Xue v Karimbla Properties [2023] NSWSC 552 | Case summary

Supreme Court of NSW|2022-09-14|Before: Henry J

The plaintiffs' claims

By their Further Amended Statement of Claim filed on 14 September 2022 (FASOC), the plaintiffs allege that Meriton engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law, being Schedule 2 to the Competition and Consumer Act 2010 (Cth) (ACL), or s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by making representations about the availability of vendor finance.
The vendor finance representations are alleged to have been made orally by Daniel Chen, a sales agent employee of MPS, at meetings on 7 and 14 August 2017 at the Development's showroom. According to the FASOC, Mr Chen, as agent for Karimbla and MPS, made the following representations to the plaintiffs (referred to as the Vendor Finance Representations): 1. the developer is willing to help the plaintiffs by providing vendor finance at market price; 2. the developer not only provides vendor financing to the purchasers of the apartments sold in the Development but also does so in relation to the purchasers of apartments sold in other developments; 3. if the purchaser could not obtain finance elsewhere, the developer will provide vendor financing to the purchaser; and 4. the developer will definitely help the plaintiffs with vendor financing, the interest rate of which will be determined by the market interest rate at the time of settlement.
The plaintiffs also claim that there was no reasonable basis upon which the Vendor Finance Representations could be made because: 1. Karimbla had intentionally crossed-out special condition 54 with respect to vendor financing in the Contract; 2. Karimbla did not invite the plaintiffs to apply for vendor financing before or at the time the Contracts were exchanged; 3. Karimbla did not provide any application form nor tell the plaintiffs that they must apply for vendor financing prior to or at the time the Contracts were exchanged; 4. Karimbla did not tell the plaintiffs that if they did not apply to the vendor financing prior to or at the time the Contracts were exchanged, the plaintiffs would not be able to obtain vendor financing at the market interest rate; and 5. at the time they made the Vendor Finance Representations, Karimbla and MPS did not genuinely believe on reasonable grounds that the plaintiffs would be able to obtain vendor financing from the developer at the market interest rate.
By way of relief, the plaintiffs seek declarations that the Contract was validly rescinded, voidable, void ab initio or should be set aside. They also seek orders for the return of the deposit, damages for breaches of the ACL or ASIC Act, interest and costs, and also seek relief against forfeiture in law or in equity and an order for repayment of the deposit pursuant to s 55 of the Conveyancing Act 1919 (NSW) (Conveyancing Act).
Meriton denies that they engaged in misleading or deceptive conduct. They accept that Mr Chen spoke to the plaintiffs in August 2017 about vendor finance but deny that he made the Vendor Finance Representations pleaded or that the plaintiffs relied on them in entering into the Contract. By way of defence, Meriton also says that the plaintiffs were provided with an opportunity to apply for vendor finance prior to settlement at its market rate of 6%, which was rejected by the plaintiffs.
The plaintiffs had also made a claim against a third defendant, VSTAR Lawyers & Consultants Pty Ltd (VSTAR), who are the lawyers that acted for the plaintiffs in relation to the Contract. That claim settled prior to the hearing, with VSTAR agreeing to pay $55,000 (inclusive of costs) to the plaintiffs in full and final settlement of the proceedings (Exhibit G).
For the reasons that follow, I have concluded that the plaintiffs' claims against Karimbla and MPS must fail.

Evidence

In support of their claims, the plaintiffs rely on two affidavits affirmed by Mr Xue on 11 May 2021 (Xue 1) and 16 August 2022 (Xue 2), and an affidavit affirmed on 11 September 2022 by Mingjing Ni, the plaintiffs' solicitor.
Mr Xue was cross-examined and gave oral evidence through a Chinese translator, to which no objection was taken. Mr Xue's first affidavit was written in English and did not identify that it had been translated to Mr Xue by his solicitor, or that Mr Xue could not speak or read English very well. His second affidavit, also written in English, was translated to Mr Xue by an accredited interpreter. In that affidavit, Mr Xue states that he considers himself able to read some English but given the importance of the affidavit and English being his second language, Xue 2 was read to him in Mandarin to ensure he fully understood its contents (Xue 2 at [3]).
Although Xue 1 does not comply with r 31.62 of the Uniform Civil Procedure Rules NSW 2005 (UCPR), the parties submitted that it would be more efficient and consistent with s 56 of the Civil Procedure Act 2005 (NSW) for that affidavit to be admitted into evidence. I accepted that submission, noting that the parties were at liberty to make submissions as to the weight to be given to the affidavit based on matters that arose in cross-examination (T78.43-79.19) and I made an order on 14 September 2022 that, for the purposes of UCPR, r 31.62(1), the plaintiffs were entitled to rely on Xue 1.
Meriton read two affidavits affirmed by Mr Chen on 30 June 2021 (Chen 1) and 24 August 2022 (Chen 2). It also read: an affidavit sworn on 6 July 2021 by Robyn McCully, the company secretary of MPS who is employed as Meriton's legal department supervisor; an affidavit sworn on 8 September 2022 by Lily McMillan, an in-house solicitor for Meriton; and an affidavit affirmed on 22 June 2021 by Helen Yang, an accredited translator who translated various documents annexed to affidavits from Chinese to English.
Meriton also subpoenaed Yunbei (Ken) Kang, a lawyer employed by VSTAR who had dealings with the plaintiffs and Mr Chen, to give evidence and tendered his affidavit that had been filed in the proceedings (Kang).
Mr Chen, Mr Kang and Ms McCully were also cross-examined.
As will appear, there are conflicts in the evidence given by Mr Xue on the one hand, and Mr Chen and Mr Kang on the other. The parties accept that the outcome of this case turns, in large part, on the Court's assessment of these witnesses and submissions were made as to the reliability and credibility of their evidence, which I deal with later in these reasons. In summary, I did not form a favourable view of Mr Xue's evidence and prefer the evidence of Mr Chen as it was supported by Mr Kang's evidence and I considered it to be more consistent with the contemporaneous documents and inherently more plausible.

Facts

The following facts are drawn from the affidavit, oral and documentary evidence. Unless otherwise indicated, I am satisfied of these matters.
In August 2017, Meriton was engaged in promoting the Development which included the sale of residential units off-the-plan. Mr Chen was employed as a sales assistant by Meriton and undertook sales duties in relation to the Development.
In early August 2017, the plaintiffs attended the Development showroom. Mr Xue had a conversation in Mandarin with a female who introduced herself as an employee of Meriton and provided the plaintiffs with apartment plans to consider.

7 August 2017: Initial meeting with Mr Chen

On 7 August 2017, the plaintiffs visited the Development showroom a second time and met with Mr Chen.
It is common ground that on this occasion, Mr Xue and Mr Chen had a discussion in Mandarin during which: Mr Xue said that he and Ms Liu were looking to buy an apartment with one bedroom and a study; Mr Chen said that Lot 202 was still available at a price of $873,000; and Mr Chen said that payment usually occurred by way of a $3,000 holding deposit, a 10% deposit on exchange (which included the holding deposit) and, as the Development was off-the-plan, the plaintiffs would not be required to pay the full amount until the Development was complete (T37.13-38.23; Chen 1 at [13]).
There is a dispute about whether there was any discussion of vendor finance on this day.
Mr Xue gave evidence that Mr Chen stated as follows (Xue 1 at [9]): "If you cannot obtain financing elsewhere at the time of settlement, we definitely will provide a loan to you."
During cross-examination, Mr Xue accepted that Mr Chen did not say the words "if you cannot obtain financing elsewhere at the time of settlement." However, he maintained that Mr Chen said words to the effect of: "we definitely will provide a loan to you" (T29.37-41; T32.30-4; T33.23-34; T37.11). He also gave the following evidence about what was discussed at the meeting on 7 August (T29.37-41): "The main problem at that time I worried about was the financial ‑ the finance, the mortgage issues, the loan. And the ‑ but the Mr Chen told me, "Don't worry about the loan. Meriton definitely can provide you a loan, because Meriton is not doing this one only. Meriton also provides loans to other projects as well, So, do not worry about this"."
In cross-examination, Mr Xue accepted that Mr Chen did not know what unit the plaintiffs were interested in (T33.44) and that Mr Chen knew "absolutely nothing" about his personal financial position at that time (T34.29-31).
Mr Chen's evidence of his discussion with the plaintiffs on 7 August 2017 does not refer to vendor finance or loans. He says that at this meeting he did not indicate to the plaintiffs that Meriton would guarantee vendor finance (Chen 1 at [13]; Chen 2 at [8]).

