v CG Access at [52] per Black J).
Bennelong says that if it made an unconditional representation that, regardless of the terms of the Xu Contract, Ms Xu would receive two car spaces, then that representation implied that that was Bennelong's intention. Bennelong has served evidence that, at least up to the date of the Xu Contract (26 May 2016), it intended to provide the purchasers with a tandem car space on completion of the Xu Contract.
It is noted that at the time of the alleged Pre-Contract Representation (from 16-20 May 2016), Bennelong had developed the blocks nearby and was planning to develop the subject land in accordance with the Draft Strata Plan and the architectural plans (including the Floor Plan), both of which provided for a tandem car space for the apartment (see Mr Flanagan's 3 April 2020 affidavit at [4]-[29], [57]; Mr Manser's affidavit at [13]-[14]; Ms Borg's affidavit at [17]-[23]). Bennelong says that there was never a plan or proposal by Bennelong to change the allocation of car spaces from the Draft Strata Plan it prepared in April 2016 (see Mr Flanagan's first affidavit at [18]). Rather, the proposal to change the car space allocation first arose in December 2018 (Dr Zhang's 10 December 2019 affidavit at [16] as tendered by Ms Xu).
It is noted that Bennelong also adduced evidence of its capacity to develop at the time of the alleged Pre-Contract Representation (Mr Flanagan's second affidavit at [4]-[29]). It is said that this was not necessary because there was no implied representation as to Bennelong's capacity to develop in the Pre-Contract Representation and Ms Xu did not act on this basis (referring to Concrete Constructions Group Ltd v Litevale Pty Ltd [2002] NSWSC 670; (2002) 170 FLR 290 at [171] per Mason P; Redmond Family Holdings v CG Access at [53] per Black J).
Bennelong says that Ms Xu has tendered no evidence to discharge the onus of establishing that Bennelong had no reasonable grounds for the future Pre-Contract Representation, and her closing submissions at [60] contain no submission to that effect, although there is such a submission in respect of TFM. It is noted that none of Bennelong's witnesses was challenged in cross-examination as to the evidence of reasonable grounds. Bennelong contends that Ms Xu has therefore not discharged her legal onus of establishing the Pre-Contract Representation was misleading.
As to the issue of causation, it is noted that this only arises if it is found that Bennelong made the Pre-Contract Representation (as to future matters, not qualified by the Xu Contract) or the Pre-Novation Representation (see second further amended statement of claim at [5]-[8], [16], [41]). It is said that no causation question arises from the Pre-Contract Representation as a matter of current fact because it was correct - the Xu Contract did describe a tandem car space.
Bennelong says that the term "may not" (see [43] second further amended statement of claim, appears to refer to what the Xu Contract allows (what the vendor could do) and "would not" appears to refer to what the vendor will actually do (what the vendor would do).
It is noted that Ms Xu has attempted to establish the Pre-Contract Representation caused her to enter into the Contract relying on the "fair inference of fact" (as referred to in Gould v Vaggelas at 236, and which was cited in Campbell v Backoffice Investments at [142] per Gummow, Hayne, Heydon and Kiefel JJ). It is said that at [143]-[147] in Campbell v Backoffice, the majority eschewed the application of the "fair inference of fact" approach from Gould v Vaggelas employed by Giles JA, and came to the opposite conclusion based on the evidence relevant to causation (see at [146]-[147]). It is noted that Ms Xu gave evidence of what she relied on and what she would, or would not, have done if she knew Apartment 40 might not, or would not, have two car spaces on completion (see Ms Xu's first affidavit at [48]-[49], [51], [62], [72]-[73], [99]; Ms Xu's second affidavit at [23]). Bennelong says that the approach in Backoffice at [143]-[147] should be followed, and the question of causation should be decided based on the evidence, not on the "fair inference of fact" approach described in Gould v Vaggelas.
Bennelong's submission is that Ms Xu's evidence establishes that she relied on the Pre-Contract Representation as a present fact but not as a future matter. It is noted that, in respect to the Xu Contract, Ms Xu in her first affidavit says she relied on the "description" of Apartment 40 in the draft Xu Contract (including in the Draft Strata Plan) as having two car spaces in signing the draft Xu Contract (see at [45]); and that Ms Xu was there referring to Exhibit 3 (not the whole draft Xu Contract) (see T 78.15-37).
Bennelong says that this evidence must be doubted as Ms Xu said when she looked at the page of the Draft Strata Plan showing the Basement Level that was in Exhibit 3 she could not tell whether the space was for two cars or for one car (T 87.21). It is noted that Ms Xu said that having two car spaces was very important to her and she specifically discussed it with her husband (see Ms Xu's first affidavit at [38], [40], [46]).
Ms Xu says she relied on the Confirmation Email (in which she understood Bennelong told her Apartment 40 "had" two car spaces) in deciding to sign the draft Xu Contract and that if Bennelong had not confirmed on or about 20 May 2016 (in the Confirmation Email) that Apartment 40 "had" two car spaces she would not have signed it (see at [48]-[49]). Ms Xu also gave evidence that she wanted to double check the long space in the Basement Level of the Draft Strata Plan (which must mean the page of it in Exhibit 3) fit two cars and belonged to Apartment 40, and she was satisfied of that by the Confirmation Email (Ms Xu's first affidavit at [46]-[48]).
