FEDERAL COURT OF AUSTRALIA
Bennett v Elysium Noosa Pty Ltd. (in liq) [2012] FCA 211
FEDERAL COURT OF AUSTRALIA
Bennett v Elysium Noosa Pty Ltd. (in liq) [2012] FCA 211
CORRIGENDUM
1. On the cover page and in [20], line 3, delete “Campomar Sociedad Limiteda v Nike International Ltd” and insert in lieu thereof “Campomar Sociedad, Limitida v Nike International Ltd”.
2. In [244], line 5, delete “dice” and insert in lieu thereof “die”.
| I certify that the preceding two (2) numbered paragraphs are a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Reeves. |
Associate:
Dated: 12 September 2012
IN THE FEDERAL COURT OF AUSTRALIA | |
DATE OF ORDER: | |
WHERE MADE: |
THE COURT ORDERS THAT:
1. The respondents pay the applicant $500,000.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
QUEENSLAND DISTRICT REGISTRY | |
GENERAL DIVISION | QUD 171 of 2010 |
BETWEEN: | LUKE ANTHONY BENNETT Applicant
|
AND: | ELYSIUM NOOSA PTY LTD. (ACN 101 485 634) (IN LIQUIDATION) First Respondent CONSOLO LTD (ACN 000 022 266) Second Respondent PEARSON PROPERTY GROUP (NOOSA) PTY LIMITED (ACN 112 256 612) Third Respondent PEARSON PROPERTY GROUP PTY LIMITED (ACN 076 423 268) Fourth Respondent CONSOLO PROPERTY PTY. LTD. (ACN 093 500 059) Fifth Respondent
|
JUDGE: | REEVES J |
DATE: | 9 march 2012 |
PLACE: | BRISBANE |
REASONS FOR JUDGMENT
Introduction
1 “Elysium Noosa” is a residential community title development located near Noosa on the Sunshine Coast of Queensland. The development was undertaken as an unincorporated joint venture between two property development companies: NR Nominees Pty Ltd (NR Nominees) and Pearson Property Group (Noosa) Pty Limited (PPG Noosa). Elysium Noosa Pty Ltd, the first respondent, owned the land upon which the development was located. On one side of the joint venture, Consolo Ltd (Consolo), the second respondent, owned all of the shareholding in NR Nominees which, in turn, owned all of the shareholding in Elysium Noosa Pty Ltd. Consolo also held all of the shareholding in Consolo Property Pty Ltd (Consolo Property), the fifth respondent. On the other side, Pearson Property Group Pty Limited (PPG), the fourth respondent, held all of the shareholding in PPG Noosa, the third respondent. Where appropriate in these reasons, I will refer to Elysium Noosa Pty Ltd, Consolo Property and Consolo as the Consolo respondents and PPG and PPG Noosa as the Pearson respondents.
2 Dr Luke Bennett, the applicant, is a medical practitioner. In early 2005 he signed a contract to purchase a lot – Lot 181 – in the proposed Elysium Noosa Community Title Scheme, for the sum of $2.1 million. Lot 181 comprised a house and land package. The development was constructed over the ensuing three years and Dr Bennett completed his purchase of Lot 181 on 11 March 2008.
3 Approximately 18 months later, on 23 September 2009, receivers and managers were appointed to Elysium Noosa Pty Ltd. It was subsequently placed in liquidation.
4 Dr Bennett was dissatisfied with his purchase of Lot 181 in various respects. As a result, he commenced these proceedings in May 2010. In his original statement of claim, he claimed that the two sales people who were involved in selling Lot 181 to him made certain misleading or deceptive representations about the property in contravention of s 52 and other sections of Pt V of the Trade Practices Act 1974 (Cth) (the TPA). Dr Bennett claimed that he was induced by those representations to enter into the contract to purchase Lot 181. One of his main points of complaint were representations that he claimed were made that a Community Centre and related facilities would be constructed at the Elysium Noosa development. Further, in a subsequent amendment to his original statement of claim, Dr Bennett also claimed that the respondents had, by their silence, engaged in misleading or deceptive conduct by not disclosing to him that there were insufficient funds available to complete the construction of the first stage of the Elysium Noosa development, including the Community Centre, at, or within a short period after, the time he completed his purchase of Lot 181.
5 The two sales people who allegedly made the misleading or deceptive representations to Dr Bennett were Nick and Julieanne Burke. The Burkes were neither employed by any of the respondents, nor parties to any other contract with any of them. Instead, they were employed by PRD Consulting Services Pty Ltd (PRD), which company was appointed by Elysium Noosa Pty Ltd in 2004 to be the sole exclusive marketing consultant for the Elysium Noosa development. It will be noted that neither the Burkes, nor PRD, is a party to these proceedings. The relationship, if any, between the Burkes and the respondents is, therefore, a significant issue in these proceedings.
6 In his original statement of claim, Dr Bennett claimed damages totalling $2 million under s 82 of the TPA. At trial, his damages claim was altered to make a claim for damages under s 87(1A) of the TPA, as well as s 82, and it was reduced to $1.2 million on the basis that Lot 181 was valued at $900,000 at the time of the trial. This value was agreed between the parties. For their part, the respondents claimed that the correct measure of damages, if damages were payable (which they denied), was based upon the value of the property at acquisition, viz settlement on 8 March 2008. The parties also agreed that value was $1.6 million. Therefore, if any damages were payable to Dr Bennett, they claimed they should be limited to $500,000.
Ten issues arise
7 During the course of these proceedings, Dr Bennett sought leave to amend his original statement of claim on four occasions. Two of those occasions occurred on the first day of the trial. By the end of this series of amendments, Dr Bennett came to rely upon two sets of alleged misleading or deceptive representations: one set made before he signed the contract to purchase Lot 181 in early 2005; and the other set made before he completed the purchase of that property in March 2008. In these reasons, the former will be referred to as the pre-contract representations and the latter will be referred to as the pre-completion representations.
8 By the time of closing submissions at the trial, the counsel for the parties agreed that the following 10 issues arose for determination:
Issue 1 – Were the pre-contract representations made?
Issue 2 – Were the pre-completion representations made?
Issue 3 – If the pre-contract representations and/or the pre-completion representations were made, were they made in connection with the sale of an interest in land and/or facilities associated with land under s 53A(1)(b) of the TPA?
Issue 4 – If the pre-contract representations and/or the pre-completion representations were made, were they misleading?
Issue 5 – If the pre-contract representations were made, did the respondents have reasonable grounds for making them under s 51A of the TPA?
Issue 6 – If the Burkes, by their conduct, made the pre-contract representations, were they, in doing so, engaged in conduct on behalf of the respondents pursuant to s 84 of the TPA?
Issue 7 – If the pre-completion representations were made, did this amount to conduct engaged in on behalf of the respondents pursuant to s 84 of the TPA?
Issue 8 – Did Dr Bennett rely upon the pre-contract representations and/or the pre-completion representations?
Issue 9 – If so, what is the measure of Dr Bennett’s damages?
Issue 10 – If any damages are awarded to Dr Bennett, should they be apportioned?
9 I will consider these issues in the order set out above. However, as will become apparent later in these reasons, it will not be necessary to consider every one of these issues and it is convenient to consider some of them together. It will also become apparent that my task of determining these issues has been rendered significantly more difficult by the deficiencies which exist in various parts of the final amended statement of claim in this matter. As a result, I have had to draw a number of inferences to fill in for essential matters that have not been pleaded, or to attempt to clarify inconsistencies. While I have endeavoured to do the best I can to identify and determine the issues that were fairly raised by the final amended statement of claim, the pleading of one aspect of Dr Bennett’s case has proved to be so deficient that no amount of inferences or clarification could result in my identifying a properly pleaded claim (see issue 2 at [67]–[79] below).
Issue 1 – Were the pre-contract representations made?
The pleadings
10 Most of the pre-contract representations are set out in a schedule to Dr Bennett’s final amended statement of claim, described as Schedule A. Some of those representations are no longer being pursued: specifically those in paras 15, 16, 17, 18, 21, 22 and 23 all of which relate to various aspects of the house constructed on Lot 181. The representations in Schedule A that are still relied upon fall into two broad categories: one category dealing with aspects of the Elysium Noosa development more generally (paras 1–11 inclusive); and the other category dealing with aspects of the house constructed on Lot 181 (paras 13, 14, 19 and 20 – there is no para 12).
11 According to the final amended statement of claim, those in the first category, the Elysium Noosa development category, were all allegedly made by one of the Burkes, in the company of the other, during discussions held at the site office at the Elysium Noosa development at the time of Dr Bennett’s initial visit to the development in January 2005. Dr Bennett’s friends, Robb and Maree Major, accompanied him on this visit and the other visits he made to the site in early 2005. In para 8 of the final amended statement of claim, Dr Bennett claimed that during discussions held with the Burkes at his initial visit, they:
(a) Showed [him], in the site office, a large scale model of the site as completed, with models of houses and other buildings on it, and the streetscape and landscaping clearly identified;
(b) Showed [him], in the site office, various posters which served to demonstrate the characteristics and qualities of individual house structures within the Development, as well as the overall development ambience;
(c) Showed [him], in the site office, some A3 sheets detailing the architecture of the various design choices available to purchasers;
(d) Gave [him] two elaborate and detailed colour brochures in relation to the Development, each brochure noting that the Development was one undertaken by “Pearson Property Group in Association with Consolo Property”.
12 Then, in para 10 of the final amended statement of claim, Dr Bennett claimed:
Further, on the occasion of the initial visit … to the site office, while engaged in the conduct referred to above in paragraph 8, Nick and Julieanne, or one of them, in the company with the other, orally informed [me] to the effect of each of the matters pleaded in paragraphs 1 to 11 of Schedule A to this pleading.
13 The 11 matters set out in Schedule A are as follows:
1. Nick and Julieanne Burke … advised that Elysium Noosa would have a Community Centre that featured:
a. A business centre with a meeting room and computer facilities;
b. BBQ and dining facilities;
c. Child minding facilities;
d. A tennis court;
e. A 25 metre lap pool;
f. A relaxation pool;
g. A gymnasium;
h. A steam room;
i. Massage rooms; and
j. A yoga deck.
2. Nick and Julieanne advised that the houses in Stage 1 of the Development would be completed and would settle at the same time.
3. Nick and Julieanne advised that the Community Centre would be completed contemporaneously with Stage 1.
4. Nick and Julieanne advised that a free shuttle bus service would be available for the use of Elysium residents and their guests.
5. Nick and Julieanne advised that Elysium would have a vehicle which would be available for the use of Elysium residents and their guests.
6. Nick and Julieanne Burke advised that prominent architects would be heavily involved in the design and construction phase of each dwelling. The architects would have free range to ensure that unique, high quality finishes and materials would be used in each dwelling and the Community Centre.
7. Nick and Julieanne Burke advised that the finishes used on all dwellings both internally and externally would be of the highest quality and that the whole purpose of Elysium was to set a new benchmark for high end architecture and good quality development.
8. Nick and Julieanne advised that the Community Centre would have free morning newspapers and a tea/coffee/juice bar available for residents and their guests.
9. Nick and Julieanne Burke advised that:
a. The site landscaping would utilise tens of thousands of new native plants;
b. Non-native and noxious plants would be removed;
c. The existing forested areas would be comprehensively rehabilitated, vines and non-native undergrowth would be removed; and
d. Landscape areas and open spaces would appear and would be professionally landscaped to the highest standards to the specifications of renowned consultants Edaw Gillespie.
10. Nick and Julieanne advised, in relation to street-scaping, that:
a. Swales would be used instead of the usual curbing and channelling;
b. Mature trees would be planted; and
c. The landscaping would be completed at the time of settlement.
11. Nick and Julieanne represented, based on the specifications of the marketed product, that Lot 181:
a. Was likely to be an asset of substantially greater value than the price paid; and
b. Was likely to increase in value over subsequent years and was unlikely to decrease in value.
14 The second category of pre-contract representations, the house construction representations, were allegedly contained in a draft copy of a sale and purchase contract for Lot 181 which had the plans for the house to be constructed on that lot attached to it. According to his final amended statement of claim (see at [16] below), those documents were provided to Dr Bennett by one of the Burkes during his second or third visit to the Elysium Noosa development in early 2005. The house construction representations set out in Schedule A, that are still being pursued, are as follows:
13. The plans that were attached to the contract for the purchase of Lot 181 (“the original plans”) indicated that the house on Lot 181 would have a single-opening triple garage door.
14. The original plans indicated that the western wall of the house would have three large rolling shutters fixed externally to the house and which extended to the full height to the corridor gallery area.
…
19. The original plans indicated that there would be large openings onto the downstairs patio by way of a unique Perspex roller blind and timber stacking shutters.
20. The original plans indicated that the windows for the master bedroom and ensuite comprised stacking structures for the entire eastern wall, such that both rooms could be fully opened as in the fashion of a veranda.
15 Finally, Dr Bennett alleges that two further sets of implied pre-contract representations were made. In his closing submissions, Dr Bennett’s senior counsel, Mr Douglas SC, described those representations as follows:
40 First, in paragraphs 12 to 15A of the statement of claim certain representations, express from documents and implied therefrom are pleaded.
41 Second, in paragraph 18, there is pleaded an implied representation in respect of the express representations that occurred, to the effect that the development plans were final, the costing of the development was complete and funds had been secured to undertake the development construction.
16 As to the first of these two sets of implied pre-contract representations, paras 12–15 inclusive of the final amended statement of claim are as follows:
12. On or shortly after 14 February 2005, [Dr Bennett] was given by Nick or Julieanne a draft copy of the Agreement in respect of the purchased lot.
13. Such draft copy of the Agreement contained plans in respect of the construction of a residence on the purchased lot.
14. The plans, on a sensible and reasonable reading and perusal of the same, conveyed the representations pleaded in paragraphs 13 to 23 of Schedule A to this pleading.
15. [Dr Bennett] read and perused the plans and construed them as conveying the last mentioned representations.
17 Then the first of these implied pre-contract representations is pleaded in para 15A of the final amended statement of claim as follows:
Further, it was implied as a representation in the conduct referred to above that there would be in place at the time of construction of Development Works, sufficient funds, borrowed or independently sourced with the respondents, to enable the same to be constructed as represented in paragraphs 1 to 23 of Schedule A.
18 The second of these two sets of implied pre-contract representations is pleaded in para 18 of the final amended statement of claim as follows:
Further, or in the alternative, such conduct was misleading and deceptive or likely to mislead or deceive [Dr Bennett] as a prospective purchaser, in contravention of s.52 and, or in the alternative, s 53A of the TPA on account of the fact that:
(aa) The substance of the pre-agreement conduct, by way of representation, was such that there was an implied representation that in respect of the matters represented:
A. Development Plans were final;
B. Costing of the Development was complete;
C. Funds had been secured to undertake the Development construction;
(a) It was engaged in without qualification or caveat as to the unconditional availability of finance to enable the future construction of the Development, and to the represented standard, to be undertaken as represented irrespective of the number of sales effected in the Development, or like market or financial conditions;
(b) At the time it was engaged in, there did not exist any unconditional credit provider finance approval, or any dedicated separate body of funds which would allow of completion of the Development, in the manner and with the timing represented to be undertaken irrespective of the number of sales effected in the Development, or like market or financial condition;
(c) At the time it was engaged in, any costing of the Development was preliminary in that it was based on sketch plans not detailed design plans and incomplete;
(d) At the time it was engaged in, no schedule of works existed such that construction completion was scheduled as was represented.
19 These allegations are in a different category to the other two categories of pre-contract representations in that they are both said to constitute implied representations that are said to arise from the conduct pleaded earlier. Accordingly, I will first determine whether the first two categories of pre-contract representations were made, as alleged, before I determine whether these implied representations arise from them.
The principles
20 Whether or not conduct amounts to a representation is “a question of fact to be decided by considering what [was] said and done against the background of all surrounding circumstances”: Campomar Sociedad Limiteda v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12 at [100]. Furthermore, the conduct concerned must be viewed as a whole and “where the conduct complained of consists of words it would not be right to select some words only and to ignore others which provided the context which gave meaning to the particular words”: Parkdale Custombuilt Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 (“Parkdale”) at 199 per Gibbs CJ. However, it is important to note that s 52 of the TPA is not confined to representations, but proscribes “conduct” that is misleading or deceptive: see Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [103]. Nonetheless, in this case, the conduct is confined to words, both oral and written. Furthermore, the words were used in pre-contract negotiations between individuals, as distinct from statements made to the public, or a particular section of the public, in a non-contractual setting. This distinction was highlighted by French CJ in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 (“Campbell”) at [25]. Taking into account these principles, I will now turn to consider the evidence going to whether Dr Bennett has established that the pre-contract representations described above were made.
Dr Bennett’s evidence
21 Dr Bennett made an affidavit in which he set out his evidence about the statements the Burkes made to him and the promotional and other material that they provided to him in the weeks before he signed the contract to purchase Lot 181 in February 2005. I interpolate that while Dr Bennett signed the Buyer’s Acknowledgement section and one other part of the contract on 14 February 2005, his signature on the execution clause was not dated. Nonetheless, the “contract particulars” section of the contract states that the contract date was 7 March 2005.
22 While he was challenged in cross-examination about other aspects of his evidence, particularly that going to whether he relied upon the various representations allegedly made to him, Dr Bennett was not challenged on his evidence as to whether the various representations were in fact made. Furthermore, neither the Burkes, nor the Majors who (as noted above) were present at the time of Dr Bennett’s visits to the site in early 2005, were called to give evidence. Accordingly, I accept Dr Bennett’s evidence on what he saw and what the Burkes said to him, and gave to him, during his visits to the Elysium Noosa site in January and February 2005. That evidence was to the following effect.
23 Dr Bennett first became aware of the Elysium Noosa development from articles he read in the local media in January 2005. As is already noted above, some time in January 2005, together with his friends Robb and Maree Major, Dr Bennett visited the site of the proposed development. There he met Nick and Julieanne Burke, who introduced themselves as the on-site sales representatives of the developer. He informed the Burkes that he wished to gain a better understanding of the development and he asked them to explain it to him. This meeting and discussion took place in the on-site sales office at the development. Dr Bennett observed that this sales office was well set-up to provide information about the development to interested parties.
24 During the course of his first meeting with the Burkes in that sales office, Dr Bennett’s evidence was that he was given, or observed, an amount of promotional material for the development as follows:
a) A large scale model of the site as completed (to early stages), with models of houses, vegetation, and other site amenities on it;
b) Various posters were situated on the wall of the Sales Office which served to demonstrate the characteristics and qualities of individual house structures within the development, as well as the overall development ambience. The posters depicted:
i. the location of Elysium as part of Noosa and its waterways; and
ii. designs and impressions of houses for sale;
c) A photograph of the poster situated on the wall of the Sales Office, depicting the locality of Elysium as part of Noosa and it’s (sic) waterways …;
d) A large double-sided colour brochure for Lot 181 … which featured:
i. a computer generated impression of the home;
ii. plans of the home;
iii. a description of the home by the architect; and
iv. key features of the home;
e) Large double-sided colour brochures for all of the homes available for purchase in Stage 1 of the development …;
f) A3 black and white floor plans and elevations for Lot 181 …, which were subsequently attached to the sale contract …;
g) “Finish boards” which provided the type of finish for the internal and external finish material for each home in Stage 1; and
h) A schedule of materials and finishes for the homes. A copy of “Issue C”, being the schedule of materials and finishes for the homes ….
25 He was also provided with the following marketing material:
a) A large pamphlet entitled ‘Elysium Noosa’ (undated) showing how Elysium was to look upon completion and the lifestyle available at Elysium …; and
b) A large pamphlet entitled ‘Elysium Noosa’ with ‘Architecture’ faintly embossed at the top of the first page (undated) ….
26 On reading the first of these pamphlets, the Elysium Noosa lifestyle pamphlet, Dr Bennett said he noted the following statements:
a) “Elysium n. abode of the blessed; (place of) ideal happiness
Is there a definition for a place that sets new benchmarks in architectural design, promotes harmonious community living, and protects and enhances its natural environment? There is now. Elysium Noosa. The best. The last. The ultimate”;
b) “Elysium Noosa brings together two seemingly contradictory attributes of place - diversity and unity. Diversity is reflected in the individual residential designs by leading Australian architects. Unity is embodied firstly by the creation of a Community Village, and secondly by harmonious integration of the community and residences with the natural environment”;
c) “Upon completion, Elysium will comprise 189 individually designed homes plus a multi-purpose community centre with health and well-being facilities, swimming pools, tennis courts, parks and a network of linked walkways. Privacy is ensured through a single access point and 24 hour on-site security”;
d) “To be the best, we had to commission Australia’s best architects. Then we briefed them to create architecture that is inspiring, harmonious and diverse. The result is Australia’s only architecturally designed residential community where no two houses are the same and every single one is a masterpiece”;
e) “Every home at Elysium Noosa is an inspirational statement in individual design. The architects involved have collaborated closely to ensure that neighbouring properties complement and enhance each other’s features and appearance. You’ll discover homes where every aspect of design, including landscaping, has been given full creative consideration”;
f) “A prestigious address is one thing. A place where like-minded individuals who appreciate design, balance and well-being can come together is something else altogether. With a range of exclusive recreation and health spa facilities as well as dedicated function and business areas, Elysium Noosa will be a thriving living community”;
g) “Residents of Elysium Noosa can look forward to being part of a cohesive neighbourhood and community where a diversity of activities are on offer. Walking trails, tennis, swimming cycling are just some of the lifestyle pursuits that can all be enjoyed without even having to leave the grounds of Elysium Noosa” (sic); and
h) “Elysium Noosa is the realisation of the vision of Pearson Property Group in association with Consolo Property to create the ultimate Noosa community. The development team saw the potential to combine their project expertise and experience with the talents of the best architects, landscape designers and community planners. As the first and last opportunity of its kind in Noosa Heads, the developers have ensured every aspect of Elysium Noosa has met uncompromising quality standards.”
27 From these statements, Dr Bennett reached the following conclusion about the Elysium Noosa development. That:
… the plan was for the development to have a lifestyle theme throughout, to have high quality architecture throughout and to have the availability of a significant community centre involving multiple facilities. The combination of those three elements impressed [him] as likely to produce a very attractive living environment.
28 Within the second of these pamphlets, the Elysium Noosa architecture pamphlet, Dr Bennett noted the following statements:
a) “Elysium brings together those two seemingly contradictory attributes of place – diversity and unity. Diversity is reflected in the designs of the residences by a number of Australia’s foremost architects, each responding to the natural assets of their particular sites. Unity is embodied in two ways – the first by creating a community heart that will feel like an extension of home, a true village to be enjoyed every day. The second is by landscape of extraordinary beauty and serenity with lakes and parks, forest walks, cycle ways and streets designed to integrate the variety of residential designs into a cohesive community environment”; and
b) “Gabriel and Elizabeth Poole Design Company is a dynamic team of young architects headed by Gabriel Poole. The company ethos is to meet the needs of each client through the creation of beautiful architecture that maintains a balance with the environment and natural surrounds. Each member of the team has an individual method of expressing the company’s goals. It is a small practice where communication between the whole team is an integral part of its successful operation.”
29 Having read these statements, Dr Bennett said that the impression he gained about the architectural components of the development was that:
… the development when finished would be a combination of very attractive lifestyle and high quality architecture, centred around a significant multi-function community centre, in an immaculately presented site.
30 During this first meeting with the Burkes, Dr Bennett said that they also explained various features of the Elysium Noosa development. They included the Community Centre, the features of which are described in some detail in para 1 of Schedule A: see at [13]1 above. He said that the Burkes told him this Community Centre, otherwise referred to as “The Club”, “would be the focal point for the lifestyle activities within the estate”. While he was attracted generally by the overall lifestyle theme of the Elysium Noosa development and was particularly interested in ensuring that any dwelling he purchased in the development was of high architectural and design quality, he said in his affidavit that: “the presence of the community centre was a significant factor to [him] in [his] decision to continue investigations and to ultimately purchase in the development”. He added that this combination of lifestyle, quality architecture and the community facilities “would underpin [his] investment in the development”. Dr Bennett also gave evidence that the Burkes told him about each of the other features of the Elysium Noosa development set out in paras 2–11 inclusive of Schedule A to the final amended statement of claim: see at [13]2–11 above.