August 2017: Price list document and daily sheet

On 11 August 2017, Mr Chen received an internal memorandum from Meriton's head office titled "Price List 11 August 2017" (11 August Price List Document) (CB109-11) which states that: Meriton would offer to refund stamp duty for all apartment sales in New South Wales; the offer was open for a limited time; the offer could not be used in conjunction with "Meriton Vendor Finance"; vendor finance was available on selected sites (one of which was the Development); and, for New South Wales sites, vendor finance was available at "6.00% fixed interest rate up to 80% lend for two years (comparison rate: 6.17%)".
The 11 August Price List Document also includes information regarding the application and approval process for a loan from MPS, and states that the interest rate is fixed, the approval is valid until the purchaser is required to settle, a fee of $1,500 is required to be paid at the time of lodging the application with all necessary documentation and the fee is refundable if the application is declined.
As part of his role, Mr Chen received a "daily sheet" sent through Meriton's internal emailing system (T66.9-10). A daily sheet dated 20 July 2017 (Daily Sheet), which Mr Chen said was current as at August 2017 (T92.3), was in evidence (Exhibit F).
The Daily Sheet states that Meriton Property Finance was offering a vendor interest rate of 6% for up to 80% lend for two years for all borrowers on contracts that have not exchanged (applicable to Meriton properties in New South Wales including the Development) and a "rescue package" rate of 8% for up to 70% lend for two years for all borrowers on contracts that have exchanged.

14 August 2017: Second meeting with Mr Chen

Mr Xue and Ms Liu visited the showroom on a third occasion and met with Mr Chen to discuss Lot 202. While Mr Xue deposes that this occurred on 17 August 2017, he accepted that it was possibly 14 August 2017 (T30.34). Based on the date and time of the completed sales advice (referred to at [44] below), I accept Mr Chen's evidence that he met with the plaintiffs on 14 August 2017.
It is common ground that on this occasion Mr Xue and Mr Chen had a discussion in Mandarin during which Mr Xue told Mr Chen that he and Ms Liu wanted to proceed with the purchase of Lot 202 but they could not afford the full price. The option of vendor finance from Meriton was raised by Mr Chen although there is a dispute as to what was said on that topic.
Mr Xue's affidavit evidence of his conversation with Mr Chen is as follows (Xue 1 at [11]-[12]; Xue 2 at [2]): Xue: This apartment satisfies us, but my wife and I really cannot afford the full price of the apartment. We may have difficulty in obtaining financing from banks if the valuation of the apartment is not high enough. Chen: Don't worry. If you get a loan from us, the valuation in Meriton is usually higher than that in banks. As Australia's largest and most reputable developer, we not only provide loans to the purchasers in this Development, but also provide loans to purchasers in other developments. Xue: What interest rate do you offer for the loan? Chen: Sorry, I cannot advise the interest rate until the Lot 202 is settled because the interest rate will be market price at the time of settlement. The interest rate may be a little bit higher than the home loan interest rates in Australian banks. Xue: If the interest rate will be close to the home loan interest rate in Australian banks, we would like to get a loan from the vendor. … Chen: I'm not responsible for the matters regarding vendor finance. When the Contract is going to settle, you could ask Meriton and there is a special department being responsible for vendor finance. If you have difficulty communicating in English, Meriton has Mandarin-speaking staff.
Mr Xue says that: he asked about vendor finance to ensure that if he could not get a loan from the banks, Meriton would help him settle; his understanding was that he could apply for a bank loan and could also choose vendor finance at the time of settlement; he did not hear Mr Chen express any exact interest rate for Meriton's vendor finance and did not know that it should be applied for before exchange of contracts; he did not know that Meriton had a rescue package rate or that, if he applied for vendor finance at settlement, the interest rate would be substantially higher than the banks' home loan interest rate; and the first time he heard about a "rescue package rate" at 6% per annum was in about June 2019 (Xue 2 at [21]).
In cross-examination, Mr Xue said that he did not want to make any changes to his affidavit evidence (T39.5-11) and also gave evidence about his conversation with Mr Chen in the following terms: (T30.42-9) A. I confirmed that if Meriton can provide me the finance and also what the interest rate was and I ask the Chen (sic) what's the interest rate and the Chen (sic) said, "Well, I don't know, and we only know that before the settlement closed and that then we will know the interest rate at that time." Q. Can you remember anything else that was said? A. Also I told him that I just signed the contract for now, but later on it will be transferred to my daughter. (T31.14-8) Q. Is that everything you can remember about that conversation on 14 August? A. Regarding the details, I don't think it's a big deal, so I didn't pay attention to the details. What I really focussed on were like the completion date, the loans, the interest rate, something like that. (T39.36-7) A. … [Mr Chen] promised that the Meriton definitely will provide a loan to me but because I knew that the interest rate was about 8%...
Mr Xue accepted that Mr Chen knew nothing about his financial position at this time (T39.16-8) and that he understood that the Meriton rate was not the same as the bank rate and might be higher than the banks' rates (T39.20-5).
Mr Chen's affidavit evidence of his discussion with Mr Xue on 14 August 2017 is as follows (Chen 1 at [15]): Xue: My wife and I are very interested in Lot 202 but cannot afford to pay the full price of the unit. Chen: Well, most purchasers get finance from the banks or we do have the option for vendor finance. It is your choice. Right now it is 6% for a 2 year interest only loan. If you wish to proceed, you will need to pay a $1,500 application fee. Xue: That rate is quite high, I don't think it will be a problem for us getting a bank loan as we have a good financial income. Chen: Vendor finance will allow you to know exactly what you can afford to borrow and be confident before you sign the contract. Approval is normally within 7 days of providing your documents. If not approved, we will refund the $3,000 holding deposit together with the $1,500 application fees. Xue: The banks are offering a lower rate and longer term than 2 years. Chen: That's fine. It's your choice but if you don't sign up to vendor finance before exchange and still need finance before settlement, we can still arrange your application it (sic) but it will be a "rescue" interest rate higher than 6%. We have many purchasers at this site and other sites that apply for vendor finance option but it's up to you. Xue: No thank you, 6% is too high compared to the bank and our income is good. We should have no problems getting a bank loan. We would like to proceed with the holding deposit. Chen: Great, like I said before the holding deposit is fully refundable, you just let us know within 2 weeks.
Mr Chen gives evidence that: he advised the plaintiffs that he was not responsible for the matters regarding vendor finance and there was a specialised vendor finance team within Meriton that could provide further details; Mr Xue was confident that he would be able to procure a bank loan for the purchase and that was Mr Xue's preference; he advised the plaintiffs of the current interest rate for vendor finance and said that it should be applied for prior to the exchange of contracts; and he told Mr Xue that the interest rate for the rescue package was substantially higher and that he could not confirm the rescue package rate as it would be different at the time of settlement. He also denies that the first time he told Mr Xue of the rescue package was in June 2019 (Chen 2 at [6]).
Mr Chen also says that during the meetings on 7 and 14 August: the plaintiffs did not indicate that they wished to opt for vendor finance with MPS; the plaintiffs did not discuss completing an application form or making payment of the $1,500 application fee; and he did not indicate that the MPS interest rate would be unknown until settlement or that Meriton would guarantee vendor finance if the plaintiffs were unable to obtain finance elsewhere prior to settlement (Chen 1 at [18]).
By the end of their meeting on 17 August 2017, the plaintiffs decided to proceed with the purchase of Lot 202 and paid a holding deposit of $3,000 which was advanced by Mr Xue by electronic funds transfer to a bank account provided by Mr Chen. Mr Chen referred the plaintiffs to Mr Kang from VSTAR, who was a solicitor that Mr Chen was familiar with, and gave them Mr Kang's telephone number.
Following the meeting, Mr Chen completed a sales advice contract order form (Sales Advice) to secure the sale of Lot 202 to the plaintiffs (CB114). Mr Chen forwarded the Sales Advice to another Meriton employee at 11.33am on 14 August 2017 and identified the purchase price as $875,000 (being an error, as the price was $873,000) and the purchasers' solicitors as VSTAR and Mr Kang. The Sales Advice had an option to select "Cash Purchaser" or "MPF Finance" of which Mr Chen selected "Cash Purchaser" and included in the section headed "Special Remarks/Requirements" the words "Stamp duty rebate on completion".