At [51], Ms Xu says that she would not have signed the draft Xu Contract if she had not received the Confirmation Email or some other confirmation from or on behalf of Bennelong that Apartment 40 "had" two car spaces, and in signing the draft Xu Contract she also relied on the "description" of Apartment 40 in the draft Xu Contract in both the Draft Strata Plan and the Floor Plan.
Insofar as Ms Xu's closing submissions at [49] appear to submit that Mr Li's email of 16 May 2016 was a cause of Ms Xu's decision to enter into the Xu Contract, Bennelong says that Ms Xu gave no evidence that she relied on Mr Li's email or that without it she would not have signed the draft Xu Contract. It is said that therefore this can be put to one side as a cause (see Backoffice at [146]-[147] per Gummow, Hayne, Heydon and Kiefel JJ). In any event, it is said that Ms Xu did not rely on Mr Li's email because, on 19 May 2016, after looking at Mr Yan's email with the five pages of the draft Xu Contract attached (Exhibit 3), she sent an email to Mr Yan asking him to confirm with the developer's lawyer that the Draft Strata Plan "has two parking spaces" (see T 87.49).
It is noted that in Ms Xu's closing oral submissions, reference was made to the bank cheque for the deposit dated 16 May 2016 as something that occurred following Mr Li's email (see Ms Xu's first affidavit at [41]-[42]). However, Bennelong says that no inference of causation can be drawn from this because the bank cheque was not sent to Bennelong until 24 May 2016 after the Xu Contract was executed. The letter from Mr Yan to Clarendon on 24 May 2016 also enclosed the s 66W certificate and identified the clauses in the draft Xu Contract that had been amended.
Bennelong says that Ms Xu's affidavit evidence on causation in respect of entry into the Xu Contract refers to the draft Xu Contract and the Confirmation Email. It is said that, because Ms Xu's claim against Bennelong only arises if her construction of the Xu Contract is not accepted, Ms Xu cannot relevantly have been led into error by provision of the draft Xu Contract; and that the key question is the impact on Ms Xu of the Confirmation Email in its context.
Bennelong says that Ms Xu's affidavit evidence about the impact of the Confirmation Email before entry into the Xu Contract is to the effect that it confirmed her view that the draft Contract described Apartment 40 as having two car spaces (see Ms Xu's first affidavit at [46]-[48], [51]). Bennelong says its impact was to confirm her understanding of what the contract described because she knew Apartment 40 did not exist in fact as she had been to the site three times in May 2016 (Ms Xu's first affidavit at [27]-[31]).
Bennelong says that Ms Xu's email to Mr Yan on 19 May 2016 supports this as it specifically refers to the "plan of the Basement", that she is "unsure whether it has two parking spaces", and asks him to "confirm with the developer's lawyer"; as does Ms Xu's evidence that she was looking at various factual matters when she looked at Exhibit 3 (T 85.42), and she sent the email to Mr Yan on 19 May 2016 because she could not tell by looking at the Draft Strata Plan whether there were two spaces or one space (T 87.19-30; T 87.49).
Ms Xu said she understood after reading the Confirmation Email that Mr Yan had confirmed with "the other party" and/or "the developer's lawyers" that the Draft Strata Plan had space for two cars (T 88.14-27). Bennelong says that Ms Xu's reference at T 88.31 to "No, that's what I asked for" must be to her email to Mr Yan on 19 May 2016.
Bennelong says that the impact of the Confirmation Email on Ms Xu was no more than to confirm to her the substance of the Pre-Contract Representation but only in its current factual sense, being what the Xu Contract described (Apartment 40 "had" two car spaces). Bennelong says that, while it can be accepted that Ms Xu thought she would be provided with two car spaces on completion, her direct evidence about why she entered into the Contract does not support a finding that she thought that because of the Confirmation Email; and it is submitted that the other evidence does not support the drawing of an inference that she thought that.
Ms Xu also refers to the Confirmation Email in her first affidavit at [99], where she states her belief at the time of completion of the Xu Contract with TFM on 29 August 2019. Ms Xu says Bennelong had agreed to sell her an additional car space "in the Contract and by the Confirmation Email", and her "rights under the Contract (and as confirmed regarding two car spaces in the Confirmation Email) remained the same" in the Novation Deed. Bennelong says that it should not be inferred in Ms Xu's favour that Ms Xu's belief as at 24 May 2016 was the same as at 29 August 2019, noting that she does not say so.
Bennelong says that, even if it is found that Ms Xu held the belief in [99] of her first affidavit when she entered into the Xu Contract, it should not be inferred from this evidence that the Confirmation Email caused Ms Xu to think she would be provided with two car spaces on completion. Rather, it is said that it was the Xu Contract which caused her to believe that; and the Confirmation Email merely confirmed that the Xu Contract described two car spaces.
Insofar as there is any suggestion that Ms Xu could not, or did not, appreciate the distinction between the Confirmation Email merely confirming the description of Apartment 40 in the draft Xu Contract, and it being a source of her contractual rights or a statement about what the vendor would do on completion, Bennelong says that a lack of English does not equate to a lack of intelligence or understanding of the transaction. It is submitted that Ms Xu showed by her evidence that she was commercially sophisticated, intelligent, careful, and understood the distinction. Moreover, it is said that Ms Xu's lack of English is not a reason to infer causation in her favour since she carries the onus of proof. It is noted that Ms Xu still had the opportunity to say what she relied on the Confirmation Email for, and Ms Xu did not say she understood it was a source of her contractual rights or a statement about what the vendor would do on completion of the Contract.