31 Despite what is pleaded in para 12 of the final amended statement of claim (see at [16] above), Dr Bennett did not say in his affidavit when it was that he first received the draft contract for the purchase of Lot 181, nor who it was that provided it to him. However, as noted above (at [21]), on 14 February 2005, he signed the “Buyer’s Acknowledgement” that the selling agent had made the requisite disclosures to him under the Property Agents and Motor Dealers Act 2000 (Qld). Furthermore, Mr Nick Burke signed the “Selling Agents Disclosure Declaration” which appears immediately above the “Buyer’s Acknowledgement” section referred to above. From this I infer that Dr Bennett received a draft copy of the contract on or before 14 February 2005 and he probably received it from Mr Nick Burke. Furthermore, the signed copy of the contract in evidence has attached to it the plans and specifications for the house to be constructed on Lot 181, so I infer that the draft copy of that document had the same material attached to it.
32 In cross-examination Dr Bennett was asked about his understanding as to what the expression in para 2 of Schedule A, “completed and would settle at the same time”, meant. His evidence on that aspect was as follows:
MR SAVAGE: Dr Bennett, in your statement you refer to the completion of the homes in stage 1 and, at different points, you refer to them as being “completed and settled at the same time” and/or that they would be completed and settled simultaneously?---Yes
You’re not suggesting it’s your belief, is it, that on a day all the homes would be completed at the same time?---Well, certainly, in the very early days of the marketing of the estate, that was suggested. I’m not naïve enough to think that a precise day would be selected, but I took that to mean within a very close period of time, perhaps weeks or even a month or two.
33 As to para 11 of Schedule A, Dr Bennett said that this was a belief he held as a result of the various statements made to him by the Burkes. In particular, he said that the following matters the Burkes told him over the course of his three pre-contract visits to the Elysium Noosa development led him to that belief:
a) Such sophisticated high quality homes could not be built by an independent builder for such prices;
b) The dwellings could only be built by a developer with significant market leverage and efficiencies;
c) The best land in the development was on sale earliest, at the best prices;
d) The architecture offered in the Lot 181 design exceeded that offered in properties in the same price range in the adjacent Noosa Springs development; and
e) Each house would be made more attractive by the fact that, on settlement, the community facilities would be available for immediate use and that the site landscaping would be immaculately conceived and maintained.
34 In general, Dr Bennett said that he believed that by purchasing in Stage 1 of the Elysium Noosa development, he would be purchasing a residence in a development with the following features:
a) A significant emphasis on health, physical activity and sporting activity;
b) It was being deliberately marketed to people who placed value on such matters;
c) It would therefore probably attract such people as purchasers; and
d) The houses in Stage 1 would be completed and settled at the same time, contemporaneously with the community facilities.
35 He added:
… what Nick and Julieanne told [him] caused [him] to conclude that the subsequent stages of Elysium were likely to be sold to purchasers who valued the same sort of lifestyle factors, and that the entire development, when complete, would be an attractive, vibrant and healthy community environment.
36 Dr Bennett visited the Elysium Noosa development on two further occasions before he signed the contract to purchase Lot 181 in February 2005. He was not able to identify the statements made at the second and third visits respectively, but he said that the following statements were made at one or other of them:
a) [He] asked about the house designs that were available in Elysium. [He] was informed by Nick and Julieanne that each of the structures in Elysium would be designed by well known architects. A house which attracted [his] interest on Lot 181 was designed by architect Gabriel Poole. [He] was aware that Gabriel Poole was an architect of significant renown and [he] thought that if [he] purchased a house designed by Gabriel Poole, his involvement would be an attractive selling point, if [he] ever decided to sell in the future;
b) [He] was particularly attracted to acquiring property in the development because of the promotion of the notion, from what [he] was told and given above, that the architecture was of highest quality and was by high profile architects. In the various meetings [he] had prior to the execution of the sale contract, [he] was told by Nick and Julieanne that the architects would be heavily involved in the construction phase, and fully in command of each design. Further, [he] was told that the architects would have free range to ensure that their choice of unique, high quality finishes and materials would be utilised in each home and The Club;
c) Nick and Julieanne showed [him] a number of different house designs. They told [him], and [he] believed, that the houses would be built with superior materials. They told [him] that the finishes internally and externally would be of high quality, and that the whole purpose of Elysium was to bespeak of high end architecture and good quality development. The entire emphasis was on high quality;
d) Nick and Julieanne reiterated the information they gave [him] at the first meeting about the community facilities. They said there would be an onsite pool of at least 25 metres in length. That was important to [him], since it was [his] intention to swim regularly, as part of [his] fitness regime;
e) They told [him] of the various facilities that would be within community facilities. Whilst it was not a matter of particular attraction to [him] that [he] could mingle with other people from Elysium at the community facilities, [he] intended to make use of almost all of the facilities described. It was a matter of importance to [him] that the existence of community facilities meant that the development would attract as purchasers people who had a sense of community and were likely to therefore be supportive and cohesive in their dealings with each other;
f) They explained to [him] that “The Club” would have free morning newspapers and a tea/coffee/juice bar freely available for the residents and guests;
g) [He] asked Nick and Julieanne about the infrastructure on the site. They told [him] that the landscaping would utilise native vegetation. They said any non-native plants would be removed, tens of thousands of new native plants introduced, and the existing forested areas would be rehabilitated in great detail, specifically with removal of vines and non-native undergrowth;
h) Nick and Julieanne spoke about the street scaping intended for the development. They described the use of swales, which [he] understood to be street-side drainage structures in the nature of a rock gully, which provided drainage instead of the usual curbing and channelling. They told [him] that mature trees would be planted so that the landscaping would be complete at the time of settlement, rather then (sic) having to wait for the trees to grown after settlement; and
i) Nick and Julieanne told [him] the development was superior to Noosa Springs located on Links Drive, Noosa Heads, Queensland, in its physical aspects including The Club, its architecture and as being a much more vibrant community socially.
37 After spending considerable time studying the double-sided colour brochures and the floor plans and elevations for the various dwellings that were available for construction in the development, Dr Bennett said he identified Lot 181 as the property of his choice. He said that the Burkes told him that a number of features would be included in the design of the house to be constructed on Lot 181, including the following:
a) [He] required a three bay garage to accommodate vehicles. There was a great deal of practical and architectural appeal to the single-opening triple garage designed by Gabriel Poole for Lot 181, Elysium. [He] was reassured by Nick and Julieanne that this would be provided and it was clearly evident on brochures, floor plans and on a scale model of the home presented in the site sales office;
b) The western wall of the house should have had three large rolling shutters fixed externally to the house and which extended full height to the corridor gallery area. Again, these were of enormous aesthetic and architectural appeal, they would have contributed significant additional light and ventilation to the entire upper floor;
c) The master bedroom ensuite should have had a large enclosed double shower with a timber floor and a timber seat within the shower;
d) The master bedroom and ensuite should have had a caulked timber floor;
e) There should have been a polished concrete finish to the driveway;
f) There should have been a polished concrete finish in the downstairs living areas;
g) There should have been large openings onto the downstairs patio by way of a unique perspex roller blind and timber stacking shutters;
h) The windows for the master bedroom and ensuite should have comprised stacking structures for the entire eastern wall, such that both rooms could be fully opened as in the fashion of a veranda;
i) There was supposed to be a drying court situated in the backyard with a water tank below;
j) The external timber cladding boards for the house were supposed to be of high quality and a superior low-maintenance natural finish; and
k) There was supposed to be full insect screening of all doors and windows.
38 Dr Bennett said that the statements the Burkes made to him persuaded him to sign the contract to purchase Lot 181. He said he was impressed by “the quality and integrity of the architecture” as these would be “important to the underpinning of the value of [his] purchase, both for the purposes of [his] use of it, and also in the sense of it being an investment”. He also said that he took into account the Burkes’ repeated assertions “that construction would be coordinated such that all [Stage 1] homes would be completed and settled simultaneously along with the advertised community facilities and body corporate services”. Finally, he said that “[he] believed that when [he] paid [his] purchase price upon settlement, [he] would be living in a completed stage with completed community facilities”.
Most of the representations in Schedule A were made
39 With the qualification expressed hereunder, based on this evidence of Dr Bennett, I find that the Burkes advised him of each of the matters set out in paras 1–10 of Schedule A. Accordingly, I find that the Burkes made representations to Dr Bennett to the effect pleaded in those paragraphs. Further, I find that, by providing the contract attaching the plans and specifications for the house to be constructed on Lot 181 to Dr Bennett, Mr Nick Burke made representations to the effect pleaded in paras 13, 14, 19 and 20 of Schedule A. These representations are specifically supported by the evidence set out at [37]a, b, g and h above, respectively. Whether any of these representations was misleading or deceptive will be dealt with in issues 4 and 5 below. The qualification relates to para 2. It is that, consistent with the evidence of Dr Bennett (see at [32] above), the words “at the same time” in that representation, in context, should be taken to mean within a reasonably short period of time of each other. I have excluded the representations in para 11 from these findings because, unlike the preceding 10 paragraphs in Schedule A, those matters were not things of which the Burkes orally “advised” Dr Bennett, but instead they are pleaded as things they “represented”, based on the “specifications of the marketed product”. In this sense, they are of a similar kind to the third category of pre-contract representation relied upon by Dr Bennett (see at [15]–[18] above) which are alleged to be implied from the express representations that are pleaded in the final amended statement of claim. I will now turn to consider para 11 of Schedule A and this third category of implied pre-contract representations in that order.
The approach to determining whether an implied representation was made
40 Before doing so, it is important to note that the determination of the question of fact whether a statement was made that constitutes a representation (as above) is of a different kind to the determination whether an implied representation was made. With both, the ultimate issue is whether the applicant was lead into error by the representation: see Parkdale at 198. However, the exercise involved with the latter is to determine whether what was actually said or done, in all the relevant circumstances, conveyed something more, such that it lead the applicant into error. The example given by Stephen J in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 227 was a situation where a person announced “… an opera as one in which a named and famous prima donna will appear and then to produce an unknown young lady bearing by chance that name …”. About this example his Honour observed: “The announcement would be literally true but none the less deceptive, and this because it conveyed to others something more than the literal meaning which the words spelled out.” Similarly, in Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 79 ALR 83 (“Henjo”), where it may have been literally true to say that the restaurant concerned had seating arrangements for 128 persons. Nonetheless, Lockhart J held (at 93–4) that the provision of a card on which the words “Seats 128” appeared immediately above the word “Licensed”, combined with a sign on the front of the restaurant which said “Fully Licensed”, conveyed the impression that the restaurant was licensed to seat 128 persons when in fact it was only licensed to seat 84. I should add that while Lockhart J came to this conclusion (at 94), his Honour also proceeded to deal with the case as one involving a representation by silence (see at 94–5). Burchett J agreed with Lockhart J at 106 and Foster J dissented on a different aspect at (106–109).
41 So, in determining whether these three implied representations were made in this case, the question is whether what the Burkes actually said, in all the relevant circumstances, conveyed something more to Dr Bennett, such that he was lead into error. In other respects the determination of this question proceeds along similar lines to the characterisation of conduct as misleading or deceptive. That is, among other things, the determination is an objective one, but it may take account of the state of knowledge of the individuals concerned when considering the “content and circumstances of the conduct”: see Campbell at [25]–[27].
42 It is also worth noting that in claiming these implied representations were made, Dr Bennett appears to have limited his reliance to the express representations the Burkes made to him, viz those in Schedule A. Further, he does not rely upon any implied representation arising out of the contract he subsequently made for the purchase of Lot 181, as distinct from the representations in paras 13, 14, 19 and 20 of Schedule A that were made by providing the draft contract to them. Nor does he claim that any of these implied representations are founded on silence in the face of a reasonable expectation of disclosure (see Henjo at 94–5), nor that a particular subject matter was so “absolutely vital” to these pre-contract discussions that there was a reasonable expectation that it would be broached in them (see Winterton Constructions Pty Limited v Hambros Australia Ltd (1992) 39 FCR 97 at 113–4 per Hill J).
43 From all this it follows that the determination of this question in this case is quite confined. It requires a careful examination of what the Burkes actually said to Dr Bennett. It also requires the identification and consideration of all the relevant surrounding circumstances in order to determine whether what the Burkes actually said to Dr Bennett conveyed something more and thereby lead him into error such that it was misleading or deceptive under s 52 or, depending on the subject concerned, false or misleading under s 53A(1)(b) of the TPA.
The implied representations about the future value of Lot 181 were not made
44 Paragraph 11 of Schedule A is set out in [13] above and does not require reiteration. The representations pleaded therein both relate to the future value of Lot 181. On this aspect it is appropriate to interpolate that I do not consider that s 51A comes into operation until such time as this alleged implied representation is established. Until then, one cannot know what it is that the representor has reasonable grounds for: see issues 4 and 5 below at [104]) et seq.
45 In his final amended statement of claim, Dr Bennett has not identified what particular “specifications of the marketed product” (pleaded in para 11 of Schedule A) it was that he claims led to the Burkes making these representations about the future value of Lot 181. Since the only matters pleaded that appear to fall into that description are the express representations in Schedule A, I will assume that it is those to which he refers. On that basis, it will be noted that none of the express representations set out in Schedule A mentions the future value of Lot 181. Moreover, none of them goes to a subject matter that could be reasonably said to be connected with the future value of Lot 181.
46 While they are not pleaded as part of the express representations in Schedule A, in his affidavit, Dr Bennett did identify the five matters set out in para [33] above. In relation to those five matters, it will be noted that the first four go to the current price of the land and house comprising Lot 181 and the other dwellings in the Elysium Noosa development. None of those four matters expressly mentions the future value of the land or dwellings concerned. Further, the fifth matter is confined to the community facilities to be provided at the development and mentions neither price nor value. While the price of Lot 181 is clearly one factor going to its value, there is a myriad of other factors that will have a bearing upon its future value, including demand in the local real estate market and economic conditions, for example, the monetary settings of the Reserve Bank of Australia. There is no evidence that any of these sorts of factors was ever raised in the discussions between the Burkes and Dr Bennett. I do not therefore consider the statements the Burkes made about the price of Lot 181, or the other dwellings in the Elysium Noosa development, could, in all the relevant circumstances, reasonably convey anything about the future value of Lot 181.
47 The only other evidence in Dr Bennett’s affidavit that appears to be relevant to this matter is his subjective belief that “[his] investment in Stage 1 was likely to increase, rather than decrease, in value over the ensuing years”. Read in context, this belief appears to be based upon Dr Bennett’s knowledge of the Noosa real estate market, rather than any information the Burkes provided to him. On this point, it is pertinent to record that Dr Bennett gave evidence that he had been involved in the Noosa real estate market since about 2003: prior to his purchase of Lot 181 in early 2005, he had bought and sold two properties, each for a profit, and bought a third property, which he continued to own at that time. He said in cross-examination that in early 2005 he believed the Noosa real estate market was “reasonably solid”. This evidence leads me to conclude that this implied representation about the future value of Lot 181 is more likely to have its genesis in Dr Bennett’s subjective views about that issue rather than anything the Burkes said or conveyed to him.
48 As to the surrounding circumstances more broadly, it may be accepted that in any negotiations for a real estate investment of the kind and in the circumstances involved here, both sides to the negotiation may well be proceeding on the unspoken premise that the particular piece of real estate concerned will appreciate in value over time. However, to convert this circumstance into an implied representation that the vendor’s agent is thereby impliedly expressing some assurance about the future value of the investment would be, in my view, to introduce a radical reallocation of the risk involved in such negotiations of a kind that could not possibly have been intended by ss 52 or 53A(1)(b) of the TPA. This is all the more so here where Dr Bennett was an experienced investor in the Noosa real estate market (see at [47] above). The situation may have been different, if Dr Bennett had expressly sought and obtained from the Burkes an assessment as to the likely future value of Lot 181, but that did not happen.
49 Taking into account what the Burkes actually said (or did not say) to Dr Bennett on this subject in all the circumstances outlined above, I do not consider that Dr Bennett has established that the Burkes made the implied representations about the future value of Lot 181 pleaded in para 11 of Schedule A.
The implied representation about funding to construct the house on Lot 181 was not made
50 I turn then to the first of the other two alleged implied pre-contract representations. This representation is pleaded in para 15A of the final amended statement of claim (see at [17] above). It relates to the funding for the construction of the Elysium Noosa development: “there would be in place at the time of construction of Development Works, sufficient funds, … to enable the same to be constructed”. In para 15A, Dr Bennett claims that this representation is to be implied from “the conduct referred to above”. In his closing submissions (see at [15]1 above), Mr Douglas identified paras 12–15A of the final amended statement of claim (set out at [16] and [17] above) as the place where this implied pre-contract representation is pleaded. I will therefore assume that it is those paragraphs that describe “the conduct referred to above”. Mr Douglas also said the representation pleaded in those paragraphs was “express from documents and implied therefrom”. Consistent with this, when one goes to those paragraphs, it can be seen that the conduct pleaded in them is directed solely to the provision of the draft copy of the contract for purchase of Lot 181, which, in turn, contained the plans and specifications for the construction of the house on Lot 181. However, no attempt is made in the final amended statement of claim, or in Mr Douglas’ closing submissions, to identify what parts of those plans and specifications are said to give rise to the implied representation that “there would be in place at the time of construction of [the] Development Works, sufficient funds, borrowed or independently sourced with the respondents, to enable the same to be constructed as represented in paragraphs 1 to 23 of Schedule A”.
51 There are also some other confused aspects of the pleading of this implied representation. The reference at the end of para 15A to all the paragraphs in Schedule A suggests that the expression “Development Works” pleaded in this representation refers to the completion of all the items described in Schedule A, ie the construction of Stage 1 of the development including the Community Centre and the related landscaping and streetscaping. However, the conduct pleaded in the immediately preceding paragraphs (paras 12–15 inclusive at [16] above) which, as mentioned above, were the only paragraphs identified by Mr Douglas as supporting the representation pleaded in para 15A, only relates to the provision of the plans for the house to be constructed on Lot 181 (see para 13 at [16] above). Furthermore, those plans are then said to convey the representations pleaded in paras 13–23 of Schedule A (see para 14 at [16] above), all of which solely relate to the house to be constructed on Lot 181. It may be noted in passing that seven of these alleged representations are no longer being pursued: see [10] above.
52 Taking into account these aspects of the pleading of this implied representation, the expression “Development Works” in para 15A must be intended to be confined to the works associated with the construction of the house on Lot 181. That being so, the concluding words of para 15A must be intended to be limited to those paragraphs in Schedule A that deal with the house to be constructed on Lot 181, viz paras 13–23. I will therefore proceed to determine this matter on that basis. However, even if, contrary to these assumptions, Dr Bennett has properly pleaded this implied representation as going to the funding necessary to construct the whole development (or even Stage 1 of it), I would, for the reasons expressed hereunder, reject that claim as well.
53 The four representations in paras 13–23 of Schedule A that are still relied upon are set out at [14] above. The whole 11, as taken from the affidavit of Dr Bennett, are set out at [37] above. Whether it is the four remaining, or the whole 11, when they are examined, it soon becomes apparent that none of them mentions funding for the house construction on Lot 181, or funding for the development generally, or any subject that could be said to be reasonably connected with that subject matter. Then, if one turns to the evidence of Dr Bennett, there is a similar dearth to that mentioned in relation to para 11 of Schedule A above. Dr Bennett does not mention the issue of funding for the construction of the house on Lot 181, or the development generally, anywhere in his affidavit. The closest he comes to broaching that subject is as follows (at paras 15 and 16):
15. I recall that on at least one of the three occasions that I visited the site office, Nick and Julieanne informed me, in the course of their marketing discussions, of a company called “Consolo”, who they described as an important partner in the development. They told me that Consolo was a company with interests in a variety of commercial activities, including property development, and that Consolo was based in Sydney.
16. Nick and Julieanne described David Pearson as the architectural or creative driver being the project, and “Consolo” as the primary commercial driver behind the project. At no point did Nick and Julieanne (or anyone else for that matter), in relation to Consolo, draw any distinction between different corporate bodies within any Consolo corporate group.
54 There is no mention of funding for the construction of the house on Lot 181, or the development more generally in this evidence. There was extensive evidence given by other witnesses in relation to the funding and financing of the Elysium Noosa development in the period after March 2005, and more limited evidence relating to the period before. However, there was no evidence from Dr Bennett, the Burkes, or anyone else, about that subject matter ever being raised in the discussions that occurred between the Burkes and Dr Bennett in this pre-contract period prior to 7 March 2005.
55 Finally on this issue, it is appropriate to recall that the question here is whether what the Burkes actually said to Dr Bennett, when considered in all the relevant surrounding circumstances, conveyed something more to him and thereby lead him into error. With that in mind, when one goes to Dr Bennett’s final amended statement of claim, it can be seen that he claims that the pre-contract representations, including this implied representation, mislead him into entering into the contract to purchase Lot 181 (para 4B) or, conversely, had it not been for the pre-contract conduct, he would not have entered into that contract (para 23(a)). Against that background, the claim in relation to this alleged implied misleading representation presents a paradox. It is that the contract for Lot 181 effectively provided that: “there would be in place at the time of construction of Development Works, sufficient funds, … to enable the same to be constructed” in the terms of this implied representation. That is so because the contract included the following terms:
4.1 Development of Scheme Land
Subject to clause 4.3, the Seller will procure construction of the Scheme Improvements substantially in accordance with the Plans and Specifications.
4.2 Construction of Dwelling
(a) Subject to the other provisions of this Contract, the Seller will procure construction of the Dwelling substantially in accordance with the Dwelling Plans and Specifications.
(b) Subject to clause 3.1, the Seller will use reasonable endeavours to procure the commencement of substantial construction of the Dwelling within 12 months from the Contract Date. The Seller may extend this date by the period of any delay which is outside the control of the Seller.
…
6.3 Seller warranties
(a) …
(b) The Seller warrants that at settlement:
(i) it will be capable of completing this Contract;
…
7.3 Payment of Balance Purchase Price
On the Settlement Date, the Buyer must pay the Balance Purchase Price to the Seller by bank cheques payable as directed by the Seller’s Lawyers.
In exchange for the Balance Purchase Price and a copy of the Body Corporate Notice signed on behalf of the Buyer, the Seller must give the Buyer at settlement:
(a) vacant possession of the Lot;
(b) any instrument of title for the Lot required to register the transfer to the Buyer;
(c) all keys and access codes for all locks included in the Property;
(d) Transfer Documents capable of immediate registration after stamping; and
(e) a release in registrable form (after stamping) of any mortgage or withdrawal of any caveat lodged over the Lot (but the Buyer may not require the Seller to register the release or withdrawal before settlement or produce a discharge or release of any other charge).
(Emphasis in original)
56 The expression “Scheme Improvements” mentioned in cl 4.1 (above) is defined elsewhere in the contract to include “all necessary civil works, road works, entry statements, communal facilities and other improvements to be built” on the Scheme land: see at [89] below. It is self-evident from these provisions of the contract that, in order to comply with these terms, Elysium Noosa Pty Ltd would have had to obtain the funding necessary to undertake the construction of the house on Lot 181, Lot 181 itself and the Scheme Improvements in Stage 1 of the development. It is therefore difficult to see how Dr Bennett can claim that this alleged implied representation lead him into the error of entering into the contract to purchase Lot 181, when that contract effectively provided him with the same outcome as he seeks to achieve by establishing this implied representation. This is, of course, different to claiming an implied representation arising out of the terms of that contract itself, which is something Dr Bennett is not pursuing in these implied pre-contract representations: see at [42] above.