Late August 2017: Dealings with Mr Kang and entry into the sale contract

Mr Xue subsequently contacted Mr Kang and retained him as the plaintiffs' lawyer in relation to the purchase of Lot 202.
On or around 23 August 2017, Mr Kang received the Contract from Meriton in relation to the purchase of Lot 202 by the plaintiffs. The Contract included a certificate pursuant to s 66W of the Conveyancing Act which, amongst other matters, required Mr Kang to certify that he had explained the effect of the Contract to the plaintiffs. Relevant to the issues in these proceedings, the Contract provided to Mr Kang (and subsequently executed by the parties) included the following information: special condition 54 relating to "Vendor Finance" was crossed out; the part of the definition of "Completion Date" at special condition 32.1 that refers to the purchaser acquiring vendor finance was crossed out; and special condition 79 relating to "Stamp Duty - Non Foreign Person" was inserted, providing that Karimbla, as vendor, agrees to reimburse the plaintiffs for the duty amount paid to the Office of State Revenue by making an adjustment at completion provided that certain conditions were complied with.
Mr Kang called Mr Xue and told him that he had received the Contract and asked him and Ms Liu to attend VSTAR's offices on 26 August 2017 so he could provide them with advice.
On 26 August 2017, the plaintiffs attended VSTAR's offices and met with Mr Kang.
According to Mr Kang's evidence, at the beginning of the meeting he gave Mr Xue a copy of the Contract and a written advice he had prepared in Mandarin (a translated version of the advice is in evidence). The advice is five pages long and sets out information relating to the legal procedure for buying Lot 202, the establishment of the Contract and the details relating to the deposit and stamp duty of $34,737. The written advice includes a section headed "Paying the balance and property settlement", which states as follows: "Once the contract has been exchanged, the parties should start to prepare for the balance of the money and settlement of the property. The settlement date is the 14th day after the completion of the property in both actual and legal sense… Money payable at the time of settlement: the property price less deposit already paid, plus initial water charge, council rate, land tax and other miscellaneous fees for the period of the settlement…"
Mr Kang's advice also includes: 1. a section headed "Breach of contract", which states that: both parties must complete the final payment and property handover on the date of settlement; if the purchaser delays payment of the balance for whatever reason then the purchaser has breached the Contract; the vendor is entitled to claim interest from the purchaser on the overdue amount; and if the purchaser's breach of Contract lasts for over 14 days then the vendor can retain the deposit, terminate the Contract, resell the property and demand from the purchaser all losses caused by the purchaser's breach; and 2. a section headed "Summary of fees payable", which refers, amongst other things, to the "Balance" of $785,700 payable at the time of settlement and identifies that the funds should be prepared in advance and that VSTAR will deal with the payment.
Mr Kang gave evidence that at the meeting he spoke to the plaintiffs in Mandarin and went through the basic information in the Contract such as the property information, price and plans for the property. He says that he gave the following advice to the plaintiffs: once the Contracts are exchanged there will be no cooling-off period; the plaintiffs are required to pay a 10% deposit before exchange; after paying the deposit, the next payment will be for stamp duty which falls due 15 months following exchange; the property will be "legally finished" when the vendor registers a strata plan and obtains the occupation certificate; the plaintiffs must settle the property on the 14th day after the vendor gives notice that the property is legally finished; settlement means that the plaintiffs must pay 90% of the purchase price; and if the plaintiffs do not settle on time, they will breach the Contract, owe the vendor funds equivalent to the balance of the purchase price if they are more than 14 days late and the vendor can terminate in which case the deposit will be forfeited (Kang at [30]).
According to Mr Kang, Mr Xue was impatient during the meeting, repeatedly tried to interrupt him and said that he already knew about "these things" as he had purchased a property before.
Mr Xue says that at the meeting with Mr Kang he sought advice in relation to vendor financing. He deposes that they had a conversation in Mandarin in words to the following effect: Xue: Aside from the information which we already knew. [Mr Chen] told us that the vendor would provide vendor finance at the time of settlement. Are the clauses regarding the vendor finance included in the Contract? Kang: No. Xue: Can we add clauses in respect of vendor finance in the Contract? Kang: No, I previously worked in Meriton, they usually do not include clauses of providing vendor finance in contract. Xue: Okay. By the way, if Mr Liu (sic) and I sign the Contract now, can we transfer the Lot 202 to our daughter at the time of settlement? Kang: Yes. We can prepare some papers for that transfer, but we may charge you more fees. Xue: That's alright. My daughter is an Australian citizen, but she does not live in Australia, she lives in America. In the future, when we are preparing relevant documents, should she come back to Australia to sign all the documents? Kang: No, she does not have to come back to Australia to sign all the documents. Look, I usually spend 20 minutes on this kind of matter. I have spent 25 minutes on your matter and do not want to spend more time. Xue: Okay. Thank you for your time.
Mr Kang denies this exchange. He says that at no time during the meeting did either Mr Xue or Ms Liu refer to vendor finance arrangements for the purchase of Lot 202 (Kang at [33]). Mr Kang says that during the meeting there was a conversation to the following effect: Kang: You must ensure that you have sufficient funds for the settlement as the Contract cannot be cancelled for any reasons. Xue: No problem, I will get a loan from the banks. … Xue: Can the property be transferred to my daughter who lives in the United States? Kang: The property can be transferred to your daughter at settlement and that transfer would not attract additional stamp duty.
In cross-examination, Mr Kang gave the following evidence: (T104.27-39) Q. Do you accept that it is possible that you spoke to Mr Xue and Ms Vue (sic) about vendor finance during the conference on the 26th? A. No, that I definitely remembered… Q. I suggest to you that Mr Xue did speak to you about vendor finance? A. No. Q. And he told you that it was important in his decision to purchase Lot 202? A. No. (T105.45-8) Q. I suggest to you that Mr Xue actually discussed vendor finance with you, and he requested that a clause concerning vendor finance be inserted in the contract? A. That's made up.
Mr Xue denies that he said to Mr Kang: "No problem, I will get a loan from the banks" (T47.46). He says that he was not sure whether he could get a loan from the banks because he already had loans of more than one million dollars around August 2017. As noted at [128] below, Mr Xue did not have loans in that amount at that time.
At the end of the meeting, the plaintiffs signed the cover page of the Contract and initialled Mr Kang's advice, and Mr Kang signed the s 66W Certificate. After the meeting, Mr Xue and Ms Lui left and returned with a bank cheque for the balance of the deposit.
Mr Xue says that at the time of exchange he and Ms Liu were not informed by Mr Kang or Mr Chen: of any requirement that an application for vendor finance should be made prior to exchange; that they would not be able to obtain vendor finance at the market rate if they did not apply for it prior to exchange; or that special condition 54 was crossed out (Xue 1 at [29]).
In cross-examination, Mr Kang said that he did not pay much attention to the deletion of special condition 54 as it was his understanding that if a purchaser did not want vendor finance, or did not apply for it to begin with, the Contract would come with "that clause crossed out". He also rejected that it was important for him to raise vendor finance with the plaintiffs as it was not up to him to promote Meriton's product (T104.10-1; T105.9-18). However, Mr Xue was aware that the Contract did not provide for vendor finance when he executed it (T47.32-5).
Between 27 and 30 August 2017, Mr Kang arranged for the executed Contract and bank cheque to be delivered to Meriton, and received a copy of the Contract executed by Karimbla.
On 30 August 2017, Mr Kang sent an email to Mr Xue that attached a letter of that date (in Mandarin) and a copy of the Contract executed by Karimbla. Mr Kang's letter records that the plaintiffs paid the deposit, advises that stamp duty in the amount of $34,795 must be paid before 28 November 2018 and also states: "Financing It is crucial to get the funds ready. You will be breaching the contract if you don't have sufficient funds, which will result in forfeit of your deposit and other legal ramification (sic). Please make sure you start to prepare the funds as soon as possible. Please contact the agent to inquire about fund remittance and other financing issues. … Settlement and working out final payment Settlement and working out final payment occur on the 14th day after the construction is completed. … If you are not ready for the settlement and final payment, then the purchaser will breach the contract. There are two consequences in the event of contract breach: - We have to pay interest on the outstanding payment and other losses suffered by the vendor, such as vendor's legal cost (sic); - If you have delayed the settlement by more than 14 days, the vendor has a right to terminate the contract, retain the deposit, re-sell the property and go after the purchaser for other additional losses suffered by the vendor."