Bennelong says that, in isolation, the first extract from Ms Xu's first affidavit at [99] could be construed as Ms Xu thinking that the Confirmation Email was part of the agreement between her and Bennelong to sell her Apartment 40 with two car spaces. However, it is said that Ms Xu clearly understood that the Xu Contract alone (not the Confirmation Email) contained her rights to Apartment 40 (see T 98.31; T 98.42 and her first affidavit at [69], [73]). It is noted that at T 94.40, Ms Xu said that "before I signed the contract I had to convince myself that there are actually two car spaces".
Bennelong says that the distinction between Ms Xu's rights under the Xu Contract and what the Draft Strata Plan described in fact, and the Confirmation Email confirmed, is drawn in the second extract from her first affidavit at [99]. It is said that it was a distinction Ms Xu also understood by the demarcation between Mr Yan's role and her role prior to the Xu Contract, as well as the process of negotiating amendments to the Xu Contract that was the subject of the Confirmation Email (see T 82.45, 85.42, 92.44, 93.12-33, 97.8-39; 98.21). Bennelong says that Ms Xu's evidence that she did not understand what an amendment was, and did not know Mr Yan had been asking the developer's solicitor to make amendments to the draft Xu Contract, should not be accepted because: she recalled Mr Yan discussing a change to cl 38.2.1; she denied that she left it to Mr Yan to decide what changes to ask for; she said that Mr Yan carried out her instructions concerning such changes; and Mr Yan's invoice refers to him discussing amendments on 20 May 2016 (see T 88.42-89.11, 92.44 , 93.12-32 and Exhibit 5).
Ms Xu said she knew at the time of the Xu Contract that the vendor could change the Draft Strata Plan under cl 38 of the Xu Contract (T 92.50). Bennelong says that this leaves two possibilities as to why Ms Xu thought the vendor would provide her with two car spaces on completion of the Xu Contract, neither of which supports the conclusion that the Pre-Contract Representation materially contributed to her alleged error that the vendor would provide her with two car spaces on completion.
Bennelong says that the first possibility is that Ms Xu thought the vendor's right to change the Draft Strata Plan under cl 38 of the Xu Contract did not allow it to change the number of car spaces it would provide her with on completion. Bennelong's submission is that it should not be accepted that Ms Xu thought this; or alternatively, if Ms Xu did think this, it was not because of the Pre-Contract Representation.
Bennelong says that it should not be accepted that Ms Xu thought that the vendor could not change the number of car spaces it provided her on completion, because: she knew the future car spaces were shown in the Draft Strata Plan (T 86.63-41); she understood everything in the Xu Contract was part of it and everything outside the Xu Contract was not (T 98.19-31); she knew the strata plan could be varied by cl 38 (T 92.50); she could not understand completely the change to cl 38.2.1 when Mr Yan mentioned it to her (T 92.44); and, she left the technical legal matters and clauses to Mr Yan unless the clause related to something in particular or something special (T 82.45, 98.11, 98.21). It is noted that there is no evidence as to what Mr Yan thought, or advised Ms Xu, about the extent of the vendor's right under clause 38 of the Xu Contract to change the Draft Strata Plan or number of car spaces. Mr Yan gave Ms Xu advice on the Xu Contract, including cl 38.2 (Exhibit 5 entries for 19 and 20 May 2016, and see T 92.44, T 93.10).
Bennelong says there is limited material on which to determine whether Ms Xu thought the vendor could not change the number of car spaces it provided her by changing the Draft Strata Plan under cl 38 or the basis for her opinion, noting that no explanation was given as to why Mr Yan did not give evidence. Thus it is said it should not be inferred that Ms Xu thought the vendor could not change the number of car spaces it provided her by changing the Draft Strata Plan under cl 38 of the Contract (citing Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168 at [13]-[16] per Hodgson JA).
Bennelong says that the second possibility is that Ms Xu thought the vendor would not exercise its right to change the Draft Strata Plan under cl 38 of the Xu Contract in such a way as to change the number of car spaces it provided her with on completion, even if it could. Bennelong's submission about this possibility is that it should not be found that Ms Xu thought this because of the Pre-Contract Representation. Bennelong says that it should be inferred from: Ms Xu's commercial experience (including as a 50% owner of a similar size development - see Exh 1-2, 6-10); her access to and use of legal services; and her intelligence, that Ms Xu understood the concept of a developer acting in its own commercial interests consistently with its contractual rights and that things may change in the course of developing. It is noted that Bennelong said nothing to Ms Xu about what a vendor would do on completion and only corresponded through lawyers about the Xu Contract and what was in it. It is noted that Ms Xu did not give evidence that the Confirmation Email (or anything else Bennelong did) caused her to believe it would provide her with two car spaces on completion even if it could refuse to.
Bennelong says that even if it were to be found that it made the future Pre-Contract Representation that Ms Xu would be provided with two car spaces on completion and the above submissions on that issue not be accepted, any representation by Bennelong about what would happen on completion ended on 9 August 2016 when Bennelong sent the letter and Deed of Rescission to Mr Yan.
Bennelong says that it cannot be correct (cf closing submissions for Ms Xu at T 171.35-41; T 172.11) that Mr Li's advice to Ms Xu (as set out in Ms Xu's first affidavit at [59]) that another developer would build on the site continued a representation by Bennelong. It is said that in this conversation Mr Li was not acting in the course of actual or apparent authority as Bennelong's selling agent (referring to s 84(4) of the Competition and Consumer Act 2010 (Cth)). It is noted that Mr Li was Ms Xu's friend or acquaintance (referring to Ms Xu's first affidavit at [16], [36]) as well as being another purchaser in the proposed development. It is said that this was not a representation of Bennelong, but; even if it was, it does not include anything about the new developer's conduct, including its future conduct.