57 For these reasons and in all the relevant surrounding circumstances, I do not consider that it can be reasonably implied from the express representations in paras 13–23 of Schedule A that “there would be in place at the time of construction of [the house on Lot 181] sufficient funds, borrowed or independently sourced … to enable the [house on Lot 181] to be constructed as represented in paragraphs [13–23] in Schedule A” or for that matter, Stage 1 of the development, or the development generally.
The implied representations about the final state of the plans, costing and funding for the development were not made
58 Finally, I turn to the implied pre-contract representation pleaded in para 18 of the final amended statement of claim set out at [18] above. This representation is pleaded in sub-para (aa) of para 18. It is as follows:
(aa) The substance of the pre-agreement conduct, by way of representation, was such that there was an implied representation that in respect of the matters represented:
A. Development Plans were final;
B. Costing of the Development was complete;
C. Funds had been secured to undertake the Development construction;
59 In short, this implied representation relates to the finality of the planning, costing and funding for the development. Unlike the other two alleged implied representations, it is directed to the current state of affairs: “were final”; “was complete”; and “had been secured”, rather than to future matters. It relies upon “the matters represented” which, as I have already observed above (at [42]), are the express representations. Since it is directed to “the Development”, subject to the qualification expressed below (at [60]), I assume that the relevant express representations are those contained in paras 1–10 of Schedule A rather than paras 13–23, which relate specifically to the house construction on Lot 181. This is confirmed at [15]41 above, where I have recorded Mr Douglas’ submission to the effect that these implied representations arise from “the express representations that occurred”. However, even if this is not what is intended, and instead this implied representation applies to the house representations in Schedule A as well, I do not consider that affects the conclusion I have reached below.
60 Before turning to consider this alleged implied representation, it is necessary to resolve some confusion in the way it is pleaded. The word “Development” is used three times in sub-para (aa). That word is defined in para 3(c) of the final amended statement of claim by reference to para 2, to mean “the unregistered residential community title development … known as ‘Elysium Noosa’”. I interpolate that the whole development is shown in the disclosure statement attached to Dr Bennett’s contract as involving the construction of 189 lots over as many as 17 stages. Nonetheless, this reference to the word “Development” in para 18(aa) is inconsistent with paras 2 and 3 of Schedule A where only Stage 1 of the development is mentioned. Furthermore, in his closing written submissions, Mr Douglas described the Elysium Noosa development for the purposes of this implied representation as: “a final development, to the extent of Stage 1, fully completed in content and detail but unconstructed”. For these reasons, I will approach this implied representation on the basis that Dr Bennett did not intend to claim that it applied to the whole development, but rather, only to Stage 1.
61 As I have already observed (at [43] above), to determine whether the Burkes implicitly conveyed something more than what they actually said in the terms of this implied representation (in the way I have assumed it was intended to be pleaded), it is necessary to carefully examine what the Burkes actually said to Dr Bennett in the context of all the relevant surrounding circumstances viewed as a whole. So, turning to the express representations in paras 1–10 of Schedule A, as with the other two alleged implied pre-contract representations above, it is apparent that none of the express representations in paras 1–10 of Schedule A expressly mentions the planning, costing or funding of the development, or even goes to a subject that could be reasonably connected with those aspects of the development. Similarly, there is no evidence in Dr Bennett’s affidavit that the planning, costing or funding for the development (whether for Stage 1 or the whole development) was ever discussed between the Burkes and himself in the pre-contract period prior to 7 March 2005.
62 Turning then to the relevant surrounding circumstances, it is important to bear in mind that the express representations in paras 1–10 of Schedule A were all made in early 2005, before the contract for the purchase of Lot 181 was entered into on 7 March 2005. At that point in time the construction of Stage 1 of the development was not due to begin until some time in the future: at that time it was expected to take about two years to complete. Dr Bennett was aware of this timetable, because he had a special condition inserted in his contract for Lot 181 that guaranteed he would not be required to settle his purchase until two years from the date of that contract.
63 Furthermore, at about this time, Dr Bennett obtained a copy of the draft contract for the purchase of Lot 181. Dr Bennett said in his evidence that he was familiar with this kind of contract from his earlier real estate investments in the Noosa area. He also said that, before he signed the contract for Lot 181, he obtained advice from a solicitor in the legal firm Virgil Power & Co, who had assisted him in his earlier real estate investments. Mr Savage SC, Consolo’s senior counsel, took Dr Bennett to some of the terms of the contract for Lot 181 in cross-examination. They included most (but not all) of the following clauses, which have an obvious bearing on whether the planning, costing and funding for Stage 1 of the development was in a state of finality at this pre-contractual stage:
3.1 Development approvals
The Seller may terminate this Contract by giving written notice to the Buyer if, by 31 December 2005:
(a) a development permit from the Noosa Shire Council authorising construction of the Scheme Improvements, on terms satisfactory to the Seller, has not taken effect; or
(b) the Seller is not able to obtain any other approval necessary for the reconfiguration of the Land, construction on the Land or the Lot, or sale or use of the Land on terms satisfactory to the Seller; or
(c) the Seller, decides, in its absolute discretion, not to proceed with construction of the Development.
…
3.1 Sunset Date
Either party may terminate this Contract by written notice to the other if the Subdivision Plan has not registered by the date 3½ years after the Contract Date.
…
4.1 Construction of Dwelling
…
(b) Subject to clause 3.1, the Seller will use reasonable endeavours to procure the commencement of substantial construction of the Dwelling within 12 months from the Contract Date. The Seller may extend this date by the period of any delay which is outside the control of the Seller.
(Emphasis in original)
64 Taking into account the terms of the express pre-contract representations themselves and all these surrounding circumstances, I do not consider that the express representations that the Burkes made to Dr Bennett before 7 March 2005 could reasonably be said to give rise to an implied representation that at about that time the planning, costing and funding of Stage 1 of the Elysium Noosa development had reached a stage of finality. To the contrary, I consider that what the Burkes actually said or provided to Dr Bennett at that time conveyed that finality was not to be reached in relation to the planning, costing and funding of the development until 31 December 2005, at the earliest, which was the last date by which Elysium Noosa Pty Ltd could act to give notice that it did not wish to proceed with the development under the terms of the draft contract: see cl 3.1(c) above. I do not therefore consider Dr Bennett has established there was an implied representation of the kind I have assumed is pleaded in para 18(aa) of the final amended statement of claim.
Conclusion on issue 1 – were the pre-contract representations made?
65 To sum up on this issue, for the reasons set out above, I consider Dr Bennett has established that:
(a) the pre-contract representations set out in paras 1–10 of Schedule A were made by the Burkes; and
(b) the pre-contract representations set out in paras 13, 14, 19 and 20 of Schedule A were made based on the plans attached to the draft contract that Mr Nick Burke provided to Dr Bennett.
66 However, I do not consider that Dr Bennett has established any of the implied pre-contract representations, whether that pleaded: in para 11 of Schedule A about the future value of Lot 181; or in para 15A of the final amended statement of claim about the future funding for the house construction on Lot 181; or in para 18 about the finality of the plans, costing and funding for Stage 1 of the development, as at early 2005.
Issue 2 – Were the pre-completion representations made?
The deficiencies in the pleading
67 The pre-completion representations were allegedly made after the contract to purchase Lot 181 was entered into in March 2005 and before that purchase was completed in March 2008. As is apparent from the pleading of these representations (set out hereunder), Dr Bennett has not nominated when, in this three year period, these representations were said to have been made. Furthermore, this pleading has many other deficiencies which I will turn to consider after setting it out in full. It is contained in para 18A of the final amended statement of claim as follows:
18A Further or in the alternative, subsequent to the Applicant entering into the Agreement but before completion thereof:
(a) there came a point in time (which the Applicant cannot further particularise on the state of the Respondent’s disclosure) when there existed no credit provider finance approval, or other dedicated separate body of funds such as would allow and be sufficient for the completion of the Development, in the manner and with the timing represented, to be undertaken irrespective of the number of sales effected in the Development, or like market or financial condition;
(b) The lastmentioned fact was known by each of:
A. Pearson, as a director of PPG and PPG Noosa;
B. Austin, as a director of Consolo, Consolo Property, Evenland, NRN and Elysium;
C. The other directors and general managers of these companies.
(c) Each of the Respondents knew that the Applicant had entered into the Agreement and that such Agreement was eventually due for completion on its terms;
(d) The lastmentioned fact was known by each of:
A. Pearson, as a director of PPG and PPG Noosa;
B. Austin, as a director of Consolo, Consolo Property, Evenland, NRN and Elysium;
C. The other directors and general managers of these companies.
(e) No attempt was made to communicate to the Applicant, in the sense that there was silence apropos the Applicant, the fact referred to in (a) above;
(f) The pre-completion conduct referred to above in this paragraph was conduct:
(i) engaged in “in trade or commerce” within the meaning of the TPA, in that it was engaged in or about the sale to the public of proposed lots of residential land, in the course of a business;
(ii) engaged in by Consolo, Consolo Property, NRN, Evenland, Elysium, PPG and PPG Noosa or one or some of them;
(iii) engaged in the course of the business, affairs or activities of each of the Respondents;
(iv) by reason of the above matters in this paragraph and paragraphs 1 and 4C(a) to (e), was engaged in on behalf of each Respondent, or one or some of them, within the meaning of s 84(2) of the TPA;
(g) Such pre-completion conduct was misleading and (sic) deceptive or likely to mislead or deceive the Applicant as a prospective purchaser, in contravention of s 52, and or in the alternative s 53A of the TPA in that, by reason of such conduct, any person in the position of the applicant may have been induced to believe that the lot construction, infrastructure and services the subject of Schedule A to this pleading would be constructed within a short period, namely by completion but if transcending the date of completion then with (sic) a short period thereafter;
(h) the Applicant was so induced to the lastmentioned belief.
68 To demonstrate the many deficiencies in this pleading, it is appropriate to begin at its concluding sub-paragraph and work backwards. First, while it goes to a matter of evidence rather than pleading, it is convenient to observe at the outset, as Mr Savage correctly pointed out in closing submissions, Dr Bennett did not give any evidence to the effect that he held the belief as pleaded in sub-para (h). Even if he had, for the reasons I have given below (at [69]), there is a significant inconsistency between the works described in sub-para (g) as the subject of that belief, and the works described in the pivotal fact in sub-para (a). Secondly, in sub-para (g), the pre-completion conduct is said to be misleading and (sic) deceptive or likely to mislead or deceive the applicant “as a prospective purchaser”. Yet, the introductory words of para 18A make it clear that the period of time during which the pre-completion representations allegedly arose was “subsequent to [Dr Bennett] entering into the Agreement” to purchase Lot 181. It necessarily follows that at that time, it was no longer possible for Dr Bennett to be misled or deceived “as a prospective purchaser”.
69 Thirdly, the works to be completed as described in sub-para (g) “the lot construction, infrastructure and services the subject of Schedule A to this pleading”, are far more limited than those described in the pivotal fact pleaded in sub-para (a), viz “the completion of the Development”. As I have already mentioned earlier in these reasons, the works pleaded in Schedule A include the construction of the house on Lot 181, the construction of Stage 1 of the development including the Community Centre and the related landscaping and streetscaping. By contrast, the “Development” is defined earlier in the final amended statement of claim as the “unregistered residential community title development … known as ‘Elysium Noosa’”. On its face, this refers to the whole development. It is not even limited to Stage 1. As I have also mentioned earlier in these reasons, the whole development involved the construction of 189 lots over as many as 17 stages.
70 Fourthly, in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357; [2010] HCA 31 (“Miller”) (at [5]), French CJ and Kiefel J emphasised the importance of clearly identifying the conduct said to be misleading or deceptive, particularly where one is pleading an allegation based on silence or non-disclosure. Specifically, their Honours said (at [5]) that:
Where silence or non-disclosure is relied upon, the pleading should identify whether it is alleged of itself to be, in the circumstances of the case, misleading or deceptive conduct or whether it is an element of conduct, including other acts or omissions, said to be misleading or deceptive.
To similar effect, see McGrath v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230; [2008] FCAFC 2 (“McGrath”) at [150] per Allsop J (as he then was).
71 This pleading shows a complete disregard for these observations. The pre-completion conduct is not clearly defined anywhere in any of the sub-paragraphs to para 18A. At best, there is a passing reference to “the pre-completion conduct referred to above” in sub-para (f). However, when one analyses what is “referred to above”, no conduct is expressly identified as the pre-completion conduct and one is left to infer that it must be confined to the “silence apropos [Dr Bennett]” pleaded in sub-para (e). This must be so because the matters pleaded in sub-paras (a) to (e) do not describe conduct as such, but rather describe various conclusions or states of affairs, viz: there was insufficient funding to complete the development (para (a)); the knowledge of the directors and general managers of some of the respondents (paras (b) to (d)); and the silence pleaded in para (e). It is true that the existence of Dr Bennett’s agreement to purchase Lot 181 is mentioned in para (c), but it is only referred to insofar as the respondents were alleged to have knowledge of it. It follows that this pleading appears to fall into the first category identified in Miller, viz where the silence or non-disclosure is itself, in the circumstances of the case, alleged to constitute the misleading or deceptive conduct.
72 Consistent with this, in his opening submissions, Mr Douglas described the relevant misleading or deceptive conduct as: “that of silence on the part of the respondents, who were engaged in a relationship with Dr Bennett in that he had signed a contract to purchase a lot, in the relevant respects pleaded”. Mr Douglas then quoted at length from the decision of the Western Australian Court of Appeal in Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193; [2011] WASCA 76 (“Owston Nominees”), which included the following (at [229]–[230]):
229. As Gummow J observed in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 40 (Black CJ and Cooper J agreeing):
But in any case where a failure to speak is relied upon the question must be whether in the particular circumstances the silence constitutes or is part of misleading or deceptive conduct. The expanded meaning given by s 4(2) to “conduct” should not distract attention from the fundamental issue in the case at hand.
230. Silence is not misleading only where there is a duty to disclose at common law or in equity: Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at 88; Demagogue Pty Ltd v Ramensky (at 40). Nevertheless, a particular relationship between the parties, whether that relationship gives rise to fiduciary or other general law duties, may assist in determining in the circumstances whether a failure to provide information, or the provision of partial information, can be characterised as misleading and deceptive: Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 465.
73 In his closing submissions, Mr Douglas pursued a similar theme when he submitted that:
The law is plain that conduct can be engaged in, or a representation made by silence or inaction. Whether that ensues depends upon the circumstances. In Greenwood v Martins Bank Ltd, Lord Tomlin observed: ‘Mere silence cannot amount to a representation, but where there is a duty to disclose deliberate silence … may amount to a representation.’
This common law jurisprudence applies, mutatis mutandis, to a TPA claim for misleading or deceptive conduct or a misleading or deceptive representation. … Given the analogous position at common law, there can be no doubt that s 53A ought to be similarly construed.
(Paragraph numbers deleted)
74 The reference to s 53A of the TPA in both the closing submissions and para 18A of the final amended statement of claim is curious. Mr Douglas did not elaborate on it elsewhere in his closing submissions. The relevant part of s 53A for present purposes is s 53A(1)(b). It provides as follows:
(1) A corporation shall not, in trade or commerce, in connexion with the sale or grant, or the possible sale or grant, of an interest in land or in connexion with the promotion by any means of the sale or grant of an interest in land:
(a) …
(b) make a false or misleading representation concerning the nature of the interest in the land, the price payable for the land, the location of the land, the characteristics of the land, the use to which the land is capable of being put or may lawfully be put or the existence or availability of facilities associated with the land; …
75 It can be seen that s 53A(1)(b) differs from s 52 in that it is confined to a false or misleading “representation” whereas s 52 applies to conduct which is more widely defined in s 4(2) of the TPA: see the discussion in Miller at [14]–[18]. If this is so, s 53A(1)(b) could not apply to misleading or deceptive conduct that is said to arise from non-disclosure or silence. The same distinction between a representation and conduct is drawn in s 51A: see McGrath at [147] per Allsop J. Even if this is not so, and the word “representation” in s 53A can be construed broadly to include conduct (see Given v Pryor (1979) 39 FLR 437 at 441, where Franki J adopted a broad definition of the word “representation” from Halsbury’s Laws of England (3rd ed), vol 26, para 1515, which included conduct), it is not immediately apparent to me how the alleged implied representations about the funding necessary to complete the Elysium Noosa development relevantly concern any of the matters relating to an interest in land described in s 53A(1)(b), viz the nature of the interest, the price payable for the land, the location of it, etc.
76 To confuse matters even further, when I asked Mr Douglas during closing submissions how the duty of disclosure to Dr Bennett arose, he said it had its foundation in the original pre-contract representations, particularly as they related to the timing of the construction of the Community Centre. Significantly, he did not mention the contractual relationship. This is particularly confusing since the only hint of a mention of the pre-contract representations in para 18A is the reference in sub-para (g) to: “the lot construction, infrastructure and services the subject of Schedule A to this pleading”. This refers to the construction works in Schedule A not the pre-contract representations therein.
77 From this survey of the pleadings and submissions on this issue, confusing as they are, the following things appear to be relatively clear in relation to the implied pre-completion representations:
(a) Dr Bennett is not relying on any term of his contract to purchase Lot 181, nor the existence of that contractual relationship itself;
(b) Instead, he is relying upon the existence of a “duty to disclose” (see at [73] above) which he says arises out of the pre-contract representations. However, he has not identified which of those pre-contract representations are pertinent to this duty; and
(c) he accepts he cannot rely upon mere silence, but he has not identified any circumstance that takes his case on this issue beyond a situation of mere silence.
Issue 2 – impossible to discern from pleading
78 It is hardly necessary to say that the situation described above is quite unsatisfactory. It is not my duty, in deciding this case, to trawl through the pleadings to try to piece together Dr Bennett’s case. Indeed, to do so and decide this issue on a basis that is not clearly pleaded could do an injustice to the respondents if they did not divine from the pleadings the same issue as I did. Where a person is pleading an implied representation arising out of a failure to disclose, or silence, which has its foundation in the circumstances surrounding that silence, or separately some duty to disclose in the particular circumstances, it is absolutely critical that the circumstances relevant to either situation are pleaded clearly and precisely. In the absence of such a pleading in this case, I do not consider that I can begin to assess whether this implied pre-completion representation arises. Nonetheless, I can say this. If it is based upon some implied representation to provide funding for the project arising out of one or more of the express representations and the circumstances in which it was (or they were) made, I have already rejected that at [52] and [57] above. Otherwise, it is not immediately apparent to me how any of the express representations in Schedule A could give rise to an implied representation of the kind pleaded in para 18A(aa). Nor, apart from the contractual relationship, which no longer appears to be relied upon, is there any other circumstance apparent to me that could support any duty to disclose in the terms of this pre-completion implied representation. For completeness, I should add that many of the leading authorities on these issues are identified in Mr Douglas’ submissions above at [73]–[74]. However, it is unnecessary, in the circumstances, to examine them. For the same reason it is unnecessary to delve into the voluminous evidence that was called by the parties dealing with the costing and financing of the development during its four to five years lifetime.
79 For these reasons, I must reject this aspect of Dr Bennett’s case.
Issue 3 – Does s 53A(1)(b) apply to the pre-contract representations made?
80 I have limited this issue to the pre-contract representations because I have not been able to discern, and therefore determine, the implied pre-completion representations issue: see at [78] above.
81 Section 53A(1)(b) of the TPA is set out at [74] above.
Contentions
82 In their closing submissions, the Consolo respondents accepted that the representations in paras 13, 14, 19 and 20 of Schedule A of the final amended statement of claim (if made, which they denied) went to the characteristics of Lot 181 within the terms of s 53A(1)(b). They also accepted that the representations as to the timing of the completion of the Community Centre building (if made, which they denied) went to the facilities associated with Lot 181 within the terms of s 53A(1)(b). This representation is set out in para 3 of Schedule A: see [13] above. However, they submitted that where this section refers to “land” or “an interest in land”, that means a proprietary interest or estate in land, not an interest in the sense of the purpose for which the land might be used. This submission can be rejected at once because I do not consider that any of the pre-contract representations is of this kind. Further, they submitted that s 53A(1)(b) does not extend to representations concerning land other than Lot 181, in this case Scheme land where the Community Centre building was to be built. On this aspect, Mr Savage relied upon the observations of Fox J in Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 (“Brown”) (at 349) as follows:
It is not necessary in the circumstances that I explore at length the question whether the facts already recited also make a case within s 53A (1) (b). I shall content myself therefore with saying that I doubt whether either of the statements come within any of the formulations concerning which “a false or misleading statement” must be made, if it is to satisfy the paragraph. In particular I doubt whether representations concerning shops on other land can constitute a “characteristic” of the particular interest in land.
(Emphasis added)
83 For their part, the Pearson respondents simply submitted that s 53A was not enlivened. Not surprisingly, Mr Douglas submitted it was. Furthermore, he submitted that the Community Centre was part of the common property of this Community Title Scheme and s 53A(1)(b) extended to Dr Bennett’s interest as a lot owner in the land comprising the common property in that Community Title Scheme.
84 For the reasons that follow, I consider both of the concessions made by the Consolo respondents (at [82] above) were properly made. Furthermore, I consider that some, but not all, of the other representations in Schedule A fall within the terms of s 53A(1)(b). In reaching this conclusion, I essentially agree with Mr Douglas’ submissions as to what constitutes the land and facilities associated with land in this case, for the purposes of s 53A of the TPA. I will now consider those expressions as they apply to the representations pleaded in Schedule A.
“Land” includes buildings
85 First, as noted above, I agree with the Consolo respondents that the representations in paras 13, 14, 19 and 20 of Schedule A are representations about the characteristics of the house and therefore the land comprising Lot 181 itself. While I am dealing with the building on Lot 181, it is convenient to mention a matter that arises from the definition of the expression “interest in land” in s 53A(3) of the TPA. That section provides as follows:
In this section, interest, in relation to land, means:
(a) a legal or equitable estate or interest in the land;
(b) a right of occupancy of the land, or of a building or part of a building erected on the land, arising by virtue of the holding of shares, or by virtue of a contract to purchase shares, in an incorporated company that owns the land or building; or
(c) a right, power or privilege over, or in connexion with, the land.
86 The word “land” is not defined anywhere in the TPA. However, at the time that the events in this case occurred, it was defined in s 22(1)(c) of the Acts Interpretation Act 1901 (Cth) as:
(1) In any Act, unless the contrary intention appears:
…
(c) Land shall include messuages tenements and hereditaments, corporeal and incorporeal, of any tenure or description, and whatever may be the estate or interest therein …
87 I interpolate that s 22 of the Acts Interpretation Act 1901 (Cth) has since been repealed and the definition of “land” in the same terms is now included in s 2B of that Act. The point in raising this matter is that it might be thought that the separate treatment of land and buildings in s 53A(3)(b) of the TPA contains an indication that a contrary intention appears for the meaning of the word “land” as it is used elsewhere in s 53A. That is, it does not include buildings. However, since no counsel submitted this was so, I will proceed on the basis that the word “land” in s 53A(1)(b) includes buildings.
“Interest in land” includes common property
88 Turning then to the expression “interest in land”. In this case that expression raises considerations that extend beyond those that would commonly apply to a straightforward sale and purchase of a suburban block of land containing a dwelling house. This is so because the contract Dr Bennett entered into involved the purchase of a proposed lot in a community title scheme, which scheme was to be governed by the Body Corporate and Community Management Act 1997 (Qld) (the BCCM Act). A community title scheme is established under the BCCM Act when the first community management statement for the scheme is recorded: see s 24(2). That occurred in relation to the Elysium Noosa Community Title Scheme on 25 February 2008. From that point, the lots in the Elysium Noosa Community Title Scheme became part of the Scheme land in the Scheme. Furthermore, under the BCCM Act, the Scheme land included the common property in the Scheme: see s 10.