October 2018: Vendor finance raised

On 10 October 2018, Mr Kang sent an email to Mr Xue in relation to the payment of stamp duty for the purchase of Lot 202. Sometime thereafter, Mr Xue attended VSTAR's office and provided a cheque for the stamp duty payment.
Mr Kang says that, sometime in October 2018, he had a telephone discussion with Mr Xue (in Mandarin) in words to the following effect: Xue: Please ask Meriton to change the contract into my daughter's name. Please also ask Meriton to provide vendor finance to pay the balance of the purchase price. My lender has valued the property at less than the purchase price and so I would have to contribute more of my own funds to settlement if I proceed with that lender. Mr Chen promised me that vendor finance would be provided if required. Kang: I will contact Meriton and make those requests.
Mr Kang gives evidence that, after his discussion with Mr Xue, he called Mr Chen and informed him that the plaintiffs wished to apply for vendor finance in relation to the Contract and asked whether Mr Chen could arrange this to which Mr Chen replied that he would let him know if vendor finance would be offered.
Mr Kang also gives evidence (Kang at [63]; T107.41-9) that around October 2018, Mr Xue told him that he had chosen not to opt for vendor finance prior to execution of the Contract and they had a conversation in words to the following effect: Xue: I did not ask for vendor finance to be included in the Contract as I had to choose between two offers by Meriton. Meriton would agree to either a refund of stamp duty at settlement or a provision for vendor finance. I chose to receive a refund of stamp duty. Mr Chen promised that vendor finance would be provided if I could not obtain other finance. … Kang: You cannot allege breach of contract as there was no requirement in the contract for Karimbla to provide vendor finance to you. Did you receive anything in writing from Karimbla or Meriton in relation to vendor finance? Xue: No, Mr Chen only promised vendor finance during our conversations and nothing was put in writing. Kang: You could allege misleading and deceptive conduct by Meriton, if Mr Chen promised vendor finance at a 4% interest rate, in order to get you to sign the Contract, and now will not provide that finance. However, it will be difficult for you to prove that the promises were made without anything in writing. Why didn't you request vendor finance when you entered into the contract? Xue: When I entered into the contract, I was confident that I would obtain bank finance. The interest rate offered for vendor finance by Meriton and Karimbla was too high compared to normal banks and the duration of the vendor finance was only for a few years which was too short. I was not concerned regarding finance as Mr Chen had promised me that vendor finance would be available as a "back up". Meriton will agree to give me vendor finance at a 8% interest rate and that is too high. Mr Chen says he now cannot arrange vendor finance at a 4% interest rate. Please ask for vendor finance at a 4% interest rate, or for the contract to be rescinded, with the deposit refunded. Kang: We will ask the vendor about your requests and will wait for a response. However, I do not think they will agree to refund the deposit as the contract has been signed and did not provide for vendor finance.
Mr Xue does not recall telling Mr Kang the valuation of Lot 202 in 2018. He says that in 2019 he had a conversation with Mr Kang during which he told Mr Kang that his lender, the Commonwealth Bank of Australia (CBA), had valued Lot 202 at about $800,000 and he would have to contribute more of his own funds to settlement if he proceeded with the lender. He deposes that he requested Mr Kang to ask Meriton to provide vendor finance to pay the balance of the purchase price as "Daniel promised me that vendor finance would be provided if required".
On 15 October 2018, Mr Kang sent an email to Ms McCully in which he conveyed Mr Xue's request to substitute the plaintiffs' daughter as purchaser of Lot 202. There was a subsequent exchange of correspondence between Ms McCully and Mr Kang in relation to that request.
On 30 October 2018, Ms McCully sent an email to Mr Kang advising that Meriton was not agreeable to the plaintiffs' request for a simultaneous exchange and recission in relation to their daughter.
Later that day, Mr Kang sent an email to Mr Xue advising as follows: "We have just received a reply from the developer in regard to re-signing of the contract, name change and the term of adding vendor's 4% loan. Unfortunately, the developer does not agree to making changes to the contract. However, we can arrange to have the property transferred to your daughter directly at the time of settlement."
Mr Kang says that the information included in his 30 October 2018 email about the refusal to add the vendor's 4% loan was based on a response he received from Mr Chen (T111.35). He says that he spoke to Mr Chen and asked him if he could arrange vendor finance for the plaintiffs and recalls that Meriton did not agree to provide it (Kang at [45]-[46]).
Mr Xue does not recall instructing Mr Kang in 2018 to ask Meriton to provide vendor finance. He says that he was waiting for Mr Kang and Mr Chen's advice regarding the settlement date and that at this time he was considering obtaining a bank loan for the settlement of Lot 202 (Xue 2 at [14(b)]).