Bennelong says it should not be found that any representation by Bennelong that Ms Xu would be provided with two car spaces on completion caused Ms Xu not to enter into the Deed of Rescission. It is submitted that this is objectively unlikely because Bennelong was no longer developing the site and Ms Xu was informed of this by email from Mr Yan on 12 August 2016. Bennelong notes that Ms Xu gave evidence of her understanding that Bennelong would no longer be developing the site, and decided not to enter into the Deed of Rescission because she thought another developer would build on the site after a conversation with Mr Li (see Ms Xu's first affidavit at [58]-[60]).
At [62] of her first affidavit, Ms Xu says if she had known at this time that Apartment 40 would not have two car spaces then she would have signed the Deed of Rescission. Bennelong notes that Ms Xu does not explain why she thought she would receive two car spaces. It says that there is no reason to infer that Ms Xu thought this because Bennelong had represented in the Confirmation Email or otherwise that she would be provided with two car spaces on completion, either because she thought the Xu Contract (including cl 38) did not allow her to be provided with less than two, or because of how she thought the new developer would conduct itself.
Bennelong says that there is even less reason at this stage, than on entry into the Xu Contract, for a finding of causation based on what Bennelong represented the Xu Contract allowed because Ms Xu now had new solicitors, Prudentia Legal, who on 22 August 2016 took issue with Bennelong about its obligations under the Xu Contract. It is noted that Ms Xu also received emails from Prudentia Legal with the subject line "Your Contractual Dispute - update of status" on 1 and 19 September 2016, respectively, discussing Bennelong's obligations under the Xu Contract, and advising that Prudentia Legal had received written confirmation from Bennelong that the site had been sold to a new developer, and that "the new developer has agreed to take on the original contract you have entered into with the Vendors and be bound by the same terms as in the original contract". To the extent that Ms Xu asserts the representations were as to the effect of the various contracts, Bennelong says that it is more likely she relied on her own solicitor than Bennelong.
Bennelong says that, although it may be accepted that Ms Xu wanted two car spaces, Mr Zhang also entered into the Contract and Novation Deed and no affidavit has been served by him. Ms Xu's representations in the Xu Contract as to no reliance (see cll 50.1 and 57.1) are also here said to be relevant.
As to Ms Xu's completion of the contract on 29 August 2019 (see Ms Xu's first affidavit at [99]), it is noted that Ms Xu deposed that she did this because she believed that she was left with no option but to settle on the property and reserve the right to claim back the additional car space she thought she had been promised under the Xu Contract (as novated). Bennelong says that Ms Xu understood that if she did not complete then she would have lost the apartment. At [100], Ms Xu stated the "downsides" if she had not completed and instead had rescinded.
In her affidavit of 24 July 2020 at [23], Ms Xu referred to her earlier evidence in her first affidavit at [99]-[100] and deposed that she did not want to lose the purchase of Lot 36. Ms Xu went on to say that it was her understanding that she could reserve her rights and commence proceedings after completion to claim back the additional car space that Bennelong and TFM had agreed to sell her in the Xu Contract and Novation Deed.
Bennelong says that the evidence reveals that Ms Xu thought she was entitled to the apartment with two car spaces under the Xu Contract (as novated) and she wanted that, which is why she completed the Xu Contract. Bennelong notes that its involvement had ended on 25 January 2017 (some two years and seven months before completion). Bennelong thus says that it should not be found that any Pre-Contract Representation or Pre-Novation Representation by Bennelong materially contributed to Ms Xu signing the Novation Deed.
As to the submission by Ms Xu that, if TFM made the Novation Representation and that the representation concerned a future matter, it is deemed to be misleading (because TFM has filed no state of mind evidence), TFM says that this is incorrect. It is noted that the legislation considers a representation as to a future matter made without reasonable grounds to be misleading, and the presumption in s 4 of the Australian Consumer Law operates to assume the absence of reasonable grounds unless some evidence to the contrary is advanced by the maker. TFM says that the representations were not made but if made were made upon reasonable grounds (as is evidenced by the completion of the development). TFM maintains that in the present case the fact that the building was completed, with a tandem car space, is sufficient evidence to infer that TFM had reasonable grounds for making a representation that it could build such a building with such features.
Accordingly, it is said that the Australian Consumer Law claim against TFM, whether founded on s 18 or s 30(1)(e), is misconceived in that it can only arise if the terms of the Novation Deed support the existence of the Pre-Novation Representation; that is, an unqualified promise to deliver a property identical to the one described in the Xu Contract, and if that were the case, the contractual case would succeed and there would be no need for the Australian Consumer Law claim.
TFM says that the fact that a representation as to a future matter does not to come to fruition does not mean that the making of that representation was misleading per se. Insofar as Ms Xu suggests that there is some deficiency in the evidence of TFM in not leading evidence in the same vein as Bennelong as to reasonable grounds to make a future representation (see submissions at [62]), TFM says that the evidence establishes that TFM was able to build a strata block with a tandem car space. It is said that, had TFM made a representation it would deliver a tandem car space to Ms Xu (which it denies) then it clearly had reasonable grounds to make such a representation because it in fact did build such a strata block with such a tandem car space.