89 It is self-evident that the lots and common property included in the Scheme land had to be constructed before the community title scheme could be established. Thus the contract Dr Bennett signed for the purchase of Lot 181 described that lot as a “proposed lot” and required, among other things, that Elysium Noosa Pty Ltd was to:
(a) obtain a development permit from the Noosa Shire Council authorising construction of the scheme improvements;
(b) procure construction of the Scheme Improvements (as described immediately above) substantially in accordance with the plans and specifications attached to the contract; and
(c) procure construction of the dwelling on Lot 181 substantially in accordance with the dwelling plans and specifications attached to the contract.
90 Once this construction work was undertaken and the Scheme was duly established, people like Dr Bennett, who purchased lots in the Elysium Noosa Community Title Scheme, acquired particular rights and interests by virtue of the provisions of the BCCM Act. They included the legal title to the lot concerned, membership of the body corporate for the Scheme (see s 31 of the BCCM Act), ownership of the common property of the Scheme “as tenants in common, in shares proportionate to the … lot entitlements of their respective lots” (see s 35(1) of the BCCM Act) and the latter on the basis that the lot owner’s interest was inseparable from that owner’s interest in the common property in the Scheme (see s 35(3) of the BCCM Act). A lot owner also acquired the right to occupy and use the common property in the Scheme.
91 It followed that, upon settlement of his purchase of Lot 181, Dr Bennett not only obtained title to that lot and the dwelling that had been constructed on it, but he also acquired, as owner of a lot in the Elysium Noosa Community Title Scheme: membership of the body corporate for the Scheme; a proportionate ownership of the common property in the Scheme; and, as noted above, a right to occupy and use the common property in the Scheme. Thus, if it had been constructed, Dr Bennett would have acquired an interest in the land upon which the Community Centre was to be built, and the Community Centre building itself. It follows that, in the terms of s 53A(3)(a) of the TPA, he acquired a legal interest in the land and buildings comprising both Lot 181 itself and a proportionate legal interest in the common property comprised in the Elysium Noosa Community Title Scheme. This would have included the Community Centre building if it had been constructed. Further, while for most purposes any rights of occupation and use of the common property in the Scheme would be subsumed in the legal interest in that land, that is not necessarily so in relation to such rights and interests that did not truly form a part of the legal interest in that land. In this case, that would probably apply to the right to use any chattels or services provided within the Community Centre building (if it had been constructed). However, if they do not form a part of the legal interest in the land comprising the common property, those rights and interests would, in my view, fall within the provisions of s 53A(3)(c) as: “a right, power or privilege over, or in connexion with, the land”.
92 Before leaving this issue, I should record that, for these reasons, I do not consider that the doubts expressed by Fox J in Brown apply in the factual circumstances of this case. Brown involved a representation made about other shops that were to operate in a new shopping centre, on the basis of which the plaintiff took a lease over one of the shops. In that situation, there is an obvious separation of the interests in the land constituted in each shop leasehold. By contrast, in this case, I consider the interest in the land comprising Lot 181 is extended by the BCCM Act beyond that particular parcel of land to include the land comprising the common property in the Elysium Noosa Community Title Scheme such that there is no relevant separation of those interests in that land.
“Facilities associated with land”
93 Finally, it is necessary to consider the expression “facilities associated with the land”. In Videon v Barry Burroughs Pty Ltd (1981) 37 ALR 365 (at 386), Fisher J observed, in the context of a prosecution for a breach of s 53A(1)(b) in relation to various statements made in connection with a residential subdivision, that:
A facility in this context is a feature or circumstance which facilitates or renders easier or more enjoyable a person’s occupation, whether as owner of a dwelling- house or otherwise, of a piece of land.
His Honour went on to observe that the availability of electricity, gas or sewerage services were obvious examples of such facilities. I respectfully agree with, and adopt, this definition of the word “facilities” in s 53A(1)(b). As to the words “associated with”, there is no apparent reason why those words should not be given their ordinary meaning. “Associated” is relevantly defined in the Macquarie Dictionary (Macquarie Dictionary Online, accessed 2012) to mean:
to unite; combine: coal associated with shale … anything usually accompanying or associated with another; an accompaniment or concomitant.
94 And in the Oxford Dictionary (Oxford English Dictionary Online, accessed 2012) as:
combined locally, circumstantially, or in classification (with); occurring in combination.
95 In this instance, I consider the Oxford Dictionary definition more appropriately conveys what is intended.
Para 1 of Schedule A – the Community Centre and other facilities
96 Applying these definitions and conclusions to the representations in Schedule A, first I consider the Community Centre and the other facilities that were to be constructed as a part of the common property of the Elysium Noosa Community Title Scheme, as described in the representations in para 1 of Schedule A, were, within the terms of s 53A(1)(b) of the TPA, all part of the interest in land comprising Lot 181.
Para 2 of Schedule A – the contemporaneous completion of the lots in Stage 1
97 The representation in para 2 of Schedule A relates to the completion and settlement of all the houses in Stage 1 of the Elysium Noosa development at or about the same time. The obvious purpose of this was so that Dr Bennett could avoid the noise, traffic and other disruptions associated with construction work on nearby lots. On that basis, I consider that is a circumstance that would facilitate or render more enjoyable Dr Bennett’s occupation of Lot 181 within the terms of the definition of “facilities” set out above. Further, it is associated with the land concerned because it is circumstantially combined with it. I therefore consider this representation related to a facility associated with the land comprising Lot 181 within the terms of s 53A(1)(b) of the TPA.
Para 3 of Schedule A – the contemporaneous completion of the Community Centre
98 As I have already observed above (at [84]), I consider the Consolo respondents were correct in conceding that the representations in para 3 of Schedule A as to the timing of the completion of the Community Centre building was a facility associated with Lot 181 itself within the terms of s 53A(1)(b). Insofar as they submitted there was a separation between the land comprising Lot 181 and the land comprising the common property that was to be the Community Centre, I have already rejected that submission above (see at [92]).
Paras 4 and 5 of Schedule A – provision of vehicles
99 As to the representations in paras 4 and 5 of Schedule A, I do not consider that the provision of a shuttle bus service (para 4), or the provision of a vehicle for the residents (para 5), could be said to be “associated” with the land or buildings comprising the common property in the Elysium Noosa Community Title Scheme within the terms of s 53A(1)(b). This is so because neither of them is land, nor could be said to be combined locally, circumstantially, or in classification with the land comprising Lot 181.
Para 8 of Schedule A – provision of Community Centre services
100 However, I do not consider that this same reasoning applies to the newspapers and refreshment services to be provided within the Community Centre in terms of para 8 of Schedule A. I consider those services could be said to be facilities combined locally or circumstantially with the land and buildings comprising the common property in the Elysium Noosa Community Title Scheme. Alternatively, or as well, I consider those services would constitute a right or privilege in connection with that land within the terms of s 53A(3)(c) of the TPA: see at [91] above. Thus, I consider this representation falls within the terms of s 53A(1)(b).
Paras 6 and 7 of Schedule A – the quality of architectural design and finishes in the Community Centre and other lots
101 While the representations described in paras 6 and 7 of Schedule A do not go to the characteristics of the dwelling on Lot 181, I consider they do go to the quality of the architectural designs and finishes to be used on all the buildings to be constructed in the Elysium Noosa Community Title Scheme, including the Community Centre. Given that I consider Dr Bennett’s interest in land here extended to and included both Lot 181 and the land and buildings comprising the common property in the Elysium Noosa Community Title Scheme, I consider those representations go to the characteristics of all the land and buildings comprising the common property in the Community Centre (para 6 of Schedule A), such that they fall within the terms of s 53A(1)(b). However, I do not consider that this would extend to the like features of the separate land and dwellings comprising each of the other lots in the Elysium Noosa Community Title Scheme (para 7 of Schedule A), excluding the common property component thereof. In this respect, I consider these other lots are in a similar position to the other shops in Brown and, therefore, I respectfully agree with the reservations expressed by Fox J in that case: see at [82] above.
Paras 9 and 10 of Schedule A – approach to landscaping and streetscaping
102 Finally, the representations described in paras 9 and 10 of Schedule A refer to the approach to be taken to landscaping and streetscaping in the construction of the Elysium Noosa Community Title Scheme. The landscaping and streetscaping in the development obviously formed part of the common property in the Scheme. As such, I consider they constituted features that could facilitate or render more enjoyable Dr Bennett’s occupation of Lot 181 and the land comprising the common property in the Elysium Noosa Community Title Scheme. Furthermore, they are plainly combined locally or circumstantially with that land. I therefore consider that those representations fall within the terms of s 53A(1)(b).
Conclusion on issue 3 – s 53A(1)(b) applies to some, but not all, of the pre-contract representations made
103 To sum up on this issue, for the reasons expressed above, of the pre-contract representations contained in Schedule A, I consider those described in paras 1–3, 6–10; and 13, 14, 19 and 20 all fall within the terms of s 53A(1)(b). However, I do not consider that paras 4 and 5, dealing with the provision of motor vehicles, or 6 and 7, insofar as they refer to other lots (excluding common property) in the Elysium Noosa Community Title Scheme, fall within the terms of that section. So, the next step is to consider whether some, or all, of these representations were false or misleading within the terms of s 53A(1), or were misleading or deceptive in terms of s 52.
Issues 4 and 5 – Were the representations misleading or deceptive? – Did the Burkes have reasonable grounds for making them?
The pleadings
104 These issues go to the question whether the representations that I have found were made by the Burkes were misleading or deceptive, or were likely to mislead or deceive, in the terms of s 52 of the TPA, or were false or misleading in the terms of s 53A(1). It is convenient to deal with issues 4 and 5 together because all of the representations I have found to have been made by the Burkes were representations with respect to future matters. Accordingly, Dr Bennett has pleaded reliance on s 51A(2) of the TPA. He did that in para 17 of the final amended statement of claim as follows (excluding the references to s 53A):
(a) Such conduct was with respect to a future matter within the meaning of s.51A of the TPA;
(b) In the case of each item of conduct, as is pleaded in Schedule A hereto, such future matter did not crystallise, or come to pass as represented;
(c) In the premises invokes s.51A(2), and says that such conduct was misleading and (sic) deceptive contravention of s.52 ....
105 Like many other aspects of the final amended statement of claim, this pleading is deficient. It does not plead that there was a want of reasonable grounds to make the representations pleaded in Schedule A in the terms of s 51A (see below). Nonetheless, I will proceed as suggested by French J (as he then was) in Fubilan Catering Services Limited v Compass Group (Australia) Pty Ltd [2007] FCA 1205 (“Fubilan”) (at [547]) and take it that this is what Dr Bennett intended to plead.
Section 51A
106 Section 51A provides:
(1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.
(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.
(3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.
107 It is to be noted that s 51A does not create an independent cause of action: see Ting v Blanche (1993) 118 ALR 543 at 552 per Hill J and Fubilan at [545]. Instead, it is an evidentiary provision which achieves a “limited extension of the scope of s 52” of the TPA: see Fubilan at [545] and [547]. Since it is expressed to apply to “this Division”, which includes s 53A, I consider it achieves the same extension to its scope. However, it should also be noted that s 51A only applies to representations, as distinct from conduct more broadly (see McGrath at [147]). Further, while there will be little, if any, practical difference in this case, it only deems representations misleading, as distinct from deceptive (s 52), or false (s 53A).
108 Before turning to consider the operation of s 51A itself, it is appropriate to briefly consider the primary proscription contained in ss 52 and 53A of the TPA.
The characterisation task under s 52 or s 53A
109 In Campbell at [25], French CJ observed that the task posed by s 52 (and by parity of reasoning, s 53A) involved the characterisation of the conduct concerned. He said:
… that generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error … 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.
110 His Honour added that the test is “necessarily objective”. Where the conduct occurs in dealings between individuals, his Honour observed (at [26]) that:
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.
111 Finally, (at [32]), his Honour elaborated upon the task of properly characterising the conduct as follows:
It is important in considering whether conduct is misleading or deceptive to identify clearly the conduct to be characterised … If the conduct is said to consist of a statement made orally or in writing, the first question to be asked is what kind of statement was made. Was it a statement of historic or present fact made on the basis that its truth was known to its maker? Was it a statement of opinion? That is to say was it a statement of “judgment or belief of something as probable, though not certain or established”? … The term “estimate” itself, used as a verb, means the “act of valuing or appraising” or an “approximate judgement of the number, quantity, position, etc, of something”.
112 It is also important to record that the characterisation of a representation said to be misleading has to be undertaken as at the time that the representation was made, not subsequently with the benefit of hindsight, although later events may be taken into account. Further, the mere fact that a representation as to future conduct does not come to pass does not make that representation misleading: see Bill Acceptance Corporation Ltd v GWA Ltd (1983) 50 ALR 242 at 250 per Lockhart J and McGrath at [146] and [198].
Section 51A(2) – the deeming provision and the onus of proof
113 Returning then to s 51A, as noted above, Dr Bennett places reliance upon the deeming provision contained in s 51A(2). I have inferred that he has also pleaded that the Burkes did not have reasonable grounds to make the representations they did. On this aspect, Mr Douglas submitted that the respondents have not adduced evidence to the contrary to displace the deeming provision in s 51A(2). For their part, the respondents accept that s 51A may apply in the circumstances of this case, but they claim that if it does, they have adduced evidence to establish that, if the Burkes made the representations, there were reasonable grounds for them to do so. I should add that there does not appear to be any dispute that they can rely upon the evidence of persons other than those who made the alleged representations: see Cummings v Lewis (1993) 41 FCR 559 at 566.
114 The legislative history of s 51A and the way in which the deeming provision in s 51A(2) operates, particularly as it affects the legal and persuasive onus of proof, were exhaustively examined by Allsop J in McGrath at [165]–[194] (Emmett J agreeing at [6]). Following that examination, his Honour reached this conclusion about the operation of s 51A(2) (at [192]):
If evidence is adduced by the representor that is said to be evidence to the contrary, it will be for the Court to determine whether it is to the contrary in the sense just discussed. If it is, the deeming provision will cease to operate. That was the view of Emmett J, as understood by Keane JA. That is my view.
115 It is convenient to interpolate that Allsop J did go on to express the view that if his understanding of the decision of Keane JA (as he then was) was incorrect and instead his Honour’s view was that established authority was to the effect that s 51A(2) operated to reverse the legal and persuasive onus of proof, he would be forced to conclude that his Honour was plainly wrong. In that event, Allsop J concluded that the correct position was that s 51A(2) did not effect a reversal of the legal and persuasive onus of proof: see at [192].
116 To understand the primary conclusion Allsop J reached, it is necessary to identify the view of Emmett J to which his Honour referred and the understanding of that view, as expressed by Keane JA. The former view – that of Emmett J – was expressed in Australian Competition and Consumer Commission v Universal Sports Challenge Ltd [2002] FCA 1276 at [46] as follows:
Another question concerning the effect of s 51A(2) is whether the provision does no more than require a corporation to go into evidence. That is to say, it does not ultimately reverse the onus but simply provides that the deeming takes effect unless the corporation adduces some evidence to the contrary. Once such evidence is adduced, it is for the Court to make a judgment, on the balance of probabilities, having regard to all the evidence, as to whether the corporation had reasonable grounds for making the representation. If an applicant elects to adduce no evidence as to that question, then the only evidence before the Court would be that adduced by the corporation. Whether that is adequate to establish that the corporation had reasonable grounds for making the representations is a matter for the Court. However, once the corporation has adduced some evidence, there is no deeming arising from s 51A(2).
(Emphasis in original)
117 The latter understanding – that of Keane JA – was expressed in Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 at [127]:
… it seems to me that, understood correctly, Emmett J is only advancing the common sense proposition that, when a representor does adduce evidence attesting to reasonable grounds, it will be a matter for the court to determine if that evidence does establish reasonable grounds, and so there will be no automatic deeming as there would be if a representor did not adduce any evidence at all. If this is all that was meant by his Honour's remarks then I would respectfully agree with them.
118 Based on this understanding, Keane JA went on to draw the following conclusion (at [128]):
It follows that I do not read the reasons of Emmett J to go so far as to suggest that the burden shifts back to a representee once evidence has been adduced by the representor. The wording of s 51A(2) means that if the evidence adduced by a representor is not actually “to the contrary”, ie it does not tend to establish reasonable grounds for making the representation, then no evidence of the kind required by the section will have been adduced and there is no reason why the deeming provision contained in s 51(2) would not continue to operate. It would, of course, be a matter for the court to determine whether or not the evidence adduced was “to the contrary”.
119 Mr Douglas submitted that I should take this approach when applying the s 51A(2) deeming provision in this case. It is debateable whether the decision of Allsop J on s 51A in McGrath was part of the ratio decidendi of that case, but, in any event, even if that decision is not strictly binding on me, having carefully read and considered it, I consider (with respect) the reasoning is cogent and the conclusion is correct. I therefore propose to follow it.
120 In this case the respondents have adduced quite extensive evidence directed to showing “to the contrary” of the deeming provision in s 51A(2) that the Burkes had reasonable grounds to make the representations they did. That being so, I consider the automatic deeming provision in that sub-section has been displaced. It is now a matter for me to assess under s 51A(1), on all the evidence, including the respondents’ evidence and any evidence called by Dr Bennett, whether I am satisfied, on the balance of probabilities, that the Burkes had reasonable grounds to make the representations they did. If I am so satisfied, then s 51A(1) will not apply and the representations will not be taken to be misleading under s 51A. On the other hand, if I am not so satisfied, the representations they made will be taken to be misleading in terms of s 51A(1). In the event I am not persuaded either way, since s 51A does not effect any reversal of the real and persuasive onus, it seems to me Dr Bennett will fail to establish that particular representation is misleading under s 51A(1). This is so because, as the applicant, he still bears the underlying persuasive onus on that issue.
The contentions
121 Turning then to that assessment, Mr Douglas’ submissions focused almost exclusively on the failure to construct the Community Centre. He submitted that, while there was undoubtedly a belief by the Burkes that the Community Centre would be constructed, the evidence showed that there was no reasonable basis for that belief. He pointed to the facts that there were no construction plans in place for the Community Centre at the time of Dr Bennett’s contract in March 2005, the design for the Community Centre was only preliminary, there was no development approval for it and the financing of it was only at a preliminary stage.
122 The Consolo and Pearson respondents variously submitted that there was ample evidence to establish that, if they were held to be responsible for the Burkes’ representations, they had reasonable grounds for making them. They pointed to the feasibility studies for the project conducted in 2004 and 2005, the detailed plans for the project, the charts and cash flows that were prepared, the detailed costings for the project prepared by Napier & Blakeley Quantity Surveyors during 2005 and the financing for the project that was put in place during 2005 and was drawn down from early 2006. They submitted that the delays experienced with the Noosa Shire Council in obtaining development approval for the Community Centre and those experienced in finding a competent builder to build the Community Centre were explained on the evidence and did not detract from the reasonable grounds the Burkes had for expressing the representations they did in early 2005.
Some further background history to the development
123 Before I proceed to consider these contentions, it is appropriate to briefly set out some more of the background history to the Elysium Noosa development. The evidence about that subject was variously given by Mr Clive Austin, Mr Michael Austin, Mr Michael Dowling and Ms Victoria Tompson. The Austins were both directors of all the Consolo respondents and the other Consolo subsidiaries, including NR Nominees. They were residents of Sydney. Mr Dowling and, subsequently, Ms Tompson served as the joint project manager for the development. They were both employed by Consolo Property (see [125] below). The evidence on this subject from these witnesses was quite extensive, so what follows is a summary beginning at about mid 2004.
124 On 6 July 2004, the Consolo Board made a decision to purchase the land necessary for the Elysium Noosa development. As a part of that decision, Consolo decided to invest $14.5 million equity in the project. To do that, it used its wholly owned subsidiaries, Evenland Pty Ltd and NR Nominees, to acquire control of a company called Indigo (Noosa) Pty Ltd, which company had already contracted to purchase the land in question. Indigo (Noosa) Pty Ltd later changed its name to Noosa Rise Pty Ltd and that company, in turn, changed its name to Elysium Noosa Pty Ltd. Early in 2004, Indigo (Noosa) Pty Ltd had obtained a development approval from the Noosa Council to subdivide and develop the land. Once it had acquired Indigo (Noosa) Pty Ltd, NR Nominees caused an application to be made to the Noosa Council to amend this earlier development approval to encapsulate the Elysium Noosa development. Thereafter, Napier & Blakeley, a firm of quantity surveyors, was employed to estimate the costs of the development. Using that costs estimate, by about January 2005, a master program for the design and construction of Stage 1 of the development was prepared using an estate master software program. That was accompanied by a feasibility study for the project.
125 As is already recorded elsewhere in these reasons, in about August 2004, NR Nominees entered into a joint venture with PPG (Noosa) to pursue the Elysium Noosa development. Mr David Pearson, who lived in Brisbane, was a common director of both PPG and PPG Noosa. While the joint venture began in August 2004, it appears the formal joint venture agreement was not signed until 15 August 2006. However, Mr Michael Austin had some recollection that another copy of that agreement was signed earlier than this date, but misplaced. Whatever the explanation is, the evidence shows that the joint venture parties complied with the terms of the joint venture agreement from August 2004. Under the terms of that agreement, Consolo Property was appointed project manager of the development jointly with PPG. Mr Michael Dowling was appointed to that role by Consolo Property, until he left that company in May 2006 and was replaced by, variously, Ms Tory Tompson and Mr Sean McKeown. In this capacity Mr Dowling prepared the master program and feasibility study described in [124] above. His role in the joint project management was to secure the financing for the project, attend to the preparation of feasibility studies and otherwise provide accounting and administrative support. Mr David Pearson was appointed by PPG as the other joint project manager. His role in the joint project management was the marketing, promotion and advertising of the project.
126 The overall management of the development was under the control of an Operating Committee that was chaired by Mr Michael Austin. As well, there was a site committee which was responsible for providing monthly reports on building progress and expenditure to BOS International (Australia) Ltd (BOS), as the main financiers for the development (see [127] below).
127 In December 2004, Elysium Noosa Pty Ltd entered into a marketing consultancy services agreement with PRD and a separate project marketing agreement with PRD Realty Pty Ltd. Mr David Pearson negotiated both of these agreements and Mr Michael Austin signed them as a director of Elysium Noosa Pty Ltd. A sales office was established on the Elysium Noosa site by late January 2005. As at March 2005, Mr Dowling estimated that $135 million total external funding was required for the project. $100 million to $110 million of this was required to undertake Stage 1 to a “cost to complete” basis. While there is a dispute about the precise timing, the financing for the project was finalised in late 2005, when a facility of $96 million was obtained from BOS, together with a facility from a mezzanine financier for the sum of $39.5 million.
128 It was a pre-condition for the BOS facility that 30 lots had to be pre-sold for the project by 31 December 2005. The existence of such a pre-sales condition was reflected in the provisions of the draft contract for purchase of Lot 181 (see cl 3.1 at [63] above). That condition was duly met and the finance for Stage 1 of the development was drawn down progressively from early 2006. Construction was undertaken throughout 2006 and 2007. There was delay to the original timetable for construction, which was due for completion in March 2007. As a result, Lot 181 was not completed ready for settlement until about February or March 2008.
129 The joint venture began to breakdown in about April 2007 and was formally terminated in August/September 2007.
130 Finally, it is pertinent to the issues presently under consideration to record there is no dispute between the parties that:
(a) some changes were made to features of the house on Lot 181, from the features shown in the plans and schedule of finishes that formed part of the contract for Lot 181; and
(b) neither the Community Centre building, nor the balance of the houses in Stage 1, were completed contemporaneously with Dr Bennett’s purchase.
Five categories of representations
131 I will now turn to make the assessment described above (at [120]), viz whether on all the evidence I am satisfied on the balance of probabilities that the Burkes had reasonable grounds to make the representations they did as at early 2005.