February 2019: Further request for vendor finance

In February 2019, Mr Xue called Mr Chen, enquired about the settlement date and raised the topic of vendor finance with him. It is common ground that Mr Chen told Mr Xue that settlement was likely to occur in July 2019.
In relation to vendor finance, Mr Xue says that he asked Mr Chen whether it was "the right time to prepare papers for the loan" and Mr Chen said he would call Mr Xue to "prepare the loan once Lot 202 is ready to settle" (Xue 1 at [35]).
Mr Chen gives evidence that, after Mr Xue was told about the likely settlement date, Mr Xue said that he would like to arrange finance with Meriton to which Mr Chen responded as follows (Chen 1 at [30]): "As I explained during our meeting, the finance is best arranged prior to exchange but I can still try and arrange finance. I warned you, the rates will be at "rescue" rates which are higher than at the time of exchange. I will need to check what the current rate for rescue packages are."
On 18 February 2019, Mr Kang arranged for an email to be sent to Mr Xue advising that settlement might occur in March 2019. The email states that Mr Xue needs to prepare funding from his lender in relation to the balance of the purchase price (being $785,700) and asks Mr Xue to urgently email VSTAR with Mr Xue's broker or banker's contact details and to begin making enquiries about financing.
According to Mr Xue's evidence, in 2019, he engaged Tina Wang of Lets Goal Group as a broker to prepare a loan for the settlement of Lot 202. Mr Xue says that Ms Wang told him in March or April 2019 that Lot 202 was valued at $800,000 and CBA might be able to help with a loan for $630,000.
On 11 March 2019, a paralegal at VSTAR sent an email to Ms Wang enclosing a copy of the Contract signed by Karimbla and, the following day, an email enclosing a direction dated 18 February 2019, addressed to Karimbla, to transfer Lot 202 to the plaintiffs' daughter.
Sometime in April 2019, Mr Chen called Mr Xue about settlement of Lot 202 and the balance of the purchase price. Vendor finance was raised in this conversation although there are differing versions as to what was discussed.
Mr Xue says they had a conversation in the following terms (Xue 1 at [40]): Chen: Hi Mr Xue. I'm calling to remind you that the Lot 202 is going to settle. It's time to prepare the remaining money of $785,700.00 for the settlement. Xue: Okay. You said that the vendor would provide a loan at market rate for the settlement. Can we start to prepare the loan? Chen: We can provide a loan to you. The interest rate of the loan is 8% per annum. Xue: It is unreasonable! Ms Liu and I will not accept this interest rate. According to the home loan interest rate in banks, a reasonable interest rate or market rate is around 3%-4% per annum. Chen: I totally understand you. However, you did not apply for the loan before executing the Contract. In this circumstance, your application for a loan is categorised as a rescue loan. The interest rate of rescue loan is about 8% per annum. Xue: It upsets me a lot. You did not tell us that Ms Liu and I should apply for the vendor finance before the execution of the Contract, neither did Ken. Chen: Please do not be angry. I'll try my best to negotiate for you to reduce the interest rate. Once I have any progress, I will let you know. Xue: Okay, I look forwards to your reply.
Mr Chen says that their conversation was in words to the following effect (Chen 1 at [31]): Chen: Hi Cong. This is Daniel in relation to the settlement of Lot 202. Have you arranged for finance for the balance at settlement? Xue: No - we have had problems with the bank valuation as the property value has declined, can you arrange Meriton finance at market rates? Chen: As I explained the last time we spoke; I can certainly try and arrange but it will not be market rates but a "rescue package" at a rate of 8%. Xue: No, I do not want to pay a higher rate that is unreasonable when the market rate is 3%-4% currently. I cannot afford those rates. The value of the unit has dropped a lot in 2019 and I no longer want to buy this unit.
On 9 May 2019, Meriton sent a notice to VSTAR advising that the strata plan for the Development had been registered on 7 May 2019.
Around this time, Mr Xue instructed Mr Kang to negotiate with Meriton about vendor finance. Mr Xue told Mr Kang that Meriton had agreed to provide finance for the settlement but there was a dispute in relation to the interest rate and, if Mr Xue could not get a deal, he and Ms Lui would like to terminate the Contract and get the refund of the deposit. Mr Kang says that he told Mr Xue that he would try to negotiate and advised Mr Xue that he did not think that Meriton would agree to refund the deposit as the Contract had been signed and did not provide for vendor finance.
Mr Kang spoke to Mr Chen and asked for vendor finance for the plaintiffs at a 4% interest rate or for the Contract to be rescinded with the deposit refunded to which Mr Chen responded that MPS did not agree to those terms.
Mr Xue says that he spoke to Mr Chen in June 2019 who told him that the best interest rate that Meriton could provide was 6% and that he told Mr Chen that this was not acceptable and the interest rate should be 3-4%.
On 24 June 2019, Mr Kang sent an email to Ms McCully advising that the purchasers requested that Meriton approve vendor financing of 80% of the property price at an interest rate of 3-4% per annum or that Meriton rescind the Contract and refund the 10% deposit on the basis that, in August 2017, prior to the signing of the Contract, the purchasers had received assurance from the vendor that vendor finance would be provided at a market interest rate. In the email, Mr Kang reserves all rights regarding misleading or deceptive conduct.
On 25 June 2019, Ms McCully sent an email to Mr Kang denying any misleading or deceptive conduct. Ms McCully's email states that Meriton could not be held responsible for the purchasers' request for finance nearly two years after exchange and also notes the following: the Contract deleted special condition 54; vendor finance had not been requested; the purchaser was required to submit an application for finance approval; and, as finance was not requested or agreed at the time of exchange, vendor finance would only be offered at the rescue package rate.
That day, Mr Kang told Mr Xue that Meriton had refused his request for vendor finance at 3-4% per annum.
On 28 June 2019, Mr Kang sent an email to Mr Xue attaching a copy of his letter dated 30 August 2017 and the Contract. He also sent a tax invoice from VSTAR requesting payment of the balance of the professional fees; VSTAR's fees were paid by Mr Xue that day.
On 29 June 2019, Mr Kang sent another email to Ms McCully conveying further instructions from the plaintiffs. The email refers to Mr Kang's instructions from the plaintiffs as follows: 1. the plaintiffs request Meriton to refund half of the deposit and terminate the Contract as a compromise to resolve the matter; 2. the plaintiffs were aware at the time the Contract was signed that vendor finance was not requested and that the price of the property was almost 10% more expensive than similar properties in the vicinity; 3. Meriton's sales agent promised that the property would rise in value, the plaintiffs would get a full valuation from lenders which would enable them to obtain financing sufficient to pay for the property and the purchaser could apply for vendor finance at an interest rate that would be comparable to most lenders around the time of settlement (not at the rescue package rate) even if the purchaser could not get a full valuation from the lenders; 4. the plaintiffs believe the rescue package rate to be extortionary and an amount they cannot afford to pay; 5. the plaintiffs only decided to proceed with the purchase of Lot 202 due to the reassurances of Meriton's sales agent that the plaintiffs could obtain full valuations and that Meriton would provide "back-up vendor finance"; 6. Meriton maintains that the actions and words of the sales agent were clearly misleading or deceptive with a view to inducing the plaintiffs into purchasing Lot 202 and the plaintiffs are now suffering greatly financially; and 7. the plaintiffs had previously been swindled by a developer, Metricon, in a separate but similar situation and if Meriton forfeited the Contract and 10% deposit, the plaintiffs would have no other recourse than going to the media to find other purchasers in similar situations and commencing a class action against Meriton and its associated subsidiaries.
On 3 July 2019, Ms McCully sent an email to Mr Kang enclosing a notice to complete that required the plaintiffs to complete the Contract by 3.00pm on Friday, 19 July 2019 and stated that Karimbla would be entitled to terminate the Contract and forfeit the deposit if the plaintiffs did not complete.
On 3 July 2019, Mr Kang sent an email to Ms McCully that acknowledged receipt of the notice to complete and pressed the plaintiffs' request for vendor finance, as sent on 29 June 2019. The email states that the plaintiffs are prepared to go to the media to find funding and similar buyers for a class action.
On 15 July 2019, Joseph Callaghan, Meriton's Group General Counsel, sent an email to Mr Kang advising that the notice to complete remained and rejecting that Meriton had done anything to give rise to a cause of action.
Around this time, the plaintiffs terminated Mr Kang's retainer and instructed Juris Cor Legal to act on their behalf.
On 16 July 2019, Juris Cor Legal sent a letter to Karimbla and Ms McCully stating that: in August 2017, Meriton's sales agent represented to the plaintiffs that they were able to obtain a vendor financing facility with Meriton to purchase Lot 202 "with the interest rate being set as that of the day of the making of the application"; Meriton's sales agent advised that the application could be made any time before settlement; at no time did the sales agent advise the plaintiffs that they would be liable for a higher fixed interest rate if they applied for vendor financing after exchange; the plaintiffs relied on the representations; the plaintiffs asked for vendor financing between April and June 2019 to which they were advised that they were only eligible for the rescue package rate of 8%; the subsequent offer of 6% was too high noting that "on the website of Meriton Property Finance then, the fixed interest rate stated was as low as 3%"; the plaintiffs offered a compromise, namely, that Meriton grant and approve a vendor financing facility to the plaintiffs at a 3.5% fixed interest rate and in return the plaintiffs will complete the purchase of Lot 202.
On 9 August 2019, Mr Callaghan sent a response to Juris Co Legal that denied that a representation was made that the plaintiffs "'(would) be able to obtain' vendor finance after exchange of the Contract without consideration of a completed vendor finance application." Mr Callaghan repeated the offer of a 6% fixed interest rate subject to approval of a completed vendor finance application and advised that the notice to complete was not withdrawn and the vendor required completion without delay.
That offer was not accepted.
On 4 November 2019, Ms McCully sent an email to Juris Cor Legal enclosing a notice of termination of the Contract (also dated 4 November 2019) which gave notice that Karimbla terminated the Contract on the basis that the plaintiffs had failed to complete by 19 July 2019 in accordance with the notice to complete and that the deposit was forfeited to Karimbla.
On or around 14 April 2020, Lot 202 was sold by Karimbla to another purchaser for $855,000.
On 23 September 2020, the plaintiffs commenced these proceedings.

Issues

The plaintiffs plead that they entered into the Contract in reliance on the four alleged Vendor Finance Representations made by Mr Chen, which they assert were misleading or deceptive in contravention of s 18 of the ACL or, alternatively, s 12DA of the ASIC Act.
The plaintiffs do not press the representation pleaded at [9(a)(ii)] of the FASOC. They accept, correctly in my view, that such a representation was not misleading or deceptive at the time it was made as Meriton was providing vendor finance to purchasers of apartments at the Development and also at other developments (T115.21-31).
As to the other pleaded representations at [9(a)(i)], [9(a)(iii)] and [9(a)(iv)], the plaintiffs submit that they should be "read together", with the gravamen of the Vendor Finance Representations being that Meriton represented to the plaintiffs in August 2017 that vendor finance would definitely be provided to the plaintiffs at the "market interest rate" at settlement if they could not obtain finance elsewhere. This was propounded by the plaintiffs at the hearing in the following ways: (T5.23-30) "… vendor finance would be offered by Meriton… around the time of settlement and if that option is taken up, if the interest rate on the vendor finance would be offered at a market interest rate… [i]t simply means the interest rate offered by the banks…" (T119.40-3) "… vendor finance will definitely be provided to the plaintiffs at market interest rate at settlement if they can't obtain finance elsewhere…" (T124.41-2) "… [market interest rate] means the interest rate offered by the Australian banks around the time that settlement was to come due."
The hearing proceeded by reference to this formulation despite the fact that it reflected a departure from the pleading at FASOC, [9(a)]. I have also approached my consideration of the plaintiffs' claims based on this formulation of the Vendor Finance Representations.
Section 18(1) of the ACL provides: A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
Section 12DA(1) of the ASIC Act provides: A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive.
Section 4 of the ACL and s 12BB of the ASIC Act are in similar terms: both provisions relate to misleading representations concerning future matters and relevantly provide that a representation with respect to a future matter will be taken to be misleading if the person making the representation does not have reasonable grounds for making it.
There was no dispute that the Vendor Finance Representations, if made, were made within the course of trade or commerce and in relation to financial services within the meaning of the ASIC Act as the representations relate to the provision of credit or a form of financial accommodation.
The key issues for determination are: 1. whether the Vendor Finance Representations were made or conveyed by Mr Chen's conduct; and 2. whether the Vendor Finance Representations were misleading or deceptive, or likely to mislead or deceive the plaintiffs in the relevant sense.
These are essentially questions of fact.
If these matters are established, the next issues for determination are whether the plaintiffs relied on the Vendor Finance Representations and whether doing so caused them loss.
As for relief, the plaintiffs do not press their claim for damages and only seek the return of the deposit, interest and costs (T117.11). There was no dispute that the plaintiffs would be entitled to this relief if the Court found that Meriton misled Mr Xue such as to cause him to execute the Contract (T116.48-50).