Further, it is said that insofar as the consequence of the misleading conduct is said to be that, had Ms Xu known the true position, she would not have entered into the Novation Deed on its current terms, then this means that her purchase would have been less profitable (since her own expert evidence indicates that the property is worth more than she paid for it, and the expert evidence of TFM is that even at the time that Ms Xu entered into the Xu Contract, the property was worth more than the contract price). It is said that, to the extent that Ms Xu says that she would have entered into the Novation Deed for a lesser purchase price, there is no evidence to suggest that TFM would have been prepared to do so, nor any sound basis to speculate that it might have (and that the evidence suggests the contrary).
TFM says that the evidence also establishes that no loss arose in that the entry into the Novation Deed gave rise to a profitable contract (given the value of the property compared to the price paid for it).
If (contrary to TFM's submissions), Ms Xu succeeds against TFM on the Australian Consumer Law claim, TFM seeks an apportionment as between TFM and Bennelong. It says that the bulk, if not all, of the loss should be attributed to Bennelong in that the conduct complained of by Ms Xu occurred before TFM became involved with Ms Xu.
As to issue 10 of the issues identified by Ms Xu, TFM says that that the manner in which this issue is raised does not accurately record the issues as they arise by reason of [52]-[59] of the TFM defence.
TFM maintains that the issue is whether, in light of the contractual warranties given by Ms Xu, and her acknowledgment of TFM's reliance upon those warranties, in the circumstances that arose (which included the fact that TFM had no prior dealings with Ms Xu), Ms Xu is estopped from making the claims she now brings. Allied to this issue, is said to be the question of Ms Xu's failure to take reasonable care to avoid the loss she now claims and the operation of s 137B of the Competition and Consumer Act 2010 (Cth) (Competition and Consumer Act) (see [60]-[61] TFM defence), as well as the issue of apportionment as between defendants (see [62] of the TFM defence).
As to issue 11 of the issues Ms Xu has identified, TFM says that this arises if Ms Xu's argument succeeds (namely, that despite the express terms of the Novation Deed and the Xu Contract, Ms Xu is entitled to hold TFM liable for the losses that she claims to have suffered by reason of her subjective understanding of the Xu Contract - an understanding that it is said axiomatically arises from matters outside of the Novation Deed and the Xu Contract). TFM says that, in those circumstances, there is no subversion of the Australian Consumer Law by TFM relying upon an indemnity given by Ms Xu to hold TFM harmless from this very scenario.
TFM maintains that it only contracted on the basis that its obligations were defined by the Novation Deed, and was given express contractual warranties by Ms Xu, upon which it relied, that she was doing so on the same basis. TFM says that, while the position may be different in respect of the Pre-Contract Representation insofar as Bennelong is concerned, there is nothing untoward in TFM being entitled to the benefit of the indemnity predicated upon a an express warranty given by Ms Xu.
In order for a party to claim relief for a false, misleading or deceptive representation, it is necessary to show loss or damage flowing from the conduct at issue (see, for example, s 236 of the Australian Consumer Law). Typically, therefore, some form of reliance by the representee on the representation must be shown to establish the relevant causation. The High Court has noted that, in establishing causation under the Australian Consumer Law, a party is not constrained by adhering to either a contractual, or tortious, approach to causation; but rather that the Australian Consumer Law allows the Court to fashion the relief to the facts (see, for example, Henville v Walker (Henville) at [18] per Gleeson CJ; [130] per McHugh J; and Murphy v Overton Investments at [44]-[45] per the Court).
As to the claims under the Australian Consumer Law, I do not accept that these have been made out. While representations were clearly made to Ms Xu by Bennelong (and later by TFM) as to what was promised in the Xu Contract, I consider that, insofar as those were representation of fact, they were not misleading or deceptive (at least in the sense that the Draft Strata Plan at that stage provided for allocation of a car space that would accommodate two cars); and, insofar as those representations were of future matters, I find that they were not misleading or deceptive as there was a reasonable basis for the making of those representations at the time they were made (based on the evidence adduced by Bennelong). Further, I accept what Allsop P, as his Honour the Chief Justice then was (with whom Macfarlan JA and Sackville AJA agreed), said in Awad v Twin Creeks Properties (at [18]):
18. … a representee would have to make a realistic allowance for uncertainties and contingencies in the future. That said, the firmness and clarity with which the representations are made may tend to heighten any requirement for the reasonable grounds in making them.
As to the making of the Pre-Contract Representation (on three occasions), this was admitted by Bennelong. It was either a statement of fact (as to the description of the apartment in the Xu Contract), in which case it was correct insofar as the Draft Strata Plan provided room for two cars, or it was a statement as to a future matter (namely, a statement of opinion or a prediction as to what features the building would have when it was constructed). However, I do not accept that it was a promise that Ms Xu would have the property as depicted on Draft Strata Plan "come what may". Furthermore, to the extent that the representation was as to a future matter (namely, that the building would be built in accordance with the draft plans), and that what Bennelong would convey to Ms Xu was the Property as depicted in the Xu Contract, not only was that representation clearly to be understood by a reasonable person in Ms Xu's position as being subject to the terms of the Xu Contract, but also I consider that Bennelong has satisfied the evidentiary onus of putting forward evidence that it had reasonable grounds for the making of such a representation (and Ms Xu appears to accept as much).
As noted above, the time at which a representation is to be determined as being false or misleading (or not) is at the time it is made (not whether a prediction or promise as to the future turns out ultimately to be correct - see Global Sportsman v Mirror Newspapers) (albeit that in relation to a claim based on the characteristics of the land it may be that it is not until the land is conveyed that it is realised that the earlier representation as to characteristics had been misleading or deceptive).