132 In making this assessment, it is convenient to consider the various representations in Schedule A in the following categories:
(a) those directly or indirectly connected with the construction of the Community Centre: paras 1, 3, 6 (in part) and 8;
(b) those directly or indirectly connected with the construction of the other lots in the Elysium Noosa development: paras 2, 6 and 7 (insofar as they relate to the other lots);
(c) those that relate to the provision of vehicles that are independent of, and not connected with, the construction of Lot 181, or Stage 1 of the Elysium Noosa development: paras 4 and 5;
(d) those that relate to the construction of aspects of the common property comprising Stage 1, excluding the construction of the Community Centre: paras 9 and 10; and
(e) those that relate to aspects of the construction of the house on Lot 181: paras 13, 14, 19 and 20.
133 Before turning to consider each of these categories in turn, it is appropriate to reiterate that this assessment has to be undertaken at the time the Burkes made the representations in early 2005, but it may take into account future events. It is also important to recall that the assessment is an objective one (see the authorities at [109]–[112] above).
The construction of the Community Centre (paras 1, 3, 6 and 8)
The Consolo chronology
134 As a part of his closing submissions on this issue, Mr Savage produced a chronology of the relevant events relating to the Community Centre. That chronology contained 39 items between 16 December 2004 and 16 September 2008. Only three of those items related to the period at or before March 2005, when the Burkes made the representations to Dr Bennett. Those items are as follows:
1. On 16 December 2004 an amended decision notice issued from the Noosa Council with respect to the Development. The plan accompanying that decision notice referred to “Group Housing including ancillary recreational & allied community use facilities in private space complying with the key requirements contained on this plan”.
2. On 17 December 2004 Napier & Blakeley, a highly experienced firm of quantity surveyors, prepared a specific report in relation to the construction cost estimate for the Community Centre assessing the cost at $3.2M inclusive of GST specifically referable to plans of the development as approved.
3. As at January 2005:
a. There was a master program for design and construction of all the facilities proposed for the development which showed the scheduling of the various elements of the Development including scheduling of the Community Facilities (Clubhouse and associated facilities) contemporaneously with schedule (sic) construction dates of Stage 1 houses; and
b. Construction costs for the Community Centre and community facilities had been included in feasibilities.
No development approval
135 The first document in this chronology is the letter from the Noosa Council dated 22 December 2004 confirming a decision of 16 December 2004 to approve the changes to the development approval that had previously been granted to Indigo (Noosa) Pty Ltd (see [124] above). The first point to be made about this development approval is that the approval letter to which it is attached, does not mention the Community Centre building, nor describe it as a separate structure which had been approved as a part of the changes to the earlier development approval. Further, the plan attached to the approval letter, which was prepared by the PMM Group, a firm of town planners, employed by Noosa Rise Pty Ltd, only refers to two buildings, or groups of buildings: an “Estate sales office” and “detached dwelling[s] within a group housing lot”. Significantly, there is no mention of a Community Centre building, or any similar structure.
136 In his closing submissions, Mr Savage sought to address this issue by pointing to the statement at the bottom of this PMM plan: “Group housing including ancillary recreational and allied community use facilities in private open space complying with the key requirements contained on this plan”. He claimed that this reference to “ancillary recreational and allied community use facilities” implicitly included the Community Centre building. Mr Michael Austin made a similar claim in his evidence, viz that the Community Centre building was ancillary to the whole development. Similarly, in his cross-examination, Mr Dowling claimed the Community Centre building was implicitly mentioned in cl 2.7 of the late 2004 development approval. That clause provided: “Swimming pools, recreational facilities and toilet blocks shall not be located below flood level, except for part of tennis court A and the public walkway and limited seating, as specified in condition 3.7”.
137 While mentioning these claims, it is pertinent to record that there is some other evidence that shows that the Consolo respondents were not always so confident about the Community Centre building being included within the terms of the late 2004 development approval. That evidence is contained in the October 2006 minutes of the Operating Committee for the development, as follows:
Community facility – Amendments are being implemented to bring the cost back to budget. Suggested that plumbing plan is lodged with Council to give them an idea of what we are building on top. Facilities supposed to be ancillary to subdivision, so we need to query whether that is Council’s attitude so that it is not a shock to Council when it is built. This should be a starting point, then get written letter to show that they accept our plans as ancillary prior to commencing construction.
(Emphasis added)
138 This minute is insightful because the proposition that the Community Centre building was ancillary to the development, was roundly rejected by the Noosa Council in its letter to the PMM Group on 5 February 2008. In that letter, the Council said that:
The development approval is for a group housing development as defined in the Schedule to the Planning Scheme for Noosa Council and the Schedule’s definition of group housing development does not include community facilities as proposed. The proposed community facilities are not contemplated by the development approval and are not considered ancillary like the approved tennis courts.
139 As a consequence of this letter, Elysium Noosa Pty Ltd caused the PMM Group to apply for an amendment to the development approval. That approval was eventually granted on 16 September 2008, as confirmed in the letter from the Sunshine Coast Regional Council (the successor to the Noosa Council) dated 19 September 2008. The plan attached to that approval refers to “community use facilities” and states that those facilities:
are to be located in accordance with this plan of development and are to be developed generally in accordance with the community centre proposal plans prepared by Cox Raynor as follows:
140 What followed was a description of some 17 plans for a clubhouse and health spa building, including ground floor plans, roof plans, elevation plans and section plans. All of those plans were dated between 7 and 9 August 2008. Furthermore, the location of the tennis courts had been changed and beside their new location on the subdivision plan, there was a notation “community use facilities” with an arrow pointing to that location. While Mr Savage claimed in closing submissions that the outline of the site for the Community Centre building appeared on the plan attached to the development approval of early 2004, I cannot locate any similar notation on those plans.
141 While I am mentioning notations on plans, I reject Mr Savage’s submission (see [136] above) that the notation on the plan attached to the development approval of late 2004 refers to a separate Community Centre building. On this aspect, it is to be recalled that the late 2004 development approval expressly referred to two other buildings (or groups of buildings) that were approved as part of the development: the site office and the houses to be constructed (see [135] above). Furthermore, the clause that was eventually used by the Noosa Council to grant approval for the Community Centre building (at [139] above) exemplifies the form of approval one would expect to see for a separate and substantial structure of this kind. Taking these matters into account, I consider the words of that notation: “ancillary recreational and allied community use facilities”, refer to the recreational facilities, such as the tennis courts, which are clearly shown on that plan. This accords with the Noosa Council’s views of those words (see at [138] above). I consider those views reflect a fair reading of what the development approval covers.
142 For the same reasons I do not accept Mr Dowling’s claim that cl 2.7 of the late 2004 development approval implicitly mentions the Community Centre building.
143 So, based on this evidence and these conclusions, I consider it is relatively clear that the Community Centre building was not included within the amended development approval for the development obtained by Noosa Rise Pty Ltd in late 2004. More importantly, given the October 2006 minute of the Operating Committee of the joint venture, I do not consider that the respondents confidently held that view. I consider that minute shows that from at last October 2006, the respondents knew there was a real likelihood that the Noosa Council had the view that it eventually expressed in its letter of 5 February 2008 (see at [138] above).
No final plans or design drawings
144 The next document in the Consolo chronology is a costs estimate for the development prepared by Napier & Blakeley Quantity Surveyors on 17 December 2004. That document certainly refers to a Community Centre building as a separate structure. However, it describes that building as a “proposed” building and the costs estimate is expressed to be based on, among other things, “preliminary architectural drawings prepared by Cox Raynor Architects”. While the Consolo chronology states that Napier & Blakeley’s cost estimate was “specifically referable to plans of the development as approved”, the letter itself does not refer to approved plans and no exhibit reference has been provided for any such plans.
145 Furthermore, Mr Dowling said in his evidence that Napier & Blakeley’s estimate was not based on final plans for the building. The absence of any final plans or design drawings for the Community Centre building was a matter that was pursued with Mr Dowling in his cross-examination. That proceeded as follows:
All right. Having regard to your experience, you knew, therefore, that the assessment of – by Napiers were not based upon final designs of the – or a final design of the community centre?---Yes.
But contemporaneously, though, you knew, didn’t you, that the marketing of the development to prospective purchasers no doubt would entail, among other things, mock-ups and plans and drawings of the community centre?---Yes.
Did you see any of those plans, drawings, or mock-ups at the time?---I saw the preliminary plans.
…
Is it correct to say that up to May 2006, when you ceased your involvement with the development, that you never saw a final design of the community centre?---I don’t believe that is accurate.
All right. Do you recall seeing some design of the community centre beyond that which was furnished to Napiers for the purpose of their assessment of late 2004?---I believe I saw a plan that would go beyond what would be described as the preliminary plan.
Are you able to say, Mr Dowling, as best as you can – and if you are not, please say so – when you saw that document?---I am not able to say so.
Would it have been shortly before you departed?---I am not able to accurately say so.
Thank you. You really can’t take it beyond that, can you, to be fair to you, as to when it was that you saw that further design?---No. But I could indicate to you where I think I would have seen it, or when I think I would have seen it.
Please do your best?---It would have been prior to finalising the financing with BOSI - - -
Thank you- - -?--- - - - because they would have wanted to see what we were delivering for that budget.
Thank you very much. And that finalisation ensued in about – or I should say in October 2005. Do you agree?---I agree.
146 It can be seen from this cross-examination that the highest Mr Dowling could put it was that he thought he may have seen final plans or design drawings for the Community Centre building in about October 2005. Added to this, it is significant, in my view, that no final plans or design drawings for the Community Centre building have been tendered in evidence, pre-dating those attached to the 16 September 2008 amended development approval issued by the Sunshine Coast Regional Council: see at [140] above. I therefore conclude that up until October 2005, at the very earliest, whatever plans or design drawings existed for the Community Centre, were only preliminary plans or drawings.
147 Finally, on this aspect, it is pertinent to note these matters. The existence of the Community Centre building does not appear in the disclosure statement that was provided to Dr Bennett with the contract for Lot 181 and the subdivisional plans attached to it. Indeed, that plan does not mention any community or recreational facilities at all, not even the tennis courts that are mentioned in the plan attached to the development approval referred to above. Having said this, I do note that there does not appear to be any provision of the BCCM Act that required the Community Centre to be identified as a part of the proposed common property of the Elysium Noosa Community Title Scheme. Nonetheless, it is significant that there are no drawings, plans or specifications for the Community Centre building, as at that time, included anywhere in the contract for Lot 181. This is to be contrasted with the quite detailed plans and specifications for the house to be constructed on Lot 181, that were included as an attachment to the contract.
No construction program
148 The third bundle of documents in the Consolo chronology are a master program for the design and construction of all facilities and a feasibility calculation for the development. As is already recorded above, both of these documents were prepared by Mr Dowling in about January 2005 (see at [125] above). The master plan document does include an item called “community facility”. It shows the design and tender stage for that item extending until the end of July 2006. It then shows the construction phase for that item extending from August 2006, to a completion date in January 2007. In this regard, it should be recalled that the original settlement date for Dr Bennett’s purchase of Lot 181 was March 2007. Turning to the feasibility calculation, on the first page of it, it shows an item number 84204 which relates to an “amenities allowance”. On that page, the letter A appears beside that item. However, on the sixth page under the heading: “Original budget July 2004”, the figure $4,399,999 appears. Mr Dowling was asked about this item in his evidence and he said that it was the allowance for the construction of the Community Centre and the figure was based on an estimate provided by Napier & Blakeley Quantity Surveyors.
149 While this item does not specifically refer to a Community Centre building, I am prepared to accept Mr Dowling’s evidence that it was intended to. If this is so, there is some evidence that, as at January 2005, a Community Centre building was to be constructed at the Elysium Noosa development, by January 2007, at a cost of $4.399 million. Of course, this evidence has to be considered in the context of my conclusions above that there was neither a development approval, nor final plans or design drawings, for such a building. It also has to be considered in the context of Mr Dowling’s evidence in cross-examination that he could not remember seeing a construction program for the development as at January 2005. His cross-examination on this aspect proceeded as follows:
Thank you. As at January 2005, did there exist a discreet (sic) document which consisted – or which could be described as a construction project for stage 1 of this development?---Can I ask what you mean by a discreet (sic) document?
Can I ask the question differently, if it assist you?---Thank you.
I am seeking to identify with you the existence of some document which one can look at and glean from it when it is that various items of construction, in respect of the development, are to or are scheduled to ensue up to the point whereby the lots in stage 1 will be settled by the prospective [purchasers]?---In the course - - -
Do you understand what I am asking you about now?---I think I understand.
Is there such a document that you can point to?---If you are referring to a construction program, in my evidence, I can’t remember seeing, specifically, a construction program, which I would anticipate to have been prepared by Napier & Blakeley.
Have you looked for such a document - - -?---I have not.
- - - of the type I described?---I have not.
Where would one find such a document?---Well, it would be in the report from Napier & Blakeley that reported to the delivery of that stage of the project.
That is the only document that you could find it in. Is that correct?---If you are talking about the discreet (sic) presentation of the construction program, that is – I think is correct.
(Emphasis added)
150 I conclude from this evidence that, while Napier & Blakeley had prepared costs estimates on the assumption the development would be constructed within a particular timeframe, as at early 2005, that assumption was not based on a considered and separate construction program for the development because none existed at that date or, indeed, by as late as May 2006. This may well be explained by the fact that construction could not commence on the development until the BOS pre-condition of 30 pre-sales had been met and the financing for the project confirmed. As noted elsewhere in these reasons, that did not occur until late 2005/early 2006.
No reliable costs estimates
151 These observations deal with the construction timeframe contained in the Napier & Blakeley costs estimates, but they do not address the reliability of those estimates. I will now turn to consider that aspect of the proposed Community Centre building. As I have already noted above, the balance of the Consolo chronology refers to the period after January 2005. Among other events, that chronology shows that the Community Centre was recosted at $4,840,474 (excluding GST) in June 2005. This is to be contrasted with the figure of $4,399,999, as at January 2005, appearing in the feasibility calculations (at [144] above). There is also other evidence to the effect that Napier & Blakeley had estimated the costs of constructing the Community Centre, as at 17 December 2004, at $3,278,170 excluding GST. Then, the entry in the Consolo chronology for 27 August 2007 shows the Community Centre facility was recosted at $4 million. Finally, at one stage – she could not recall the date, but it must have been after she commenced in May 2006 – Ms Tompson said in her evidence: “We were trying to bring the club house back down to a $2 million budget.” The discrepancies between all these costs estimates was not satisfactorily explained.
152 Moving forward to the period around early 2008, both Mr Clive Austin and Ms Tompson were asked about the costing and construction of the Community Centre building at that time. Their evidence is telling. It demonstrates that at that time, some three years after Dr Bennett entered into the contract for Lot 181, the costings, tendering and construction of the Community Centre was in complete disarray and the prospects of it being constructed in the near future were remote. I interpolate that, while these events long post- date the time at which the Burkes made the representations about the Community Centre, they are still relevant to the question whether the Burkes had reasonable grounds for making those representations. For example, if there was never a reliable costs estimate prepared for the Community Centre building, that is relevant to whether there were ever reasonable grounds to say it would be built. Returning to the evidence of Mr Clive Austin and Ms Tompson, it also shows that none of the Napier & Blakely costs estimates have proved reliable and that the respondents were unable to find a builder who was willing to construct the building at the price the joint venture partners were willing to pay. This latter aspect tends to reinforce the former. Mr Clive Austin’s cross-examination was as follows:
You had no current price in respect of the construction of the community centre?---No. I didn’t have that. No.
No builder had been identified to undertake the construction of the construction centre - of the community centre I should say?---My recollection as to [Mr] Douglas was that there were discussions going on with some builders, several builders, but there was no signed contract as at February ’08.
And as far as you knew, there wasn’t anything even close to a signed contract as at that date?---I can’t answer that.
Nothing is recorded in the minutes to suggest otherwise, is it?---No.
No commencement or likely commencement date for construction had been determined; do you agree?---That’s correct.
No completion date for construction had been determined?---That’s correct.
153 And a little later in his cross-examination:
If hypothetically a prospective purchaser such as Dr Bennett had come to you in late February 2008 and asked you when the clubhouse construction would commence your truthful answer would be, on the basis of what you knew at that time, - was “I simply don’t know”?---That’s correct.
If in that same hypothetical conversation he had asked you, well, “Who do you think the builder is likely to be?” Your truthful answer would be “I don’t know.” Is that correct?---That’s correct. Yes.
If he had have asked you in that hypothetical conversation, “When was it likely to be completed?” Your truthful answer would be “I don’t know”?---That’s correct.
And if he had asked you whether or what the price was likely to be to complete it your truthful answer would be “I don’t know”?---That’s correct.
154 Ms Tompson’s cross-examination was similarly noteworthy. It was as follows:
The reality is this, I suggest: that the pricing of the community centre remained a problem from the time you commenced your involvement with this project right up until the end of 2008?---When you say a problem, you mean we couldn’t get it to budget, is that what you’re saying?
Yes?---No, at a stage we did have it under budget by one of the builders – we did have a price agreed by Epic Constructions, I believe.
Are you speaking of the construction prospectively being undertaken in that regard by Epic?---Epic, yes.
But being it went awry again, didn’t it?---That’s correct, yes.
So it was the case that this remained a running sore; isn’t that the case?---A what sorry?
It remained a running sore: the pricing of the community centre?---Well there was (sic) a number of times that we had builders price it. We had about three different builders price it.
…
MR DOUGLAS: Thank you. Was it the case that after the receipt of those tenders – of the tender pricing from those two companies that there was immediately deployed a redesign of the community centre?---Yes, yes.
And that was to bring it within budget?---Yes.
And is it the case that the prices from those companies was (sic) over budget before or after the redesign?---This is suggesting it was before.
But you don’t remember?---Well, we wouldn’t have redesigned it if it wasn’t over budget.
No genuine commitment
155 Apart from these particular aspects of the construction of the Community Centre building, it is instructive to consider the more general attitude of these various witnesses (above) towards it. Their evidence conveyed to me the clear impression that the Community Centre building was something to which they did not give any real importance or priority, nor devote any significant attention, or resources. In short, I do not consider that they had a genuine commitment to provide the Community Centre building as a part of Stage 1 of the development. There are several examples of this attitude in the evidence, but the following will suffice.
156 By May 2006, when Mr Dowling left Consolo Property, he said he did not regard the construction of the Community Centre as being a matter of significant importance. In cross-examination, he said this:
Is it correct to say that again, by May 2006, you saw the need to embark upon the construction of the community centre was becoming a matter of significant importance?---No.
All right. It didn’t give you any concern?---That construction had not been progressed at that point in time?
Yes?---No.
157 For his part, Mr Michael Austin considered that Dr Bennett was bound by his contract and that it was not a matter of great concern whether the Community Centre was built before or after Dr Bennett was required to settle under that contract. His principal concern was the marketing of the project. He addressed this issue in varying ways in his cross-examination. First, he said:
So your position, at this time, was, in April 2007, that it didn’t matter whether or not the community centre was constructed before settlement?---Correct.
That wasn’t a concern to you at all?---No. I wanted it done as soon as possible for marketing purposes because once that was finished, the estate would have the streetscape of stage 1, which is remarkable, and the community facilities and, as a result, people would, then, feel that they were coming more to an – an ordinary subdivision, rather than a complete construction site, and one of the problems with the marketing was that this was continually a construction site.
158 Much later in his cross-examination he said:
Thank you. Your position in respect of Dr Bennett’s settling his contract was he was obliged to settle irrespective of whether the community centre was constructed or completed ..... ?---Correct.
And as part of that, your approach was that if it transpired, there was some difficulty after settlement – that is after his settlement of his contract, then he would just have to take that up through the body corporate?---No, he would have his contractual rights. Yes, but owners’ corporation – I mean - - -
159 Finally, he reiterated this position by saying:
And my point to you is, sir, that evidence is the fact that as far as you were concerned, at the time that Dr Bennett was obliged to settle, if there was a problem later with the community centre, well that was a matter for him to take up through the body corporate?---Or through his contract.
Or through his contract if it was worth anything?---Correct. And my view about that was that he bought pursuant to the contract. So my focus was on ensuring that each purchaser was delivered what they had contracted to purchase.
160 As well as being dismissive of any obligation to construct the Community Centre building, these statements are, in my view, somewhat disingenuous. That is so because Mr Michael Austin is a lawyer and at the time of this cross-examination, if not well before, he must have known that there was no mention of any obligation to construct the Community Centre building in Dr Bennett’s contract, or in the disclosure statement for the Elysium Noosa Community Title Scheme attached thereto. It follows he must have known Dr Bennett had no contractual rights he could pursue, nor any claims he could successfully make against the body corporate for the Scheme.
161 This review of the evidence relating to the Community Centre building as at early 2005, when the Burkes made the representations about it, shows that it was a component of the Elysium Noosa development for which there was no development approval, no final plans or design drawings, no construction program, no reliable costings and no genuine commitment to it by the joint venture partners. At the highest, for the respondents, the Community Centre building had been included in a feasibility study for the development that was based on costs estimates prepared by Napier & Blakeley (that have proved to be quite unreliable), which, in turn, was based upon preliminary drawings prepared by Cox Raynor Architects (that have not been produced in evidence).
162 Taking into account all these matters, I do not consider that, as at early 2005, the Burkes had reasonable grounds to make the representations to Dr Bennett that the Community Centre building would be constructed contemporaneously with the completion of his purchase of Lot 181. I would add that this conclusion does not necessarily reflect adversely on the Burkes, but on the respondents, who were the source of the information they used to make those representations (see at [226]).
163 This conclusion affects all the items in Schedule A that fall within this category. If there were no reasonable grounds to make the representation about the construction of the Community Centre building (para 1), there were self-evidently no reasonable grounds to make the representations about the contemporaneous completion of that building with Stage 1 (para 3), the use of architectural designs and unique and high quality finishes on that building (para 6) and the provision of services within that building (para 8). I therefore find within the terms of s 51A(1) that each of the representations in this category was misleading because there were no reasonable grounds for making them.
164 Having reached this conclusion, it is strictly unnecessary to consider whether the other representations in Schedule A are also misleading. This is so because the representations about the Community Centre building are the main source of Dr Bennett’s complaint about the Elysium Noosa development (see at [121] above). Furthermore, I have already concluded that all of those representations fall into both ss 52 and 53A of the TPA (see at [103] above). It follows that, if Dr Bennett cannot establish that he was induced to enter into the contract for Lot 181 by the misleading character of those representations, he is unlikely to establish that occurred as a consequence of any of the other representations in Schedule A. In effect, therefore, the Community Centre building representations are the high water mark of his claims.
The contemporaneous completion and the architectural design standards used on the other lots (paras 2, 6 and 7)
165 Nonetheless, since a large body of evidence was directed to the other representations in Schedule A, I will briefly (but not exhaustively) consider them. The first of the four remaining categories (see above at [132]) relates to the representations dealing directly or indirectly with the construction of the other lots in the Elysium Noosa development. The first thing to be said about this category is that it does not fall into s 53A (see [103] above), so it does not have the same advantages for Dr Bennett’s case as the Community Centre building representations do. Turning then to the contemporaneous completion aspect in para 2 of Schedule A.
166 As noted above (at [130(b)]), it is not in dispute that the other houses in Stage 1 were not completed contemporaneously with Dr Bennett’s purchase of Lot 181 in terms of para 2 of Schedule A. Of course, while this fact can be taken into account in assessing whether the Burkes had reasonable grounds to make that representation as at early 2005, it is not determinative. On that question, the evidence falls both ways. On the one hand, there is the admission of Mr Dowling (see at [149] above) that there was not any construction program in place for the development as at early 2005. On the other hand, there was in place, as at early 2005, a development approval which included Stage 1 of the development and which also included a subdivisional plan showing the location, size and layout of the 41 lots in Stage 1 (excluding, of course, the Community Centre building). Further, there is Mr Dowling’s evidence that, as at January 2005, he had prepared the master program for the design and construction of the development (see [125] and [148] above) which showed that all the lots in Stage 1 were scheduled for their construction to be completed contemporaneously in early 2007. On that subject, Mr David Pearson gave some pertinent evidence. He said that the intention as at early 2005 was that:
… as some houses were being completed … and settled upon in Stage 1, construction would have commenced on some houses in Stage 2. The intention was to have builders moving from house to house in a staggered and orderly fashion from Stage 1 to Stage 2 and then to subsequent stages.