Were the Vendor Finance Representations made?

The first issue is whether the plaintiffs have established, as a matter of fact, that Mr Chen made the Vendor Finance Representations.
The plaintiffs accept that the outcome of this issue turns on the discussions between Mr Xue and Mr Chen and whether Mr Xue's version of what was discussed is to be preferred over that of Mr Chen. This depends, in part, on the Court's assessment of the evidence of Mr Xue, Mr Chen and Mr Kang which was informed by my notes taken at the hearing and the legal principles set out below.
In O'Connor v O'Connor [2021] NSWSC 1056 at [108]-[109], Hammerschlag J (as his Honour then was) stated: "Where a party seeks to rely upon spoken words as a foundation for a cause of action the conversation must be proved to the reasonable satisfaction of the Court. This means that the Court must feel an actual persuasion of its occurrence or its existence. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319. The sensation of feeling an actual persuasion, after a contest, that an event has happened or that something exists is one which is well known and recognised by experienced trial judges for what it is."
In Briginshaw v Briginshaw (1938) 60 CLR 336 at 361; [1938] HCA 34, Dixon J emphasised that where the law requires proof of any fact, the Court must feel an actual persuasion of its occurrence or existence before it can be found, and "[i]t cannot be found as a result of mere mechanical comparison of probabilities independently of any belief in its reality."
In Watson v Foxman (1995) 49 NSWLR 315 at 318-9, McLelland CJ in Eq made some oft-cited observations regarding the fallibility of human memory in the context of a claim of misleading or deceptive conduct where the conduct was the speaking of words in a conversation: "… In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions of self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience."
The plaintiffs submit that the Court should find that the Vendor Finance Representations were made for the following reasons: the content of Xue 1 at [11] regarding the plaintiffs' meeting with Mr Chen on 14 August 2017 should be accepted by the Court as correct and true; Mr Chen's accounts of his discussions with the plaintiffs were inherently improbable and inconsistent with the contents of the Meriton website at the time; Mr Chen and Mr Kang were unsatisfactory witnesses; and, given the Vendor Finance Representations concerned matters that would occur in the future, they are presumed to be misleading as Meriton did not adduce any evidence to show that there were reasonable grounds for making them in August 2011.
I do not accept these submissions. Having carefully considered all of the evidence, I do not "feel an actual persuasion" that Mr Chen made the Vendor Finance Representations in the terms asserted by the plaintiffs and I have accepted Mr Chen's accounts of their discussions. This is for the following reasons.
I have significant reservations about Mr Xue's evidence. I have concluded that he is not a reliable witness and that aspects of his evidence lacked credibility.
While the Court is not bound to accept or reject the evidence of a witness in its entirety, my finding that Mr Xue is not a reliable witness is significant in this case given that the disputed parts of his evidence of his conversations with Mr Chen, which comprise the Vendor Finance Representations, are not corroborated by any other witness or contemporaneous documents. It is also relevant to my assessment of Mr Xue that he seeks for the Court to accept his evidence and his contention that Mr Chen made statements to him that conveyed, in essence, an unqualified guarantee that Meriton would provide vendor finance to the plaintiffs at the time of settlement at an unknown interest rate pegged to the average of the home loan interest rates offered by commercial banks. For reasons to which I will come, I consider that to be inherently improbable.
I accept that aspects of Mr Xue's evidence of his discussions with Mr Chen are consistent with Mr Chen's evidence. This is apparent from the outline of their evidence (at [20]-[99] above) and the evidence given in cross-examination (T37.19-38.41; T40.32-6). However, the plaintiffs' claim that the Court should find that the Vendor Finance Representations were made by Mr Chen relies on the Court's acceptance of all of Mr Xue's evidence at [9] and [11] of Xue 1, as well as his evidence in cross-examination (as set out at [27] and [38] above).
A difficulty with the plaintiffs' reliance on that evidence is that, during cross-examination, Mr Xue gave evidence that he did not prepare Xue 1 (it was prepared by his solicitor) and that "maybe… the translation is not 100% accurate" (T31.40; T32.10; T33.12-3). The fact that Mr Xue provided an original statement in Chinese to his solicitor (T39.5-11) does not, in my view, add weight to the contents of that affidavit in the context of that matter and the following matters.
In cross-examination, Mr Xue resiled from aspects of his evidence in Xue 1, including about what was said by Mr Chen at the 7 August meeting. Mr Xue stated that Mr Chen did not say all of the words attributed to him by Mr Xue in that affidavit (T32.27-34). Mr Xue's explanations that he "didn't think [he] wrote this" and that "maybe I didn't pay attention to the details or to those words" but that the "core issues" were correct and true (T32.42; T33.10-21) were not convincing in the context of a claim that relies on the veracity of his evidence of what was discussed at those meetings with Mr Chen and where Mr Xue's evidence in cross-examination of the "core issue" about what Mr Chen said to him (T29.6-41; T30.40-31.18) was materially different to his version of the conversations in Xue 1 at [11]-[12] and his pleaded case.
The reliability and credibility of Mr Xue's evidence was further undermined when Mr Xue gave evidence that: he did not receive the 30 August 2017 email from VSTAR (T48.20; T49.10-50.24) despite him deposing that he received an email from VSTAR dated 30 August 2017 which was exhibited to his affidavit and in respect of which his solicitors had obtained a translation (Xue 1 at [32]); and he denied receipt of any written advice about the Contract from VSTAR (T43.5-13) notwithstanding that he had initialled a five page letter of advice, written in Chinese, from Mr Kang dated 28 August 2017 (T43.15-45; CB408-12/493-8) and there were records in evidence of other written advices and emails sent to him at the email address he used (see, for example, CB421-2/503-4).
As to Xue 2, Mr Xue gave evidence that when he met with his solicitor he "only listened to the main part or the core part" (which was not identified) and he "didn't listen to all the details" (T53.26-30). Mr Xue was also unsure if he had read the documents in Mr Kang's exhibit even though he deposed that he had (T53.37-9; Xue 2 at [14(c)]).
Consistent with that theme, during cross-examination, Mr Xue gave the following evidence (T31.14-8): Q. Is that everything you can remember about that conversation on 14 August? A. Regarding the details, I don't think it's a big deal, so I didn't pay attention to the details. What I really focussed on were like the completion date, the loans, the interest rate, something like that.
Despite his apparent focus on the interest rate at that meeting, Mr Xue gave evidence that he "did not hear" Mr Chen express "any exact interest rate" for Meriton's vendor finance (Xue 2 at [21(c)]).
Mr Xue gave evidence in cross-examination that he could not say whether his statement in Xue 2 that he "had loans of more than $1,000,000 around August 2017" was right or not and that he "didn't think about it carefully" when he included that matter in his affidavit (T25.44-26.17). Mr Xue's explanations that he considered the information "not relevant to the case" and that he did not want to release personal information (T25.7-12) was unconvincing given that Mr Xue had proffered the evidence to explain why he did not say the words attributed to him by Mr Kang (namely, that Mr Xue was not concerned about not being able to obtain vendor finance as he would "get a loan from the banks") (Kang at [33]; Xue 2 at [11(c)]). Further, Mr Xue's evidence that he had loans of $1,000,000 at that time was shown to be false as the documents he produced indicates that the amount outstanding to Westpac in August 2017 was just over $300,000 and the NAB facility was not opened until 4 December 2017 (Exhibit H).
Mr Xue's evidence that he did not mention anything to Mr Kang in 2018 about vendor finance from Meriton was also contradicted by the email sent by Mr Kang to Mr Xue on 30 October 2018 that referred to receiving a reply from the "developer" in regard to the term of adding "vendor's 4% loan" which the developer did not agree to do (CB515/516) and his oral evidence that Mr Kang called him (T52.49). While I accept that memories fade, Mr Xue's evidence in cross-examination that the email was "not a real document" and was "fabricated" (T52.40) is not credible given it was sent to an email address which Mr Xue accepted he used and which the plaintiffs' Counsel candidly accepted in closing submissions (T123.29-35).
The overall impression created by the above is that Mr Xue did not take care in preparing his affidavit evidence. This leads me to have serious doubts that the contents of Xue 1 were fully understood and approved by Mr Xue when it was executed, and that it accurately reflects his recollection of events, including the key aspects of the disputed conversations with Mr Chen. More generally, Mr Xue's evidence paints a picture of a person who does not listen to aspects of conversations that he might not consider to be important to him and creates the impression that he was prepared to make statements which he believed would assist his case.
Mr Xue's evidence and the plaintiffs' claim that the Vendor Finance Representations were made on 7 and 14 August in the terms asserted also seems improbable.
In that context, Mr Xue's evidence that Mr Chen said to him on 7 August that Meriton "definitely will provide me a loan" (T35.16-20) without any reference to an interest rate, terms or other conditions, when it was supposedly said within moments of them meeting (T33.32-4) and was not in line with the requirements for vendor finance as set out in the application documents (CB537-46), and when Mr Xue knew an application process was involved is implausible, in my view, and I do not accept it. I reject Mr Xue's evidence and accept Mr Chen's evidence that vendor finance was not discussed on 7 August. Mr Chen's evidence that vendor finance was only raised in the later discussion on 14 August is more consistent with the logic of events, as plaintiffs' counsel appeared to accept during closing submissions (T123.44-124.33).