As to the Pre-Novation Representation, I do not accept that Bennelong made any representation as to what TFM would do in relation to the development; it simply conveyed (as was the case) to Ms Xu's solicitors that the Xu Contract was being novated. As to TFM, it did no more than represent that it would be bound by the Novation Deed. That representation was not false or misleading. To the extent that TFM has not put on state of mind evidence as to its intentions at the time as to what would be built, I agree with TFM that one can infer (from what was done) that TFM did intend to build the development in accordance with its understanding of the contractual obligations.
As to the reliance alleged by Ms Xu on the Pre-Contract Representation made by Bennelong, I consider that, from the time of the August 2016 Letter (in which Bennelong offered rescission of the Xu Contract), it cannot plausibly be said that Ms Xu reasonably relied on any promise by Bennelong as to the development of the building (or conveyance of an apartment in the building to Ms Xu, with or without car spaces). That is because such a representation is entirely inconsistent with Bennelong's then advice that it was not viable for it to carry out the development. From that time, it must have been clear to Ms Xu that (absent some change of position) Bennelong would not be the ultimate developer for the Encore Development. Moreover, Ms Xu's evidence makes clear that she decided not to enter the Deed of Rescission proffered by Bennelong because she thought (based it seems on Mr Li's opinion) that another developer would take over the property. It is abundantly clear that Ms Xu signed the Deed of Novation, not in reliance on any promise made by Bennelong or anything it said or did at the time, but in reliance on the promise made by TFM in the Novation Deed that, in effect, it would honour the obligations of the vendor under the Xu Contract (as Substitute Vendor) (which, on the proper construction of the Xu Contract, I have concluded it has done).
As to the Pre-Novation Representation that Ms Xu would have the same rights and entitlements under the Novation Deed as she did under the Xu Contract, said to be made by both Bennelong and TFM, , even assuming it to have been made by both Bennelong and TFM, the fact is that it was not false or misleading. That is the contractual position and TFM's stance has at all times been that it would comply with the relevant provisions (as properly construed). Again, whether the representation is proved to be false or misleading is assessed at the time representation made - not by what ultimately transpired.
I accept Bennelong's submission that the making of the Novation Deed is fatal to any claim for misleading and deceptive conduct as against Bennelong. It is submitted that it cannot be said that there is any relevant reliance and/or loss by Ms Xu based on Bennelong's conduct after this point in time (even had I come to a different conclusion as to the nature of the Representations).
Insofar as Bennelong submitted that the fact that Mr Zhang (Ms Xu's husband) was not joined to the proceedings and gave no evidence that he had relied on any of the alleged Representations was fatal to the claim of reliance or that the loss claimed was caused by the alleged Representations, it is not necessary here to deal with this argument. Suffice it to note that I would not have determined the claim by Ms Xu against her on this basis, in that it seems to me that, although she entered into both the Xu Contract and the Novation Deed at the time with her husband, by the time of completion of the Xu Contract she was the sole purchaser and her claim for relief is as to her position as sole purchaser.
Ms Xu says that she purchased Apartment 40 (and Apartment 34 in the same building for her daughter) and visited the site several times watching it being built and dreaming of her inner city life when she was able to live there. It is said that Stevenson J's reasons in Zhu v Snell [2014] NSWSC 468 (see at [210]-[212]) apply equally in the present case.
Ms Xu further says that, with a completed contract (as here), the bias is in favour of specific performance, citing Longtom Pty Ltd v Oberon Shire Council (1996) 7 BPR 14,799, where Young J, as his Honour then was, said (at 14,802) that, "[o]rdinarily, equity courts do not consider that damages are an adequate remedy where one side has completely performed the contract", and (at 14,803) cited a statement by Bacon VC in Greene v West Cheshire Railway Co (1871) LR 13 Eq 44 (see at 51) as to the purpose of the grant of specific performance.
Ms Xu says that the question whether damages are inadequate is subjective to the plaintiff and that, assessed from her position, Apartment 40 with two car spaces is of particular value to her and damages are clearly inadequate.
Ms Xu maintains that, had the Representations not been made, she would not have entered into the Xu Contract or the Novation Deed, and she would have rescinded the Xu Contract in August 2016 when the opportunity to do so arose. Consequently, it is said that she has suffered loss or damage "because of" the impugned conduct.
Ms Xu says that transfer of a second car space most effectively compensates Ms Xu for the defendants' misleading conduct because that remedy would mean that Ms Xu receives a property which has the same four essential characteristics as the property that the defendants represented to her that she would receive on completion of the Xu Contract, noting that a contract for sale of land is a classic example of a contract where damages are an inadequate remedy.
If, contrary to Ms Xu's primary contention as to relief it is found that damages are appropriate, then it is noted that s 236 of the Australian Consumer Law requires a measure of damages that conforms to the remedial purpose of the statute, and justice and equity of the case. Here, it is said that the suitable measure of damages is the difference between the position in which Ms Xu is now, and the position in which she would have been had the defendants not engaged in the misleading and deceptive conduct.
Ms Xu says that, if she is successful against TFM, justice requires that damages be measured on the breach of contract, not on a tort approach, so that she be put in the position she would have been in had TFM kept its bargain (either with two car spaces in tandem ($100,000-$125,000) or two single spaces ($125,000-$150,000).