167 As to the architectural design standards, Mr Dowling gave evidence that Mr David Pearson had explained that a group of 10 or 12 well known architects had been commissioned to design each of the houses in the development on the basis that:
… they would be randomly given lots of land and asked to produce a design for a high-end home in keeping with the view at that time of Noosa, which was that it was a high quality location, with great appeal to individuals that were interested in having a “work of art” as their home.
168 I infer from this evidence that architects were involved in the design of each of the other houses in Stage 1 of the development.
169 Mr Michael Austin also gave evidence that the Operating Committee for the development implemented a design development review process to ensure that each house in the development was built in accordance with the concept in the plan and schedule of finishes contained in the individual contracts for the sale of lots in the development. He also pointed to the fact that Elysium Noosa Pty Ltd’s contract with the builder, Epic, contained a clause which required all construction work in the development to be performed and completed to “the high quality of workmanship and finish in accordance with the detailed working design documents”.
170 Finally, it is to be noted the disclosure statement for the Elysium Noosa Community Title Scheme included an extensive development and landscape code for the development and required, among other things, that the body corporate would establish an architectural review committee to oversee the design of buildings in the development and the materials used on them.
171 Taking into account these matters, on the ambivalent state of the evidence relating to these three representations in Schedule A, I am not satisfied on the balance of probabilities whether the Burkes did, or did not, have reasonable grounds to make those representations as at early 2005. It follows that since Dr Bennett bears the persuasive onus on this issue, he has not established these three representations are misleading in the terms of s 51A(1).
The provision of vehicles (paras 4 and 5)
172 In his closing submissions, Mr Savage pointed out that the disclosure statement for the Elysium Noosa Community Title Scheme, attached to Dr Bennett’s contract for Lot 181, contained a proposed budget for the body corporate for the Elysium Noosa Community Title Scheme. That budget included an item: “Lease Payments 2 cars – Toyota Tarago and Toyota Hiace Mini Van”. The budget made provision for such lease payments from and including Stage 2B of the development. While this obviously does not mean that these vehicles would be provided contemporaneously with the completion of Stage 1, it is to be noted that, unlike with the representations in paras 1–3 inclusive, the representations in paras 4 and 5 of Schedule A are not to the effect that those vehicles would be provided at the completion of Stage 1. Furthermore, these representations do not specify who will be responsible for the provision of the vehicles. Nonetheless, given the context that Lot 181 was a proposed lot in a Community Title Scheme and the fact that these vehicles were to be provided for Elysium Noosa residents, I consider it can be inferred that they were to be provided by the body corporate for the Elysium Noosa Community Title Scheme. In these circumstances, since the proposed budget for the Elysium Noosa Community Title Scheme expressly provided that these vehicles were to be provided, albeit not at the end of Stage 1, I consider that the Burkes had reasonable grounds to make the representations in paras 4 and 5 as at early 2005. Those representations are therefore not misleading in the terms of s 51A(1).
The landscaping and streetscaping (paras 9 and 10)
173 In his affidavit, Dr Bennett does make some criticisms of the landscaping that was constructed for Stage 1 of the development. He said:
The swales have not been constructed to a satisfactory standard as shown by … five photographs taken on 20 November 2008 and 20 March 2009 which demonstrate the swales inability to cope with rain.
174 Furthermore, Dr Bennett said in his oral evidence that he had concerns over the landscaping and the general site presentation. In particular, he said:
It is my feeling that the landscaping and the site presentation of the Elysium development never attained anything like the presentation of the landscaping in Noosa Springs [the development next door to the Elysium estate] which is heavily vegetated and very well maintained to this day.
175 On the other hand, in her affidavit, Ms Tompson stated that, from her observations on the Elysium Noosa site, “the landscaping works identified in [para] 9 of Schedule A to the Statement of Claim were completed”. She then annexed documentation showing the payments that had been made to various contractors for the landscaping works on the site. However, she did add that:
… some landscaping works were not completed as at 11 March 2008 … because other houses in [Dr Bennett’s] street were in the course of being built, and the ongoing construction process of those houses meant that landscaping was getting ruined and was being replaced; accordingly the landscaping in that area was not totally completed until a later date.
176 Ms Tompson also claimed in her affidavit that the “streetscaping as detailed in [para] 10 to Schedule A … was also completed”. Apart from this evidence, there is no evidence bearing on the quantity of new native plants used, the removal of any noxious plants, the rehabilitation of the existing forested areas, the use (or otherwise) of renowned consultants EDAW Gillespie, the use of swales instead of curbing and channelling, the planting of mature trees or the completion of landscaping at the time of settlement of Lot 181 – all matters mentioned in these two representations.
177 Finally, it is to be noted that the disclosure statement for the Elysium Noosa Community Title Scheme did include a development and landscape code which provided for the continued supervision of the landscaping of the site by the body corporate into the future. Moreover, the development approval issued by the Noosa Council in late 2004 contained extensive provisions in relation to the environmental, ecological and landscape management of the site, including a requirement to submit various plans to the Council. That requirement applied to plans, for example, in relation to “environmental management plans for construction and operation stages” and “landscape master plan/assessment report”.
178 Taking into account these matters, as with the second category above (see at [171]), on the state of the evidence relating to these representations, I am not satisfied on the balance of probabilities whether the Burkes did, or did not, have reasonable grounds to make those representations as at early 2005. It follows that Dr Bennett has not established these two representations are misleading in the terms of s 51A(1).
House construction (paras 13, 14, 19 and 20)
179 As has been noted earlier in these reasons, the house on Lot 181, and Lot 181 itself, were duly constructed and Dr Bennett completed his purchase of them in March 2008. The house on Lot 181 was constructed substantially in accordance with the plans and specifications included in his contract for Lot 181. However, it is common ground that the special features of the house identified in these four paragraphs of Schedule A were not included in the house when completed. The gist of Dr Bennett’s complaint on this aspect appears to be the Burkes had no reasonable grounds for making these representations in early 2005, given what was produced on settlement in March 2008. In my view, this complaint is unsustainable for at least two reasons. First, there was ample material, including the detailed plans and specifications for the house on Lot 181, prepared by the architect Gabriel Poole, that provided reasonable grounds for the Burkes to make the representations they did as at early 2005, about the various features that would be included in that house. This is to be contrasted with the total absence of plans, design drawings and specifications for the Community Centre building as at that time (see above). Secondly, it is a relevant circumstance that the draft contract that the Burkes provided to Dr Bennett at about the same time also included a term, to the following effect:
4.6 Changes to the Dwelling
The Seller may:
(a) make changes to any part of the Dwelling as directed by the local authority or as reasonably required to comply with proper and usual building practices; and
(b) make changes to the Dwelling Plans and Specifications, including substituting any items (including Chattels) with items of a similar quality (as decided by the Seller acting reasonably).
(Emphasis in original)
This clause has an obvious bearing upon whether the completed house on Lot 181 provided any evidence that the Burkes did not have reasonable grounds for the statements they made three years earlier as to what features would be included in that house. I should add that, in determining whether there were reasonable grounds for these representations, I do not consider that it is necessary to determine the issue (to which a large amount of time and evidence was devoted at trial) about whether the respondents were entitled under the contract for Lot 181, to make the changes they did. This includes the evidence about the various discussions and communications between Dr Bennett, Mr David Pearson and Mr Gougoulas and the cross-examination of Dr Bennett about the favourable views he had allegedly expressed about the house in his communications with real estate agents, and numerous other similar matters.
180 In all these circumstances, I consider that the Burkes therefore had reasonable grounds for making these four representations about the house on Lot 181 as at early 2005. These four representations are, therefore, not misleading in the terms of s 51A(1).
Conclusion on issues 4 and 5
181 To sum up on this issue, for the reasons expressed above, I consider that the Burkes did not have reasonable grounds to make the representations in paras 1, 2, 3, 6 and 8 of Schedule A as at early 2005, and those representations were therefore misleading in terms of s 51A(1) of the TPA. However, as to the other representations in Schedule A, I am either not satisfied, on the balance of probabilities, that the Burkes did not have reasonable grounds to make those representations, or I am satisfied, on the balance of probabilities, that they did. It follows that Dr Bennett has failed to establish any of these representations are misleading in terms of s 51A(1) of the TPA.
Issues 6 and 7 – s 84(2) – Were the burkes engaged in conduct on behalf of the respondents?
The pleadings
182 There are three reasons why these two issues should be considered together. First, they both involve s 84 of the TPA. Secondly, in his closing submissions in relation to issue 7, Mr Douglas simply adopted all of his submissions on issue 6. And, thirdly, I have rejected Dr Bennett’s case on the pre-completion representations on the basis that it has not been pleaded in a form that allows me to consider it. It would therefore be futile to consider issue 7 as a separate issue here.
183 Putting aside his reliance on s 84 for the purposes of the pre-completion representations, Dr Bennett relies upon s 84 in relation to the pre-contract representations as follows (para 4C of the final amended statement of claim):
In respect of the Development:
…
(d) The Development was undertaken by one or alternatively some or all of Consolo, Consolo Property, NRN, Evenland, Elysium, PPG and PPG Noosa;
(dd) The Development was undertaken in the course of the business, affairs or activities of each of the Respondents;
(e) Further:
(i) Each of Consolo and PPG were the ultimate beneficiaries of the expected profits of the development;
(ia) The said subsidiaries of each of Consolo and PPG acted as their agents in respect of the measures pleaded above in (b) of this paragraph;
(ii) Directors and employees of each of the subsidiaries engaged in the promulgation and pursuit of the measures pleaded above in (b) of this paragraph, directly and indirectly by giving instructions to the others and otherwise permitting such measures to be pursued;
(f) By reason of the matters pleaded above in this statement of claim, any representation made or conduct engaged in, whether in documents drafted for Development marketing furnished, or orally by Nick and Julieanne as sales agents in representations to prospective purchasers of lots in the Development:
(i) was engaged in the course of the business, affairs or activities of each of the Respondents, or alternatively one or more of them;
(ii) thereby was conduct engaged in on behalf of each of the Respondents, or alternatively one or some of them, within the meaning of s.84(2) of the TPA.
184 The measures pleaded in (b) were said, in that sub-para, to have been “promulgated … with a view to marketing the Development”. They are:
(i) A design for the Development, both as to individual lots and common facilities;
(ii) A development theme;
(iii) Engagement of public relations and marketing consultants;
(iv) A system of press releases to media publications;
(v) The drafting of documents for posting in a site office, together [with] brochures and individual lot plans to be furnished to prospective Development lot purchasers;
(va) The construction of a Development model which was placed in the site office;
(vi) The refurbishment of a site office on the Development land;
(vii) The appointment of on site sales consultants to deal with members of the public interested in considering purchase of any lot;
(viii) The tutoring of site office sales consultants as to information pertaining to the Development for imparting to prospective purchasers;
(xi) (sic) Construction;
The section and its basic elements
185 Section 84(2) of the TPA provides:
Any conduct engaged in on behalf of a body corporate:
(a) by a director, employee or agent of the body corporate within the scope of the person’s actual or apparent authority; or
(b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, employee or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, employee or agent;
shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate.
186 The main focus of this section is the conduct for which a body corporate may be responsible. It is to be contrasted with the state of mind of a body corporate, which is the main focus of s 84(1) of the TPA. To trigger the deeming provision in s 84(2) of the TPA, the conduct in question must, first, be engaged in “on behalf of” the body corporate concerned. Then the conduct must be engaged in by someone who falls within the descriptors in sub-para (a) or (b).
Failure to clearly plead basic elements
187 The conduct in question in this case is that of the Burkes, in particular their conduct in making the representations in Schedule A about the Community Centre building. That conduct is pleaded, albeit somewhat more broadly, in para 4C(f) of the final amended statement of claim, viz:
… any representation made or conduct engaged in, whether in documents drafted for Development marketing furnished, or orally by Nick and Julieanne as sales agents in representations to prospective purchasers of lots in the Development.
188 Then sub-para 4C(f)(i) and (ii) plead that that conduct was engaged in “in the course of the business, affairs or activities of each of the Respondents”. The basis of these claims appears to be pleaded in paras 4C(d), (dd) and (e)(i) and (ii). Thus, the first element in s 84(2) has been pleaded – that the Burkes’ conduct was engaged in “on behalf of” the respondents. However, it is with the next element that I have encountered further deficiencies in the final amended statement of claim in this case. That is, in identifying which of the descriptors in s 84(2)(a) or (b) the Burkes were said to fall into. Since it does not appear to be in dispute that the Burkes were not, at any relevant time, directors, employees or agents of any of the respondents within the terms of s 84(2)(a), I must assume it is s 84(2)(b) that applies here. If so, the final amended statement of claim does not identify which director, employee or agent of the respondents gave the direction, or consented or agreed to, the Burkes engaging in the conduct mentioned above. In para 4C(e)(ii), it is alleged that certain instructions were given about the measures in para 4C(b). However, that pleading does not appear to allege that those instructions were given to the Burkes by a named and identified director, employee or agent of one or more of the respondents. Rather it appears to allege that the subsidiaries of each of the respondents gave such instructions to each other.
189 Nonetheless the reference to “otherwise permitting such measures to be pursued” in para 4C(e)(ii) could conceivably extend to include the Burkes because two of the measures identified in para 4C(b) are: “The appointment of on site sales consultants to deal with members of the public interested in considering purchase of any lot” (sub-para (vii)); and “The tutoring of site office sales consultants as to information pertaining to the Development for imparting to prospective purchasers” (sub-para (viii)). I will therefore assume that Dr Bennett is relying upon s 84(2)(b) of the TPA to allege that certain unnamed directors, employees or agents of the respondents “directly and indirectly gave instructions to” the Burkes and otherwise permitted them to act as sales consultants in relation to the development. Since the only persons who could realistically be among these unnamed directors etc are the Austins, Mr Dowling and Mr Pearson, I will assume it is one of them that gave the instructions to the Burkes. I am fortified in this approach by the fact that the respondents appear to have proceeded on the same assumptions in their affidavit material and in their closing submissions. I will now turn to record the contentions of the parties on this issue.
The contentions
190 The respondents’ position on s 84 is as follows. While that section was intended to extend the common law, there is still a need to analyse whether the person’s conduct could be said to have been “engaged in on behalf of” the corporation, or “at the direction or with the consent or agreement of” a servant or agent of the corporation. They submitted it is not enough, for the purposes of that section, that certain business activities were being carried on by a corporation such that any act by any person associated with those business activities can be taken to have been done on behalf of that corporation. On the facts of this case, they submitted, all of the activities were conducted by corporations or entities other than the second and fifth respondents. Elysium Noosa Pty Ltd owned and sold the land. It paid the bills and engaged the consultants and contractors for the development. The joint venturers – NR Nominees Pty Ltd and PPG Noosa – carried out the day-to-day operations of the joint venture through an Operating Committee comprised of representatives of each of them. Mr Savage submitted Consolo’s only role in relation to the development was to commit some equity to it. There was never any detailed discussion about the development in the Consolo Board and the reporting to that Board in relation to the development was at a general level. Further, he submitted, no decisions relevant to the issues involved in these proceedings was made by the Consolo Board, instead all these decisions were made within the Elysium Noosa joint venture. He submitted it is too loose a connection to suggest the commitment of funds by an ultimate holding company to a subsidiary that is involved in a development, equates to the ultimate holding company, Consolo, conducting the development.
191 As to whether the Burkes were agents of, or acting at the direction, or with the consent of, servants or agents of the respondents, the respondents submitted the facts are that they worked for PRD, which company was, in turn, engaged by Elysium Noosa Pty Ltd. PRD was not a servant or agent of any of the respondents. They submitted that Dr Bennett has not identified any servant or agent of the respondents who gave any direction to the Burkes, or PRD, or consented to the Burkes making the representations they did to Dr Bennett. They submitted that none of Mr Clive Austin, Mr Michael Austin, Mr Michael Dowling or Mr David Pearson gave any relevant directions to the Burkes, or to PRD, as to what was to be said to prospective purchasers, and nor did they (with the exception of Mr David Pearson) have any role in the production or promulgation of any of the promotional material for the development. Finally, they submitted, none of those persons was challenged in cross-examination on their evidence on these matters.
192 Mr Douglas’ submissions on behalf of Dr Bennett were, perhaps not surprisingly, to the opposite effect. He submitted that, in making the representations, the Burkes engaged in conduct on behalf of each of Consolo, Consolo Properties, PPG and PPG Noosa. Furthermore, he submitted that they did so with the consent or implied agreement of Mr Michael Austin and Mr Clive Austin, the directors of each of Consolo, Consolo Properties, NR Nominees and Elysium Noosa Pty Ltd (on Consolo’s part) and Mr Pearson, the director of each of PPG and PPG Noosa (on Pearson’s part). He submitted Consolo owned all of the shareholding in each of Consolo Property, NR Nominees and Elysium Noosa Pty Ltd. Likewise, PPG held all of the shareholding in PPG Noosa.
193 In relation to the Consolo respondents, Mr Douglas submitted that Consolo Property was a subsidiary of Consolo charged with operating its property division. He submitted that the Consolo Board made decisions on matters of investment and policy in relation to the development and very few, if any, separate Board meetings were held for Consolo Property. Instead, he submitted, the Consolo Property Board meetings were conducted as a part of the Consolo Board meetings and were minuted as such by Consolo. As a part of this approach, the activities of Consolo Property were reported as a part of Consolo’s annual reports. Mr Douglas highlighted the following parts of those annual reports relating to the period in question in these proceedings:
Mr Clive Austin and Mr Michael Austin, as Directors of Consolo (2005 Report):
During the year we shifted our residential focus to Queensland, increased focus on industrial property and achieved [successes] with our major offshore investment … we have secured two major residential sub-division opportunities on Queensland’s Sunshine Coast. Elysium, at Noosa, is the last major residential precinct to be developed within the Noosa Heads postcode. It involves the development of a luxury estate with resort style amenities and caters for the premium market with house prices ranging upwards from $1.5m. The estate will be progressively developed over a three year period … Both projects are being undertaken in joint venture with Brisbane-based Pearson Property Group. Looking at Consolo Property in its entirety, the property team headed by Richard Luscombe and Michael Dowling – together with our extended family of joint venture partners, architects, project managers and advisors – have worked extremely hard this year to put in place the platform and future pipeline of activities to ensure a prosperous and sustainable level of return on funds invested.
Mr Clive Austin, as Executive Chairman, and Mr Michael Austin, as managing director of Consolo (2006 Report):
… the largest single initiative upon which the company has embarked … Property division … New Joint General Managers Sean McKeown and Tory Tompson are managing projects [they are replacing Mr Richard Luscombe in that role].
Our luxury residential development, Elysium Noosa …
We also intend to start looking at designs for future stages of Elysium.
Mr Clive Austin and Mr Michael Austin as directors of Consolo (2007 Report):
[Consolo has taken steps] … to focus on our two major property developments: Elysium, at Noosa, and Dicky Beach near Brisbane.
… Property development is a core business for Consolo.
… The Elysium project at Noosa, which is the Company’s largest single project, progressed during the year with a number of notable milestones.
… The remaining 29 sold houses are scheduled to be completed by the end of the first quarter of 2008, as are all the community facilities … In consultation with our joint venture partner it was decided during the year to broaden the potential market for the Elysium product …
194 Mr Douglas pointed to the following events which were, he submitted, of significance to the Consolo respondents’ role in the development:
1. That the minutes of the Consolo Board of 6 July 2004 recorded the decision to acquire the property for the Elysium Noosa development;
2. That Mr Michael Austin, as a director of Elysium Noosa Pty Ltd, signed the agreement to engage PRD as the marketing consultant for the development;
3. That Mr Michael Austin, as a director of Elysium Noosa Pty Ltd, signed Dr Bennett’s contract for the purchase of Lot 181.
195 In relation to the Pearson respondents, Mr Douglas submitted that their reliance on the joint venture agreement to distance themselves from their involvement in the development should be rejected because the evidence showed that the joint venture Operating Committee did not commence to operate until May 2006. He submitted that Mr Pearson and his companies were responsible for the marketing of the development and he was directly involved in the preparation of brochures and newspaper articles promoting the development.
Factual background as to how the development was carried out
196 To put these submissions in some context, and to properly consider this issue, it is necessary to set out some further factual background about the development and how, and by whom, it was carried out. In doing so, I will endeavour to avoid repeating too much of the background material that is already set out at [123]–[129] above.
197 As noted a number of times elsewhere in these reasons, the Burkes were employed by PRD. They worked as sales agents in the site office at the Elysium Noosa development from January 2005 until about May 2006. During that period, the main people involved with the development for the respondents – the Austins, Mr Dowling and Mr Pearson – had varying levels and kinds of involvement with them. Mr Clive Austin does not appear to have any significant involvement with the Burkes, nor does Ms Tompson, who did not arrive on the scene until after they had left. However, Mr Michael Austin said in his evidence that he had met the Burkes on site on one or two occasions, but he said he did not give them any instructions or any tutoring in relation to the marketing of the development, or in relation to what they should tell prospective purchasers of properties in the development. Mr Dowling’s evidence about the Burkes was to similar effect, although he appears to have had more frequent contact with them. He said in his evidence that he met them shortly after the marketing for the development commenced, he had discussed the project with them and they had asked him questions about it. For his part, it is clear on the evidence, that Mr Pearson knew the Burkes reasonably well and he appears to have had a much closer involvement with them than either Mr Michael Austin, or Mr Dowling. He said in his evidence that, to prepare the Burkes to sell the Elysium Noosa development to potential purchasers, he was involved with others in training sessions to ensure that they could answer all questions that may arise.
198 These varying levels and kinds of involvement with the Burkes is consistent with the differing kinds of involvement the Consolo respondents and the Pearson respondents had in the development. On the Consolo side of the joint project management, Consolo Property and Mr Dowling were responsible for arranging the finance for the project and for providing administrative support. On the Pearson side, Mr Pearson was responsible for the marketing, promotion and advertising of the development. However, Mr Pearson said in his evidence that he consulted regularly with Mr Dowling and, after his departure, with Ms Tompson about marketing matters. Mr Pearson said he was also responsible for the media releases that were issued in relation to the development and he employed the services of other specialist marketing companies such as Pulse Media and Black Ink.
199 The media releases that were issued by Mr Pearson in January 2005 resulted in a number of articles being published in the local media. They included the following:
Noosa News, NoosaProperty section for 28 January 2005
Prestige land development opens doors
…
ELYSIUM Noosa opened its sales office on 27 hectares of former horse grazing land, once owned by the Hoffman family, adjacent Noosa Springs and Lake Weyba on Friday.
Developers David Pearson, of Pearson Property Group, and Michael Dowling, of Consolo Property, engaged 12 top Australian architects to each design three to four homes, which will be sold as part of a house and land package for between $1.25 and $2.5 million.
…
Stage one, comprising 41 individually designed and landscaped homes are selling off the plan now.
Mr Dowling said civil engineering works were due for completion in October and all homes were expected to be erected within 18 months.
When the five-stage, $400 million development is completed, it will hold 189 separate dwellings set over 27.5 hectares with 35% of land set aside as parkland.
The central facilities at Elysium (Greek for abode of the blessed) include swimming pool, tennis courts, health spa and parks linked by walkways and bike paths.
Architects include Gabriel Poole, Bark Design, Cox Raynor, Bligh Voller Nield.