Further, Mr Xue's evidence that on 14 August Mr Chen did not say anything about the applicable interest rate on exchanged contracts or a "rescue package", and that Mr Chen made an unqualified promise that Meriton would provide a loan in two years' time at an unknown "market interest rate" when Mr Chen had received documents from Meriton setting out the interest rates on exchanged and unexchanged contracts and the process involved for purchasers to apply for vendor finance, is difficult to accept. Ms Liu's absence as a witness in this case was also notable. She verified the Amended Statement of Claim filed on 18 August 2022, swore an affidavit on 16 August 2022 that was included in the Court Book and was required for cross-examination. No explanation was provided as to why the plaintiffs chose not to read her affidavit or call her to give evidence. As a party to these proceedings who was present on the occasions of the disputed conversations between the plaintiffs and Mr Chen in August 2017, it is expected that she would have been able to explain the doubts raised by Mr Xue's evidence or corroborate Mr Xue's account of what was discussed on 14 August 2017. I accept Meriton's submission that the Court can draw an inference that Ms Liu's evidence would not have assisted the plaintiffs' case: Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8; National Australia Bank Limited v Dionys as Trustee for the Angel Family Trust [2016] NSWCA 242 at [138].
I am also not persuaded that the matters raised by plaintiffs' Counsel should lead to a finding that I do not accept Mr Chen's evidence and prefer Mr Xue's.
Mr Chen impressed me as someone who sought to give evidence accurately and to the best of his recollection. He conceded appropriately when he could not recall things (see, for example, at T62.43 and T71.3) and his oral evidence was generally consistent with his affidavit evidence and the documentary evidence adduced in the case. I also consider that Mr Chen's accounts of the discussions were inherently probable; they were consistent with the contents of the contemporaneous documents available to Mr Chen at the time. Nor were his accounts at odds with the Meriton website at the time.
In my view, the reliability of Mr Chen's evidence was made apparent when he gave evidence about the "rescue package" that was available to a buyer if they decided not to apply for vendor finance prior to exchange and his statement that the package, including the "rescue rates", were set out in the Daily Sheet (T66.1-10). Mr Chen's recall was shown to be correct when the Daily Sheet was produced in response to a call at the hearing. It confirmed that, at the time of Mr Chen's 14 August discussion with Mr Xue, the applicable vendor finance interest rate for unexchanged contracts was 6% for two years and the "rescue package" rate on exchanged contracts was higher (at the time, 8% for two years). Given the contents of the Daily Sheet, I find Mr Chen's evidence that he told Mr Xue that the vendor interest rate at that time was 6% and that there was a rescue rate that would be higher if he still needed finance before settlement inherently probable. I also find that Mr Chen had reasonable grounds for making such statements.
I do not accept the plaintiffs' submissions that Mr Chen was an unsatisfactory witness because he was evasive when answering questions about the Meriton website and because the information regarding vendor finance contained on Meriton's website as at August 2017 was inconsistent with what Mr Chen deposes to in Chen 1 at [19]. Mr Chen accepted that the interest rates for vendor finance for unexchanged contracts and the word "exchange" did not appear on the four pages of the website extract annexed to Ms McMillan's affidavit and that it did not refer to "vendor finance at a rescue rate after exchange" (T68.15-69.1). More relevantly, the website refers to a 6% fixed interest rate with up to 80% lend for two years for New South Wales developments and a requirement for payment of a refundable application fee of $1,500, consistent with the matters referred to by Mr Chen regarding his discussion with Mr Xue on 14 August 2017. In my view, the statement on the website that "[o]nce you have applied and your loan has been approved, the interest rate is fixed and the approval is valid until you are required to settle" is more suggestive of a rate that has been locked in for some time, such as on exchange, rather than just prior to settlement.
Mr Chen had to be asked by the Court to listen to the question asked (T69.46-7) but he acknowledged that what he said in his affidavit was different to the website extract and answered in a clear and direct manner thereafter (T70.1-4).
I reject the plaintiffs' submission that it is probable that Mr Chen obtained his knowledge as to the details of the vendor finance facility offer by Meriton Property Finance in August 2017 from the Meriton website. The evidence satisfies me that Mr Chen's knowledge about that matter was derived from the information contained in the 11 August Price List Document (at [30] above) and the Daily Sheet, the contents of which are consistent with Mr Chen's evidence about what he told Mr Xue regarding the applicable interests rates for vendor finance and the availability of, and process for applying for, vendor finance.
As Mr Chen said in cross-examination, it was unnecessary for him to refer Mr Xue to the Meriton website in circumstances where Mr Xue was not interested in obtaining vendor finance from Meriton (T72.45-73.19). Mr Xue had told Mr Chen that the 6% rate for vendor finance was too high, that he did not consider he would have any problems getting a bank loan and that he wanted to proceed on that basis. In any event, the fact that Mr Chen did not refer Mr Xue to the website does not, to my mind, undermine the credibility of his evidence in circumstances where, as I have said, its contents were consistent with the documents created prior to and after exchange.
Mr Chen did not refer in his affidavit evidence to discussing the offer of the stamp duty rebate offer with Mr Xue. In cross-examination, Mr Chen also said that he did not recall having any such discussion (T71.5-72.4; T84.9). However, I am not persuaded by the plaintiffs' submission that Mr Chen's lack of recall is significant and renders Mr Chen's account of his conversation with Mr Xue concerning vendor finance inherently improbable. Memories can fade and the issues in this case relate to the request for vendor finance.
In any event, based on the totality of the evidence, I consider it is more likely that the offer of the stamp duty rebate was referred to by Mr Chen during his discussion with Mr Xue on 17 August 2017 and that Mr Xue accepted that offer instead of the offer of vendor finance, and so find. This finding is supported by: Mr Chen's evidence in cross-examination that if there was an offer available, he would mention it to a buyer (T70.36-45; T71.46); the terms of the offer contained in the 11 August Price List Document; the contents of the Sales Advice which was completed by Mr Chen shortly after his discussions with Mr Xue; the Contract which provided for a stamp duty rebate but no vendor finance; and Mr Kang's evidence, which I accept, that Mr Xue did not mention to him that he wanted vendor finance from MPS until October 2018 and he told Mr Kang that he had accepted the stamp duty rebate offer at the time (as referred to at [65] above).
As to the errors in the Contract price and deposit amount in the Sales Advice, I do not consider that a $2,000 disparity reflects poorly on Mr Chen's credit, the reliability of his evidence or is otherwise significant, particularly where the error was not repeated in the Contract.
I also consider that it is inherently improbable that Mr Chen would have made the Vendor Finance Representations in the terms asserted given the unqualified nature of the offer of vendor finance of about $700,000 at unknown rates. This is primarily for the reasons set out at [132]-[133] above and the fact that Mr Chen was aware of MPS' offers, applicable interest rates and application process at the time. As Meriton's Senior Counsel submitted, Mr Xue's account of what Mr Chen said is also unlikely in the context where Meriton Property Finance holds an Australian Credit Licence (CB538) and is subject to the regulatory obligations attaching to the provision of consumer credit (T135.3-6).
As to Mr Kang, I do not accept the plaintiffs' submission that the Court should conclude that he was an unsatisfactory witness and that I should prefer Mr Xue's evidence where there is a conflict. Mr Kang did not come across as seeking to present his evidence to suit an agenda or as embellishing his testimony. His evidence was generally reliable, consistent with the objective facts and contemporaneous documents and corroborative of Mr Chen's, and I accept it.
The plaintiffs' submissions focused on Mr Kang's lack of file notes of his conversations with Mr Xue. I do not consider that the absence of file notes reflects badly on Mr Kang's credit or the reliability of his evidence in this case. Mr Kang made appropriate concessions that he should have kept better notes and that he had refreshed his memory about the 26 August conference with the plaintiffs based on his written advice (T109.30; T102.33).
Mr Kang was clear and firm in his recollection that vendor finance was not discussed at the 26 August meeting with the plaintiffs. His explanation that it was not his role to promote Meriton's financial products was, in my view, tenable (T104.14-21; T105.35). He was also clear in his recollection that Mr Xue did not raise the subject of vendor finance with him until October 2018 (T107.46). Mr Kang's evidence about that matter was supported by the contents of his 30 October 2018 email to Mr Xue (referred to at [69] above). I reject the plaintiffs' submission that the reference in that email to the developer not adding the term about the 4% loan was possible confirmation of enquiries Mr Xue had made at the time when the Contract was exchanged (T127.29-128.35). Even Mr Xue's evidence (at [71] above) does not suggest that he asked Mr Kang to make those enquiries at that time to include a term for a 4% loan.
Thus, I accept Mr Kang's evidence that Mr Xue did not raise vendor finance with him in August 2017 and only raised it with him in around October 2018.
I also accept Mr Chen and Mr Kang's evidence that Mr Xue told them that he was not interested in seeking vendor finance from Meriton prior to or at the time of exchange because he was confident of obtaining finance from a bank at a lower rate.
For these reasons, I do not accept Mr Xue's accounts of his conversations with Mr Chen on 7 and 14 August 2017 except to the extent that they are corroborated by other evidence. I find that Mr Chen told Mr Xue and Ms Liu that the interest rate for vendor finance was 6% for a two year interest only loan in August 2017, that if they did not sign up for vendor finance before exchange and still needed finance before settlement an application could be made but the interest rate would be higher than 6% as it was at the "rescue" rate, and that Mr Xue indicated to Mr Chen that he was not interested as 6% was too high and he expected to be able to get a loan from a bank. I also find that Mr Chen did not represent to Mr Xue and Ms Liu that Meriton would definitely offer or provide vendor finance to the plaintiffs at settlement at a market interest rate.
It follows from this that I am not satisfied that Mr Chen made the Vendor Finance Representations in the formulation for which the plaintiffs contend or as pleaded at FASOC [9(a)(i)], [9(a)(iii)], or [9(a)(iv)]. Accordingly, the plaintiffs' claim under s 18 of the ACL and s 12DA of the ASIC Act fails.