If Ms Xu is unsuccessful against TFM but succeeds against Bennelong, she seeks the following in loss and damage: her legal costs in July-August 2019 and in these proceedings; and late penalty interest, which she says she suffered because of Bennelong's false or misleading representation or conduct as to the character of Apartment 40/Lot 36, being the property described in the Xu Contract.
Bennelong says that damages for expectation loss are only awarded in misleading or deceptive conduct claims where the representation amounts to a collateral contract (citing Gates v The City Mutual Life Assurance Society Limited (1986) 160 CLR 1 (Gates v The City Mutual Life Assurance Society) at 14-15 per Mason J (as his Honour then was), Wilson and Dawson JJ; [1986] HCA 3). It says that it cannot be maintained that Bennelong's alleged representations amount to a collateral contract because of the Novation Deed, in which Ms Xu released Bennelong (see Defence at [54]). Moreover, it is noted that the claim against Bennelong only arises if the contract claims fail against TFM (see the further amended statement of claim at [40]). Bennelong says that it follows that claims for such loss under the Australian Consumer Law must fail here because to arise they must be inconsistent with the Xu Contract, but a collateral contract may not be inconsistent with the main contract (see Hoyt's Proprietary Limited v Spencer (1919) 27 CLR 133; [1919] HCA 64).
It is noted that, in closing submissions (at [112]-[114]), Ms Xu does not argue that Gates v The City Mutual Life Assurance Society is wrong or attempt to distinguish it; nor has Ms Xu attempted the comparison required by Marks at [42] between her position now and her position if the alleged contravening conduct had not occurred. It is said that a comparison between Ms Xu's position now and if the Xu Contract had delivered what she hoped for is not the correct comparison; but even that comparison was correct, it would not assist Ms Xu against Bennelong because she released it from the Xu Contract (see cl 1.4(a) of the Novation Deed).
Bennelong says that this case is not like Murphy v Overton Investments, where the appellants' loss was an increase in periodic outgoings, which was a risk hidden from them when they entered into a long lease (noting that even then, the appellants were not necessarily entitled to the full increase and there were questions about whether they should have sold up - see at [66]-[71] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ). It is noted that Ms Xu does not claim she suffered loss because the risk of a change to the Draft Strata Plan was hidden from her (see HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 (HTW) at [30] per Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ); Ms Xu admits she knew about that risk (see at T 92.50).
Bennelong says that a comparison between Ms Xu's current position and the position in which she says she would be if there was no contravening conduct reveals that Ms Xu has suffered no loss. It is said that Ms Xu is in a better position now than if she rescinded, or did not enter into, the Xu Contract because she paid less to purchase the apartment with a single car space than its value of $2.3-$2.4 million (see Mr Fernando's report of 26 June 2020; Mr Hubbard's report of 27 July 2020). It is noted that the approach of subtracting value from price is commonly employed where the acquisition of land is induced by deceit or misleading or deceptive conduct (see HTW Valuers at [34]-[40] per Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ), and that Ms Xu has not identified any reason not to employ it here other than that the Xu Contract did not provide her with the benefits she hoped for (which Bennelong says is not a basis for finding loss, citing Marks at [47]-[48], [52]-[53] per McHugh, Hayne and Callinan JJ).
Bennelong says that the heads of loss claimed by Ms Xu are also inconsistent with her allegations of reliance. It is noted that Ms Xu alleges that if she knew the vendor might not, or would not, provide her with the tandem car space she would have: accepted Bennelong's offer to rescind the Xu Contract in August 2016; not entered into the Deed of Novation; not entered into the Novation Deed for a lesser purchase price (see further amended statement of claim at [43]). Bennelong says that none of these alternatives would have resulted in the Xu Contract completing with the tandem car space, so the claimed heads of loss cannot follow from the pleaded case.
Bennelong says that any loss Ms Xu has suffered by completing the Xu Contract with a single car space was not caused by Bennelong. It is said that this is because her remedy under the Xu Contract, upon being allocated a single car space instead of the tandem car space, was to rescind the Xu Contract and recover her deposit plus interest (see cl 38.3). It is said that any loss Ms Xu suffered by completing the Xu Contract with one car space was caused by her own decision to do so, not by any conduct or representation of Bennelong, which she knew about by then (cf Marks at [119] per Kirby J).
It is again noted by reference to cll 6 and 7 of the standard form contract that, if the varied standard terms allowed a claim for compensation for Ms Xu's complaint, then that claim had to be made before completion, and none was made.
As to the question of relief, TFM says that, even on the hypothesis that the proper construction or implied term alleged by Ms Xu is accepted, specific performance would not be ordered for the following reasons.
First, that the only right that Ms Xu conceivably could have to specific performance would be to have delivered to her the property as described in the Xu Contract (which included the location of her car space at the lift). It is noted that this is no longer property of TFM and Ms Xu has abandoned impeaching the title to that property in the hands of the fourth defendant. It is said that TFM could not be ordered to do something which it is not within the power of TFM to do.
Second, that whatever right to specific performance Ms Xu had under the Novation Deed (or the Xu Contract), that right merged with the transfer of Lot 36 to Ms Xu (citing Svanosio v McNamara at 211-2 per McTiernan, Williams and Webb JJ). It is noted that Ms Xu has not pleaded that there was a warranty under the Novation Deed (or the Xu Contract) that the property would have two car spaces that gives right to a claim for breach of that warranty (and so reliance upon the decision of Bergin J (as her Honour then was) in Sumy v Southcorp at [53] is misguided).