This article included a photograph apparently taken at the Elysium Noosa site office under which appears the caption “EXCITING OUTLOOK: David Pearson, left, of PPG, and Michael Dowling of Consolo with Elysium Noosa on-site sales representatives Nick and Julianne Burke”. (Emphasis in original)
“On behalf of”
200 As Mr Savage correctly pointed out in his submissions, it is well-established that s 84 extends the common law: see, eg Lisciandro v Official Trustee in Bankruptcy (1995) ATPR 41-436 at 40,903 per Kiefel J. In NMFM Property Pty Ltd v Citibank Ltd (2000) 107 FCR 270; [2000] FCA 1558 (“NMFM”), Lindgren J described it (at [1241]) as: “an enlarging provision, that is, one that is intended to make proof of corporate responsibility for conduct easier than it is at common law by providing additional means of proving that matter”.
201 As I have already observed above (at [186]), the main focus of s 84(2) is conduct. In this case, it is the conduct of the Burkes. For the deeming provision in s 84(2) to apply, two questions about their conduct have to be answered in the affirmative. They are:
(a) was the conduct engaged in on behalf of the respondents; and
(b) was the conduct engaged in at the behest of the respondents?
See NMFM at [1238]. I have expressed the second question in this form because of the assumption I have made about the way Dr Bennett has pleaded this aspect of his case in his final amended statement of claim (see at [189] above).
202 In Walplan Pty Ltd v Wallace (1985) 8 FCR 27 (“Walplan”), Lockhart J (Sweeney J agreeing at 28 and Neaves J at 39), said (at 37) that the expression “on behalf of”:
… is not one with a strict legal meaning and it is used in a wide range of relationships. The words are not used in any definitive sense capable of general application to all circumstances which may arise and to which the subsection has application. This must depend upon the circumstances of the particular case, but … the phrase suggests some involvement by the person concerned with the activities of the company. The words convey a meaning similar to the phrase “in the course of the body corporate’s affairs or activities”.
203 In NMFM, Lindgren J referred with approval to the aforementioned views of Lockhart J and added that (at [1243]):
… it is neither necessary nor sufficient that the person whose conduct is in question (the actor) intended his or her conduct to be for the benefit of the corporation, let alone that it in fact be for its benefit …
204 Further, his Honour said (at [1244]) that:
It seems to me that an act is done “on behalf of” a corporation for the purpose of s 84(2) if either one of two conditions is satisfied: that the actor engaged in the conduct intending to do so “as representative of” or “for” the corporation, or that the actor engaged in the conduct in the course of the corporation’s business, affairs or activities. This view accords with what Kiefel J said in Lisciandro v Official Trustee in Bankruptcy (1995) ATPR 41-436 at 40,903-40,904.
205 However, lest it be thought that the observations of Lindgren J (above) exhaustively define the circumstances in which s 84(2) operates, in Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199, Keane JA (as he then was) pointed out that Lindgren J had earlier quoted from Walplan such as to indicate that they did not (see at [55]).
206 In Ackers v Austcorp International Ltd [2009] FCA 432 (“Ackers”) (a case relied upon by Mr Douglas), Rares J dealt with a factual situation that is somewhat similar to the present case. In that case, Austcorp was engaged in the business of a property developer. In its 1999 Annual Report, Austcorp identified the particular development concerned in that case as a joint venture project with Great Pacific that was being developed on prime central coast waterfront land (see at [217]). While his Honour’s conclusions are specifically directed to the facts of that case, he proceeded to hold that the particular development was part of the ordinary business, affairs and activities of Austcorp and representations made by “officers, subsidiaries, PRD and Mr Walker” was conduct engaged in on behalf of Austcorp (see at [217]).
207 I respectfully agree with these various observations about the operation of s 84(2). Among other things, they show that the level of involvement of the actor concerned may not be significant, provided it comprises “some” involvement. In context, I consider this means some real or genuine involvement. They also show that the actor’s subjective intention is one criterion for assessing whether he or she is acting on behalf of the company concerned. Alternatively, they show that an objective assessment of the actor’s conduct may lead to the conclusion that he or she was acting on behalf of that company. Finally, they show that the assessment as to whether the actor was acting on behalf of a company is ultimately dictated by the circumstances of each particular case. Thus it may conceivably involve a combination of the subjective and objective assessments (above) in a particular case.
208 Taking into account these principles and the factual background to the Elysium Noosa development set out above (at [123]–[129] and [196]–[199]), I consider it was the Burkes’ subjective intention to act “on behalf of” all of the respondents when they were engaged in selling Lot 181 to Dr Bennett. Alternatively, or as well, I consider that an objective assessment of the Burkes’ conduct in all the circumstances, leads to the same conclusion.
209 The evidence of the Burkes’ subjective intentions to act “on behalf of” the respondents appears in what they said to Dr Bennett about which companies were involved in the Elysium Noosa development. In his affidavit, Dr Bennett said this:
15. I recall that on at least one of the three occasions that I visited the site office, Nick and Julieanne informed me, in the course of their marketing discussions, of a company called “Consolo”, who they described as an important partner in the development. They told me that Consolo was a company with interests in a variety of commercial activities, including property development, and that Consolo was based in Sydney.
16. Nick and Julieanne described David Pearson as the architectural or creative driver behind the project, and “Consolo” as the primary commercial driver behind the project. At no point did Nick and Julieanne (or anyone else for that matter), in relation to Consolo, draw any distinction between different corporate bodies within any Consolo corporate group.
210 To similar effect are the statements contained in the Elysium Noosa lifestyle pamphlet that the Burkes provided to Dr Bennett. That pamphlet contained the following statements:
Elysium Noosa is the realisation of the vision of Pearson Property Group in association with Consolo Property to create the ultimate Noosa community. The development team saw the potential to combine their project expertise and experience with the talents of the best architects, landscape designers and community planners. As the first and last opportunity of its kind in Noosa Heads, the developers have ensured every aspect of Elysium Noosa has met uncompromising quality standards.
211 Finally, the Burkes’ subjective intentions can be inferred from their presence in the photograph, along with “David Pearson of PPG, and Michael Dowling, of Consolo” that appeared in the Noosa News propertyweek section on 28 January 2005 (see at [199] above).
212 Alternatively, or as well, the following matters support the same conclusion on an objective assessment of all of the relevant circumstances. It is appropriate to begin with Consolo. Its decision to acquire the land in question (through its subsidiaries, Evenland Pty Ltd and NR Nominees) and invest $14.5 million into the development was foundational to the whole project. On that subject, Mr Clive Austin said in re-examination:
MR DOUGLAS: The acquisition would not have not ensued unless the Board of Consolo Limited gave its [imprimatur]?---If it had not provided the equity. Yes.
It was a decision for the Board of Consolo whether the acquisition ensued I suggest to you?---Well, it was a decision for the Board of Consolo whether they provided the equity or not.
If Consolo Limited decided that this acquisition wasn’t a good one for the Consolo group of companies, then this acquisition wouldn’t have gone ahead?---They wouldn’t have provided equity.
213 Mr Michael Austin gave evidence to similar effect. He said in cross-examination that the decision of the Consolo Board of 6 July 2004 to proceed to purchase the land “was very important in relation to the funding aspects of it. Yes.” He went on to describe the project as “A major project.”
214 This is consistent with the way the project was described in Consolo’s Annual Reports (see at [193] above) as, variously: “the last major residential precinct to be developed within the Noosa Heads postcode” (2005 Report), “the largest single initiative upon which the company has embarked” (2006 Report), and “the Company’s largest single project, progressed during the year with a number of notable milestones” (2007 Report).
215 From this evidence I conclude that, during this period from 2004 onwards, the Elysium Noosa project was a central and main part of the business, affairs and activities of Consolo.
216 Turning then to Consolo’s subsidiary companies, both Mr Clive Austin and Mr Michael Austin made it clear in their evidence that all of those subsidiaries took their direction on investment practice and the implementation thereof from the Consolo Board. Mr Clive Austin said in cross-examination:
MR DOUGLAS: And would it be a purpose, perhaps one of a number of purposes, of [the practice of having one of you, if not both of you, on the Board of a subsidiary] to maintain a consistency of investment practice and implementation across the Consolo group?---I’d agree with that, yes.
217 As to the operations of Consolo Property, Mr Michael Austin emphasised that it was a separate entity with separate offices and separate employees. Nonetheless, Mr Clive Austin agreed that the expression “Consolo Property”, when used in Consolo’s reports, “was more descriptive of the property activities of the Consolo Group than it was of the … company Consolo Property Pty Ltd”. In this respect, I consider Mr Douglas has, in his submissions (see at [193] above), accurately summarised the evidence as to how Consolo and the various companies within the Consolo Group carried out the business, affairs and activities of the Consolo Group. From this and other evidence to similar effect, it is apparent, in my view, that once Consolo had acquired the Elysium Noosa property and made its investment in the project, it was Consolo Property’s role in the Consolo Group to attend to the day-to-day management of the project. Thus, in performing this role, its central and main business, affairs and activities was the Elysium Noosa development, just like that of its parent company, Consolo. Viewed in this way, I consider it is immaterial whether Consolo, as a separate entity, took no part in any discussions or decisions affecting the day-to-day management of the project. The critical fact is that both separate entities – the parent company and its subsidiary, Consolo Property – were involved in different ways in the same central and main business, affairs and activities, viz pursuing the Elysium Noosa development.
218 On the Pearson side, the same applied to the parent company, PPG, and its subsidiary, PPG (Noosa). Both were involved in the same central and main business, affairs and activities of pursuing the Elysium Noosa development.
219 For these reasons, I consider the Elysium Noosa development was a central and main part of the business, affairs, and activities of each of the companies involved in the Elysium Noosa joint venture. On Consolo’s side, that included Consolo itself (as the main financial investor), Consolo Property (as the joint project manager), NR Nominees (as one of the joint venture partners) and Elysium Noosa Pty Ltd (as, among many other things, the owner of the land). On the Pearson side, that included both PPG (as an investor and the other joint project manager) and PPG Noosa (as the other joint venture partner).
220 Turning then to the Burkes. The marketing and selling of the lots in the Elysium Noosa development was self-evidently critical to its financial success. While his comments were specifically directed to the settlement of the sales of the lots in early 2008, Mr Michael Austin readily agreed that this was so.
221 So, taking into account the conclusion that the Elysium Noosa development was a central and main part of the business, affairs and activities of all of the respondents and the conclusion that the Burkes were engaged in an activity that was critical to the financial success of that development, I consider, on an objective assessment, it can be fairly said that the Burkes were acting “on behalf of” the respondent companies within the terms of s 84(2) of the TPA when they were engaged in that selling activity.
222 It is immaterial, in my view, whether the Burkes were also employed by PRD and their selling activities were concurrently being carried out on behalf of PRD. It is also immaterial whether anyone at Consolo, or at the Pearson companies, was aware that the Burkes were engaged in the selling activities on their behalf. Instead, what matters is whether the Burkes’ selling activities, when viewed objectively, could be said to be a part of the business, affairs and activities of those companies. I do not consider that this conclusion strains the expression “on behalf of”, or applies too loose a meaning to it. It is consistent, in my view, with casting a wide net and allowing an applicant in the position of Dr Bennett, to sheet home responsibility to each of those companies, on whose behalf the Burkes were carrying out this critical sales activity in the Elysium Noosa development.
“At the behest of”
223 This answers the first question above (at [201]) in the affirmative. The next step is to consider the second question: was the Burkes’ conduct engaged in at the behest of the respondents? This was the shorthand way Lockhart J used to describe the provisions of s 84(2)(b) in Walplan. His Honour said (at 37) that: “the second limb of the subsection extends the corporation’s responsibility to the conduct of other persons who act at the behest of a director, agent or servant of the corporation” (emphasis added). This is, with respect, an apt and succinct way of encapsulating the words in that subsection: “at the direction or with the consent or agreement (whether express or implied) of”. Before turning to consider whether one or more of these matters has been established in this case, it is convenient, first, to record that all the other elements in s 84(2)(b) have been established, or at least, are not in dispute. The words at the beginning: “any other person”, obviously includes the Burkes. I have assumed (see at [189] above) the words: “director, employee or agent” variously include Mr Michael Austin, Mr Dowling and Mr Pearson. There does not appear to be any dispute that each of those three men had the actual or apparent authority to give a direction, consent or agreement to the Burkes on behalf of their respective companies, if that is what happened.
224 Turning then to the question whether all, or some, of those three men gave a direction, consent or agreement to the Burkes. To begin with, I consider the words “(whether express or implied)”, positioned as they are immediately after the phrase “the direction or with the consent or agreement”, apply to each of the operative words in that phrase, ie “direction”, “consent” and “agreement”.
225 Secondly, I consider it is appropriate to apply the ordinary meaning of the word “direction”. The dictionary definition of it is: “guidance; instruction: to offer some direction, (plural) instructions … order; command … management; control” (Macquarie Dictionary, The Macquarie Dictionary Online, accessed 2012), or “the action or function of directing … of putting or keeping in the right way or course; guidance, conduct … of instructing how to proceed or act aright; authoritative guidance, instruction … of keeping in right order; management, administration” (Oxford Dictionary, Oxford English Dictionary Online, accessed 2012). Thus it should be taken to mean to give: “authoritative guidance, instruction … of keeping in right order; management, administration”. It follows that the question here can be narrowed to whether any of the three men mentioned above gave any authoritative guidance, etc to the Burkes.
226 In answering that question, it is convenient to begin with Mr David Pearson. He was the person responsible for the management of public relations and marketing for the whole Elysium Noosa development, on behalf of the joint venture partners. Mr Pearson said in his affidavit that the Burkes “were required to learn about every element of the Elysium Project, including every architect, every house and layouts, and all design attributes”. He also said that, together with others, he was involved in instructing the Burkes “to ensure that they could answer all questions that may arise” in selling the lots in the development. I infer from this evidence that Mr Pearson was among those who required the Burkes to learn “every element of the Elysium Project” in his capacity as the manager of public relations and marketing for the whole Elysium Noosa development. Based on this evidence, I find that Mr Pearson gave authoritative guidance and instruction to the Burkes of a kind that falls squarely within the ordinary meaning of the word “direction” above.
227 Further, since Mr Pearson was, at this time, concurrently acting in his capacity as a director of both PPG Noosa and PPG, I consider this direction was given to the Burkes by Mr Pearson when he was acting in that capacity. It follows that I consider the Burkes were acting at the behest of these two Pearson companies within the terms of s 84(2)(b).
228 Furthermore, since he had the acknowledged joint venture management responsibility for marketing the development on behalf of the joint venture – a process that quintessentially involved selling the lots in the development – I consider Mr Pearson was also acting as the agent of all the corporate entities involved in the joint venture when he gave this direction to the Burkes. This obviously included the various Consolo corporate entities involved in the joint venture, whether directly (in the case of Elysium Noosa Pty Ltd, NR Nominees and Consolo Property) or indirectly (in the case of Consolo) as outlined above. It follows that I consider the Burkes were also acting at the behest of those companies within the terms of s 84(2)(b).
Conclusion on issues 6 and 7
229 To sum up on these issues, for the reasons expressed above, I consider the Burkes were, within the terms of s 84(2):
(a) acting “on behalf of” each of the respondents in that they were acting in the course of the business, affairs and activities of each of them in selling the lots in the Elysium Noosa development; and
(b) acting “at the behest of” each of the respondents in that they were acting at the direction of Mr Pearson who was concurrently acting as a director of both of the companies he used to conduct the joint venture and as the agent for all of the Consolo companies directly and indirectly involved in the joint venture for the Elysium Noosa development.
Issues 8, 9 and 10 – Was there reliance, how to measure damages and whether to apportion damages?
230 It is convenient to deal with issues 8, 9 and 10 together because all of them are connected with damages, ie either the causation, the assessment or the apportionment thereof.
231 As I have already observed earlier in these reasons (at [55]), in his final amended statement of claim Dr Bennett has claimed that the Burkes’ pre-contract representations misled him into entering into the contract to purchase Lot 181 or, conversely, had it not been for those pre-contract representations, he would not have entered into the contract.
No right to terminate under BCCM Act
232 Dr Bennett also claimed that, had it not been for the “pre-agreement conduct and pre-completion conduct, he would not have completed nor, on account of the contravention in respect thereof, been obliged to complete the Agreement” (see para 23(aa) of the final amended statement of claim). This claim can be disposed of immediately for two reasons. First, since I have concluded that I am unable to discern how Dr Bennett’s pre-completion case is put, beyond expressing some reservations about it, I have been unable to make any determination on it (see at [78] above). Secondly, in any event, I do not consider that Dr Bennett has made out the “contravention” referred to in this plea. In his closing submissions, Mr Douglas identified the contravention as a breach of the warranty expressed in s 223(3) of the BCCM Act, which, he submitted, gave rise to a right to terminate the contract before completion under s 224 of the BCCM Act, notwithstanding cl 7.6(b) of the contract. That clause provided:
The Buyer must not object, delay settlement, make any claim or withhold any part of the Purchase Price because of:
…
(b) non completion of any facilities to be constructed on the Scheme Land;
233 Mr Douglas submitted that the breach of warranty arose because, in the terms of s 223(3) of the BCCM Act, there were “circumstances … in relation to the affairs of the body corporate likely to materially prejudice” Dr Bennett, viz that the Community Centre had not been constructed as part of the common property of the Elysium Noosa Community Title Scheme.
234 There is a number of reasons why this submission must be rejected. First, as Mr Savage pointed out in his closing submissions in reply, no such case was pleaded, nor the subject of evidence. Secondly, as a consequence of the latter, there is no evidence as to whether the body corporate assets that Mr Douglas identified as critical to this issue were supplied to the body corporate. Those assets were critical because they were described in the disclosure statement and were of a nature that would have required them to be located within the Community Centre, thus giving rise to the inference, so Mr Douglas submitted, that the Community Centre had to be constructed. They included: the gymnasium equipment; poolside furniture and pool cleaning equipment; furniture items for the recreation facility; furniture and a computer printer/copier for the use of the general manager and any other body corporate employees.
235 Thirdly, even if this issue was pleaded and there was such evidence, the alleged breach of warranty in s 223(3) of the BCCM Act is essentially based on an inaccuracy in the disclosure statement which formed part of the contract for Lot 181 under s 215 of the BCCM Act, viz the failure to expressly mention that the Community Centre would be provided as a part of the common property of the Elysium Noosa Community Title Scheme. However, as I have pointed out earlier in these reasons (at [147] above), there does not appear to be any provision of the BCCM Act that required the Community Centre to be so identified in that disclosure statement. If there was not such requirement in the BCCM Act, it is difficult to see how the non-inclusion of the Community Centre could have amounted to an inaccuracy under the BCCM Act.
236 Finally, even if all this is not so, I do not consider that the failure to construct the Community Centre in all the circumstances of this case amounted to a circumstance “in relation to the affairs of the body corporate”. That is so because, as I have pointed out elsewhere in these reasons (see at [160]), the Community Centre is not mentioned anywhere in Dr Bennett’s contract for Lot 181, or the disclosure statement attached to it. In other words, the Community Centre was not ever identified or included as a part of the common property of the Elysium Noosa Community Title Scheme such that it could ever be considered to be part of the affairs of the body corporate within that expression in s 223(3) of the BCCM Act.
237 I will now return to the reliance and causation questions (see [280] above).
Reliance and causation established
238 On those questions, Mr Douglas submitted that the representations the Burkes made operated as an inducement for Dr Bennett to enter into the contract for Lot 181 and since that was a material cause, that was sufficient. He relied upon Gould v Vaggelas (1985) 157 CLR 215 and Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 (“Wardley”). He also submitted that causation should be assessed according to the common law practical or common sense approach, except insofar as that concept is modified expressly or impliedly by the provisions of the TPA. On this aspect, he relied upon Wardley and March v E & MH Stramare Pty Ltd (1991) 171 CLR 506.
239 Mr Savage submitted that nothing the Burkes said or did induced Dr Bennett to complete his purchase of Lot 181. Instead, he submitted Dr Bennett’s decision to do so was based upon the valuation obtained by his financiers, the Bank of Queensland, from Propell National Valuers, which put the market value of Lot 181, as at January 2008, at $2.9 million. He also submitted that, at the time of settlement of his purchase, Dr Bennett was well aware that the community facilities were not complete and he had received legal advice on that issue before proceeding to settle. Mr McBride made similar submissions.
240 It is well-established that it is sufficient for the purposes of the TPA that the contravening conduct is a cause of the loss: see I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41 at [33] per Gleeson CJ and Taylor v Crossman (No 2) [2012] FCAFC 11 at [64]–[65]. Furthermore, so long as the contravening conduct materially contributes to the loss, a causal connection will ordinarily exist even though the breach without more would not have brought about the loss: see Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 (“Henville”) at [106] per McHugh J and North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60 (“North East Equity”) at [171]. To break the chain of causation requires an abnormal event that, as a matter of common sense, brings about that result. A person’s own act or omission usually constitutes a link, rather than a break, in the chain of causation which stretches from the contravening conduct to the loss: see Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 356–7 per Brennan J, Henville at [14] per Gleeson CJ and North East Equity at [170].
241 Dr Bennett said in his affidavit that: “If a different, lesser picture had been painted to me and what the development entailed for me as a buyer with lesser lot or community facilities, provided by the time I settled on $2.1 million purchase (sic), I would not have entered the contract”. The respondents did not challenge this aspect of Dr Bennett’s evidence. Instead, as their submissions show, their challenge was essentially directed to the period leading up to the completion of Dr Bennett’s purchase in March 2008. In the absence of any challenge to Dr Bennett’s evidence on this aspect, I accept his evidence and find that he acted on the Burkes’ pre-contract representations, specifically those about the Community Centre in paras 1, 3, 6 and 8 of Schedule A, to enter into the contract to purchase Lot 181.
242 Based on this finding and applying the authorities referred to above, once Dr Bennett entered into the contract to purchase Lot 181 and that contract was not terminated under cl 3.1 (which it was not), that meant that once he received a notice to settle – under the contract, 14 days notice could be given upon the establishment of the Scheme or on the completion of the dwelling, whichever was the later – he was obligated to pay the sum of $2.1 million in accordance with the terms of the contract. Assuming, therefore, that he suffered loss as a consequence, there was a relevant connection between his reliance on the Burkes’ representations about the Community Centre and that loss.
243 There are two other aspects of this issue I need to address. First, I have already rejected the submissions of Mr Douglas that Dr Bennett could rely upon the provisions of the BCCM Act to avoid the obligation to settle his purchase of Lot 181 (see at [232]–[237] above). It follows from this conclusion that I consider Dr Bennett was obligated to settle his purchase and pay the sum of $2.1 million in accordance with the terms of the contract for Lot 181, whether or not the common property for the Elysium Noosa Community Title Scheme included the Community Centre and its related facilities at completion, as represented by the Burkes. However, even if I am incorrect in this conclusion and Dr Bennett could have relied upon the provisions of the BCCM Act to avoid his obligation to settle the purchase of Lot 181, I do not consider that his decision to proceed with the settlement constituted an abnormal event such that, as a matter of common sense, it broke the chain of causation: see the principles and supporting authorities set out at [240] above.
244 Secondly, I reject the respondents’ submissions that Dr Bennett did not rely upon the Burkes’ representations, but instead completed his purchase of Lot 181 knowing that the Community Centre had not been constructed and relying on the Propell valuation putting the market value of the property at $2.9 million. The complete answer to these submissions is (as above) that once Dr Bennett signed the contract for Lot 181, the dice was cast and, provided the contract remained on foot, he was obligated to settle his purchase in accordance with the terms of that contract. Indeed, Dr Bennett correctly made this very point when the same proposition was put to him by Mr Savage in cross-examination (which evidence I accept) as follows:
Well, can I suggest to you that that simply wasn’t so, and can I suggest to you that when you saw the valuation at 2.9 million, you completed because you thought that you had made a profit - a handsome profit on your investment, and you wanted to keep that rather than to let it go by cancelling the contract?---No, that’s an inaccurate statement. I completed because I felt obliged to by the contract that I had signed. I was, especially by the day of settlement, quite dissatisfied with the way things were going, and as I have said to you, I was hopeful that we may be able to make the best of a bad situation and get to a point where the value evidenced in this valuation may be salvageable at some point in the medium - or the near to medium term, I suppose.