Further observations

I should record that even if I had been satisfied that Mr Chen had represented to Mr Xue that vendor finance would be offered at settlement at a market interest rate, I would have concluded that the plaintiffs' claim could not succeed. This is for the following reasons.
First, I do not consider that the representation that vendor finance will be offered to the plaintiffs at the "market interest rate" at settlement conveys the meaning that the rate offered by MPS would be at, or on the plaintiffs' case, below the home loan interest rate offered by the Australian banks at around the time of settlement. This is in circumstances where MPS is not a retail bank in the business of providing home loans but a provider of consumer credit on a short term basis for periods of two years.
Second, the plaintiffs' contention that the representation conveyed was that the vendor finance interest rate would be the same or less than the highest rates offered by the retail banks is not supported by Mr Xue's own affidavit evidence, where he says that Mr Chen told him that the "interest rate may be a little bit higher than the home loan interest rates in Australian banks" and that he would like to get a loan from the vendor "if the interest rate will be close to the home loan interest rate in Australian banks". It is also inconsistent with Mr Xue's evidence in cross-examination where he accepted that the Meriton rate was not the same as the bank rate (T39.24-5) and he knew that Meriton's interest rate was about 8% (T39.35-9), being a rate higher than the banks rates.
In that context, the propositions put by plaintiffs' Counsel in closing submissions that the relevant comparator by implication is that the vendor interest rate that had to be offered by Meriton was the "average" of the rates offered by the banks at the time of settlement is, in my view, unsustainable (T129.28; T131.24-6; T132.6-14). The adoption of the "average" rate does not have any foundational support in the evidence.
Third, another difficulty with the plaintiffs' claim is, as Meriton submits, that the evidence suggests that Mr Xue did not rely on a representation that vendor finance would definitely be offered at market rate at a settlement. As Mr Xue accepted in cross-examination, he signed the Contract knowing it made no provision for vendor finance and made a deliberate decision to do so (T47.32-35) and he did not know the details of the proposed loan at that time (T36.5-15). Relevantly, Mr Xue was not an unsophisticated first home buyer. The evidence discloses that he has purchased five other properties in New South Wales, including a property located in a Meriton development in 2008 and, as he told Mr Chen and Mr Kang, he was confident he would get a bank loan. Mr Xue also had experience in arranging loans and was aware that lenders would want and require information about his financial position before agreeing to lend him money (T34.29-38).
Fourth, in July 2019, the plaintiffs were offered the opportunity to apply for vendor finance from Meriton for two years with a 6% interest rate; this was prior to settlement and months before termination which occurred on 4 November 2019. Even if I were to accept that the "market interest rate" meant a rate similar to or slightly higher than the rates offered by the Australian banks, the evidence indicates that the offer of a 6% interest rate was within that range, with the ANZ rate for an interest only loan for the first two years being 5.69%. While this rate appears to be the highest of the bank rates at that time, the lowest was 4.44% which I consider to be not that different to the offer of a 6% rate. It is hard to see how the plaintiffs could establish that a representation that vendor finance would be offered at an interest rate that was slightly higher than the bank rate was false, misled or deceived them in the relevant sense or was causative of any loss when an offer of vendor finance at such an interest rate was in fact made by Meriton and the plaintiffs chose to reject it and sought a rate of 3.5% that was below all of the bank rates at that time.
Finally, I note that my finding at [151] above means that the plaintiffs' claims for relief against forfeiture in law or in equity, and for an order for repayment of the deposit pursuant to s 55 of the Conveyancing Act do not arise. During closing submissions, plaintiffs' Counsel confirmed that they did not advance these claims should their misleading or deceptive conduct case fail (T119.25).

Costs and orders

As I have concluded that the plaintiffs have failed to establish their claim or any entitlement to relief, I will order that the FASOC be dismissed.
Given the outcome, I see no reason why the usual order that costs follow the event should not apply and I will make an order that the plaintiffs pay the first and second defendant's costs of these proceedings. However, as the parties did not make submissions on costs, I have deferred entry of that order so that if any party wishes to seek a special costs order, they can apply to do so within 14 days.
For these reasons, I make the following the orders: 1. Dismiss the plaintiffs' Further Amended Statement of Claim. 2. Unless a party makes an application for a different costs order within 14 days, the plaintiffs are to pay the first and second defendants costs of the proceedings on the ordinary basis as agreed or assessed.

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: 25 May 2023

Australian Securities and Investments Commission Act 2001(NSW)

Xue v Karimbla Properties

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