Third, that Ms Xu is not entitled to an order that TFM provide some sort of substitute performance for the performance provided for in the Xu Contract: the car spaces are not fungible property. It is said that Ms Xu has no right to demand the transfer of the title over another lot owned by TFM.
Fourth, that any order for "substituted specific performance" of the nature contemplated by Ms Xu would impose undue hardship on TFM in circumstances where the evidence demonstrates that, as at 14 August 2020, there are only five remaining car spaces available to supply fourteen unsold units with an option of a car space. In circumstances where Ms Xu has not, despite her evidence, moved into the unit, but instead has leased it, it is said that damages are the only remedy Ms Xu could seek.
Fifth, in relation to damages, that the damages under the Australian Consumer Law would be nil for the reason that Ms Xu has not suffered a loss (but in fact made a profit) by entering into the Xu Contract (and the Novation Deed). It is said that if TFM is found to have breached the Xu Contract, and Ms Xu's remedy is not confined, then the range of damages appears to be between $100,000 and $125,000 (a matter which TFM says will have some significance on the question of costs, if Ms Xu is successful).
Here, effectively what Ms Xu's evidence was amounts to a "no transaction" case (i.e., she would have entered into the Deed of Rescission and would not have entered into the Novation Deed had she known that she might not end up with two car spaces).
An award for damages in a "no transaction" case in a suit for misleading and deceptive conduct requires the court to be satisfied that, "but for" the conduct at issue, the plaintiff would not have entered into the transaction, and so would not have suffered the loss. In Wyzenbeek v Australasian Marine Imports Pty Ltd (in Liq) [2019] FCAFC 167 (Wzyenbeek), the Full Court of the Federal Court described (at [89]) a "no transaction" case as being where, "the claimant asserts that he, she or it would not have entered into the transaction and, so, should be granted relief on the basis of being restored to the position that would have existed if there had not been any transaction." The Court also noted the following (at [106]):
106. A "no transaction" case is a legal construct to accommodate the position of a person who claims to have been injured by entering into a contract by or induced by, conduct or a representation of someone, including by a person who was not a party to the contract. The construct would be unnecessary in a case between contracting parties where rescission of the transaction with restitution in integrum is still possible, including if the Court can make allowances for deterioration of the subject-matter of the transaction which, in some instances, can also include a claim for damages.
[Citations omitted.]
There is some dispute in the authorities as to whether it is necessary to undertake a comparison between the loss caused by the wrongdoer's act or omission that a claimant actually suffered, with the evaluation of a chance that the claimant may have engaged in some other hypothetical transaction in which he, she or it would have incurred similar loss or damage (see Wzyenbeek at [92], [118], the Full Court of the Federal Court there expressly disagreeing with Applegarth J in Westpac Banking Corporation v Jamieson; [2015] QCA 50; (2016) 294 FLR 48 at [143]-[144]; see also Cummins Generator Technologies Germany GmbH v Johnson Controls Australia Pty Ltd [2015] NSWCA 264 at [133]-[135]).
I consider, with respect, that the better view is that expressed by the Full Court of the Federal Court in Wzyenbeek (at [94]) namely that, "it is sufficient for the claimant to prove that the wrongdoer's conduct is a cause of the loss claimed" (although comparison with another hypothetical transaction may go to the calculation of the quantum of the damages claimed depending on the particular circumstances). In Henville, McHugh J said that:
134. Here the misrepresentations induced Mr Henville to enter into a contract and to construct units under the belief that the project would produce a substantial profit. If there had been no misrepresentations, Mr Henville would not have embarked on the course that he did and the loss that he suffered would have been avoided. That being so, his loss was a direct result of the misrepresentations and would have been recoverable in an action for damages for deceit. Moreover, I think that in a general way the loss was a reasonably foreseeable consequence of the misrepresentations. Although Mr Henville badly underestimated the cost of constructing the units, nothing in the findings of Anderson J or the Full Court demonstrates that any of the costs were unreasonably incurred. Matters such as the project being delayed with a consequential increase in costs and interest rates rising are matters that in the ordinary course of a development are reasonably foreseeable. [emphasis added]
In Morellini v Adams [2011] WASCA 84, McLure P (Pullin and Newnes JJA agreeing) stated (at [57]) that:
57. … There will be a relevant causal connection between the breach and the loss or damage if the claimant would not have entered into the transaction but for the misrepresentation, if that misrepresentation is continuing or if the purchaser "is locked into" the transaction.
In Cummins Generator Technologies Germany GmbH v Johnson Controls Australia Pty Ltd [2015] NSWCA 264, Beazley P, as Her Excellency then was, (Leeming and Gleeson JJA agreeing), set on the following (at [133]):
133. In my opinion, the trial judge was correct in stating that there was no strict requirement to prove a "no transaction" or "different transaction" case. Rather, it is necessary for a party to prove that in reliance on the misrepresentation it acted in a particular way that caused it loss and to then prove the quantum of that loss. That involves a consideration of the particular circumstances in which the conduct that caused the loss occurred. This was demonstrated in the recent decision of the Queensland Court of Appeal in Westpac Banking Corporation v Jamieson [2015] QCA 50. …
Here, the difficulty I have is that Ms Xu has not established that any loss has been sustained by entering into the transaction; rather, she is seeking to be put in the position that she would have been in had the expectation been satisfied. I accept the submission for TFM that in the circumstances her loss is nil. In any event, even if the measure contended for by Ms Xu had been the appropriate measure, at most her loss would be in the order of $100,000-$125,000 (quite disproportionate to the likely costs of this litigation).