245 In any event, even if the Propell valuation was relied upon, in part, by Dr Bennett and he was somehow able to avoid his obligation to settle his purchase of Lot 181, for the reasons given above, I do not consider that either of these events effected a break in the chain of causation between the Burkes’ representations and his alleged loss.
246 For these reasons, I consider that the representations the Burkes made to Dr Bennett, which caused him to enter into the contract for Lot 181 and in turn eventually obligated him to settle that contract, notwithstanding the failure to provide the Community Centre and related facilities in accordance with those representations, was a cause of his alleged loss.
The loss should be calculated at the date of acquisition
247 As I noted near the outset of these reasons (at [6]), Dr Bennett has claimed his damages should be assessed at $1.2 million on the basis Lot 181 was valued at $900,000 at trial. The respondents say that if any damages are to be awarded, they should be limited to $500,000 on the basis that Lot 181 was valued at $1.6 million at settlement. Both of these values have been agreed by the parties.
248 As to the appropriate method by which I should measure Dr Bennett’s damage, Mr Douglas submitted that it was difference between what Dr Bennett paid for Lot 181 and its value as at the date of trial. In making this submission, Mr Douglas acknowledged that the common approach in a case of this kind is to subtract the value of the property from its price as at the date of acquisition. However, he relied upon the “alternative approach” identified by the High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 (“HTW Valuers”) at [63] and following. He also relied upon the similar approach taken by the Full Court in North East Equity. In support of that submission, he submitted that Dr Bennett’s case was, in truth, a “no transaction” case in that, but for the Burkes’ representations, the transaction would not have ensued at all. As a consequence, Dr Bennett would not have been left with a property which, he submitted, was now worth less than the purchase price. He added that Dr Bennett has also been left with “an incomplete development and if he were forced to sell now ‘a notional purchaser [would be] able to point to the absence of the community centre on this high end development. The very problem has tainted his asset.’”
249 Mr Savage submitted that, if Dr Bennett has suffered any damage, the usual approach should be taken to the assessment of that damage, ie to calculate the difference between the “real” value of the property at the time of purchase and the price he paid for it. He also submitted that market conditions had declined significantly since March 2008 and the global financial crisis had also intervened. These factors made an assessment by reference to the value of the property at trial inappropriate. He also submitted that Dr Bennett’s damage was not to be measured by reference to the difference between the value of the property as purchased and the value it would have had if the Burkes’ representations were true. Further, he submitted that there was no evidence that the failure to build the Community Centre building had an adverse impact on the value of the property. Finally, he relied upon the evidence that the new owner of the Scheme land, AV Jennings Ltd, has recently agreed to build the Community Centre on the land. Mr McBride essentially supported Mr Savage’s submissions on this issue.
250 In turning to consider these submissions, I can say at the outset that I consider all of Mr Douglas’ submissions must be rejected and most (but not all) of Mr Savage’s must be accepted. To begin with, I consider Mr Douglas’ reliance on HTW Valuers and Northeast Equity is misplaced. Neither of those cases involved representations made by a vendor in connection with the sale of an interest in land such as occurred in this case. The issues relating to the measurement of damage that arose in those cases were of a different kind and considerably more complicated than they are in this case.
251 HTW Valuers involved representations made by a valuer to the proposed purchaser of a shopping centre to the effect that a new shopping centre to be constructed nearby was not likely to adversely affect the tenancy levels in the proposed purchase. That turned out to be quite inaccurate. After the new shopping centre opened the applicant suffered a collapse in its rental income. The damages issues in HTW Valuers were complicated by the fact that the applicant had unsuccessfully tried to sell the shopping centre it purchased. Significantly, for present purposes, while the High Court said (at [63]–[65]) that the alternative approach of assessing damages by calculating the purchase price of the asset, less whatever was left in the purchaser’s hands, was open under s 82 of the TPA, it did not ultimately take that approach in that case. Instead, it held that the common approach should be applied, viz to deduct the true value of the asset at purchase from the purchase price. There is no evidence in this case that Dr Bennett has tried to sell Lot 181 without success. There is, therefore, no basis for taking this “whatever was left in the purchaser’s hands” approach. Moreover, despite that complication being present in that case, as I have already noted above, the High Court still adopted the common approach. Since there is no such complication in this case, there would appear to be even more reason why the common approach should be adopted here.
252 Turning then to North East Equity. That case involved the sale of a carrot processing plant. The applicant had financed the purchase by entering into a five year lease of the plant with a financier. The new plant was then integrated with an existing plant, with the result that the integrated new plant was so large and complex that the applicant claimed it was locked into using it: see North East Equity at [157]. The damages issue was complicated by these factors and a number of others, including disputes about the effect the allegedly faulty equipment had on the applicant’s business operations and whether there had been a break in the chain of causation when the applicant had moved its whole packing operation to another location. In the end result, the Full Court did not actually decide that the alternative approach should be applied in the circumstances of that case. Instead, it found that the trial judge had erred in not considering whether that alternative approach should be applied and therefore referred the matter back to him to make that assessment: see North East Equity at [176].
253 However, even if the Full Court had adopted the alternative approach in that case the complications that arose there with the damages issues are so vastly different to those in this case, that I consider it provides no support for adopting the alternative approach here. In particular, there is no evidence that Dr Bennett is “locked into” Lot 181 and there was no business activity associated with his purchase of that asset.
254 Aside from rejecting these cases as supporting the application of the alternative approach in this case, there is another good reason why, in the circumstances of this case, the common approach should be taken. That is, the need to separate out events that occurred after the purchase of Lot 181 when one is assessing whether Dr Bennett suffered loss and, if so, how that loss is to be quantified. In Henville, Gleeson CJ explained why the common approach is apt when such a need arises (at [24]–[25]), as follows:
24. Although there has been some discontent with its apparent rigidity, a primary reason for the general principle that damages in deceit, where there has been a fraudulent inducement to acquire shares in a company, are measured by the difference in the value of the shares at the time of acquisition and the price paid for them, is the need to separate out losses resulting from extraneous factors in the later conduct of the company’s business. Peek v Derry was a case concerning shares in a tramway company that were taken up on the faith of a false prospectus. Cotton LJ said :
“Neither can the Plaintiff get the benefit of any loss or depreciation in the shares which was occasioned by subsequent acts. If the company at the time was a good company and the shares had an intrinsic value, then no fact which subsequently occurred, as for instance, some Act of Parliament being passed to prevent such tramways from using steam-power, or anything else, ought to add to the damages to be paid by the Defendants. And of course a plaintiff cannot aggravate the damages he is to get by acting unreasonably, and if here the Plaintiff had in any way acted unreasonably, then any loss which was the consequence of that would not be added to the damages which were to be paid by the Defendants.”
25. Later, his Lordship referred to “events injurious to the company, which occurred not from intrinsic defects in it, but from events which happened after the purchase”, which “cannot be taken into account”.
255 And further (at [28]–[29]):
28. In Gould v Vaggelas, a case of deceit which induced the purchase of a business, Gibbs CJ said:
“There is no reason in principle why the defrauded purchaser should not recover damages for all the loss that flowed directly from the fraudulent inducement (unless, possibly, the loss was not foreseeable). If the purchaser, besides paying more for the business than it was worth, has suffered additional losses which resulted directly from the fraud he ought to be compensated for them. Of course, the court (sic) must be satisfied that the loss did result directly from the fraud and not from some supervening cause such as the folly, error or misfortune of the purchaser himself …”.
29. Dawson J said in the same case:
“Moreover, for a loss to be recoverable it must be clear that it is suffered as a direct consequence of the deceit and is not referable to something else such as the purchaser’s ineptitude in the conduct of the business.”
256 There is no suggestion in this case that Dr Bennett was inept and, as I have already noted above, there was no business activity associated with his purchase of Lot 181. However, there was a number of events subsequent to Dr Bennett’s purchase of Lot 181 that were not the direct consequence of the Burkes’ representations and yet had an adverse effect on the market value of Lot 181. Many of them were identified in one of the valuations tendered on behalf of the respondents. That valuation was prepared by Mr Doyle, a certified practising valuer with the firm CB Richard Ellis. He noted the following:
As at January 2011, the Noosa market continued to display recessionary trends being impacted greatly by the ongoing effects and impacts of the global financial crisis. Key factors that have impacted the Noosa market, including but not isolated to the “Elysium Noosa” project include:
• The impacts of the global financial crisis, lending liquidity and buyer uncertainty;
• Impacts of interest rate rises during 2009/10;
• The announcement that the “Elysium Noosa” development had gone into liquidation and was subsequently sold as Mortgagee in Possession mid 2010 to the AV Jennings Group;
• Other significant master planned residential resort and residential community titled developments within the Noosa locality failing with receivers and managers appointing (sic), including:
- “The Noosa Sanctuary” at Noosa Heads reportedly costing in excess of $200 Million and later selling in late 2010 for circa $65 Million fully complete;
- “Elysium Noosa” development reportedly costing in excess of $50 Million (for land) plus in excess of $50 Million for civil works, later selling for mid $30 Million price range in December 2010;
- Petrac “Noosa North Shore Beach Houses” development. This reported $200 Million development was sold on a piecemeal disposal. Completed houses previously selling in the early $1 Million price ranges are currently listed for sale through selling agents Tom Offerman Real Estate of Noosa Heads at price reductions as Mortgagee in Possession sales of up to in excess of 50-60%.
It is my opinion that based upon my experience within the Noosa locality, having particular regard to the above market factors, the appointment of receivers and managers to the balance land of “Elysium Noosa” had begun a chain of events which led to a significant drop in market appeal for the “Elysium Noosa” development. Discussions with key selling agents within the Noosa locality including selected agents who have listed properties for resale within “Elysium Noosa” reveal that the development had failed to deliver as promised, especially in terms of the standard of finish for residential dwellings and lack of communal facilities. … This degree of uncertainty coupled with very high Body Corporate charges of circa $5,500 per annum for facilities not yet delivered, has ultimately created a development of little to no appeal to incoming purchasers.
257 From this, it can be seen that it would be extremely difficult to separate out the effect of these subsequent events if one were to adopt a later date than the date of acquisition when fixing the value of Lot 181. I might add that these subsequent events do not include an even more recent event relied upon by Mr Savage: the agreement the new purchaser, AV Jennings Ltd, reached with the body corporate for the Elysium Noosa Community Title Scheme to build the Community Centre at the development. Thus, the continuing effect of all these subsequent events reinforces the argument for applying the common approach in this case and drawing the line at the date of Dr Bennett’s acquisition of Lot 181.
258 There are two other aspects of Mr Douglas’ submissions that I need to dispose of. The first is his submission that this case is different because it is a “no transaction” case. On that aspect, I respectfully agree with what Brereton J had to say in Street v Luna Park Sydney Pty Ltd [2007] NSWSC 588 (“Street”) at [9] as follows:
It makes not the slightest difference that it is the plaintiff’s case that they would never have purchased the subject property but for the conduct complained of, as distinct from that they would have purchased it only for a reduced price. In many fraud or s 52 cases a purchaser will say that he, she or it would never have purchased had they known the true position. Even so, having purchased, the asset may prove to be worth no less than what they paid for it, in which case they have suffered no loss, despite reliance on misleading and deceptive conduct and despite the fact that they would not have embarked on the purchase but for that conduct. Accordingly, I do not think that any approach other than that authorised by Potts v Miller is warranted, just because the plaintiffs say that they would not have purchased at all.
259 The second is Mr Douglas’ submission that: “a notional purchaser [would be] able to point to the absence of the community centre on this high end development. The very problem has tainted his asset”. This submission appears to me to be tantamount to saying that Dr Bennett should be compensated, in money terms, for what it was represented he would receive, viz a lot in a high end development with a Community Centre. If I have correctly understood this submission, it must be rejected. First, the fact that Dr Bennett’s case is, indeed, a “no transaction” case means that he is to be compensated for the effects of the transaction into which he was wrongly induced to enter, not for the benefits that contract failed to provide to him. In other words, he is, as Mr Savage correctly submitted, not to be compensated by reference to the difference between the value of the property as purchased and the value it would have had if the Burkes’ representations were true: see Marks v GIO Australia Holdings Limited (1998) 196 CLR 494 at 514–5 and Bonett v The Barron and Dowling Property Group Pty Ltd (2006) 67 NSWLR 475; [2006] NSWSC 975 (“Bonett”) at [140].
260 These reasons dispose of all of Mr Douglas’ submissions, the main one being that the alternative approach outlined in HTW Valuers should be adopted in this case. Instead, I consider the common approach should be adopted and Dr Bennett’s loss should be assessed by reference to the value of Lot 181 at the date of settlement. The next question is how one is to go about applying the common approach to measure Dr Bennett’s loss in this case.
Calculating the loss
261 The common approach has been stated on numerous occasions in the past (see, eg HTW Valuers at [35] (above at [216]); Ackers at [444] and North East Equity at [132]), but the following exposition of it by Brereton J in Street (at [5]) will suffice:
In this case, the change of position was the purchase of the relevant property, as it normally is in a fraud or s 52 case. In those circumstances, the ordinary rule is that damages are measured by the difference between the price actually paid for the property and its true value, that true value being determined on the assumption that the transaction was not affected by the conduct complained of, and that all relevant matters relating to the value of the property were known at the time of the purchase [Potts v Miller (1940) 64 CLR 282; Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281].
262 It should be noted that, while this is the common approach to be applied in cases of this kind, it is only a rule of practice and it is not to be applied universally, inflexibly, or rigidly. The reason for this was explained by the High Court in HTW Valuers at [36] as follows:
One key qualification of the rule which prevents it from being inflexible is that the test depends not on the difference between price and “market value”, but price and “real value” … or “fair value” … or “fair or real value” … or “intrinsic” value … or “true value” … or “actual value” … or what the asset was “truly worth” … or “really worth” … or “what would have been a fair price to be paid … in the circumstances … at the time of the purchase”. This distinction is sometimes difficult to draw, but it is old … and fundamental.
263 See also North East Equity at [134].
264 As noted above, the parties have agreed that the value of Lot 181, as at 8 March 2008, was $1.6 million. Since this agreement was made by reference to the competing approaches to the assessment of Dr Bennett’s loss, I can only assume that the parties’ agreement also means it is agreed that this value was the “true” or “intrinsic” value of Lot 181 for the purposes of calculating his loss according to the common approach. In other words, this is the value of the benefit that has to be deducted from the loss Dr Bennett incurred by being misled into entering into the contract for Lot 181 and thereby having to pay $2.1 million in accordance with its terms.
265 In this respect, Mr Savage’s submission that there was no evidence that the failure to build the Community Centre building had an adverse impact on the value of Lot 181, is somewhat perplexing. There is no doubt what Dr Bennett paid for Lot 181, viz $2.1 million. If the common approach, for which Mr Savage submitted, is adopted and this agreed “true” value of $1.6 million is deducted from the purchase price Dr Bennett paid for Lot 181, the loss he suffered by entering into the contract to purchase that lot is quite clear: $500,000. As I have already observed above, that loss is not to be calculated by reference to whether or not the Community Centre building was built, or even will be built, but by reference to the loss Dr Bennett sustained by entering into the contract for Lot 181, on the misleading representation that the Community Centre would be built. So, if the evidence is lacking in any respect, it could only be as to the value of the benefit Dr Bennett obtained by entering into the contract for Lot 181. As noted above, Dr Bennett has to bring that value to account in calculating his loss. However, since that value is to be applied in reduction of Dr Bennett’s loss, it is, in my view, a matter upon which the respondents bear the onus, not him: see Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd (1991) 33 FCR 1 at 17; Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 at [255] and [264]; Ruthol Pty Ltd v Tricon (Australia) Pty Ltd [2005] NSWCA 443 at [44] and [53]; and E K Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 at [194] and [195]. Thus, any lack of evidence in this regard will not avail the respondents.
266 In all these circumstances, I consider it is fair and just to adopt the value of $1.6 million as the true value of Lot 181 as at settlement at 8 March 2008. Accordingly, I assess Dr Bennett’s loss as a consequence of him being misled by the Burkes’ representations into entering into the contract to purchase Lot 181, at $500,000.
No apportionment is required
267 The tenth and final issue is the question of apportionment.
268 On this issue, the respondents rely upon s 87CB of the TPA and submit that Dr Bennett’s claims are apportionable under that section. Mr Savage, on behalf of the Consolo respondents, identified the following concurrent wrongdoers:
the respondents, other than the second and fifth respondents;
the Burkes;
the two PRD entities who employed the Burkes;
Virgil Power & Co, Solicitors, who advised Dr Bennett;
Propell National Valuers and Mr Casper.
269 Mr McBride, on behalf of the Pearson respondents, submitted that no apportionment should be made against the third and fourth respondents and instead, full liability should be fixed on the Consolo respondents who, he submitted, had control over the financial aspects of the Elysium Noosa development throughout.
270 Mr Douglas submitted that s 87CB does not apply to the claims under s 87(1A) which are now made in the final amended statement of claim in the alternative to those under s 82. He also submitted it does not apply to contraventions of any of the other provisions of Pt V of the TPA, specifically s 53A(1).
271 Section 87CB(1) falls within Pt VIA of the TPA. It provides:
This Part applies to a claim (an apportionable claim) if the claim is a claim for damages made under section 82 for:
(a) economic loss; or
(b) damage to property;
caused by conduct that was done in a contravention of section 52.
272 The background to the introduction of Pt VIA of the TPA was explained by Finkelstein J in BHPB Freight Pty Ltd v Cosco Oceania Chartering (No 2) [2008] FCA 1656 (“BHPB”) at [4]–[5] as follows:
4. Proportionate liability was introduced into state and federal legislation following an inquiry into the law of joint and several liability established by the Commonwealth and the New South Wales Attorneys-General in 1994. The impetus for the inquiry was the growing number of actions against professionals, particularly auditors, who were being singled out as targets for negligence actions not because of their culpability (which might be small) but because they were insured and had the capacity to pay large damages awards. One consequence was a sharp rise in insurance premiums payable by professionals. The inquiry was conducted by Professor Davis of the Australian National University. He published stage one of his report in July 1994 and stage two in January 1995. In his report Professor Davis recommended that joint and several liability for negligence which causes property damage or economic loss be replaced by liability which is proportionate to each defendant’s degree of fault.
5. Draft model provisions that reflected the recommendation of the enquiry were published in July 1996 in the form of a part that could be inserted in appropriate legislation. The Commonwealth, State and Territory governments agreed to amend relevant legislation, based on the draft model provisions, to facilitate the introduction of a nationally consistent proportionate liability regime in respect of claims for economic loss or property damage. To implement its part of the agreement the Commonwealth amended the Australian Securities and Investments Commission Act 2001(Cth), the Corporations Act 2001 (Cth) and the Trade Practices Act so that proportionate liability applied to claims for damages for economic loss or property damage arising from misleading or deceptive conduct. By amendments to the Wrongs Act, Victoria introduced proportionate liability in respect of claims for economic loss or property damage arising from a failure to take reasonable care.
273 Later in his reasons, Finkelstein J observed that the provisions of Pt VIA “are confined to claims for damages under s 82 based on a contravention of s 52” (see at [7]) and a claim for relief under s 87 of the TPA is not an apportionable claim within Pt VIA “as it is not ‘a claim for damages under s 82’” (see at [9]). I respectfully agree with these observations.
274 The background history to the introduction of Pt VIA outlined by Finkelstein J in BHPB demonstrates that it was introduced for a particular purpose, viz professional indemnity claims where the proportionate culpability of the professionals concerned was relatively small, but their capacity to pay was relatively large. Consistent with this purpose, the language used in s 87CB is very specifically confined to particular claims for damages for particular contravening conduct. Whether or not the legislature has hit its intended target with this language is a matter that I do not need to determine in this case.
275 However, for present purposes, I consider it is plain that s 87CB does not apply to claims for damages made under s 87(1A), or to claims where the damages are caused by false or misleading representations in contravention of s 53A(1) of the TPA. If the legislature had intended that s 87CB was to apply to all claims for loss or damage under the TPA, it could very easily have done that by omitting the words “made under s 82” from that section. It has not chosen to do so. Similarly, if the legislature had intended s 87CB to apply to any claim for conduct in contravention of any of the provisions of Pt V of the TPA, it could very easily have done that by referring to that Part, rather than specifically referring to “a contravention of s 52”. Again, it has not chosen to do so.
276 Taking into account these aspects of the purpose, context and language of s 87CB, I do not therefore consider it applies in this case, insofar as it involves claims under s 87(1A) for a contravention of s 53A. In other words, neither of those components of the claims in this case is an apportionable claim under s 87CB(1) of the TPA.
277 In the alternative, Mr Savage submitted that Dr Bennett had been given leave to amend his statement of claim on the first day of the trial to claim relief under s 87(1A) on the basis of a contravention of s 53A to avoid his claims being apportioned under s 87CB. This circumstance, so Mr Savage submitted, should be taken into account by the Court in the exercise of its discretion under s 87(1A) as to whether to grant relief under s 87(1A) and, if so, whether to grant relief for the whole or a part of Dr Bennett’s loss or damage. In making this submission, Mr Savage relied upon the decision in Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd (2001) 114 FCR 108; [2001] FCA 1620 (“Mayne Nickless”). In that case, the applicant sought to avoid the time limit for the commencement of claims under s 82 of the TPA by making its claim under s 87(1). Of that situation, the Full Court said this:
In the exercise of [the discretion under s 87(1)], a court would be entitled to have regard to whether the sub-section had been invoked merely to overcome a time problem in proceedings that could, absent that problem, have been brought under s 82.
278 Mr Savage submitted that the present situation was analogous to that in Mayne Nickless because Dr Bennett had amended his statement of claim to make his claims under s 87(1A) and s 53A of the TPA merely to avoid apportionment under s 87CB.
279 I do not consider that this analogy is valid. Mr Savage is quite correct in observing that the provisions of s 87, including s 87(1A), are discretionary and the Court may only award a part of the claim, whereas s 82 is not discretionary and contains no provision for awarding a part of a claim. However, the analogue between the two cases ceases at that point. In Mayne Nickless, the applicant made its claim for damages under s 87(1), rather than pursuing a claim for damages under s 82. It did that to attempt to avoid the time limit in s 82. Here, Dr Bennett is seeking to pursue his claim for damages under s 87(1A) as well as a claim under s 82. There are significant differences between these two approaches. First, s 87(1) is quite different to s 87(1A). That is so because the provisions of the former are ancillary to the provisions of s 82, whereas the latter constitutes a standalone cause of action: see Mayne Nickless at [53]. Furthermore, as a standalone cause of action, s 87(1A) has its own time limit in s 87(1CA). Secondly, and perhaps more importantly on this apportionment issue, s 87CB only applies to a situation where the claim for damages is being made under s 82 and for a contravention of s 52. So, it follows, from my reasoning in [276], that any different combination of the nature of claim and contravening provision is not an apportionable claim under s 87CB. Thus, a claim under s 82 for a contravention of s 53A is not an apportionable claim, and nor is a claim under s 87(1A) for a contravention of s 52. It follows that, since Dr Bennett can structure his claims so that they are made under s 82 for a contravention of s 53A, he avoids the exercise of any discretion under s 87(1A) and any apportionment under s 87CB.
280 For these reasons, I do not consider that Dr Bennett’s damages fall to be apportioned under s 87CB of the TPA.
Conclusion
281 In conclusion, for the reasons expressed above, I consider that Dr Bennett is entitled to judgment in the sum of $500,000 under s 82 of the TPA because the representations the Burkes made to him that the Community Centre would be completed as a part of Stage 1 of the Elysium Noosa development were misleading in contravention of s 53A(1)(b) of the TPA.
I certify that the preceding two hundred and eighty-one (281) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves. |
Associate:
