FEDERAL COURT OF AUSTRALIA
DATE OF ORDER:
20 August 2019
THE COURT ORDERS THAT:
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
NSD 279 of 2017
DEREK DIXON ECKFORD
SIX MILE CREEK PTY LTD ACN 059 767 994
DATE OF ORDER:
22 August 2019
THE COURT ORDERS THAT:
1. There be judgment for the applicant against the first and second respondents in the sum of $2,573,542.46, made up of the following amounts:
(a) $936,304.26 on account of the Purchase Claim;
(b) $1,153,396.55 on account of the Loan Claim;
(c) $915,936.65 on account of the Construction Cost Claim;
(d) $592,905 on account of pre-judgment interest in accordance with s 51A of the Federal Court of Australia Act 1976 (Cth); and
(e) less the sum of $1,025,000 being the current value of lot 10.
2. The first and second respondents pay the applicant’s costs.
3. The question of whether the applicant’s costs payable by the first and second respondents be on the ordinary basis or otherwise be reserved.
4. The applicant file and serve written submissions of no more than 3 pages on the question of costs by 30 August 2019.
5. The respondents file and serve written submissions in reply of no more than 3 pages on the question of costs by 6 September 2019.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
1 In about late September, the applicant, Derek Eckford, and his late wife, Gale, were on a family holiday on the Gold Coast in Queensland. At that time, they resided in Dubbo, New South Wales. They both had lived there for about 40 years and had raised their family of three sons, one of whom subsequently died. One of their sons, Jason Eckford, and his wife, was on the holiday, together with his parents.
2 One day in late September or early October 2007, Mr and Mrs Eckford drove from the Gold Coast to the Sunshine Coast. There, they noticed a sign advertising undeveloped lots of land for sale in an estate then called “Avalon @ Coolum”. They drove around the estate, which consisted of about 60 parcels of undeveloped, subdivided lots. The estate was located on hilly terrain. They drove up to the sales office for the estate where Ken Guy Real Estate, the selling agent, had a site office. It was located on the highest point and had views to the Pacific Ocean and Coolum Beach on the eastern side, and to Mount Coolum on the south.
3 Six Mile Creek Pty Ltd owned the estate and it, together with its principal and controlling mind, Daniel (Danny) McLaughlin, are the respondents. The site office was on lot 10. Lot 10 had a “sold” sign placed next to the site office. The real estate agent at Ken Guy responsible for conducting sales of Avalon @ Coolum lots was Mark Boulter. His daughter, Angela, was on duty in the site office at the time Mr and Mrs Eckford called in to enquire about whether any lots were for sale. She arranged for her father, Mr Boulter, to attend and he gave Mr and Mrs Eckford a sales brochure, a price list dated 14 September 2007 and a copy of the plan of subdivision for the estate. The latter two documents had highlighting that showed that certain lots had been “sold” and their prices were recorded on the price list.
4 It is common ground that Mr Boulter made four representations to Mr and Mrs Eckford on both this and a subsequent visit on a Saturday, probably 29 September 2007. The representations in substance were that three lots (lots 17, 18 and 19), located on the southern boundary of lot 10, had building covenants on them that contained height restrictions limiting the height of any buildings, trees and vegetation that could be on those lots, so as to ensure, as the brochure promised, that lot 10 would keep its ocean views “FOREVER”, and, also, that lots 8 (which was directly north of lot 10, but below and separated from it by lot 9, and had a similar aspect), 17, 18 and 19 had been “sold” at the prices specified in the price list.
5 Subsequently, Mr and Mrs Eckford agreed with Jason Eckford that he would lend them the money to buy lot 10 for its list price of $895,000 plus stamp duty. On 20 November 2007, they entered into a contract to purchase lot 10 from Six Mile Creek that contained the building covenants including the height restrictions that supposedly would bind the owners of lots 17, 18 and 19 “FOREVER”. Mr and Mrs Eckford then sold their Dubbo home and built a house using their funds on lot 10, all the while believing that lots 17, 18 and 19 were burdened with the height restrictions.
6 In February 2016, Mr Eckford and Jason Eckford learnt that, at some time after Mr Boulter had shown them the price list, Six Mile Creek had sold lots 17, 18 and 19 to third parties on contracts which contained none of the height restrictions to bind the new purchasers of those lots.
7 Mr Eckford, as the surviving joint tenant of lot 10, contends that Six Mile Creek and Mr McLaughlin engaged in misleading or deceptive conduct and made false or misleading representations in contravention of each of ss 52(1) and 53A(1)(b) of the Trade Practices Act 1974 (Cth) (TPA) in making representations concerning the effect and operation of the height restrictions and the nature of existing “sales” of lots in the estate as stated in the price list.
8 Mr Eckford also contends that Six Mile Creek and Mr McLaughlin made a fraudulent representation that lots 17, 18 and 19, together with lot 8, had been “sold”. That was because, previously, Six Mile Creek, through Mr McLaughlin, had agreed to terminate the contract for lot 19, so that the purchaser of that lot could buy lot 9 (and in fact had terminated the contract for lot 19 on 1 October 2007), and lots 8, 17 and 18 were the subject of contracts under which the purchasers had either paid no deposit at all, or a partial deposit of $1,000, were persistently in default and were never likely complete those contracts. Mr Eckford contends that the statement that those lots had been “sold”, unqualified as it was, conveyed the representation that the lots were, in the belief of the vendor, the subject of contracts that either had been completed already or would be completed so as to ensure that the height restrictions in the building covenants would be enforceable to protect Mr and Mrs Eckford’s views from lot 10 to the south. Mr Eckford claims damages for the tort of deceit against both respondents in respect of this representation.
9 Mr Eckford alleges that Six Mile Creek made two representations about the height restrictions with respect to future matters and that it did not have reasonable grounds for making them by reason of which they were taken to be misleading, pursuant to s 51A(1) of the TPA. In addition, Mr Eckford also alleges that Six Mile Creek and Mr McLaughlin had fraudulently concealed from him, until 2016, the falsity of the height representations.
10 Mr Eckford says that, had he realised that the representations were not correct in stating that the views of lot 10 were protected by the height restrictions by reason of the “sales” of lots 17, 18 and 19, he and his wife would never have bought lot 10. Mr Eckford claims injunctions under s 80 of the TPA restraining Six Mile Creek from approving any development on lots 17, 18 and 19 exceeding the height restrictions on each of those lots in the building covenants forming part of the contract of purchase for lot 10, declarations that Six Mile Creek and Mr McLaughlin, as an accessory, engaged in conduct in contravention of ss 52 and 53A(1)(b) of the TPA, and damages under ss 82 and 87(1) of the TPA on the basis of a no transaction case.
11 Mr Eckford claims damages under the following five heads:
Cost of lot 10, stamp duty and associated expenses (the purchase claim)
Costs of construction of a dwelling on lot 10, relocation from Dubbo to lot 10 and associated expenses (the construction cost claim)
Interest at prejudgment rates under s 51A of the Federal Court of Australia Act 1976 (Cth) on items 1 and 2 or only on item 2 calculated from dates when money was expended (the interest claim)
Interest due to Jason Eckford on his loan (the loan claim)
Loss of a capital gain on the Dubbo property
12 The respondents deny all liability. They assert that Mr and Mrs Eckford did not rely on any representation. Mr McLaughlin also denies that he has any personal liability for any of the representations.
13 In essence, Six Mile Creek and Mr McLaughlin accept that the representations about the height restrictions were made, but say that, first, they were true at the time they were made because of the contemporaneous existence of exchanged contracts for the sale of lots 8, 17, 18 and 19 when Mr and Mrs Eckford first visited the site office, and, secondly, even if those representations and the representation in the price list that those lots had been “sold” were misleading or deceptive or false or misleading, the conduct occurred more than six years before Mr and Mrs Eckford entered into the contract of purchase on 20 November 2007 and completed it on 11 January 2008, and ss 82(2) and 87(1CA) of the TPA made the claims unmaintainable. In addition, Six Mile Creek and Mr McLaughlin deny that they were in any way fraudulent in representing that lots 8, 17, 18 and 19 had been sold or that Mr and Mrs Eckford had relied on that representation in going into the contract to purchase lot 10. They also contend that Mr Eckford cannot succeed on his claim that they had made a fraudulent representation because he had, or with reasonable diligence could have, discovered the alleged fraud more than 6 years before he commenced this proceeding on 24 February 2017.
14 The respondents say that any damages, on a no transaction case, should be limited to $627,248.16, being the difference in the total of the purchase and construction cost claims, and what they asserted, based on the valuation evidence that they adduced, as the current value of lot 10 of $1,225,000.
15 Mr Eckford pleaded that Six Mile Creek engaged in conduct that conveyed the following representations to Mr and Mrs Eckford, namely that:
(1) Six Mile Creek had sold, at least, each of lots 17, 18 and 19 on conditions that included a covenant that restricted the maximum height of any buildings on each lot, and that would be passed on to future owners of those lots;
(2) Six Mile Creek would not approve or permit the construction of any building on any of lots 17, 18 or 19 that exceeded the respective height restriction in the building covenants in respect of that lot;
(3) Six Mile Creek would remove or prune, or cause to be removed or pruned, any trees or shrubs located on at least each of lots 17, 18 and 19 that interfered with the sea view sight lines of lot 10 (I will refer to representations (1), (2) and (3) collectively as the height representations); and
(4) Six Mile Creek had sold already:
(a) lot 8 for a price of $795,000;
(b) lot 17 for a price of $675,000;
(c) lot 18 for a price of $715,000;
(d) lot 19 for a price of $565,000.
(the price list representation)
16 The following issues arise in the proceeding:
(1) did Six Mile Creek and or Mr McLaughlin engage in conduct that conveyed any of the representations on which Mr and Mrs Eckford had relied and was any such representation misleading or deceptive, or false or misleading, or, in respect of representations (2) and (3), made without reasonable grounds (the liability issue);
(2) did Six Mile Creek and or Mr McLaughlin make the price list representation knowing that it was untrue or recklessly indifferent as to whether it was true or false (the fraud issue);
(3) are Mr Eckford’s claims statute barred and did Six Mile Creek and or Mr McLaughlin fraudulently conceal from Mr Eckford the fact that Six Mile Creek had sold each of lots 17, 18 and 19 without any height restrictions (the limitation issue); and
(4) did Mr Eckford suffer any, and if so what, loss or damage or become entitled to any, and if so what, relief (the relief issue).
17 The TPA provided, as at September to November 2007, relevantly:
In this Act:
(a) a reference to loss or damage, other than a reference to the amount of any loss or damage, includes a reference to injury; and
(b) a reference to the amount of any loss or damage includes a reference to damages in respect of an injury.
(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.
52 Misleading or deceptive conduct
(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(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:
(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;
(1) …where, on the application of the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:
(a) a contravention of any of the following provisions:
(i) a provision of Part IV, IVA, IVB, V or VC;
(b) attempting to contravene such a provision;
(c) aiding, abetting, counselling or procuring a person to contravene such a provision;
(d) inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision;
(e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or
(f) conspiring with others to contravene such a provision;
the Court may grant an injunction in such terms as the Court determines to be appropriate.
(5) The power of the Court to grant an injunction requiring a person to do an act or thing may be exercised:
(a) whether or not it appears to the Court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing;
(b) whether or not the person has previously refused or failed to do that act or thing; and
(c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person refuses or fails to do that act or thing.
(1) Subject to subsection (1AAA), a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
(2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.
(1) Subject to subsection (1AA) but without limiting the generality of section 80, where, in a proceeding instituted under this Part, ….the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this subsection) in contravention of a provision of Part…V…, the Court may, whether or not it grants an injunction under section 80 or makes an order under section 82…make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.
(2) The orders referred to in subsection (1) and (1A) are:
(c) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage;
(d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage;
(g) an order, in relation to an instrument creating or transferring an interest in land, directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to execute an instrument that:
(i) varies, or has the effect of varying, the first-mentioned instrument; or
(ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first-mentioned instrument.
18 The Limitation of Actions Act 1974 (Qld) (the Limitation Act) provided:
38 Postponement in cases of fraud or mistake
(1) Where in an action for which a period of limitation is prescribed by this Act—
(a) the action is based upon the fraud of the defendant or the defendant’s agent or of a person through whom he or she claims or his or her agent; or
(b) the right of action is concealed by the fraud of a person referred to in paragraph (a); or
(c) the action is for relief from the consequences of mistake;
the period of limitation shall not begin to run until the plaintiff has discovered the fraud or, as the case may be, mistake or could with reasonable diligence have discovered it.
19 In this case, as will appear, there is little doubt that Six Mile Creek made the representations substantively in the contemporaneous documents which Mr and Mrs Eckford received and that the real estate agent whom they met at the estate, Mr Boulter, also made them, orally, to reinforce the selling message. There are issues whether, so far as Mr Eckford’s evidence is concerned, he and his wife relied on what they read and heard and how, relevantly, Mr Eckford understood those representations and, so far as the respondents’ evidence is concerned, what they intended to convey to Mr and Mrs Eckford.
20 As the principal events in dispute occurred over 12 years before the non-expert witnesses gave evidence at the trial, it is particularly apposite to apply the principles identified by Dowsett, Rares and Logan JJ in Julstar Pty Ltd v Hart Trading Pty Ltd  FCAFC 151 at -:
The assessment of the evidence of witnesses in such a case, ordinarily, will be approached in the manner discussed by McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319 as follows:
“Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described [sic] as “misleading”) within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court “must feel an actual persuasion of its occurrence or existence”. Such satisfaction is “not … attained or established independently of the nature and consequence of the fact or facts to be proved” including the “seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding”: Helton v Allen (1940) 63 CLR 691 at 712.
Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) … in the absence of some reliable contemporaneous record or other satisfactory corroboration.” (non-italic bold emphasis added)
That caution is also reflected in s 140 of the Evidence Act 1995 (Cth) and in what Dixon J said in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-363 about the standard of proof. Dixon J emphasised that, when the law requires proof of any fact, the Court must feel an actual persuasion of its occurrence or existence before it can be found. He said that a mere mechanical comparison of probabilities, independent of any belief in its reality, cannot justify a finding of fact: see too Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 at 479-482 - per Weinberg, Bennett and Rares JJ. As Dixon J said (60 CLR at 362): “In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences”. But, the nature of the fact to be proved necessarily affects the sufficiency of the evidence by which it can be established.
(bold emphasis in original; underline emphasis added)
21 In addition, in evaluating whether a person has contravened the statutory norm in s 52 of the TPA and its analogues, the tools of analysis drawn from the laws of deceit, namely misrepresentation and reliance, can sometimes be helpful in identifying such conduct and deciding whether loss or damage has been suffered by the contravention. However, Gummow, Hayne, Heydon and Kiefel JJ noted in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 341-342 :
But as McHugh J correctly pointed out in Butcher v Lachlan Elder Realty Pty Ltd [(2004) 218 CLR 592 at 623 ], the “conduct” with which s 52 of the Trade Practices Act 1974 (Cth) deals is not confined to “‘representations’, whether they be representations as to matters of present or future fact or law” [McHugh J dissented in the result of the particular case but not as to these questions of principle]. This proposition applies with equal force to s 42 of the Fair Trading Act. References to misrepresentation or reliance must not be permitted to obscure the need to identify contravening conduct (here, misleading or deceptive conduct) and a causal connection (denoted by the word “by”) between that conduct and the loss and damage allegedly suffered. As McHugh J also pointed out in Butcher [(2004) 218 CLR 592 at 625 . See also the judgment of the Court in Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 84 ], with particular reference to s 52 of the Trade Practices Act, but with equal application to s 42 of the Fair Trading Act:
“The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself [See Equity Access Pty Ltd v Westpac Banking Corporation  ATPR ¶50,943 (40-994) at 50,950 per Hill J; see also Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202-203 per Deane and Fitzgerald JJ]. It invites error to look at isolated parts of the corporation’s conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct [See, eg, Trade Practices Commission v Lamova Publishing Corporation Pty Ltd (1979) 42 FLR 60 at 65-66; 28 ALR 416 at 421-422 per Lockhart J]. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole [See, eg, Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535 at 541 per Sheppard J, Hill J agreeing]. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document.”
(italic emphasis in original)
22 Mr Eckford is in his early 80s, and Mr McLaughlin is 86 years old. Both men gave evidence over what for them was a relatively long period in the witness box. I attempted to give each of them breaks on a regular basis, particularly when it appeared either was looking or, appearing by his answers, to be exhausted or needing a rest. That said, each generally gave evidence in a way which satisfied me that he fully understood what he was asked and was alert and responsive to the question. To the extent that, on isolated occasions, particularly Mr McLaughlin, appeared tired when he gave particular answers, I have given those answers no probative weight.
23 In Mr McLaughlin’s case, I have also taken into account, in assessing his overall evidence, the fact that the events that he had been asked to recall and the state of mind that he formed at the relevant times, all occurred over 12 years ago, and that the passage of time and the advancing of his age have appeared to play a greater role, than with Mr Eckford, in some aspects of his recollection. Nonetheless, contemporaneous documents and Mr McLaughlin’s obvious astuteness, as an experienced property developer as at 2007 and in his oral evidence, have enabled me to form what, I am comfortably satisfied, is a reliable view of his overall credibility.
24 Of course, here, Mr Eckford claims on the basis of contraventions of ss 52 and 53A and fraud against each of Six Mile Creek and Mr McLaughlin. In evaluating the fraud allegations, I also have had regard to s 140 of the Evidence Act 1995 (Cth) and Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australian v Australian Competition and Consumer Commission (2007) 162 FCR 466 at 480  per Weinberg, Bennett and Rares JJ.
25 When Mr and Mrs Eckford first drove around the estate in late September 2007 and reached its highest point, they found the site office. It was located on lot 10. Mr and Mrs Eckford went into the office and spoke to Ms Boulter. They told her that they were rather interested in the estate. She asked whether they would like to see a sales representative. As a result, Mr Boulter arrived at the site office shortly afterwards and introduced himself.
26 Mr and Mrs Eckford told Mr Boulter that they had an interest in lot 10. He said that it was the “premier lot”. They went out onto the verandah, which had an elevated view, while Mr Boulter paced out the block (lot 10), by reference to the boundary pegs from the survey, to give them an indication of its size. They all then went inside the site office. Mr Boulter handed Mr and Mrs Eckford the brochure, the plan, that had highlighted on it the lots that had been sold, and the price list dated 14 September 2007, similarly highlighted.
27 Mr Boulter pointed out the various features of the subdivision and made frequent reference to the sea views. He discussed lot 10 and, when Mr Eckford pointed out that it had been marked as “sold”, Mr Boulter told him that the purchaser had not settled and had been delaying settlement. Mr Boulter then said lot 10’s views of the ocean were protected. He explained that was because the lots to the south between it and its sea view (lots 17, 18 and 19), which abutted onto, and fell away from, lot 10, had already been sold with the building covenants and height restrictions.
28 Lots 17, 18 and 19 were located on land that was running downhill from the summit on which lot 10 was located. Thus, lot 10 overlooked the hillside to its south on which lots 17, 18 and 19 were located on land falling away from the southern boundary of lot 10. As Mr Eckford went through the brochure, what caught his eye was its emphasis on there being ocean views “FOREVER”. Mr Boulter showed Mr and Mrs Eckford a copy of the building covenants. He told them that the purpose of the building covenants was to protect their investment in the land they would be buying because it restricted the heights of any buildings that could be constructed in front of lot 10 (i.e. to the south). Mr Boulter told Mr and Mrs Eckford that the building covenants applied to all lots on the estate including the existing purchaser of lot 10. He pointed out cl 4.5, which contained the height restrictions that applied to lots 15, 16, 17, 18, 19 and two other blocks. He emphasised that lots 17, 18 and 19, as immediately below lot 10, had already been sold with the building covenants (including the height restrictions on them) in force, saying “so that protects your view from hereon in”. Mr Boulter also said that the building covenants would apply to, and benefit, Mr and Mrs Eckford if they bought lot 10. He said that the building covenants had to be transferred by persons when selling the land.
29 Mr Eckford also noticed in the brochure that all plans for building work had to be approved by both the developer and the owner before they went to the local Council (for approval) and that there also were covenants restricting landscaping. Mr Boulter told them again that because the height restrictions were in place, and lots 17, 18 and 19 had been sold with them, this would protect views from lot 10 for all time. He added that the landscaping restraints also ensured that lot 10’s sea views could never be interfered with by another lot. Mr Boulter said that he wanted to reinforce the fact that the building covenants offered Mr and Mrs Eckford protection, were they to buy lot 10, and “was your insurance for your investment”. Mr Boulter said to them:
We [i.e. Six Mile Creek or Ken Guy] had already ascertained what the safe maximum height limits were on specific lots so that we could keep in perpetuity those view lines and give people quiet enjoyment of what they bought [so] that they had certainty and surety of that.
30 When Mr and Mrs Eckford looked through the building covenants with Mr Boulter at the site office, they raised a concern with him that cll 1.1 and 11 permitted the owner to waive, vary or relax the building covenants. Mr Boulter told them that that was not a concern because lots 17, 18 and 19, where building work could affect their views, had been sold with the building covenants attached so that “you have no problem with this”. Mr Boulter also explained that the height restrictions relating to trees and other plants, limited the height of vegetation on the burdened lots (17, 18 and 19) to three metres, and when the growth exceeded that height, the owner (i.e. the existing vendor) had the right to go onto the relevant lot to prune or remove the excess trees or plants. Mr Eckford said that he and Mrs Eckford discussed with Mr Boulter the fact that future purchasers would also be bound by the building covenants, both for lot 10 and the burdened lots. Mr Boulter did not have a copy of the building covenants for Mr and Mrs Eckford to take away with them, but they took the brochure, price list and plan with the lots sold highlighted on it.
31 Mr Boulter said that if they were interested, he would speak to the owner (i.e. the vendor) to see whether it would be prepared to “forego” the existing contract for lot 10 and give Mr and Mrs Eckford the opportunity to purchase lot 10. Mr and Mrs Eckford responded that, of course, they were interested, and that they wanted to have their son have a look at the property because he would have to help them with the finance.
32 I have reproduced below the price list that Mr and Mrs Eckford received when they first visited the estate in late September 2007, which had the shading or highlighting that indicated lots that had been sold, as it appeared in the reproduction. (The abbreviation “nsv” signified “no sea view”.)
33 The brochure showed, on page 2, a road plan of the estate with the site office and indicated that an ocean and a beach walk were to the east of the estate. The heading on page 2 included “Ocean View Land Estate” and a box on its right side had the heading “A new exclusive subdivision, many with OCEAN VIEWS FOREVER”. A contour plan of the estate was on page 3, and the next four pages contained extracts from the plan that showed the location of the various lots and their areas in square metres. Page 8 was headed “Summary of Building Covenants” and stated:
To all owners – ensures a quality estate.
Must be approved by [the developer] The De Angelis Group and Six Mile Creek Pty Ltd [the owner].
3. Comply with Law
All buildings must also be approved by Maroochy Council.
Governs size, approved materials, building heights – minimum house size [internal – including garage] is 240m2. Patios and Balconies are not included.
5. Other structures
Garages, sheds, driveways, pools, display homes – what they need in order to comply.
6. Fencing, walls & screening
What is required in order for them to comply.
7. Construction & Maintenance obligations
The basic do’s and don’ts [sic] for building in this estate.
8. Environmental Requirements
Landscaping and restrictive covenant to ensure that sea views are never interfered with by another lot.
9. External Structures
Just what is allowed and where.
Where to park, restriction to structures, legal right, signage, a future buyer to also be governed by these Covenants.
11. Building Covenants
The approval process prior to any work commencing.
34 Below is an extract from the plan that Mr Boulter gave Mr and Mrs Eckford, with shading to indicate the lots already sold. (North is at the top.)
35 Mr Eckford said that he observed that his wife was involved in all the conversations and was perusing the documents with him. Sensibly, senior counsel for the respondents said that I could infer, if I accepted Mr Eckford’s evidence, that Mrs Eckford would have understood and relied on the same matters as her husband. I have drawn that commonsense inference.
36 When Mr and Mrs Eckford returned to their holiday accommodation, they had a discussion with Jason Eckford and showed him the documentation they had brought back, being the brochure, price list and plan. They told him that they were both quite interested but could not afford to both buy the land and build a house on it and asked whether he would be prepared to assist them. Jason Eckford said that he would have to see the lot they were interested in first, and they then arranged to meet Mr Boulter at lot 10 again.
37 They all returned on the following Saturday (probably 29 September 2007) and met Mr Boulter. He said that he had spoken to “Danny”, the owner, and that he (Danny) would be prepared to “forego” the existing contract for lot 10 if Mr and Mrs Eckford were prepared to put down a deposit of $1,000 on that day, because the other purchaser had been delaying settlement. Mr Boulter said that the purchase price would have to remain at $895,000. He said that when the contract was signed later, Mr and Mrs Eckford would have to pay the balance of the 10% deposit and that settlement would have to occur within 30 days.
38 Jason Eckford spoke with Mr Boulter, and asked him about the building covenants and height restrictions, and in particular, how they affected lots 17, 18 and 19. Mr Boulter told Jason Eckford, in his parents’ presence, that lots 17, 18 and 19 had already been sold with the building covenants attached and that those covenants would also apply to unsold lots.
39 Jason Eckford said that he would be prepared to finance his parents if they could afford the construction of a home on the new property. Mrs Eckford said that she was very thrilled that they could acquire the block and looked forward to building a home on it where their children and grandchildren could visit the couple on the holidays. After discussing matters with Jason Eckford, Mr and Mrs Eckford agreed and they paid $1,000 to Mr Boulter to secure the purchase.
40 Importantly, prior to paying the $1,000 holding deposit and signing a document that Mr Boulter wrote out about the proposed sale, Mr Eckford considered the asking price of $895,000 for lot 10 and decided that it was “an acceptable figure in view of what else was sold of the properties” that he noted as recorded on the price list. However, Six Mile Creek only terminated the existing contract for lot 10 on 1 October 2007 (see  below).
41 The prices that Mr Eckford saw in the price list had “a big influence” on his decision to purchase. He explained that, for example, the price list recorded a sold price (of $795,000) for lot 8. He said that lot 8 was one lot removed from, and behind, lot 10 (i.e. to its north) and its views (to the south) would be restricted by the building that he and his wife intended to construct because lot 10 had no height restrictions. He said that he considered the information about other lots that were smaller in area than lot 10 (which was 952m2), like lots 17 and 18 (which, he said, were around 700m2) and had sold for, he thought, $735,000. He gave those estimates of size and price in his evidence in chief without referring to the price list. I am satisfied that, at the time of his actual consideration of those matters in 2007, he took the actual sizes and prices set out in the price list into account in his thought process.
42 In fact, the price list stated that each of lots 8, 17, 18 and 19 was “sold”, and that lot 8 was 803m2 and had sold for a price of $795,000, lot 17 was 871m2 and had sold for a price of $675,000, lot 18 was 768m2 and had sold for a price of $715,000, and lot 19 was 615m2 and had sold for a price of $565,000. The price list had a comment “Great sea views/build envelope” next to each of lots 8, 17 and 18 and the comment “Good sea views” for lot 19. Lot 10 had the same comment as lots 8, 17 and 18 but it was 952m2 and had sold for $895,000. At the foot of the price list, there appeared a concluding section stating that there were, in total, 60 lots, 34 of which had “definite Sea Views” and the average size of the lots was 923m2.
43 Mr Eckford said that if lots 17, 18 and 19 did not have the height restrictions controlling the height of buildings on them, he would not have purchased lot 10. For him, the importance of the height restrictions was strictly to preserve the views from lot 10 and it was essential that lots 17, 18 and 19 be restricted to the heights that were set out in the building covenants that he saw at the site office (and which were later included in the contract for purchase of lot 10).
44 On Friday, 5 October 2007, Ken Guy sent Mr and Mrs Eckford a proposed contract for lot 10 together with a note of instructions on how it and its annexures should be completed and a request that deposits be made out to Brennans Solicitors’ trust account. I infer that on or shortly after 1 October 2007, Mr Boulter told Mr and Mrs Eckford that the “owner” had terminated the existing contract for lot 10 and would sell it to them. One of the annexures to the note was a selling agent’s disclosure to buyer form under the Property Agents and Motor Dealers Act 2000 (Qld) (form 27c). That form stated that its purpose was to make the purchaser aware of the relationships that the selling agent had with persons to whom the agent referred the purchaser and of the benefits that the agent and other people received from the sale.
45 The selling agent’s disclosure in the form 27c stated that the agent had referred Mr and Mrs Eckford to a company called Pangus Pty Ltd, and that its relationship with the selling agent was as “the Developer”. The disclosure in that form 27c was somewhat obscure. It stated that the selling agent would receive a total of $59,070 including GST, as marketing fees from the sale. Under the column headed “Benefit to person/entity to whom buyer referred (if any) $ Amount” was the following: “Avalon @ Coolum Sales/The Project Marketing Group acting for The De Angelis Group trading as Pangus Pty Ltd”. The selling agent’s disclosure declaration on the form 27c stated that the selling agent was Sydney Fish Pty Ltd and Cross Match Holdings Pty Ltd [t/as Avalon @ Coolum Sales] which signed and dated it 5 October 2007. (That document was later signed by Mr and Mrs Eckford.)
46 On 20 November 2007, Mr and Mrs Eckford exchanged contracts with Six Mile Creek for the purchase of lot 10 for the price of $895,000. The contract contained a number of standard and special conditions, and included the whole of the building covenants. Special condition 7.1 provided that the purchaser acknowledged that the building covenants, special conditions and annexures to the contract formed part of it and that:
The Buyer acknowledges that:
(c) it shall be at the discretion of the Seller as to whether or not the Seller seeks to enforce covenants which are obtained from any other Buyer of Land within Avalon@Coolum Development.
(d) the Buyer has no claim or action against the Seller if the Seller adopts an altered form of Building Covenants in contracts of sale for other land within the Avalon@Coolum Development.
47 Clearly enough, special condition 7.1(d) applied to future sales, not (what Mr and Mrs Eckford had been told were) completed sales of other lots which included all of the building covenants, especially the height restrictions.
48 The building covenants (as Mr and Mrs Eckford saw at the site office and included in their contract for purchase of lot 10), relevantly provided:
1 BENEFIT OF COVENANT
1.1 Avalon @ Coolum is a prestige residential estate. In order to encourage the ‘At One with Nature Theme’ and the Green Smart HIA initiative, these Covenants have been developed to continue to encourage this quality environment and are intended to establish standards of construction for all residences constructed in the estate, with a consistently high standard of house design encouraged with due recognition given to interest, variety and compatibility within the streetscape and be for the benefit of the Buyer and any party to whom the Buyer assigns the benefits of these covenants and to SIX MILE CREEK PTY LIMITED ACN 059 767 994 the Seller and its assigns. However, notwithstanding the Covenants contained herein the Seller reserves the right at the request of a Buyer or at its own discretion to vary, add to or exclude any of the obligations under the Covenants in respect of any Lot provided that such action will only be taken by it in keeping with the aims to establish a modern well designed residential estate. The Seller will not be liable to the Buyer or any other owner for any variation, addition or exclusion of these Covenants.
1.2 The Building Covenants and Design Guidelines are intended to act as investment protection so all proposed homes must satisfy the requirements, hence owners can be confident that future houses, garages and gardens will be constructed in a manner complimentary [sic] to the streetscape and the character of this environment.
2.1.1 No construction of any improvements or structures on the site (including any dwelling, outbuildings or other structures such as a pergola, carport, fences and pools) is to take place unless all plans and specifications are approved in writing by the Seller.
4.5 Building Heights – Restrictive covenant.
With the object and intent of preserving the views of other lots the maximum permitted height to the top of the eaves of the upper storey of the following lots above and relative to the maximum natural ground level at the rear of these lots individually shall be as follows:--
Lot 15 – 5 metres
Lot 16 – 4 metres
Lot 17 – 3 metres
Lot 18 – 4 metres
Lot 19 – 4 metres
Lot 57 – 4 metres
Lot 58 – 4 metres
8.3 Restrictive covenant
8.3.1 With the object and intent of preserving the sea views envisaged by the estate layout trees and shrubs on Lots 2, 3, 14, 15, 16, 17, 18, 19, 21–26, 30, 33, 51–59 inclusive shall be of a type that will not interfere with the sea view lines from Lots 1–40.
8.3.2 Should trees or shrubs planted initially or subsequently interfere with the sea view lines of any of the Lots 1–40, then the trees shall be (at the option of the Seller) removed or pruned at the cost of the Buyer and where the Buyer falls [sic] to act promptly after a request to either remove or prune the trees then the Buyer shall allow access to the lot by the seller or its agents to do so at the cost of the Buyer.
11.1 Seller may vary or relax Building Covenants and Design Guidelines
The Buyer agrees that the Seller has the right to waive, vary or relax the Building Covenants and Design Guidelines, particularly in relation to any other sale of any part or stage of the Estate, and in that event, the Buyer agrees that it will have no claim whatsoever against the Seller.
The Buyer may not bring any action or make any claim against the Seller in respect of:--
(a) any change to the Building Covenants and Design Guidelines from time to time; and
(b) any non-compliance with the provisions of Building Covenants and Design Guidelines by any third party or by the Seller.
11.2 Enter and Remedy
The Seller or its agents may come onto the Land after reasonable notice and remedy any breach of these Building Covenants and Design Guidelines by the Buyer or any future owner (or the Buyer’s or the future owner’s tenants or agents) and the Seller’s costs (including legal costs) of notifying and (if necessary) remedying that breach may be recovered from the Buyer as a liquidated debt.
(underline emphasis added; bold emphasis in original)
49 Clauses 4.5 and 8.3 contained the height restrictions.
50 On 27 December 2007, Mr and Mrs Eckford entered into a deed of arrangement and debt with their son, Jason Eckford (the loan deed). The loan deed contained a preamble reciting that:
Jason Eckford had lent his parents $930,000 to purchase lot 10 and pay stamp duty; and
it was an essential term that interest on the balance of the loan would be calculated annually and that the repayment of the loan, plus accrued interest, had to be made within six months of any of the parties electing to bring it to an end.
51 The interest rate under the loan deed was to be the Reserve Bank of Australia cash rate, plus 4% per annum, with accrued interest to be added at the end of each year. The loan deed provided that:
in the event that each of the borrowers died, the last surviving borrower would direct his or her executor to repay the balance of the loan plus accrued interest before any distribution to other beneficiaries of the balance of the estate under a will; and
the surviving parent agreed that the balance of the loan plus interest and obligations accrued by the deceased parent would be assumed by the survivor.
52 On 11 January 2008, Mr and Mrs Eckford completed the purchase of lot 10 from Six Mile Creek using about $936,000 that Jason Eckford had lent them to do so and to pay the stamp duty on the contract and their associated expenses.
53 I accept Mr Boulter’s evidence generally as reliable. He said that, in about early 2007, he and Mr McLaughlin discussed the proposed plan of subdivision for the estate, local government requirements, the encumbrances that would be placed on specific lots and the proposed building covenants, including those relating to the maximum height of buildings and vegetation growth allowable on particular lots so as to protect the views from lots situated above those (to be burdened) lots. Mr Boulter explained that this occurred in the context that Six Mile Creek had engaged Ken Guy to sell the estate as a whole. That activity culminated in the entry, on 29 May 2007, into a put and call option deed between Six Mile Creek, Pangus and Agostino (Gus) De Angelis as guarantor of Pangus’ obligations.
54 Mr McLaughlin received advice from his accountant, James Whitelaw, about the commercial terms that came to form part of the put and call option, including the values given for the lots in each of the list price and minimum resale price in schedule 1 of the put and call option. Mr Whitelaw recommended to Mr McLaughlin that Paul Baynes of Nicholsons solicitors act for Six Mile Creek in drafting the put and call option and in respect of matters arising under it. Mr McLaughlin accepted that advice.
55 Mr Whitelaw composed the prices for the list price in schedule 1 by averaging the values for each lot that Six Mile Creek had obtained from each of Mr De Angelis, Watpac (another entity which had also negotiated to buy or arrange sales of lots in the estate) and PRD Nationwide’s Andy Lake. Mr Whitelaw suggested (and Mr McLaughlin accepted) that the list price effectively would represent the net minimum proceeds Six Mile Creek had to receive after all selling costs had been paid while the minimum resale price would ensure that, after any sale, Pangus had achieved a sufficient margin to meet those selling costs, as well as enabling each of Six Mile Creek and Pangus to receive 50% of any excess, which would build up Pangus’ equity in meeting the total of the project fee.
56 The put and call option relevantly provided that:
Six Mile Creek granted Pangus a call option, being the right to require Six Mile Creek to enter into a contract for the sale of a lot in the estate with a third party purchaser on specific terms, including that:
the purchaser had to pay, at least, the minimum resale price for that lot set out in schedule 1;
the purchaser had to pay a deposit equal to 10% of the purchase price;
settlement had to occur 30 days after the date of the contract;
the purchaser had to “abide by and be bound by the building covenants for Avalon@Coolum (as notified by [Six Mile Creek])”; and
where a company was the purchaser, the purchaser had to include its directors as guarantors (cl 2.1(b)).
When Pangus exercised a call option, it had to deliver to Six Mile Creek’s conveyancing solicitors (who were Bakers Lawyers of Buderim, Queensland) a notice doing so, two copies of the contract executed by the purchaser (and any guarantor) and the amount of the deposit then payable in accordance with the contract (cll 2.4 and 2.5). Unless Six Mile Creek had agreed in writing, a call option would not be exercised validly if the purchase price shown in the contract were less than the minimum resale price (for the lot set out in schedule 1), the provisions of cl 2.4 were not complied with, completion was specified to occur more than 30 days from the contract date, or Pangus was in default of its obligations under the put and call option (cll 2.6 and 2.7).
Pangus had to pay Six Mile Creek:
(a) $500,000 as an advance on the project fee of $16.112 million on the next business day after execution of the put and call option; and
(b) $6.925 million, as a second advance on the project fee, by 28 June 2007 (cl 4.1).
When a sale of a lot completed, Six Mile Creek had to pay its bank, as mortgagee, what the bank required, any balance up to the list price in schedule 1 (being a price for each lot (and which was less than the minimum resale price), the total for which equalled the project fee of $16.112 million), any other sum then due to Six Mile Creek, the selling agent’s commission, and half of any residue paying the balance, if any, to Pangus (cl 5.1).
Bakers had to advise Pangus of any requests by purchasers for extensions of the finance date in any contract, alterations to the standard form of the contract, settlement figures and the occurrence of completion of a contract (cl 5.2).
Pangus would engage the selling agent (which, in the event, was Ken Guy) and agreed to indemnify Six Mile Creek against all claims for commission and marketing fees (cl 5.3) while Six Mile Creek agreed to give the agent access to the estate to market it (cl 9).
The put and call deed also provided:
9.2 The Grantee [Pangus] must use its best endeavour to market, advertise and otherwise promote the sale of the Lots as soon as possible after the date of this Deed but otherwise generally in the manner necessary to achieve the payment of the Project Fee to the Grantor [Six Mile Creek] in the time and in the manner detailed in this Deed.
9.4 The Grantee is responsible for and must ensure that in respect of each Third Party Contract any agent engaged by the Grantee to sell the Lot has compiled with the provisions of PAMDA [the Property Agents and Motor Dealers Act 2000 (Qld)] with respect to the provision of statements and warnings to the third party purchaser prior to the Contract being signed by the buyer.
57 In particular, cl 14.2 prohibited Pangus, without Six Mile Creek’s prior consent, from exercising a call option if it was in default under the put and call option, and cl 18.1 made time of the essence of the put and call option. Clause 24.1 provided:
The parties are to act in good faith towards the other parties in respect of this Agreement including being just and faithful in all activities and dealings with the other party.
58 The two sets of prices in schedule 1 to the put and call option referred to four lots (20, 21, 56 and 60) that a previous agent, Kevin Ball, had already sold and did not comprise part of the total of the project fee. The list price for lot 10 was $537,933 and its minimum resale price was $600,968.
59 Mr Boulter said that he and Mr McLaughlin formulated together the brochure and the terms of the building covenants (including the height restrictions) and that Mr McLaughlin specifically approved the final form of each of those documents.
60 On 9 June 2007, Mr McLaughlin left Australia and travelled to Ireland. He remained overseas until 12 September 2007. Mr Whitelaw appears to have had day-to-day carriage of the commercial decision-making for Six Mile Creek in Mr McLaughlin’s absence, while Mr McLaughlin’s daughter, Elizabeth Sutton, acted as the office manager and executed contracts under a power of attorney on its behalf. Mr Whitelaw spoke with Mr McLaughlin while the latter was overseas in 2007, about once per fortnight.
61 Initially, Mr McLaughlin had agreed to pay Mr Boulter’s firm, Ken Guy, project marketing fees or commission (as Mr Boulter indicated in his email of 14 June 2007 to Mr De Angelis), but subsequently Pangus took over that obligation under the put and call option.
62 On 20 June 2007, Mr McLaughlin had a telephone conversation with the proposed purchaser of lot 20 (which was not part of the put and call option) concerning the issue of whether he would extend the 30 day settlement date for that purchase. Ultimately, Mr McLaughlin, through Mrs Sutton, advised Chris Baker of Bakers (Six Mile Creek’s solicitors for conveyancing of lots on the estate) that the 30 day settlement period for lot 20 would remain.
63 On 28 June 2007, Pangus defaulted in paying the sum of $6.925 million under the put and call option. Soon after, Mr McLaughlin became aware that Pangus had defaulted, while he was on his holiday in Ireland. Mr De Angelis had made efforts to obtain finance for Pangus to make the outstanding payment during June 2007, before the default occurred and had sought help, through Mr Boulter, from Six Mile Creek and Mr Whitelaw.
64 On 25 July 2007, Rob Buckland of McDonald, Balanda & Associates (MBA), acting on behalf of Trent Caruana, sent a letter to Paul Brennan of Brennans (who acted for Pangus and Mr De Angelis). MBA wrote that they enclosed contracts for lots 10, 43, 44, 45, 50 and 57 signed by their client (the Caruana contracts). They requested that the vendor sign the contracts and return one copy of each to the intending purchaser. The letter stated:
The signing of the Contracts by our client, and submission of same to you for signing by the Seller is subject to and conditional upon the separate Agreement between our client, ACN 097 611 535 Pty Ltd [the ACN company], [Pangus] and [Mr De Angelis] being signed [the Caruana agreement].
65 On 30 July 2007, when Mr Baker received the letter together with the contracts, he sent an email to Mr Whitelaw (he misaddressed the copy of this email that he intended also to send to Six Mile Creek by leaving a letter off its email address). He headed his email, “Deed of Release – Trent and Gus”, referring to Mr Caruana and Mr De Angelis. The heading suggested that the existing commercial relationship between Mr Caruana and Mr De Angelis was already known to Six Mile Creek and Mr McLaughlin. He observed in the email to Mr Whitelaw and its intended recipient, Mrs Sutton, that:
It seems they have done a deal on these 6 lots with someone who has lent finance to Pangus. 2 of the contracts are on terms (180) days that I would imagine will not be acceptable. You will see there are rebates in the agreement which reduce the price and with 1 contract conditions that need to be attended to before it goes unconditional. On the whole I imagine that the terms will not be acceptable to you, but of course I will await your instructions.
66 Mr Whitelaw thought that the Caruana contracts “looked a bit skinny”. Coincidentally, on 27 July 2007, Mr McLaughlin had sent a fax in his handwriting (which was not easily legible) to Mr Whitelaw’s firm without indicating that it was for his attention. Ultimately, Mr Whitelaw received the fax on 31 July 2007 and asked Mrs Sutton to translate it. She wrote back that Mr McLaughlin had written:
Re: Coolum & Gus
Hows [sic] the non payment going. How are sales & settlements? Can u fax me an update
67 Later on 31 July 2007, Mr Whitelaw emailed Mr Baynes of Nicholsons saying that he had spoken to Mr De Angelis that day and they had made arrangements for Mr De Angelis to make an appointment for them to meet later that week. Mr Whitelaw noted that Pangus was in breach of the put and call option and had not paid the $6.925 million. He said that Mr De Angelis had sold approximately nine lots “but 6 are at a relatively low value, but above the release value” (i.e. within the list prices making up the projected $16.112 million). Mr Whitelaw wrote that he had told Mr McLaughlin on the phone on the previous night (30 July 2007):
that we need to start talking to Gus’s agents with a view to cutting Gus loose. We cannot miss the peak selling period which is fast approaching.
68 The references to “Gus’s agents” appear to be a reference to Mr Boulter and his firm, and the “peak selling period” to the forthcoming spring and summer.
69 On 6 August 2007, MBA sent to Brennans a signed version of the Caruana agreement. In it, the ACN company had the same address as Pangus and Mr De Angelis and, I infer, it was a related company. The Caruana agreement recited that:
Mr Caruana and the ACN company were parties to an investment agreement dated 5 October 2006 to develop land at Peregian Beach in Queensland under which Mr Caruana had lent the ACN company $580,000 and Mr De Angelis had guaranteed the obligations of the ACN company to Mr Caruana; and
the put and call option and the fact that Mr Caruana was desirous of purchasing lots 10, 43, 44, 45, 50 and 57.
70 The Caruana agreement provided that purchases of the six lots in the Caruana contracts would occur relevantly at discounts, including for lot 10, of $290,000, from its price of $895,000 in the price list. The structure of the Caruana agreement was that, notwithstanding the nominal purchase prices in the Caruana contracts, Six Mile Creek as vendor would enter with Mr Caruana as purchaser, as between the De Angelis entities and Mr Caruana, he would only have to pay the discounted price (in the case of lot 10 of $605,000) and the De Angelis entities would be responsible for paying the total difference of $290,000 to Six Mile Creek.
71 The details of this arrangement were not known to those on Six Mile Creek’s part, save for Mr Baker’s deduction in his email of 30 July 2007 that Mr Caruana had “done a deal on those 6 lots with someone who has lent finance to Pangus”. Obviously enough, Mr Caruana’s ability to complete the Caruana contracts depended on Mr De Angelis’ ability to supplement Six Mile Creek’s 50% share of the amount by which the purchase price exceeded the minimum resale price under the put and call option (being, in lot 10’s case, $600,968) and the amounts Mr Caruana would pay under the Caruana agreement. The total difference between the contract prices for the six lots and the prices Mr Caruana had agreed to pay the De Angelis entities was $580,000. The settlement times for lots 50 and 57 were to be 180 days, and for the other four lots, 30 days.
72 Thus, by about 31 July 2007, Six Mile Creek had received the Caruana contracts signed by Mr Caruana and needed to decide whether it would execute them. And, Mr De Angelis was in the position where, to use Mr Whitelaw’s words, if he did not perform, he would be “getting the boot”.
73 On 10 August 2007, Mr Brennan emailed Mr Buckland of MBA and Mr Baker, informing them that, among other matters, the settlement time for lot 10 was to be amended to 37 days from the date of the contract, and all of the Caruana contracts were to be amended by deleting the special conditions that made them subject to the Caruana agreement. Mr Brennan wrote to Mr Baker later that day attaching a copy of Mr Buckland’s email in which he had noted that the Caruana contracts had been delivered to Mr Baker’s office but “stand in “limbo” due to special conditions which your client is not prepared to accept”. Mr Brennan said that Mr Caruana now wished to proceed on the basis that the special conditions be deleted, but that he would require finance and asked whether that was acceptable to Six Mile Creek.
74 Next, on 15 August 2007, Brennans delivered to Bakers contracts for the sale of lots 17 and 18. The purchaser of lot 17 was Leighton Dial, whose address was a post office box in Kent Town, South Australia, at a price of $725,000. A deposit of $1,000 was payable after execution of the contract and 5% of the purchase price was payable later at an unspecified date. The purchaser of lot 18 was Nick Dean Properties Pty Ltd which had exactly the same post office box address in Kent Town as Mr Dial. The price was $715,000, with a deposit of $1,000 payable after execution, together with 5% of the purchase price at an unspecified time. Each of the contracts for lots 17 and 18 incorporated the building covenants with the height restrictions. Nick Dean Properties and Mr Dial signed their contracts on 9 and 10 August 2007 respectively.
75 On 15 August 2007, Mr Brennan emailed Mr Baker the then current position in respect of 15 contracts that Pangus had negotiated thus far. The email noted that lots 47 and 49 had a settlement date fixed and the Caruana contracts had been signed by Mr Caruana and submitted to Bakers. Mr Brennan noted that Mr Caruana’s solicitor had confirmed that the Caruana contracts could be amended by deleting the special conditions that Mr Caruana had sought previously to include in relation to the Caruana agreement. Mr Brennan said that Mr Baker had told him earlier that day that he was awaiting instructions from Mr Whitelaw about a contract for lot 46 that had already been delivered to Bakers and contracts for lots 8, 17, 18, 19, 40 and 48 that Mr Brennan had caused to be delivered to Bakers that day. He added:
It is clearly apparent from the number of contracts in existence that our client has worked very hard and redoubled his efforts since meeting with Mr Whitelaw to discuss the delay. I am instructed to advise that our client visited the Sunshine Coast today in order to negotiate 4 further contracts which shall be available within 48 hours. Further, three more contracts are being negotiated and are likely to be available next Monday.
76 The contracts for lots 43 and 44 provided for settlement to take place 30 days from the contract date, but the contracts were subject to Mr Caruana obtaining sufficient finance to complete the contract, to be notified within 14 days of the contract date. The price for lot 43 was $300,000 and for lot 44 was $295,000 and each contract had a deposit of $1,000 payable when the buyer signed the contract, and a further deposit of $4,000 payable 14 days from the contract date.
77 The purchaser in the contracts for lots 8 and 19 was Bolivar Road Pty Ltd, which had an address in Kensington Gardens, South Australia. The price for lot 19 was $725,000, with deposits of $1,000 due on the buyer’s signature and $10,000 payable within 14 days of the contract date. The price for lot 8 was $995,000, with deposits of $1,000 due on the buyer’s signature and $14,000 within 14 days of the contract date. Mr De Angelis had an interest in Bolivar Road, as did his business associate in Pangus, Walid Najjar, although there is no evidence that, at this time, Mr McLaughlin knew of Mr Najjar’s involvement in Bolivar Road. Both contracts incorporated the building covenants and height restrictions and provided for settlement to occur 45 days after exchange (without any conditions such as the contract being subject to finance). Curiously, the price list (as at 14 September 2007) stated that lot 8 had been sold for $795,000. There was no evidence (including of some other extant contract) to explain how that sum, rather than the sum of $995,000 in the contract for lot 8, came to be used in the price list.
78 On 20 August 2007, Mr Whitelaw emailed Mr Baynes to bring him up to date with the current position under the put and call option, noting that “We have told Gus he has to perform or he gets the boot”. That referred to an earlier conversation between Mr Whitelaw and Mr De Angelis to which Mr Brennan’s email to Mr Baker of 15 August 2007 above, in turn, referred (see  above). Mr Whitelaw wrote that he had sent Mr De Angelis an email in the previous week informing Mr De Angelis that his finance broker was not performing and “would be the end of him”. The email continued:
We are just giving him enough time to convert his leads to contracts and then a decision will be made, probably this week.
79 Mr McLaughlin gave evidence about the above ultimatum that Mr Whitelaw had given Mr De Angelis while he was in Ireland. He had agreed with Mr Whitelaw that Pangus or Mr De Angelis be allowed to convert whatever leads that they had at that particular point in time into contracts because he, Mr McLaughlin, was thinking of terminating the put and call option. He was concerned that Pangus could not actually perform. Mr McLaughlin said that if the leads had been converted into contracts, then Six Mile Creek would be in a lot better position to influence prospective purchasers to take interest in other lots because it could say that those lots had been “sold”. He gave this evidence:
But but good for Six Mile Creek because you were wanting these lots to be sold, particularly as this was the peak period? --- Yes. That’s correct. Yes, yes.
And if lots were sold, it would then enable the agent to inform other purchasers that this particular lot has sold for X or Y dollars and that might influence a prospective purchaser to buy another lot? --- Yes. That yes, that’s the way that real estate works, I think. Yes. Yes.
80 On 21 August 2007, Mr Baker emailed Mr Whitelaw and Mrs Sutton copies of the Caruana contracts, together with contracts for lots 17, 18, 40, 46 and 48. He said that there were two more contracts, namely for lots 8 and 19, but that they had not been completed properly and he needed to amend them before sending them. Mr Whitelaw emailed Mr Baker on 22 August 2007 saying that he was preparing a schedule to send over to Mr McLaughlin that night. Mr Whitelaw enquired about what the prices for lots 8 and 19 were and Mr Baker responded with the prices.
81 Importantly, on 22 August 2007, Mr Baker settled a letter with Mr Whitelaw that Bakers sent on 23 August 2007 to Brennans in relation to the put and call option. The letter referred to Pangus’ breach in failing to pay the $6.925 million and previous discussions between Mr De Angelis and Mr Whitelaw on this topic. It stated that Six Mile Creek was not prepared to allow the breach to continue any further and required Pangus to pay default interest of 15% per annum, to apply from 28 June 2007, in respect of the unpaid amount that would continue to accrue until it had been paid in full. Next, the letter required that any funds received from completed contracts be applied, first, in payment of the interest due on the outstanding $6.925 million, secondly, in reduction of the balance of the remaining principal due of $8.687 million and, thirdly, in reduction of the unpaid $6.925 million. The letter stated that nothing would be paid to Pangus until the breach was rectified or the put and call option had been completed.
82 Mr McLaughlin learnt of the contract for lot 8, probably either from Mr Whitelaw’s summary sent on about 22 August 2007 or from earlier reports given to him by his daughter, while he was in Ireland. He gave this evidence about what he appreciated about the contract for lot 8 at that time, which I accept:
And the fact that only $1000 was nominated on this contract was another reason to cause you to think that there was something wrong with this contract? --- Yes. Well, yes, I thought it was, probably, they would never find the money to you know, to pay for it. Yes.
And you see that below the $1000 is $14,000? --- Yes. Yes.
And adding those two sums together obviously gives $15,000, and that is nowhere near a 10 per cent deposit, is it? --- That’s right.
And you know that the option deed with Pangus required third-party contracts, such as this, to provide 10 per cent, didn’t you? --- Correct.
In other words, a deposit of $95,000? --- That’s right.
And you knew that there was something wrong with this contract, didn’t you? --- Yes, well, I thought they would never they had to borrow that sort of money against it, yes.
And you knew also that they wouldn’t be able to actually purchase they wouldn’t be able to complete this contract? --- Yes, and I thought that in my own mind, yes.
83 Moreover, Mr McLaughlin knew that lot 8 was a difficult block on which to build a house and “wasn’t one of the better blocks”. He considered that the price of $995,000 was an overpayment. I am satisfied, having seen Mr McLaughlin give evidence about the contract for lot 8, that he knew at the time that he learnt about it, in the second half of August 2007, that it was a commercially unrealistic contract that involved a very substantial overpayment for the lot and was never likely to be completed.
84 Mr McLaughlin said that he did not remember too much about the contracts for lots 8 and 19. Senior counsel for Mr McLaughlin had objected to Mr McLaughlin being asked questions based on documents, such as the contracts for lots 8 and 19, that were open in front of him in the witness box. Senior counsel asserted that it was obvious that Mr McLaughlin was responding to questions about them on the basis that he was reconstructing his evidence from the documents. However, I did not form that impression.
85 I sought to clarify with Mr McLaughlin what his actual evidence was in circumstances where he said it was his practice to look at contracts either when they were made or when he returned to Australia. Mr McLaughlin said, “well I don’t remember too much about them, but I do remember that the deposits [for lots 8 and 19] were very weak and I always thought to myself, these contracts will fall over anyhow, you know. That was my opinion” (emphasis added). Mr McLaughlin said the fact that he knew that Brennans were acting for both Pangus and Bolivar Road caused him to think at this time in late August 2007 that there could be an association between those two companies. Mr McLaughlin learned of the details of the contract for lot 19 at the same time as that for lot 8 and that Bolivar Road was the purchaser for each. He noticed the small amounts of the deposits of $1,000 and $10,000 for lot 19, and considered at the time that “it wasn’t a solid contract”, meaning (in his mind) that it could have fallen over or not proceeded the next day. He gave this evidence:
And you realised that this was not a bona fide contract that would go to completion and result in Bolivar Road Proprietary Limited purchasing Lot 19 for $725,000? ---Yes, well, again, again, I did think it could be a bodgy contract, yes.
(bold emphasis added)
86 Mr McLaughlin said that he was sure that he learned of the details of the contract for lot 17 (and, I infer, all the other contracts for the lots marked as “sold” in the price list to the extent he did not already know of them in Ireland) when he returned on 12 September 2007 or shortly thereafter. When he learned the details of the contract for lot 17, he noticed the deposit was only $1,000 and realised there was something unusual about that contract. He thought, like the other contracts, it was “bodgy”. He gave this evidence concerning not just lot 17 but also each of the contracts for lots 8, 18 and 19:
Yes. And you as at the time you became familiar with the terms of this contract, were of the opinion that because the deposits were very weak, you always asked yourself whether this contract would fall over anyway. Correct? --- Correct. Yes.
And as a result of that state of mind, you didn’t intend that Six Mile Creek would complete this contract, did you? --- No. Well, I wasn’t 100 per cent sure. No.
You agree with me that Six Mile Creek your state of mind was that Six Mile Creek would not be completing this contract, correct? --- Well, I wasn’t, I wasn’t fully sure. No.
[W]hen you saw the terms of this contract you understood that the contract would not settle, in other words, it wouldn’t go through with Nick Dean Properties Proprietary Limited becoming the owner of Lot 17? --- Well, it looked dodgy. Yes. I said it looked dodgy.
It looked dodgy? --- Yes
So you accept, don’t you, Mr McLaughlin, that the four contracts I’ve taken you to, you formed the view when you saw them that they looked dodgy? --- Yes.
87 Mr McLaughlin had serious doubts that the purchaser under each of those four contracts would ever be able to come up with the funds to become the owner of the lot, although he was not 100% certain of that outcome. He said that, as at late August and early September 2007, he considered that the contracts for lots 8, 17, 18 and 19 “were very dicey”. That accords with a contemporaneous note that Alan Cumming, a partner of Bakers, later made when taking instructions from Mr McLaughlin on 25 September 2007, in which he said that he regarded those contracts and the Caruana contracts as “all a joke” as explained at  below.
88 On 24 August 2007, Brennans replied to Bakers’ letter of 23 August 2007 confirming that Pangus accepted all of the terms of the offer made in that letter, including the requirement to pay interest at 15% per annum on the overdue $6.925 million.
89 On 24 August 2007, Mrs Sutton, under a power of attorney on behalf of Six Mile Creek, executed the contracts for lots 10, 17, 18, 45, 50 and 57 and, on 27 August 2007, Bakers wrote to MBA enclosing some of those executed contracts. On 29 August 2007, Mrs Sutton returned the contracts for lots 8 and 19 to Bakers noting that they did not appear to include the building covenants signed by the purchaser.
90 On 3 September 2007, Mr Cumming wrote to Mrs Sutton enclosing a copy of a transfer form for registration at the Queensland land registry in favour of Mr Caruana, as transferee, for a consideration of $895,000 in respect of lot 10. The letter noted that the purchaser “was to have paid an initial deposit of $1,000.00 upon signing of the Contract, with the balance deposit of $4,000.00 payable by Friday, 7 September 2007” and that the contract was subject to finance being obtained by 7 September 2007 (original emphasis). There is no evidence that Mr Caruana paid any deposit on lot 10. I infer that he did not do so because the ACN company already owed him $580,000. Also on 3 September 2007, Mr Cumming wrote in similar terms to MBA, who acted for Mr Caruana, stating that he was to have paid the initial $1,000 deposit on signing the contract for lot 10. Mr Cumming also wrote similar letters on 3 September 2007 to MBA in respect of lots 43, 44 and 45, each of which referred to the requirement that the initial deposit of $1,000 was to have been paid on signing the relevant contract.
91 On 5 September 2007, Mrs Sutton executed the transfer form in respect of lot 10 and a discharge authority addressed to the Commonwealth Bank from Six Mile Creek, requesting it to inform Bakers of any information or documentation the bank required to complete a sale of the lot. The respondents argued that their contemporaneous conduct in pursuing routine conveyancing steps such as this in anticipation of the completion of these contracts were indicative of their state of mind, namely that the contracts were not unusual and that they expected them to be completed. However, I do not consider that this conduct takes matters beyond Six Mile Creek putting itself into the position that it would be ready, willing and able to complete if, in the event, a purchaser was also in a position to complete, and that it could provide evidence of this being its position if it terminated a contract for a purchaser’s breach. That was a prudent conveyancing step, particularly in light of the respondents’ contemplation that Pangus and its associates would be unable to raise the money to fulfil their various contractual obligations.
92 On the same day, Mr Cumming wrote to Mrs Sutton concerning lot 19, reminding her that the buyer was to have paid an initial deposit of $1,000 on the signing of the contract and a balance of $20,000 by 12 September 2007, with settlement due on 15 October 2007.
93 On 5 September 2007, Mr Buckland of MBA wrote to Mr Brennan about the Caruana contracts, noting that all the contracts were dated 24 August 2007 and that the 14 day finance period would expire on the following Friday, 7 September 2007. Mr Buckland said that finance approval would not be available by that date and sought an extension of time, adding “My client [Mr Caruana] has told me his finance application has stalled as he is waiting for a ‘letter of irrevocable authority’ from your client [Pangus]. My client is going to call your client re the letter”. Mr Brennan replied shortly afterwards on 5 September 2007 in an email saying that he would shortly send an amended deed of agreement dealing with a handwritten agreement between their respective clients for approval, and reminding Mr Buckland that the irrevocable authority was one of the terms of that handwritten agreement. Mr Buckland responded immediately afterwards saying that Mr Caruana was still a bit unclear about the “letter”.
94 On 7 September 2007, MBA wrote to Bakers seeking extensions of time for the Caruana contracts in order to obtain finance to 21 September 2007 for lot 10 and to 5 October 2007 for the other five lots. On the same day, Bakers wrote to MBA in respect of lot 57, noting that the balance of the deposit of $4,000 was due that day and that settlement was scheduled for 20 February 2008.
95 On 10 September 2007, Bakers wrote to Brennans separate letters in respect of lots 17, 18 and 19, and the Caruana contracts. Bakers noted that the contract for lot 17 was subject to Mr Dial obtaining finance approval by 14 September 2007 and paying the total deposit of $37,250 by 24 August 2007. They sought confirmation that Brennans were holding that total deposit in their trust account. The letter noted that settlement was due on 23 October 2007. In respect of lot 18, Bakers wrote that the contract was subject to the conditions that finance be approved on the date of the letter, namely 10 September 2007, and that Nick Dean Properties pay the total deposit of $36,750 by 24 August 2007. They sought confirmation that Brennans was holding that total deposit in their trust account. The letter confirmed that settlement was due on 22 November 2007.
96 Bakers’ letter in respect of lot 19 noted that the contract was subject to the condition that Bolivar Road pay the balance of the deposit of $20,000 by 12 September 2007 and that settlement was due on 15 October 2007. The letter in respect of the Caruana contracts confirmed that Six Mile Creek had granted an extension to 21 September 2007 of the finance date for lot 10, with time to remain of the essence, and that Bakers were awaiting final instructions from Six Mile Creek in respect of the requests concerning lots 43, 44, 45, 50 and 57.
97 On 10 September 2007, Mr Brennan wrote two emails to Bakers. The first was in respect of lot 18 and sought an extension of two weeks to the finance date that was due to expire that day. In the second email, Mr Brennan noted that he was also acting for the buyer of lot 17 for which the finance date was 14 September 2007. Mr Brennan stated that finance was being arranged by the same broker as for lot 18, and referred to his earlier email and sought a similar extension of two weeks for lot 17 with time to remain of the essence. Both emails made no response to Bakers’ requirement of confirmation that the two deposits had been paid into Brennans’ trust account. The absence of this confirmation supports the inferences, that I draw, that first, Brennans held no deposits for either lot 17 or 18 in their trust account and, secondly, Six Mile Creek and Mr McLaughlin understood this by around 12 September 2007.
98 On 11 September 2007, Bakers wrote to Brennans advising that Six Mile Creek had granted extensions of the finance conditions in both contracts for lots 17 and 18 to 24 September 2007.
99 The correspondence above suggested a clear connection between the purchasers’ efforts in seeking finance for both lots 17 and 18, in circumstances where Mr Brennan was also acting for Pangus and Mr De Angelis.
100 Mr McLaughlin said that he visited the site office on lot 10 soon after his return from Ireland, on 12 September 2007, and met Mr Boulter then. Mr McLaughlin was aware at this time that Mr Boulter was marketing lots on the estate and providing members of the public with the brochure, a price list and information about the lots. Mr McLaughlin said that Six Mile Creek provided the information in the price list that Mr Boulter used.
101 On 12 September 2007, Bakers wrote to the Commonwealth Bank in respect of lot 10, noting that settlement was due on 1 October 2007, and seeking that the bank organise itself to be in a position to grant a release of that lot from Six Mile Creek’s mortgage of the estate if the purchaser completed.
102 On 19 September 2007, Mr Cumming emailed Mr Brennan concerning three different contracts. Significantly, the email stated that Six Mile Creek agreed to Bolivar Road’s proposal to “swap” its contract to buy lot 19 with a new contract to buy lot 9 if Bolivar Road delivered a signed copy of the new contract (for lot 9) that included a waiver of any cooling off period. Mr Cumming wrote that if Six Mile Creek were satisfied with the terms of the new contract, it would terminate the existing contract for lot 19 “on the basis of your client’s [Bolivar Road’s] failure to pay the deposit”. Next, Mr Cumming wrote that Bolivar Road was in default under the contract for lot 8 for failure to pay the deposit. The email requested that Bolivar Road immediately remedy that default by paying $15,000 into Brennans’ trust account, noting that Six Mile Creek reserved its rights in respect of that breach. I infer that Bolivar Road had not paid any deposit for lots 8 and 19 and that, at this time, Six Mile Creek and Mr McLaughlin were aware of this.
103 On 20 September 2007, Bakers wrote to MBA in respect of lots 43, 44, 45, 50 and 57 informing MBA that Six Mile Creek agreed to an extension of the finance date to 5 October 2007 for all of those contracts, on condition that “given that your client is in default of the Contract for failure to pay the Deposit, our client requires your client to pay to Brennans Solicitors Trust Account a non-refundable deposit in the amount of $10,000.00 for each lot by Friday, 21 September 2007” and that the settlement date for the contracts was to remain unaltered. The letter went on to say that if Mr Caruana agreed to those conditions and subsequently failed to obtain finance, the deposit would be forfeited.
104 On 20 September 2007, Bakers wrote to Brennans informing that the purchaser of lot 17 was in default “for failure to pay the Deposit” and stating that Six Mile Creek required Mr Dial to pay the deposit of $37,250 to Brennans’ trust account by no later than 21 September 2007.
105 By 21 September 2007, it was becoming increasingly obvious to all concerned that Mr Caruana was in considerable financial difficulty in raising money to proceed with the purchase of any of the six lots for which he had contracted. On that day, he emailed his solicitor, Mr Buckland, under the heading “Update on the mess”. Mr Caruana wrote that he had spoken to Mr De Angelis about “how to deal with Six mile creek (Danny)” and that Mr De Angelis had advised that Mr Caruana needed to show that he had attempted to get finance but had been required to bring one of his other properties in as security, which had delayed the approval process. Mr Caruana asked that Mr Buckland negotiate an extension for completion of the contracts for lots 43, 44 and 45 for a further six months and instructed him to offer a non-refundable deposit of $2,000 for each lot. He asked that Mr McLaughlin be informed that Mr Caruana would need to sell two properties in order to obtain finance to purchase lots 43, 44, 45, 50 and 57. As he observed, “My take on it is that what we are asking is probably going to be rejected by Danny and he will cancel the contracts. This will take us back to square one”. Mr Caruana then turned to the contracts between himself and Mr De Angelis. Understandably, Mr Caruana was concerned about the $580,000 that Mr De Angelis or his companies still owed him in respect of the Peregian Beach development (see  above). Mr Caruana was proposing to use a second mortgage offered by Mr Najjar, in support of Mr De Angelis and Pangus, to enable him to finance the purchase of lot 10. Mr Caruana accepted that he was in default and Mr McLaughlin had the right to cancel the six contracts.
106 As a consequence, later on 21 September 2007, Mr Buckland wrote to Bakers in respect of the Caruana contracts. He noted that Mr Caruana was pursuing finance approvals for lot 10 as expeditiously as possible, but that the financier for lot 10 had asked Mr Caruana to include another property as security which had delayed the approval. The letter sought an extension for Mr Caruana to obtain finance for lot 10 to 28 September 2007. It also sought an extension of time in which lots 43, 44 and 45 could be settled to six months so as to bring them in line with the settlement dates for lots 50 and 57. MBA proposed, on behalf of Mr Caruana, for a non-refundable deposit of $2,000 to be payable in respect of each lot (excluding lot 10) by 28 September 2007. The letter said that finance approval for lots 43, 44, 45, 50 and 57 was available subject to Mr Caruana being able to sell two other properties.
107 Bakers forwarded that correspondence later on Friday, 21 September 2007 to Mr McLaughlin and Mrs Sutton seeking instructions. The following Monday, 24 September 2007, Mr McLaughlin instructed Mr Cumming, as recorded in his file note, that a $2,000 deposit was too low for a six month settlement period and insisted on a deposit of $10,000. Mr McLaughlin said that if Mr Caruana was “serious”, there needed to be “hurt money”. Mr McLaughlin told the solicitor that he thought that the Caruana contracts would just be rolled along by Mr Caruana. He said that the price for lot 10 was $895,000. Mr Cumming raised a concern that Mr Caruana might pull out if Mr McLaughlin did not agree to his terms and that settlement was due on 1 October 2007. Mr McLaughlin said that he would speak to Mr Whitelaw and revert with his instructions to Bakers.
108 Also on 24 September 2007, Bakers emailed Mr Brennan concerning lots 17 and 18 noting that finance approval for those lots was due on that day. Shortly afterwards, Brennans responded in letters on behalf of each of Mr Dial and Nick Dean Properties seeking an extension to 7 October 2007 for finance to be granted and Mr Cumming immediately sought instructions from Six Mile Creek about that.
109 Significantly, on 25 September 2007, Mr McLaughlin told Mr Cumming, as recorded in Mr Cumming’s file note, that he (Mr McLaughlin) considered that the extension applications for lots 10, 17, 18, 43, 44, 45, 50 and 57 “were all a joke”. Mr McLaughlin told Mr Cumming that he had “been in the game a long time” and that contracts were “not worth anything until they settle”. He said that he would let Mr Cumming know, the following day, what his decision was.
110 By mid to late September 2007, Mr McLaughlin gave evidence that he had familiarised himself with all the contracts that Mrs Sutton had signed while he was away and had discussed with Mr Boulter using up-to-date information in the price lists. Mr McLaughlin said that he had no doubt that he visited Mr Boulter on site in September 2007 and was aware that Mr Boulter was engaging with members of the public about the sale of lots because that was his job, including providing them with the brochure and the price list.
111 Mr McLaughlin agreed in cross-examination that Six Mile Creek provided Mr Boulter with the information used in the price list. However, the respondents argued that I should not accept this admission on the basis that it conflicted with what Mr Boulter had said that the information in the price list was compiled by persons working in the office of his real estate agency, Ken Guy. I reject that argument. Mr Boulter’s office had to ascertain from the vendor, Six Mile Creek, whether any particular lot had in fact been “sold”. That is because Pangus had to submit contracts under the put and call option for Six Mile Creek to decide whether or not it would accept, and then execute, them. On any view, the word “sold” could only properly be applied once both the purchaser and Six Mile Creek, as the vendor, agreed that the sale was going to proceed by each of them exchanging a contract. Once Six Mile Creek, in fact, had exchanged a contract, Mr Boulter and his firm would be informed that the property was “sold”. It was in Six Mile Creek’s interest to ensure that this information was provided promptly to Ken Guy, Mr Boulter or his office because, as Mr McLaughlin knew and intended, use of that information would enhance the agents’ ability to market the estate (see  above).
112 In my opinion, what both Mr Boulter and Mr McLaughlin said reflected two sides of the one coin, namely, each man’s perspective on how the information in the price list in fact was compiled. For Mr Boulter, the price list itself was made from information that his office had, but the source of that information (given that he had been trying to effect the sale) received in his office, must have been the vendor (directly or indirectly through the solicitors acting for one or both of the parties to the proposed transaction) communicating it to the real estate agency. It was only when Six Mile Creek was bound under a contract that Mr Boulter or his firm could have used the word “sold” in the price list with any confidence, and Mr McLaughlin wanted Mr Boulter to have and use that information.
113 On 26 September 2007, Bakers wrote to Brennans in respect of lots 17 and 18 and to MBA in respect of the Caruana contracts. Bakers advised Brennans that Six Mile Creek had agreed to extend the finance date to 5 October 2007, with time to remain of the essence. Bakers informed MBA that Six Mile Creek agreed to extend the finance date for lot 10 to 28 September 2007, but did not agree to the payment of a non-refundable deposit in the amount of $2,000 for each of lots 43, 44, 45, 50 and 57 and required a non-refundable deposit in the amount of $10,000 for each lot to be paid by 28 September 2007. The letter said that if Mr Caruana agreed to those conditions, Six Mile Creek would agree to the extension of the settlement dates and to change the finance dates as sought in MBA’s letter of 21 September 2007, with time to remain of the essence.
114 Also on 26 September 2007, Mrs Sutton emailed Mr Cumming and Mr Baker, raising queries about matters that her father, whom she called “the Boss”, had raised based on Mr Whitelaw’s latest summary of the contractual position of sales and settlements for the estate relating to lots 8, 9, 17, 25, 40 and 55. Later that day, Mr Baker emailed Mr McLaughlin telling him that he had a new contract that he would send for lot 19 with a sale price of $565,000 and a deposit of $29,750, subject to a satisfactory soil test within 14 days and settlement in 45 days. Mrs Sutton responded later that day noting that lot 19 already had a buyer and asking Mr Baker to check the lot number, prompting Mr Baker to ask Mr Cumming what was happening with the current lot 19 contract and whether it had been terminated at that stage.
115 On 26 September 2007, Bakers made arrangements with the Commonwealth Bank to attend at settlement for lot 10 at 3pm on 1 October 2007. But, on the same day, MBA wrote to Bakers seeking an extension of the settlement date for lot 10 to 1 November 2007 saying that “Obviously our client’s financier (assuming he receives finance approval) will not be ready for settlement” on 1 October 2007.
116 Later on 26 September 2007, Mr McLaughlin spoke with Mr Cumming about that letter and instructed Mr Cumming to respond that he would agree to an extension of the settlement date to 1 November 2007 for lot 10 on condition that Mr Caruana pay a non-refundable deposit of $10,000 by Friday 28 September 2007, with time to remain of the essence. However, Mr McLaughlin instructed Mr Cumming not to terminate the contract in the same letter. Mr Cumming wrote to MBA as instructed on 27 September 2007.
117 On 28 September 2007, MBA responded on Mr Caruana’s behalf in respect of the contract for lot 10, saying that he could not give any advice about obtaining finance approval on that day and could not agree to the condition that Six Mile Creek had imposed on the extension of the settlement date to 1 November 2007. Notwithstanding that, MBA asserted that Mr Caruana wanted to proceed with the matter and “regrets the delays and inconvenience caused to your client in this regard”. He attached an email addressed to Mr McLaughlin that Mr Caruana had sent to MBA, and asked that this be forwarded to Mr McLaughlin. The letter concluded by seeking an extension for finance approval to 26 October 2007 and for settlement to occur by 23 November 2007. Mr Caruana’s email, dated 28 September 2007, introduced himself and said, “By now you would be asking yourself whether I am serious about completing the contracts because I have asked for finance extensions and settlement date extensions”. He asserted that due to current business dealings “out of my control”, he could not obtain finance approval immediately and that his financier had predicted that it would take up to four weeks to settle lot 10 but that he was still working on seeking to achieve it. He said that he felt “a deal of reluctance to pay the deposits when the business dealings are as yet not sorted out. I understand that you can cancel these contracts” but expressed hope that Mr McLaughlin would enter into further contracts with him in the future when his financial position changed, and apologised for not being able to complete the contracts at that stage. Mr Cumming forwarded MBA’s letter and Mr Caruana’s email to Mr McLaughlin for instructions later on 28 September 2007.
118 In the meantime, unbeknownst to Mr McLaughlin, on 27 September 2007, the National Australia Bank had advised Mr De Angelis that it was not prepared to provide finance to support Pangus’ obligations under the put and call option. Indeed, the bank noted that features of Mr De Angelis’ proposal that it found unacceptable included that Pangus did not acquire title to the estate but simply had certain rights to sell parcels under the put and call option in circumstances where the bank was being asked to provide Pangus with funding of $6.9 million supported by a third party mortgage given by Six Mile Creek (as contemplated by cl 10 of the put and call option). The bank noted that it had become apparent that Six Mile Creek was not prepared to provide the bank with a guarantee creating liability on its part under the mortgage that Pangus wanted it to grant to secure Pangus’ proposed borrowing to pay the overdue $6.925 million.
119 Mr and Mrs Eckford first visited the estate shortly before their second visit which was probably on 29 September 2007. As is apparent from the above, Mr McLaughlin was intimately involved in giving instructions to his solicitors, his daughter and Mr Whitelaw about how to progress the various contractual and financial matters affecting his and Six Mile Creek’s interests. He knew by now that Mr Caruana actually could not complete the Caruana contracts at that time, reaffirming the view that he had formed previously that those contracts, along with those for lots 8, 17, 18 and 19, were “not worth anything unless they settle”. Moreover, on about 19 September 2007, Mr McLaughlin knew that the contract for lot 19 would be terminated because Bolivar Road wanted to “swap” it for lot 9 even though that termination had not occurred by late September 2007. Bolivar Road was a company related to Mr De Angelis and Pangus. Pangus was by now three months in default of paying the $6.925 million due as the second instalment of the put and call option. Mr McLaughlin knew that the purchasers of lots 17 and 18, Mr Dial and Nick Dean Properties, had requested and been granted two extensions of two weeks, first, on 10 September 2007 and, secondly, on 24 September 2007, of the date by which they could obtain finance to 5 October 2007. There is no evidence that any of the previously unpaid deposits for lots 17 and 18 had been paid at this time, or subsequently.
120 I find that Mr McLaughlin was aware by late September 2007 that the purchaser for each of lots 17 and 18 had paid no money at all as deposits on those contracts and “having been in the game a long time”, he knew that although those contracts were “not worth anything until they settle”. Mr McLaughlin considered those extension applications to be demonstrative of contracts that he regarded as “dodgy” or “bodgy”, as he said in the witness box.
121 Mr McLaughlin was an astute businessman who involved himself in the oversight of sales on the estate. He understood that Pangus was doing whatever it could to keep Six Mile Creek from terminating the put and call option. He saw the contracts that Pangus had arranged in August 2007 with the South Australian purchasers, Mr Caruana, Bolivar Road, Mr Dial and Nick Dean Properties as “all a joke”. That was because, by 25 September 2007, the purchasers in each of those contracts had exhibited the same lack of financial resources as Pangus was displaying. Moreover, first, the price for each of those lots was higher than the minimum resale price in the put and call option (indeed the price for lot 8 was uncommercially high), secondly, the contract for each required a deposit of only $1,000 that did not exhibit the purchaser’s commitment (such as with Bolivar Road’s contracts for lots 8 and 19 where Mr McLaughlin thought that the deposits were “very weak…and these contracts will fall over anyhow”), thirdly, most of those contracts also required a subsequent payment of a further deposit (still short of 10% of the purchase price) that were the subject of extension requests and never appeared to have been paid, fourthly, many of the contracts were subject to finance and, by 25 September 2007, the purchasers were seeking a second extension to obtain finance without having paid any substantive deposit at risk of forfeiture and, fifthly, Mr Caruana appeared to be trying to recoup all or some of an earlier investment he had made with Pangus in his contracts in circumstances where Pangus had no cash and had agreed to pay 15% per annum (or $1,038,750 per annum) from 28 June 2007 on the outstanding debt of $6.925 million when its only realistic prospect of funding such a payment would be from profits derived from sale of lots on the estate.
122 I find Mr McLaughlin’s state of mind to have been that, on 25 September 2007 and thereafter until each contract was terminated, the Caruana contracts and the contracts for lots 8, 17, 18 and 19 were “all a joke”, as he told Mr Cumming. But, he wanted to use their existence as a means to market other lots in the estate because, as he said in evidence, “that’s the way real estate works” (see  above). And that is what Six Mile Creek and he did with those contracts, in using, or authorising Mr Boulter to use, the price list (being that dated 14 September 2007) in dealing with persons in the position of Mr and Mrs Eckford.
123 On Monday, 1 October 2007, at 8.23am, Bakers forwarded MBA’s letter of 28 September 2007 to Brennans informing them that they were awaiting Six Mile Creek’s instructions. However, at 1.40pm that day, Bakers wrote to MBA terminating the Caruana contracts on the basis that Mr Caruana had failed to obtain finance approval by the finance date (which by then had been extended only to 28 September 2007) and had not complied with Six Mile Creek’s conditions for granting a further extension. The letter stated that the contracts were then at an end. Thus, Six Mile Creek was free to sell lot 10 to Mr and Mrs Eckford. I infer that this occurred after Mr Boulter had informed Mr McLaughlin that he had people (namely Mr and Mrs Eckford) genuinely interested in purchasing lot 10.
124 Also on 1 October 2007, Bakers wrote to Brennans terminating the contract for lot 19, on the basis of Bolivar Road’s failure to pay the balance of the deposit. There is no evidence that this termination was connected to any “swap”, as Bolivar Road had proposed originally in respect of lot 9, which remained for sale (see  above).
125 On 5 October 2007, Bakers wrote to Brennans separately about lots 17 and 18, noting that the finance approval for each contract was due that day and enquiring whether Brennans held the full deposit. Brennans replied saying that Mr Dial had not given them instructions and added, “We are advised that he works on the oil rigs in the north of Australia”. Brennans responded on behalf of Nick Dean Properties seeking an extension to obtain finance until 19 October 2007 and added that Nick Dean Properties had sold a property, the sale of which would complete in two weeks’ time, at which point it would pay the deposit specified in the contract for lot 18. Brennans added that Nick Dean Properties would pay $2,000 into Brennans’ trust account on the following Monday, 8 October 2007, as a part payment of the deposit, adding that if this was not acceptable, Six Mile Creek should accept the letter as notice that the contract was terminated because the purchaser had been unable to obtain finance. I infer that, by no later than soon after Bakers received this correspondence, the respondents were aware that neither Mr Dial nor Nick Dean Properties had paid anything yet as a deposit on lots 17 and 18.
126 As noted in  above, on 5 October 2007, Ken Guy sent Mr and Mrs Eckford the proposed contract for lot 10 and associated documents.
127 On 8 October 2007, Bakers wrote to Six Mile Creek and Mr McLaughlin. The first letter attached Brennans’ letter of 5 October 2007 in respect of lot 18, noting that when the property settlement of Nick Dean Properties’ sale occurred, it would pay the full deposit of $36,750 and, in the meantime, Nick Dean Properties would pay $2,000 as part payment of the deposit on 8 October 2007. The second letter was in respect of lot 17, attaching Brennans’ letter of 5 October 2007 and noted that finance approval had been due by 5 October 2007.
128 On 9 October 2007, Brennans wrote again to Bakers concerning lot 18, saying that they had not received the sum of $2,000, but had received a copy of a contract for the sale of five lots in South Australia by Nick Dean Properties. Those properties appeared to be home units. Brennans advised that settlement of that attached contract was due on 26 October 2007 and that they believed that Nick Dean Properties, after that time, would be able to pay the deposit. They also noted that completion of that contract would not affect their client’s ability to obtain finance.
129 On 10 October 2007, Bakers wrote to Brennans about lot 18, noting that Six Mile Creek had agreed to extend both the finance date, along with the date for payment of the total deposit, to 26 October 2007.
130 On the same day, Bakers advised Brennans in respect of lot 17 that:
Our client [Six Mile Creek] has instructed us to request that the agent continues to market the property for sale.
If our client receives another offer on the property, it is likely that our client will terminate this Contract unless your client confirms that he has obtained finance and pays the deposit.
131 Mr Cumming emailed Mr Boulter shortly afterwards on 10 October 2007 noting, in relation to lot 17, that the deposit was payable on 24 August 2007 and finance approval was due on 5 October 2007. Mr Cumming conveyed Bakers’ instructions “to request that you place Lot 17 back on the market”. The email noted that if Mr Boulter obtained another offer in respect of lot 17, it was likely that Six Mile Creek would terminate the existing contract unless the current purchaser declared it to be unconditional and paid the deposit.
132 Thus, as at 10 October 2007, the position continued to be, to the respondents’ knowledge, that no deposit had been paid for either of lots 17 or 18 and, in addition, lot 17 was “back on the market”.
133 On 12 October 2007, Mr Brennan wrote to MBA requesting Mr Buckland to obtain Mr Caruana’s instructions as to whether or not he would be “prepared to reenter [sic] the contracts for Lots 10, 43, 44, 45, 50 and 57”. Mr Brennan then asked Mr Buckland to send an email confirming Mr Caruana’s willingness, if he expressed it, to proceed with the purchase of the remaining unsold lots and what the terms would be, adding “We intend to send a copy of your email to Bakers Lawyers to demonstrate that our client does have willing purchasers” (emphasis added).
134 Also on 12 October 2007, Brennans, on behalf of Pangus, wrote to Bakers attaching a number of documents that suggested that Pangus was working towards obtaining finance. The letter sought to demonstrate Pangus’ “commitment to achieving a goal of the early payment of your client in the shortest possible time possible in the circumstances. We believe that this is the “concrete” assurance that you require”. The letter went on to say that:
As far as the Caruana contracts are concerned your client did have a choice as to whether or not the contracts were terminated. Now your client can see that our client is working towards the solution we trust that he will not do anything further to make matters worse.
Brennans stated that they had written to Mr Caruana’s lawyer on the same day requesting a letter confirming that he would be prepared to re-enter into the contracts, except that for lot 10 that was being sold to another purchaser (obviously Mr and Mrs Eckford). The letter said that Brennans did not believe that it was fair for Six Mile Creek to complain about the lack of contracts when it had cancelled six of those (being the ones with Mr Caruana).
135 Brennans said 10 lots were “in progress” as at 12 October 2007, namely four contracts where the purchasers had paid only $1,000 each as a deposit, one that was subject to finance where a purchaser had paid a part deposit of $2,000, and two unconditional contracts where the purchaser had paid no deposit at all. Only one of the contracts in progress had had a full deposit paid, but that contract had not been signed. Pangus was still in default in respect of the $6.925 million that, by now, was almost four months overdue. Brennans asked for an extension of settlement (by Bolivar Road) on lot 8 to 2 November 2007 (which was within the timeframe that their letter outlined by which Pangus hoped to raise finance to be able to satisfy its obligations). The letter also stated that five purchasers had cancelled their contracts and asserted the above activity was “hardly a sign of a lack of effort on the part of our client or the Real Estate Agents”. The letter also noted that four lots had settled.
136 On 15 October 2007, Bakers responded, agreeing to an extension but only to Thursday, 18 October 2007, with time to remain of the essence, and on condition that Bolivar Road pay the total deposit of $15,000 into Bakers’ trust account by 5pm on 17 October 2007, in which case settlement would be extended to 2 November 2007. Brennans responded later that day under the heading “Pangus Pty Ltd – Avalon@Coolum – Lot 8” agreeing to the proposal, subject to settlement being extended to 15 November 2007 in order to ensure that funding would be available to settle.
137 On 16 October 2007, Peacockes Solicitors, acting on behalf of Mr and Mrs Eckford, wrote to Bakers advising that the contract had been signed and that they held a cheque for $88,500, being the balance of the deposit payable to Brennans’ trust account. They requested some amendments to the contractual terms and made an enquiry, based on their understanding that an option had been entered into between the vendor and Pangus, adding:
Furthermore Special Condition 6 entitles [Pangus] to enter a caveat. Are you aware whether Pangus intends to enter a caveat and if so, the reasons for such caveat being entered into[?]
138 On 18 October 2007, Bakers sent to Six Mile Creek a contract for sale of lot 25 from Aerodrome Pty Ltd for it to sign. On 1 November 2007, Mr McLaughlin handwrote on his copy of that letter that he would agree to a 90 day settlement provided that this contract was unconditional and a non-refundable deposit of $29,750 was paid. When challenged in cross-examination about the imposition of the term for the non-refundable deposit, Mr McLaughlin sought to say that he had not been able to make a similar stipulation for lots 17, 18 and 19 because Mr De Angelis was in control of selling those properties. I do not accept Mr McLaughlin’s explanation. That is because he had power to determine whether or not he, on behalf of Six Mile Creek, would sign any contract that Pangus had presented under the put and call option, when Pangus was in default. His decision to insist on a substantive deposit in this instance demonstrated that he could have made similar stipulations about lots 17, 18 and 19, had he decided that to do so was in his or Six Mile Creek’s commercial interest.
139 On 19 October 2007, Mr Brennan emailed Peacockes with a draft letter from Mr and Mrs Eckford to Pangus, offering a licence of lot 10 to enable Pangus to maintain the site office there for a fee of $200 per week, terminable on one month’s notice. After they purchased lot 10, Mr and Mrs Eckford granted a licence on those terms.
140 On 26 October 2007, Bakers and Brennans exchanged letters about lot 18 for which finance approval was due that day. Brennans responded that they were unable to make contact with their client, and sought an extension over the weekend until the following Monday. On 30 October 2007, Bakers wrote to Brennans in response to a telephone conversation that the solicitors had had, agreeing to extend the finance date for lot 18 to Wednesday, 31 October 2007 and also making that the date for payment of the total deposit.
141 On 1 November 2007, Six Mile Creek sought to exchange a contract with Aerodrome for the sale of lot 25, requiring payment of $335,000 and requiring payment of the deposit of $29,750 within one business day.
142 However, on 2 November 2007, Thompson McNichol, as solicitors for Aerodrome, wrote to Bakers referring to an earlier email of 17 October 2007, in which Aerodrome had offered to buy both lots 19 and 25 as a joint offer. They pointed out that Aerodrome was not prepared to be bound unless it could purchase both lots. The letter stated that Aerodrome was prepared to effect settlement on 3 December 2007 if contracts for the sale of lot 25 were also exchanged. On 7 November 2007, Bakers responded to Thompson McNichol extended the time for payment of the deposit on lot 19 to 12 November 2007, and indicated that a signed contract for lot 25 was being sent by post.
143 On 7 November 2007, Bakers asked Brennans whether Mr Dial had returned from the oil rig or they held any instructions in relation to sale of lot 17. On the same day, Bakers wrote to Brennans about lot 18, noting that finance approval and payment of the deposit had been due to occur on 31 October 2007, but that Bakers had received no information about those matters. They asked whether Nick Dean Properties had received finance approval and paid the deposit.
144 On 8 November 2007, Bakers wrote to Six Mile Creek confirming that the contract for lot 8 was then unconditional and that settlement was due to occur on 15 November 2007. On the same day, Brennans replied to Bakers advising that they had no instructions in respect of either lots 17 or 18.
145 On 8 November 2007, Thompson McNichol wrote to Bakers advising them that Aerodrome had been in discussion with Pangus and understood that it would be appropriate for the dates for payment of the deposits under each of the contracts for lots 19 and 25 to be extended to 1 December 2007, and that settlement for lot 19 occur on 10 December 2007 and for lot 25 on 1 March 2008. Bakers replied on 12 November 2007, agreeing to the amendments on condition that deposits were paid by 16 November 2007.
146 On 16 November 2007, Bakers wrote an email to Six Mile Creek, advising them that the purchaser of lot 8, Bolivar Road, did not agree to pay an additional $5,000 “and wanted to include this Lot as part of the whole package as the Buyer is a related company of Pangus” (emphasis added). Mr Cumming said that as Bakers could not obtain instructions from Six Mile Creek, they had decided to tender at the settlement meeting, and to reserve the vendor’s rights to terminate the contract and forfeit the deposit. The email also advised that Aerodrome had now terminated the contract for lot 19 so that both contracts for it and lot 25 had been terminated.
147 On 20 November 2007, Mr and Mrs Eckford and Six Mile Creek exchanged contracts for lot 10.
148 On 5 December 2007, Six Mile Creek’s solicitors wrote to Pangus giving notice under the put and call option for Pangus to remedy its default in failing to pay the $6.925 million due on 28 June 2007. On 14 December 2007, Six Mile Creek terminated the put and call.
149 I infer that Six Mile Creek terminated the contract for lot 8 soon after 16 November 2007 and, certainly by 14 December 2007, when it terminated the put and call option. (The respondents admitted in their further amended defence that the contract for lot 8 was terminated not before 17 November 2007).
150 On 11 January 2008, Mr and Mrs Eckford settled their purchase of lot 10.
151 On 21 January 2008, Bakers wrote to Brennans in respect of lot 18, noting that finance approval had been due on 31 October 2007 and, given the delay, Nick Dean Properties had clearly evinced an intention not to be bound by the contract and, accordingly, Six Mile Creek terminated it. On the same day, Bakers wrote a similar letter to Brennans in respect of lot 17, noting that finance approval had been due on 5 October 2007, and that Six Mile Creek terminated the contract for lot 17.
152 On 1 February 2008, Pangus began proceedings in the Supreme Court of Queensland against Six Mile Creek in respect of the termination of the put and call option, relying on Six Mile Creek’s letter of 23 August 2007 as amounting to an offer to vary Pangus’ obligations in relation to the payment of the $6.925 million instalment, that Pangus had accepted in its solicitors’ letter dated 24 August 2007.
153 On 29 February 2008, Six Mile Creek filed a defence to Pangus’ statement of claim, stating that it was ready and willing to perform the put and call option as varied and the proceeding settled.
154 On 14 April 2008, Six Mile Creek entered into an agreement with Ken Guy and Mark Boulter Realty to project market the sale of lots in the estate. At some point thereafter, that agency came to an end and, on 1 September 2008, Six Mile Creek appointed Mr Lake and PRD (see  above) to be the real estate agent marketing properties in the estate.
155 At some stage, which I infer was shortly after his appointment, Mr Lake developed a new marketing brochure and name for the estate, calling it “Grande Vista” in the new marketing brochure. The brochure made no mention of the building covenants having any height restrictions, and PRD issued a pricing schedule which identified, without stating a price, those lots that had been sold. In the pricing schedule, lot 8 was for sale for $720,000, lot 17 for $480,000, lot 18 for $500,000 and lot 19 for $465,000.
156 As Mr McLaughlin said in evidence, the explanation for the difference in prices from the time of the price list issued by Mr Boulter on 14 September 2007 and the subsequent ones issued by Mr Lake, was that “the market dropped away with pretty slow selling”. The commercial reality was that the height restrictions on lots 17, 18 and 19 limited the use that purchasers could make of those lots and their ability to get the full benefit of views from them, and the removal of the height restrictions in that slow market enhanced the prospects of sales at better prices.
157 On 16 December 2008, Mr Lake wrote to the architect for Mr and Mrs Eckford informing them that he and Mr McLaughlin had just perused the plans for the new house to be built on lot 10 and that they had approved those plans in their current format. The letter added, “Please ensure that the Estate Covenant is adhered to throughout the construction phase”. The reference to “the Estate Covenant” was to the building covenants.
158 On 30 July 2009, Mr and Mrs Eckford wrote to Mr McLaughlin, whom they stated that they understood to be “the responsible authority who developed the site”, informing him that their builder and architect had identified that the road, which should have been completed up to the boundary of lot 10 consistently with the plan, had stopped about 15 metres short of where it ought to have been built. They asked if that could be remedied, and Mr McLaughlin subsequently did so.
159 On 8 September 2009, Six Mile Creek entered into a contract with Ranjit Paul and Nicole Wall for the sale of lot 18 for $465,000. The building covenants were in a similar format to those contained in the contract which Mr and Mrs Eckford signed, except that they omitted cll 4.5 and 8.3 containing the height restrictions that had limited the height of buildings that could be constructed on lot 18 to four metres above the highest AHD (Australian Height Datum) level on the land.
160 On 16 September 2009, Jason Eckford and Mr and Mrs Eckford wrote to Mr McLaughlin thanking him for a meeting that they had on site the previous day to discuss the unfinished road and Mr McLaughlin’s undertaking that he would attend to having it completed.
161 On 1 October 2009, Mr and Mrs Eckford wrote again to Mr McLaughlin and Six Mile Creek concerning, first, the completion of the road work to the commencement of the driveway on their property, and secondly, their recent meeting with the new owners of lot 18, adding that:
[i]f adhered to, Lots 19, 18 and 17 are subject to height restrictions under your Building Covenants to protect the views of other Lots. Lots 19, 18 and 17 directly relate to our view and to some extent the view and value you receive from surrounding other unsold lots.
Would you be kind enough to allow us to view plans upon the construction proposal being presented to you of lots 19, 18 and 17. We would like to submit, if necessary on the levels and cut as they relate to the appearance of Lots 9, 10, 17, 18 and 19 and also how they relate to the appearance of the peak of the estate in general.
162 On 12 October 2009, Mr and Mrs Eckford emailed Mr McLaughlin asking for approval for amendments to their plans for construction of a dwelling on their lot to add a one metre increase in the height of the first floor. They wrote that “There are no restrictions in your Building Covenants to our Lot that we know would prevent approval”. Mr McLaughlin emailed back on 14 October 2009 that he had no problem with the extra metre of height on their property and authorised it.
163 When Mr McLaughlin was cross-examined about his knowledge of the contract of 8 September 2009 between Six Mile Creek and Mr Paul and Ms Wall, he gave this evidence:
After Six Mile Creek had entered into this contract with this couple, you did not and to your knowledge nobody on behalf of Six Mile Creek informed the Eckfords that this contract did not have the form of the covenants that were in the Eckfords’ contract, correct? --- That’s correct. Yes.
And you knew in September 2009 that the contract in front of you did not contain the building covenants that the Eckfords’ contract had, didn’t you? --- I didn’t know at the time. No.
164 Having considered the whole of the evidence, I do not believe Mr McLaughlin’s answer that he did not know, as at September 2009, that the height restrictions had been removed from the building covenants and that he had simply left it to Mr Lake to include whatever covenants Mr Lake thought the contracts for sale should contain. Mr McLaughlin said that he had approved Mr Lake’s brochure for the marketing of the estate under Mr Lake’s supervision. Having regard to his close involvement, earlier, in giving instructions for the extensions of time and contractual terms to which I have referred above, and his experience as a property developer of considerable ability over a long period, I do not believe that when Mr Lake was marketing the estate, Mr McLaughlin had no role in removing the height restrictions from, and was unaware that there were no height restrictions in, the contracts for lots 17, 18 and 19. In my opinion, his evidence as follows demonstrated he knew that he was giving a false account about those matters:
I’m suggesting to you that you knew full well that when Mr Lake took over as the real estate agent to market this estate that there was no inclusion in his brochure to the building covenants; you knew that, didn’t you? --- No, I didn’t know that. I was - - -
You must have known that because you read the document, didn’t you? --- I didn’t read it properly, no.
You are - - -? --- I just - - -
- - - saying this now, Mr McLaughlin, because you understand you’re in a very difficult position, don’t you? --- I understand that, yes, yes.
And I have to do this, you are giving false evidence about the non-inclusion of the building covenants in the contracts from 2009 onwards, aren’t you? --- That’s right.
165 Senior counsel for the respondents argued that, when Mr McLaughlin made the above admission, namely he had been giving false evidence about his knowledge of the non-inclusion of the height restrictions in the contracts from 2009 onwards, he had been confused. However, I was observing Mr McLaughlin closely at the time, and am satisfied that he was seeking to deflect responsibility from himself for the removal of the height restrictions. I was fully satisfied then (and on reflection in preparing these reasons, remain so) that he made that admission after realising that his attempt to paint a different picture was inconsistent with his close attention to the way in which he approved all the contracts for sale (including those resulting in the conveyance of lots 17, 18 and 19) as well as the terms of Mr Lake’s brochure and he kept himself informed of issues that arose as each contract progressed to completion. I do not accept that Mr McLaughlin, as at September 2009 and thereafter, was not fully cognisant (as he had been earlier in 2007 and 2008) of the importance of the removal of the height restrictions in marketing lots 17, 18 and 19 which, following the cancellation of the earlier contracts for those lots in late 2007 and early 2008, he and Six Mile Creek had not been able to re-sell under Mr Boulter’s agency.
166 On 30 May 2011, Jason Eckford emailed Mr McLaughlin (copying Mr Lake) that his mother had passed away the previous month and that his father had asked him to assist with matters relating to the development, because his father rarely checked his emails. The email continued:
We have previously asked if you would kindly notify us of any applications for development approval for Lots 17, 18 and 19. We would appreciate the opportunity to make submissions to you regarding the height limits in the Building Covenants if it appears that any application does not comply. This is because we have looked closely at the Covenant and it is open to varying interpretations. It is a very important issue to us as it could effect [sic] our views and the views of most blocks North of them, which the Covenant intends to protect.
167 The email asked if Mr McLaughlin could confirm receipt, and inform Jason Eckford whether he was prepared to include them in the process so that he need not make further enquiries. On 5 July 2011, Jason Eckford emailed Mr McLaughlin again saying that he had not had a response to his email of 30 May 2011.
168 On 6 July 2011, Mrs Sutton responded saying that her father was overseas until the end of August. She commiserated about the death of Mrs Eckford and stated, “At this stage there are no plans to build on the blocks mentioned”. Jason Eckford replied later that day, asking that his request be brought to Mr McLaughlin’s attention for a reply when he returned.
169 On 31 October 2011, Jason Eckford emailed Mr McLaughlin again, referring to the previous emails, and asking for a response. Mr McLaughlin responded on 3 November 2011, saying:
[s]till no pending sales or contracts on these blocks. Thus no building happening in the near future. As you know the market has quietened and quietened. Andy Lake will try and keep you updated.
170 Jason Eckford replied soon afterwards on 3 November 2011 saying that he understood that lots 17 and 18 had been sold and that he and his father anticipated that the next step would be development approvals being sought from Mr McLaughlin or Six Mile Creek. He wrote:
[a]s per the below email [being the initial email in the chain of 30 May 2011, see  above], our reason for contacting you is [to] request the opportunity to submit to you on the height covenents [sic] because they are very open to varying interpretations which may not be appreciated. Are you ok with giving us that opportunity when the applications are submitted? Obviously this is a big concern of ours given the price we paid for our lot.
171 Mrs Sutton replied soon afterwards on 3 November 2011, saying:
Sorry I wasn’t on the ball with the Lot nos. We have not received any applications to date for building on Lots 17 & 18 and Lot 19 is unsold. [K]eep you informed.
172 As can be seen from this exchange of emails, neither Mr McLaughlin nor Mrs Sutton directly stated that there were no height restrictions in the building covenants that applied to lots 17, 18 or 19 or that the position had changed since Mr and Mrs Eckford contracted to buy lot 10 in late 2007. That set the context for Jason Eckford’s next email to Mr McLaughlin on 27 April 2012. In it, he said that, recently, his father had received a phone call from Mr Lake to enquire as to his interest in purchasing lot 18 from the current owners. The email continued:
Andy seemed to indicate that it would be in his interest to do so because any future purchasers would not be bound by the height restrictions in the Avalon Building Covenants, thus losing our views on Lot 10. As you no doubt appreciate given our earlier emails to you, we were quite concerned by this given our views are predicated on their compliance. We therefore revisited the Covenants. It appears that you have the right to relax them to achieve a sale of unsold lots, although limited within certain objectives. As you have sold Lot 18 we presume you no longer have a financial interest in waiving the height restriction of Lot 18, and for that matter Lot 17 as well. In fact, still unsold lots held by you suggest to us that you still have a financial interest in ensuring their compliance.
If you are approached regarding their waiving would you be kind enough to advise us? We stand to suffer a massive financial loss if they weren’t retained by any future purchaser and or complied with by current owners. If those circumstances arise and you are indifferent, as an exercise of good faith under our contract, we will kindly ask that you assign your rights to us (as permitted under the Covenants) to Lot 18 and Lot 17 so we can protect our views and those of other surrounding Lots without concerning you.
173 He concluded:
If you have no intention of waiving them we thank you for that and look forward to our opportunity to submit to you on any proposed development heights given as we have previously raised with you the fact that the Covenants are open to varying interpretation [sic].
174 Later on 27 April 2012, Mrs Sutton wrote back saying that Mr McLaughlin was away on annual leave at that time but that “I will attempt to convey your concerns”. Thereafter, Six Mile Creek and Mr McLaughlin made no response to the requests, far less did either clarify that lots 17 and 18 no longer had any height restrictions in the building covenants governing those lots.
175 Mr McLaughlin said, and I find, that he was sure that he would have read the email of 27 April 2012 from Jason Eckford when his daughter brought it to his attention at some stage after he returned from leave. He gave this evidence:
My question is that you knew that Jason Eckford was concerned about the loss of the view from lot 10 at this time, because you’ve said this email would have come to your attention? --- Yes.
HIS HONOUR: Is that right? --- Yes. No. At no time did Andy Lake come back to me and say, “Well, I’ve got the wrong covenant for Eckford that we had in the beginning”, you know?
MR STUDDY: Mr McLaughlin, that’s not my question. You know my question is: you knew some time shortly after or some time in April or May 2012 that Jason Eckford was concerned about the loss of the views from lot 10, didn’t you? --- Yes, of course. Yes.
And you did not, at that time, or in 2013, 14, 15, or 16, indicate to Jason Eckford that there was an issue with the height covenants, did you? --- No, I just thought that Jason was - - -
Concerned? Worried? --- Well, I thought - - -
MR McCULLOCH: Well, your Honour, the witness really should be permitted - - -
THE WITNESS: As I said before, I never realised that we didn’t have the right covenant. That’s - - -
MR STUDDY: The situation is this, isn’t it, that you were aware that the Eckfords had made an inquiry and were concerned about their views - - -? --- Yes.
- - - and at no time did you say to them, “This is the true situation”, did you? --- No, I admit that.
And you didn’t do that because you didn’t want the Eckfords to know that there weren’t building covenants that governed lots 17, 18 and 19; correct? --- No. No, I didn’t know. I didn’t know that. I still thought Andy Lake was using the same covenant […]
176 Mr McLaughlin’s evidence, that I have emphasised in the passage in  above, that at no time did Mr Lake tell him that there had been a change to the building covenants, demonstrates the implausibility of Mr McLaughlin’s evidence had he consulted Mr Lake on how to reply to Jason Eckford’s emails. If Mr Lake had told Mr McLaughlin that there were no height restrictions in force to protect the views from lot 10 against interference by development activity on lots 17, 18 and 19, Mr McLaughlin would have been reminded of the change in covenants. If, on the other hand, Mr Lake had told him that the height restrictions that the contract for lot 10 included were still in place, then Mr McLaughlin would have been able to reply to that effect to Jason Eckford’s emails.
177 In my opinion, having considered all of the circumstances (cf. Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at 384  per Heydon, Crennan and Bell JJ), Mr McLaughlin’s difficulty in answering questions on this subject in his cross-examination arose because he knew that he had taken the risk in his much earlier conduct based on his appreciation that any direct answer to Jason Eckford’s email enquiries would have revealed that lots 17, 18 and 19 either had been sold, or were being marketed, without the height restrictions. Between late September 2007 and November 2007, Six Mile Creek had included those height restrictions in the contract for lot 10 and had represented that lots 17, 18 and 19 had already been sold with the burden of the height restrictions on them in order to induce Mr and Mrs Eckford to pay the highest price on the price list of $895,000.
178 Mr McLaughlin took a calculated approach of not responding directly in answer to the enquiries Jason Eckford was making to Six Mile Creek and him after the sale of lot 10. That was because he did not want to expose the difficult situation in which his conduct, by removing the height restrictions from lots 17, 18 and 19, had placed Six Mile Creek and himself. I find that he intentionally concealed from Mr Eckford and Jason Eckford the change that removed the height restrictions from the building covenants in the contracts that he had caused Six Mile Creek to enter for the sale of lots 17, 18 and 19. This is why he gave false evidence about that issue in this proceeding. In my assessment, Mr McLaughlin knew, at all times in his dealings (directly or through Mrs Sutton or Mr Lake), when responding to the enquiries above by Mr and Mrs Eckford and Jason Eckford, that he had made, or authorised, the changes to the building covenants in order to secure sales of lots 17, 18 and 19 at higher prices than they would otherwise have obtained had the height restrictions continued to apply to those lots.
179 On 11 June 2012, Mr Lake emailed Mr McLaughlin attaching a copy of the plans for lot 17 and saying that he could see no reason:
why we wouldn’t approve them. It’s a very high quality home that can only add value to the overall estate. The only reason I’m wanting you to OK these is because of the persistent concern the Eckford’s (Lot 10) have had with losing their view. I can’t see this house impacting their view. Let me know if you are fine with it and I’ll send them the approval letter.
180 Mr Lake worked closely with Mr McLaughlin (as had Mr Boulter earlier) on sales of lots in the estate. Thus, Mr Lake’s description in his email of “the persistent concern the Eckford’s (lot 10) have with losing their views” is revealing. It showed that both he and Mr McLaughlin knew, first, of that concern and, secondly, that there may come a time when the change removing the height restrictions from the building covenants could cause problems.
181 On 18 July 2013, Mr Eckford and Jason Eckford wrote another email to Mr McLaughlin referring to their earlier emails and saying that lot 18 was the only undeveloped lot which concerned them:
…regarding compliance with the height covenants (and in turn the views of our Lot 10 and others). We understand that Lot 18 has been on sold and as such we anticipate a building proposal will be submitted for your approval shortly.
…we wish to take the opportunity to reiterate our offer set out in our email of date 27 April 2012. That offer, includes if necessary, assigning the Building Height Covenant should a proposal to build above the height limit be submitted and you are indifferent. As previously mentioned, the Covenant is open to interpretation so an opportunity to submit to you at an early stage would be appreciated as well.
182 On 22 July 2013, Mrs Sutton responded thanking Mr Eckford and Jason Eckford for their email and saying simply “To date there has been no building proposal received by [our] company”. Again, Mrs Sutton’s email made no reference to the height restrictions or the fact that they did not exist on lots 17, 18 or 19 to protect the views from lot 10.
183 On 10 September 2015, Jason Eckford emailed Mr McLaughlin and Mrs Sutton saying that his father had mentioned that he had met the new purchaser of the undeveloped lot 18 and the two had discussed the four metre height restriction. Jason Eckford wrote that the purchaser had assured his father that his intention was to comply with it. Jason Eckford said that his father was highly appreciative of the purchaser’s comments, but asked Mr McLaughlin and Mrs Sutton to notify them if anything in excess of the four metres was submitted “as not only will it block our views, but detract from the design of the estate relative to surrounding properties”. Jason Eckford and his father also thanked Mr McLaughlin and Mrs Sutton for any involvement they had had in approving the construction of lot 17 which, they noted, still complied with the three metre height restriction based on the highest AHD point on lot 17.
184 In February 2016, Jason Eckford exchanged correspondence with the former owners of lot 18, Mr Paul and Ms Wall, who provided a copy of their contract of purchase from Six Mile Creek dated 8 September 2009. In it, the building covenants omitted cll 4.5 and 8.3, which contained the height restrictions for, among others, lots 17, 18 and 19. Thus, more than six years after the sale to Mr Paul and Ms Wall, Mr Eckford and Jason Eckford discovered that lot 18 had been sold in 2009 without any height restrictions at all.
185 On 22 February 2016, Jason Eckford wrote to Mr Lake, introducing himself as Derek Eckford’s son. Jason Eckford said that his father had been approached by the new owner of lot 18 who had presented plans that had eaves for the upper story:
…which are far in excess of the building height covenant attached to that lot.
Would you please advise me whether these plans have been submitted to Six Mile Creek Pty Ltd? If so, the outcome of that process and the reasoning behind it?
If you are not the correct contact for this enquiry, would you kindly advise who is?
186 On the same day, Mr Lake responded to Jason Eckford’s email, saying:
As I explained to Derek, since the inception of Ban the Banners legislation in 2010 estate covenants have been diluted in many regards. Local authorities hold the balance of power as to height regulations and boundary setbacks.
Mr Lake suggested that Jason and Mr Eckford contact the local Council’s building department if they were of the view that current height regulations had been breached, noting that the plan submitted to Six Mile Creek showed the maximum height above natural ground level was 6.58 metres at the highest point, which was well below that allowed under the local planning laws. He said that “If you have any further issue with Six Mile Creek’s obligations then you can contact the company’s solicitor Michael Sutton”. Mr Sutton was Mr McLaughlin’s son-in-law.
187 Soon afterwards, Jason Eckford responded saying that as far as his research had indicated, the “Ban the Banners” legislation made no mention of prohibiting building covenants that restricted height to protect views. He continued, “Are you telling me that the building height covenant was removed by Six Mile Creek Pty Ltd in respect to the sale of lot 18 to the present owner?” Mr Lake responded soon afterwards on 22 February 2016 saying “We just had a conversation with Danny McLaughlin in regards to your concerns. He has instructed me to direct your concerns to his lawyer Michael Sutton”. Jason Eckford responded soon afterwards saying that was hardly a satisfactory response, and asked whether Six Mile Creek had removed the height restrictions on lot 18. Mr Lake responded, “I have not been informed of same but as explained Danny instructed me not to get involved so I won’t be taking this any further”.
188 On 18 March 2016, Jason Eckford wrote to Mr McLaughlin directly and asked for answers to his father’s queries, adding that:
…I deserve to hear the explanation as well. This is because I gifted to Gale and Derek the land purchase price ($895,000.00) and stamp duty ($32,750.00) out of damages awarded for my quadriplegia.
189 Mr McLaughlin responded that day, apologising for his lack of response and, on 22 March 2016, emailed Jason Eckford with a copy of the then current building covenants in respect to the sale of lot 18, stating “for your perusal which does not…seem to mention” cl 4.5. Mr McLaughlin said that, as Jason Eckford mentioned, the covenants were open to interpretation. Jason Eckford responded soon afterwards, attaching a copy of the building covenants contained in the purchase of lot 10 and pointed out that cl 4.5 was well known to Mr McLaughlin and Mr Lake.
190 On 23 March 2016, Mr McLaughlin responded saying that it was understandable that Jason Eckford had sought an explanation and that he was reviewing “what records we have and as you appreciate its [sic] nearly ten years ago”.
191 Finally, on 4 April 2016, Mr McLaughlin emailed Jason Eckford saying, “We are having difficulty finding old records. I can not [sic] recall the covenants changing and in regard to the sale of Lot 18 we were not the seller”. He offered to discuss the matter if Jason Eckford wished to do so.
192 In cross-examination, Mr McLaughlin said that he did not understand Mr Lake’s initial response to Jason Eckford’s enquiries in February 2016 that blamed the “ban the banners” legislation for the non-inclusion of the height restrictions in the contract for the sale of lot 18. He said that Mr Lake had suggested that response and he, Mr McLaughlin, agreed and told Mr Lake that Jason Eckford could direct his enquiries to Mr Sutton (Six Mile Creek’s lawyer).
193 I asked Mr McLaughlin why, if he believed in 2011 and 2012 that the height restrictions were still in place, he did not simply say that to Jason Eckford. He responded, evasively, that “I never knew that Andy Lake was using the [amended] covenant[s]”. He gave the following evidence in answer initially to my questions, and then to senior counsel’s:
…if your belief at that time was that the height covenants were in force you could have easily told Mr Eckford, “Don’t worry, the height covenants are still there,” couldn’t you? --- Yes. That’s right.
Why didn’t you? --- Well, I don’t know because I left a lot to Andy Lake. Yes. The sale.
So you’re blaming Mr Lake for everything, are you? --- Not – not in a way. I’m as I say I was negligent myself.
MR STUDDY: And just finally, picking up on his Honour’s question, you acknowledge, don’t you, that you were receiving emails from Mr Eckford directly about this topic? --- Yes.
And you didn’t respond yourself, or, to the best of your knowledge, Elizabeth didn’t, by providing the information which Mr Eckford had requested, did you? --- As I said before - - -
No, no? --- ..... we didn’t do that.
And finally, you didn’t do that because you didn’t want to provide him with any information on this topic? --- Well, …he wasn’t complaining about anybody that was overbuilding that built too high up at that time.
194 In my assessment, Mr McLaughlin knew in 2011 and thereafter that a direct answer to Jason Eckford’s emails to him about the height restrictions on lots 17, 18 and 19 would have exposed that Six Mile Creek, on his instructions, had removed them from the contracts of sale of those lots and left lot 10’s views unprotected. Mr Lake was also an addressee of some pre-2016 emails set out above. Mr McLaughlin said (in the evidence above) that he did not know why, if he believed the height restrictions were in place, he did not give a direct answer to the enquiries, claiming, irrelevantly, that it was “because I left a lot to Andy Lake”. However, Mr McLaughlin had no need to involve Mr Lake in any responses at that time, if Mr McLaughlin’s assertion of his belief as to the continuing presence of the height restrictions were true.
195 Mr Lake did not give evidence and there was no evidence that the respondents had any communication with him as to the way to respond to queries from the Eckfords prior to 11 June 2012 when Mr Lake sought Mr McLaughlin’s instructions on plans for lot 17 (see  above).
196 As the foregoing account of the email correspondence between Mr Eckford and Jason Eckford, on the one hand, and Mr McLaughlin, Mrs Sutton and Mr Lake, on the other, shows, Six Mile Creek and Mr McLaughlin studiously avoided referring to the existence or non-existence of any height restrictions on lots 17, 18 and 19 prior to the communications in 2016. The emails were evasive on that topic, but sought to offer comfort to Mr Eckford and Jason Eckford on the basis that no building proposal had yet been submitted that might involve a breach of the (previous) height restrictions affecting lots 17, 18 and 19 contained in the contract for the purchase of lot 10.
197 As I have found above (see -), Mr McLaughlin knew, when he was dealing with the Eckfords from late 2009, that Six Mile Creek had sold, or was offering to sell, lots 17, 18 and 19 with no height restrictions in the building covenants applying to those properties. His evidence demonstrated that, had he truly believed that they had nothing to worry about, he had no reason not to have informed the Eckfords that the height restrictions were in place on lots 17, 18 and 19. Having had the benefit of observing Mr McLaughlin closely and giving such allowances as I think are necessary for his age and, from time to time, tiredness while giving evidence, I am satisfied that he was not telling the truth in asserting that he knew nothing prior to 2016 about the removal of the height restrictions from the contracts for lots 17, 18 and 19. The reason he said that he was “negligent” was because, when he gave instructions for their removal in the contracts for sale of lots 17, 18 and 19 that Six Mile Creek offered after Mr and Mrs Eckford purchased lot 10, he did not think to do so would cause any problems. He chose not to inform Mr Eckford or Jason Eckford, when they enquired, of this significant change to the contractual arrangements between Six Mile Creek and Derek (and while she was alive, his wife) because he knew how serious the situation would have become had he revealed the true situation.
198 I am satisfied on the whole of the evidence that Six Mile Creek engaged in conduct by which it made each of the height and price list representations in trade or commerce to Mr and Mrs Eckford in the period between their first meeting with Mr Boulter at the site office on lot 10 in late September 2007 and when they received a copy of the proposed contract that Ken Guy sent to them on 5 October 2007.
199 As I explain in these reasons, Mr McLaughlin was aware of all of the essential matters that went to make up each contravention of ss 52(1) and 53A(1)(b) at all relevant times: Yorke v Lucas (1985) 158 CLR 661 at 667, 670 per Mason ACJ, Wilson, Deane and Dawson JJ, and so was involved in each contravention by Six Mile Creek within the meaning of ss 75B and 87(1) of the TPA.
200 Representation (1) (see  above) was that Six Mile Creek had sold, at least, lots 17, 18 and 19 on conditions that included a building covenant that restricted the maximum height of any buildings on, and would bind future owners of, those lots. To some extent, representation (1) overlapped with representation (4), being the price list representation, because of the significance of the existing “sale” of each of lots 17, 18 and 19. Mr Boulter showed Mr and Mrs Eckford the building covenants that included cll 4.5 and 8.3, that were also in the draft contract that they received, and the brochure reaffirmed their application to all of the lots in the estate.
201 While cll 1.1 and 11.1 of the building covenants and special condition 7.1 of Mr and Mrs Eckford’s contract for lot 10 contemplated that Six Mile Creek could vary the building covenants, those clauses must be read objectively, as a reasonable person in the position of the parties would have understood them to mean, having regard to the language of those provisions, read in the light of the contract as a whole. In doing so, the Court also considers the circumstances known to the parties and the purpose and object of the transaction: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 462  per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ.
202 Here, leaving to one side the representations, cl 1.1 of the building covenants expressed what the parties would have understood was the governing proviso or limitation on Six Mile Creek’s power to vary their terms, namely that “such action will only be taken by it in keeping with the aims to establish a modern well designed residential estate” (emphasis added). In other words, the height restrictions had the purpose and were provided, as cl 4.5 stated, “with the object and intent of preserving the views of other lots”, i.e. to protect the views of properties such as lot 10 which had views over the seven burdened lots (including lots 17, 18 and 19). A residential estate, with that express object and intent could not be described as “well designed”, if it allowed the existing views of the higher lots to be obstructed by new buildings constructed or of uncontrolled growth of vegetation, on lower lots after the owner of the higher lot had built a dwelling taking advantage of those views.
203 I find that the express purpose of the height restrictions, as proclaimed in the brochure, was to protect the clear views from lots such as lot 10, and that the proviso in cl 1.1 prohibited Six Mile Creek deleting or varying the height restrictions on lots 17, 18 and 19.
204 Moreover, representations (1) and (4) emphasised that because lots 17, 18 and 19 had been “sold” with the building covenants, including the height restrictions, binding their purchasers, special condition 7.1(d) was of no moment to Mr and Mrs Eckford. That is because special condition 7.1(d) dealt prospectively with Six Mile Creek adopting different covenants in its sales of then as yet unsold lots and so would not apply (had the representations been true) to lots 17, 18 and 19 which Six Mile Creek had told Mr and Mrs Eckford, falsely, had been “sold” beforehand.
205 The respondents did not dispute that Mr Boulter told Mr and Mrs Eckford, at the first meeting in late September 2007 that, as I find, the price list and highlighting on the plan that Mr Boulter then handed to Mr and Mrs Eckford, affirmed that Six Mile Creek had already “sold” lots 17, 18 and 19 subject to the height restrictions forming part of the building covenants. And, Mr Boulter told them that those “sales” would mean that lot 10 would “keep in perpetuity those view lines” and that they would have certainty that they would have, as the brochure proclaimed, “OCEAN VIEWS FOREVER” (see  and  above).
206 As I explain in these reasons, in relation to the price list representation, the statement that lots 17, 18 and 19 had been “sold” and, accordingly, that the height restrictions would apply to those lots in perpetuity was false, first, to Mr McLaughlin’s knowledge as at late September 2007 (see - above) and, secondly, immediately after then because Six Mile Creek, on Mr McLaughlin’s instructions on 1 October 2007, had terminated the contract for lot 19 around shortly before Ken Guy sent the proposed contract for lot 10 to Mr and Mrs Eckford in its letter of 5 October 2007 (see  above) and because, on 10 October 2007, lot 17 was “back on the market” (see  above).
207 The respondents argued that s 53A(1)(b) of the TPA had no work to do on the facts of this proceeding. They contended that the height representations did not relate to the use to which lot 10, as opposed to other lots, could be put. They submitted that this flowed from what Cooper J said (in dissent) in Bowler v Hilda Pty Ltd (1998) 80 FCR 191 at 222F-223F, namely that there was no relevant difference between s 53A(1)(b) and s 52(1) as to what constituted a prediction or opinion that would amount to a false or misleading representation or misleading or deceptive conduct (see at 222G). The respondents said that s 53A(1)(b) applied only to the use to which lot 10 itself could be put.
208 I reject that argument. The prohibition in the chapeau of s 53A(1) extended to the actual, or 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” (emphasis added). The section defined the word “interest” in relation to land in s 53A(3) as meaning not only a “legal or equitable estate or interest in the land” (s 53A(3)(a)) but also “a right, power or privilege over, or in connexion with the land” (emphasis added, s 53A(3)(c)). The height restrictions, if enforceable, would have amounted to “a right…in connexion with” lot 10, namely a right akin to that of a dominant tenement with an easement over the burdened lots (here lots 17, 18 and 19).
209 In addition, representation (1) was a representation in connexion with the sale of each of lots 17, 18 and 19, namely that Six Mile Creek had sold those lots and that their present and future owners were, presently, and in the future would be, bound by the height restrictions which, of course (if in place), would limit the use to which each of lots 17, 18 and 19 could be put. The enforceability of the height restrictions in respect of lots 17, 18 and 19 was an aspect of the nature of the “interest” that a purchaser could acquire in lot 10 that Six Mile Creek, through Mr Boulter, promoted to Mr and Mrs Eckford.
210 Where an agent, prior to the commencement of his, her or its agency, makes a fraudulent representation (to the agent’s knowledge) to a person to induce a sale and, subsequently, the owner of the property to be sold appoints the agent to act for it, if the innocent person later enters into the contract induced by the misrepresentation, the owner is bound by the knowledge of the agent of the fraud: Briess v Woolley  AC 333 at 349 per Lord Reid (with Lord Asquith of Bishopstone’s agreement, and see too at 344 per Lord Oaksey, 354 per Lord Tucker and 359 per Lord Cohen). Lord Reid said:
The misrepresentations were continuing representations intended to induce the other party to make the contract, and when that party made the contract to his detriment, a cause of action arose, and in my opinion it arose against both the agent and the principal. The agent continued to be fraudulent after he was appointed. It was his duty, having made false representations, to correct them before the other party acted on them to his detriment, but he continued to conceal the true facts.
211 Nor did Cooper J hold, in Bowler 80 FCR at 222G-223B, that s 53A(1)(b) did not operate if s 52(1) did. Rather, his Honour held (at 222G) that there was no relevant difference between ss 53A and 52 in respect of the test as to what constitutes the making of a statement of opinion or prediction of a false or misleading representation or misleading or deceptive conduct. Heerey J discussed s 53A in the following terms in Bowler 80 FCR at 207E-G, with which I agree:
Section 53A is concerned with the sale or grant of interests in land. Almost invariably, such transactions involve a sequential process with negotiations and representations followed by contract, which in turn is followed by settlement and conveyance of title. The purchaser’s only concern is with what he or she obtains on settlement. Very commonly some attribute of the land important to the purchaser is not in existence at the stage of negotiation or contract but is provided at settlement, for example the discharge of a mortgage so as to give an unencumbered title to the purchaser. Thus it is of the essence of s 53A that it is concerned with representations (the provision explicitly refers to representations rather than conduct) concerning something which often will only be shown to be true or false in the light of future circumstances. In the words of Mr J D Heydon QC in “Trade Practices Law”, p 6175, referring to representations as to use in s 53A(1)(b): “This part of s 53A(1)(b) is drafted in terms of promise or prediction, not in terms simply of present statements.” Therefore the test is simply whether the representation was false or misleading as to the use to which the land could be lawfully put at the time of settlement. No question of the representor’s intention or belief at the time of making the representation arises. As mentioned, s 51A is only evidentiary: Cummings v Lewis [(1993) 41 FCR 559] at 567. It does not have the effect, in a claim under s 53A(1)(b) relating to use, that if the corporation does have reasonable grounds there is no contravention; note particularly s 51A(3).
212 Here, Mr Eckford pleaded that representation (1) was false or misleading because Six Mile Creek had not sold each of lots 17, 18 and 19 with the building covenants containing the height restrictions. In other words, the falsity of representation (1) concerned the use to which each of lots 17, 18 and 19 was “capable of being put or may lawfully be put” within the meaning of s 53A(1)(b). As Heerey J explained, for the purposes of s 53A(1)(b), representation (1) concerned a subject matter that “will only be shown to be true or false in light of future circumstances”, because it involved a prediction about any future development or construction work that could occur as a matter of contractual right (i.e. the constraints imposed by the height restrictions in the building covenants) on lots 17, 18 and 19 as between Six Mile Creek and the current and future owners of each of those lots. The test, as Heerey J explained, is whether the prediction to Mr and Mrs Eckford was false or misleading in respect of the sale of lot 10 at the time of settlement of the contract for the sale of lot 10 on 11 January 2008.
213 Therefore, in addition to the reasons I have given as to why representation (1) was misleading and deceptive (and objectively false) at the time it was made in late September 2007 and before 5 October 2007, it was false and misleading as at 11 January 2008 because, first, Six Mile Creek had terminated the contracts for sale of lot 19 (twice, the latter termination occurring on 16 November 2007, see  above) and, secondly, it knew that the purchasers of lots 17 and 18 had not complied with the conditions of the extensions of times for finance and had done nothing to pursue those contracts since at latest 31 October 2007, as is evidenced by Bakers’ letters terminating those contracts on 21 January 2008 (see  above). In addition, lot 17 had been on the market, on Mr McLaughlin’s instructions, since 10 October 2007.
214 It follows that Six Mile Creek contravened ss 52(1) and 53A(1)(b) of the TPA by making representation (1).
215 Representation (2) (see  above) was that Six Mile Creek would not approve or permit the construction of any building on any of lots 17, 18 or 19 that exceeded the respective maximum height restriction for that lot in the building covenants. This representation was conveyed by, first, the assertions that each of lots 17, 18 and 19 had been sold already burdened by the height restrictions and, secondly, the conduct that I have found which conveyed representation (1). For the same reasons that representation (1) was misleading and deceptive, false and misleading in contravention of ss 52(1) and 53A(1)(b), so too was representation (2). Representation (2) was also made with respect to future matters, namely that by reason of the “sale” of lots 17, 18 and 19, future development of each of those lots would be governed by the height restrictions in cl 4.5 of the building covenants. Given my findings that Mr McLaughlin believed that, as at late September 2007, each of the contracts for sale of lots 17, 18 and 19 were “all a joke”, “bodgy” and “not worth anything until they settle”, I am satisfied that Six Mile Creek has not adduced evidence that it had reasonable grounds for making representation (2) to rebut the presumption in s 51A of the TPA that it was misleading. Indeed, I am satisfied that Six Mile Creek did not have reasonable grounds for making representation (1) to Mr and Mrs Eckford in late September 2007 and, by 10 October 2007, it had no grounds to do so because it had terminated the contract for lot 19 and lot 17 was “back on the market” (and the representation was about all three lots).
216 Representation (3) (see  above) was that Six Mile Creek would remove or prune any trees or shrubs located on at least each of lots 17, 18 and 19 that interfered with the sea view sight lines of lot 10. Representation (3) was conveyed in the same way as representations (1) and (2) and was misleading and deceptive, false and misleading, and made without reasonable grounds with respect to future matters for the same reasons as I have found in respect of representation (2).
217 The price list representation (representation (4)) (see  above) was that Six Mile Creek had sold each of lots 8, 17, 18 and 19 at the prices for each stated in the price list.
218 The word “sold” when applied to real property that is, or has recently been, on the market can be used in an ambiguous way. One frequent use is that, as soon as a real estate agent or vendor has found a purchaser who has indicated that he, she or it would be willing to enter into a contract of sale, the word “sold” will be applied to advertising signs and used in documents, such as a price list, when a development comprising of numerous lots is marketed. This use of “sold” will, of course, extend to situations in which the parties have exchanged contracts for the sale but the whole of the legal and beneficial interest has not passed to the purchaser because completion has not yet occurred or the purchaser has not yet become the registered proprietor, if the land is Torrens system land. Another use of the word “sold” in such context is the latter sense, namely, where the legal and beneficial interest has passed from the vendor to the purchaser by a completed sale and the purchaser is the owner, or is in a position to be registered as proprietor, if the land is under Torrens title.
219 When Mr and Mrs Eckford first arrived at the site office on their initial visit, they discussed the status of lot 10 to discover that, although it was marked as “sold” on the price list, and a “sold” sign was visible outside the site office, in fact, lot 10 was subject to a contract for sale by Six Mile Creek that had not been completed and, as occurred, liable to termination.
220 Mr Eckford evaluated the asking price for lot 10 of $895,000 in the context in which he saw the price list recording, as “sold”, lots 17, 18 and 19 located physically to the south on a slope immediately below lot 10, that were also subject to the height restrictions that would protect lot 10’s views, and lot 8, which was smaller than lot 10 but had a similar view to the other lots. The price list described three of those lots and lot 10 as having “Great sea views” and lot 19 as having “Good sea views”. That raises the question as to what the price list’s use of the word “sold” in connection with lots 8, 17, 18 and 19 conveyed to a reasonable person in the class of persons who were interested in purchasing lots on the estate, such as Mr and Mrs Eckford, as well as what “sold” conveyed to Mr and Mrs Eckford in the circumstances.
221 An important tool used by developers and real estate agents in marketing a development, such as Avalon @ Coolum, was that if prospective purchasers could be told about the lots that had been sold already, as Mr McLaughlin said, it would be “a lot better” for the vendor in achieving the future sales of more lots. As he said, “that’s the way that real estate works” (see  above).
222 Six Mile Creek and Mr McLaughlin argued that neither of them made the price list representation. They asserted that Mr Eckford had pleaded as “shams” the contracts of sale of lots 8, 17, 18 and 19 the subject of the notation “sold” in the price list and that he had not proved this. They also argued that Mr Eckford had not pleaded the termination of lot 19 on 1 October 2007 as conduct conveying a representation by silence and thus, he could not rely on this fact.
223 The respondents accepted (in their closing submissions) that they had authorised the publication of the brochure, plan and other printed material other than the price list. However, they denied that Mr McLaughlin provided or approved the price list dated 14 September 2007 that stated that lots 8, 17, 18 and 19 had been “sold”. The respondents argued that the price list identified, at the foot of the document, its publisher as “Developer – The De Angelis Group”. They contended that Mr Boulter was Pangus’ agent and that the form 27(c), included with the contractual documents that Ken Guy sent to Mr and Mrs Eckford on 5 October 2007 (see  above), disclosed or reaffirmed this. They submitted that, whilst he was aware that Mr Boulter was using a price list, Mr McLaughlin “was not a participant in the providing [of] information to Mr Boulter to update either the 1 September 2007 or 14 September 2007 [price lists]”. As I noted at  above, they argued that, based on Mr Boulter’s evidence, the price lists were based on information collated in Ken Guy’s back office as opposed to being based on information emanating from either of the respondents. They argued:
The crux of the dispute on agency is whether the issue of the price list which contained reference to the sham contracts (assuming this finding is made) can be sheeted home to Six Mile Creek or Mr McLaughlin or both.
The complete answer to this, is that it is not a case which has been pleaded or opened on or advanced on the evidence and it fails in limine. That is readily apparent from a fair reading of paragraphs 32A; 32B; 61W and 61X [in the amended statement of claim].
224 The respondents argued that Mr Boulter’s acts and conduct in relation to the price list representation could not be attributed to them, relying on what Edelman J had said about the principles of the law of agency in Perpetual Trustee Co Ltd v Burniston (No 2); sub nom A v B1 (No 2) (2012) 271 FLR 122 at 167-170 - concerning the attribution of one person’s acts to another person. They contended that Six Mile Creek never appointed Mr Boulter or Pangus as its agent for the purpose of making the “sham” contracts for lots 8, 17, 18 and 19 (the impugned contracts). They submitted that the making of the impugned contracts was inimical to the commercial intent of the put and call option and outside the scope of the rights that it conferred on Pangus and Mr De Angelis.
225 I reject the respondents’ arguments. First, Mr McLaughlin admitted that Six Mile Creek provided Mr Boulter with the information as to “sales” that appeared in the (14 September 2007) price list. Secondly, Mr McLaughlin was actively monitoring the sales activity of Pangus and Ken Guy as evidenced in the lots for which Pangus asked Six Mile Creek to execute and exchange contracts. Mr McLaughlin knew, and intended, that Mr Boulter would use the information about those exchanges (and any completed contracts), and he caused Six Mile Creek to provide that information to Mr Boulter (and Ken Guy) to use it to inform members of the public who expressed interest in lots in the estate. Mr McLaughlin knew that Mr Boulter used an up-to-date price list (that he or his office prepared with information that Six Mile Creek had supplied as to the then current position in respect of each lot) to do this.
226 Thirdly, the statement of claim pleaded that the price list representation was false at the time of its making because each of lots 8, 17, 18 and 19 had not been sold by Six Mile Creek for the stated price or at all and was not the subject of a bona fide contract of sale, as both it and Mr McLaughlin knew. Mr Eckford also pleaded that Six Mile Creek had terminated each of the contracts for lots 8, 17, 18 and 19 on a date shortly before 31 October 2007, being the date when Mr and Mrs Eckford submitted a signed copy of their contract to purchase lot 10 to Six Mile Creek. The statement of claim also alleged that the contract for lot 19 had been terminated on 16 November 2017. However, in the defence, the respondents pleaded (as was the fact) that the contract for lot 19 had been terminated on 1 October 2007. Mr Eckford also pleaded that Six Mile Creek terminated the put and call option on 14 December 2007 and that by reason of the terminations of all of the impugned contracts in the circumstances, Six Mile Creek, “at least”, never intended to complete those contracts.
227 Mr Eckford pleaded that the impugned contracts were not bona fide contracts and that Mr McLaughlin and Six Mile Creek knew this. He gave particulars that asserted that Six Mile Creek had entered into those four contracts to give the appearance to third parties that the lots had been sold for the prices in the price list without it having any intention of completing those contracts, and that its intention was to terminate them at a later date in accordance with what he and Mr Whitelaw wanted (as I have found at -, - and  above).
228 In my opinion, the case that Mr Eckford pleaded broadly accorded with the facts in evidence. Mr McLaughlin caused Six Mile Creek to enter into the impugned contracts (for lots 8, 17, 18 and 19) which had “very weak” deposits in circumstances where it is likely that he believed, and certainly by the time of making the representations, as at late September 2007, he had come to believe, that the contracts were not going to be completed because the purchasers did not have the financial resources to do so. However, he wanted to maintain the false veneer of the lots having been “sold” to attract other purchasers for unsold lots in the estate.
229 I do not consider that Mr Eckford pleaded or had to prove that the impugned contracts were a sham. The state of the pleadings and the respondents’ argument do not preclude the use of the evidence that the parties led at the trial, which may have gone further than Mr Eckford’s pleaded allegations or the respondents’ pleaded defence, that the contract for lot 19 had been terminated on 1 October 2007. As Gummow, Hayne, Heydon, Crennan and Kiefel JJ said in Vale v Sutherland (2009) 237 CLR 638 at 651 :
In his written submissions to this Court the Trustee contends that the determination of whether Mr Vale disputed the value asserted in the notice “depends entirely” upon whether in his defence he made a “specific denial” or a statement of “specific non-admission” in accordance with the rules, as outlined above. However, in Banque Commerciale SA (In liq) v Akhil Holdings Ltd [(1990) 169 CLR 279 at 296-297] Dawson J noted:
“But modern pleadings have never imposed so rigid a framework that if evidence which raises fresh issues is admitted without objection at trial, the case is to be decided upon a basis which does not embrace the real controversy between the parties … cases are determined on the evidence, not the pleadings.”
Thus, whatever view is taken of the range of issues tendered by the pleadings, it was open to Lloyd-Jones FM to decide the case as he did. No unfairness results to the Trustee from such a result.
230 A “sham” “refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences” (emphasis added): Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at 486  per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ. Here, there is no evidence to suggest that both the purchasers under each of the impugned contracts and Six Mile Creek intended that the contracts would not be effective and would not have legal consequences.
231 While Mr McLaughlin was very cynical that the purchasers could raise the finance to complete the impugned contracts, he and Six Mile Creek did not have, and certainly did not share, any intention that the contracts should not have legal consequences. Rather, he was a realist who recognised that, first, it was in Six Mile Creek’s and his commercial interests to allow Pangus to continue to seek finance to meet its debts and to market lots for sale from the estate until he was ready, if Pangus continued to be in default, to terminate the put and call option, secondly, the publication of the existence of the contracts for lots 8, 17, 18 and 19 and the Caruana contracts could help sell more lots and improve Pangus’ and Six Mile Creek’s financial positions and, thirdly, the reality, by no later than 25 September 2007, that the purchasers of lots 8, 17, 18 and 19 were very unlikely to ever be able to complete.
232 Those matters had the consequence that the respondents’ use of the impugned contracts in the price list lacked bona fides. That is because even though each of those contracts, technically, did have legal consequences, including the contractual rights of Six Mile Creek to require performance, “subject to finance” or by dates for which time was of the essence, nonetheless Six Mile Creek could terminate them for breach, or it or the purchaser could terminate those that were “subject to finance”, if the purchaser could not raise the finance. A contract that allows such a result is not a sham. This is because the parties to it intend that it will operate according to its intended legal consequences. But, at the same time, in circumstances, such as in this proceeding, such a contract will not be a bona fide contract where the vendor uses it to suggest to third parties that it reflects a sale if, as here, the vendor does not believe that the contract has any realistic prospect of being completed so as to result in a transfer of the legal and beneficial ownership of the property the subject of the contract. The impugned contracts, after 25 September 2007, were not, in Mr McLaughlin’s eyes, bona fide, because he did not think that they were ever likely to proceed to completion but he wanted to use the continuing fact of their existence to promote sales of lots in the estate.
233 Because the respondents, first, admitted in their defence that Six Mile Creek had terminated the contract for lot 19 on 1 October 2007 and, secondly, had put lot 17 “back on the market” on 10 October 2007, they could not rely on either lot as being the subject of a bona fide contract or “sale” after those respective dates, without disclosing the termination or resumption of marketing to Mr and Mrs Eckford.
234 Six Mile Creek held Ken Guy and Mr Boulter out and authorised him (and it) to act as its agent to sell lots on its estate. Mr McLaughlin gave evidence that accorded with commercial reality, namely that Six Mile Creek gave Ken Guy and Mr Boulter the information used in the price list. Mr Boulter said that if a proposing purchaser wanted anything outside the terms of a standard contract, he had to refer the request to both Pangus and Six Mile Creek “because, at the end of the day, Six Mile Creek had to be in agreement to any change”. More fundamentally (because Pangus was in default under the put and call option), the decision whether to enter into a contract was Six Mile Creek’s alone and, once it did, it needed, and Mr McLaughlin wanted, to tell Mr Boulter that the contracts had been exchanged. Mr McLaughlin confirmed that, first, he discussed with Mr Boulter the status of lots that had been sold and their prices and, secondly, he was aware that Mr Boulter was incorporating that information in other price lists that he showed members of the public.
235 Pangus engaged Ken Guy as its marketing agent for the estate (see cl 9 of the put and call option: see  above). When Pangus found a potential purchaser, it had the right (if not in default) to call on Six Mile Creek to execute a standard contract under cl 2 of the put and call option. But in pursuing its commercial objectives under the put and call option, Pangus necessarily required Mr Boulter (and his company, Ken Guy) to consult with, and obtain approval, from Six Mile Creek about matters connected to the proposed sale of lots.
236 So it was when Mr and Mrs Eckford’s expressed a desire to purchase lot 10. Mr Boulter knew that he had to, and did, seek instructions from Six Mile Creek and Mr McLaughlin about whether to terminate the existing contract (with Mr Caruana) and allow him to market lot 10 to Mr and Mrs Eckford. The mere fact that Ken Guy was contractually bound to act as Pangus’ marketing agent did not exclude it also being in a position where its acts in dealing with Mr and Mrs Eckford were attributable as the acts of the owner of lot 10, Six Mile Creek. In any event, I accept the evidence of both Mr Eckford and Mr Boulter that Mr Boulter told Mr Eckford he would ask the “owner” (namely, Six Mile Creek and Mr McLaughlin) about whether lot 10 could become available for purchase.
237 Indeed, on 10 October 2007, Six Mile Creek instructed Mr Boulter to “place Lot 17 back on the market”. And I infer that, similarly, Mr McLaughlin, on behalf of Six Mile Creek, made the decision to terminate the Caruana contracts, after Mr Boulter sought his instructions, so that lot 10 could be offered by Mr Boulter to Mr and Mrs Eckford.
238 The respondents’ argument that, in this scenario, there was some clear indication of a limitation of Mr Boulter’s authority from Six Mile Creek to market lot 10 because, somehow, Mr and Mrs Eckford would have understood as a matter of objective fact, that Mr Boulter (whatever his other roles may have been) was not acting as an agent of Six Mile Creek, is without substance. The mere fact that “Developer – The De Angelis Group” appeared on the price list does not mean that, when Mr Boulter used that document to market lots in the estate, a person reading it would have understood that its statements about the status and sale price of lots marked as “sold” were made exclusively and only by “Developer – The De Angelis Group”, whatever that group was, and that the owner of the estate and the person who actually had entered into each transaction the subject of the word “sold”, in fact, had no role in communicating that information through Mr Boulter’s use of the price list.
239 Mr Boulter used the price list at Mr McLaughlin’s direction, or as Six Mile Creek’s controlling mind, with his express or implied consent and agreement. Indeed, on 10 October 2007, Six Mile Creek (through Bakers) instructed Mr Boulter directly that lot 17 was “back on the market” (see  above). That action confirmed that Six Mile Creek held Mr Boulter out as its agent. More significantly, Mr Boulter told Mr and Mrs Eckford at the first meeting that he would speak to the “owner” when they expressed interest in lot 10 and at the second meeting that he had spoken to “Danny”, the “owner”. And the brochure noted that all approvals had to be approved by the developer and the owner, naming both as The De Angelis Group and Six Mile Creek (see - above). These facts would convey to a reasonable person in Mr and Mrs Eckford’s position (as it did to them) that Mr Boulter was acting on behalf (as I find to be the case) of Six Mile Creek.
240 In any event, for the purposes of claims under ss 52(1) and 53A(1)(b) of the TPA, s 84(2)(b) of the TPA deemed Mr Boulter’s use of the price list in relation to his dealings with Mr and Mrs Eckford to be conduct engaged in by Six Mile Creek. That section relevantly provided:
(2) Any conduct engaged in on behalf of a body corporate:
(b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant 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, servant or agent;
shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate.
241 The put and call option was a means by which, in consideration of the various payments specified in it, including the initial $500,000 and the due, but unpaid, $6.925 million, Six Mile Creek gave authority to Pangus to market lots on the estate on the basis that it could call on Six Mile Creek to contract with persons who had signed a draft contract on either the standard terms provided in the put and call option (in which case, Six Mile Creek had to execute the contract) or varied terms (in which case, Six Mile Creek had a discretion whether to agree to accept those variations).
242 The price list was one tool by which Ken Guy and Mr Boulter marketed the lots. Mr McLaughlin was aware of that conduct and he and Six Mile Creek assisted them and Pangus in compiling and updating price lists from time to time, including the price list (dated 14 September 2007). Moreover, as I have found in about mid-August 2007, Mr McLaughlin and Mr Whitelaw wanted Pangus to convert its leads into contracts so that these could be used in the further marketing of unsold lots. That use, to Mr McLaughlin’s knowledge, necessarily involved creating (and updating from time to time) a price list that identified what lots had been sold and their prices because, as he said, “that’s the way that real estate works” (see - above).
243 The notations of “sold” in the price list against lots, and the corresponding prices stated to have been achieved in the sale of those lots, comprised information that Six Mile Creek and Mr McLaughlin had lent their assistance to Ken Guy, Mr Boulter and Pangus in publishing the price list to enable Mr Boulter to promote further sales of lots owned by Six Mile Creek. Indeed, Six Mile Creek and Mr McLaughlin intended that Ken Guy, Mr Boulter and Pangus would republish the information about the exchanged contracts and prices so as to convey to members of the public that the relevant lots had been “sold”. In any event, such a republication was the natural and probable result of Six Mile Creek and Mr McLaughlin providing that information to the real estate agent and Pangus. That conduct, in a practical way, made Six Mile Creek and Mr McLaughlin publishers of that information as it appeared in the price list: John Fairfax & Sons Ltd v Cojuangco (1988) 165 CLR 346 at 350 per Mason CJ, Wilson, Deane, Toohey and Gaudron JJ applying what Isaacs J had explained in Webb v Bloch (1928) 41 CLR 331 at 363-366; Kazal v Thunder Studios Inc (California) (2017) 256 FCR 90 at 119  per Besanko, Wigney and Bromwich JJ.
244 The fact that, when Mr Boulter made the price list representation to Mr and Mrs Eckford, he may not have been aware of Mr McLaughlin’s state of mind does not, of course, affect the respondents’ legal responsibility or liability for the making, by them through their agent, of that representation: Webb 41 CLR at 365-366, applying S Pearson & Son Ltd v Dublin Corporation  AC 351; see too Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 585 per Brennan, Deane, Gaudron and McHugh JJ. And, Mr Boulter communicated directly with Mr McLaughlin and Six Mile Creek in relation to his dealings with Mr and Mrs Eckford in order to create the availability of lot 10 for them to purchase.
245 In Burniston 271 FLR at 167-170 -, Edelman J discussed the distinction between attributing acts (as in one meaning of “agency”) and liability (as in the use of the expression “vicarious liability”). However, the respondents did not identify anything that his Honour said in that case that would operate to insulate them, under the common law, from Mr Boulter’s conduct in making the price list representation being attributed to them by his agency. His conduct in making the price list representation for Six Mile Creek was analogous to what the commission agent did in soliciting and obtaining proposals from insureds, so that the insurer could consider whether it would insure the risks, in Colonial Mutual Life Assurance Society Ltd v The Producers and Citizens Cooperative Assurance Company of Australia Ltd (1931) 46 CLR 41. Dixon J with whom Rich J agreed said (at 50 and see too at 46-47 per Gavan Duffy CJ and Starke J):
…the “agent” represented the Company in soliciting proposals so that he was acting in right of the Company with its authority, it follows that the Company in confiding to his judgment, within the limits of relevance and of reasonableness, the choice of inducements and arguments, authorized him on its behalf to address to prospective proponents such observations as appeared to him appropriate. The undertaking contained in his contract not to disparage other institutions is not a limitation of his authority but a promise as to the manner of its exercise. In these circumstances, I do not think it is any extension of principle to hold the Company liable for the slanders which he thought proper to include in his apparatus of persuasion.
246 For these reasons, as at each of late September 2007 to early October 2007 and up to 20 November 2007, the price list representation was misleading and deceptive and false and misleading within the meaning of ss 52(1) and 53A(1)(b) of the TPA.
247 In addition, by 11 January 2008, Six Mile Creek, on Mr McLaughlin’s instructions, had terminated the two contracts for lots 19 and 8 and had put lot 17 back on the market. Moreover, as I have explained earlier, by 11 January 2008, both Mr Dial and Nick Dean Properties had failed to do anything to remedy their defaults under the contracts for lots 17 and 18 since 31 October 2007 and, on no basis could a reasonable person have made a prediction (and I find Mr McLaughlin did not believe) that those contracts would ever be completed: Bowler 80 FCR at 207E-G.
248 The respondents argued that Mr and Mrs Eckford had decided to buy lot 10 before they even spoke to Mr Boulter for the first time and that after they had spoken with him, they accepted the “take it or leave it” offer at the asking price of $895,000 without relying at all on any of the representations. The respondents also contended that, had Mr and Mrs Eckford relied on the height representations to the effect that Six Mile Creek would not allow construction of any building on lots 17, 18 and 19 exceeding the maxima in cl 4.5 of the building covenants, they would have made, but did not in fact make, prominent reference to this in the post-contractual correspondence. Accordingly, they asserted, Mr and Mrs Eckford did not rely on the representations. The respondents submitted that this conclusion was reinforced by the content of the emails Jason Eckford sent in which he referred to the language of the building covenants being open to “varying interpretations” that could allow Six Mile Creek to relax them to achieve sale of unsold lots.
249 I reject the argument that Mr and Mrs Eckford did not rely on the representations. They saw that lot 10 had a “sold” sign on it at the first visit, before meeting Mr Boulter. No doubt, as Mr Eckford said, his late wife “fell in love” with lot 10. Mr Eckford said that once they saw the site, its dimensions and position, they thought that they would like to buy lot 10 from whomever owned it. He also agreed, in cross-examination, that it was an “impulse buy” but, as he said, “I didn’t know what money was involved until Mr Boulter gave us the price list” (emphasis added).
250 I accept Mr Eckford’s evidence generally and, in particular, that after receiving the price list, he compared the asking price for lot 10 of $895,000 and its size as disclosed on the price list with the prices, sizes, descriptions of the views and locations of lots 8, 17, 18 and 19, which both Mr Boulter, orally, and the price list, in writing, informed him were “sold”, to assess their comparative values. He said that the prices paid for those four lots “had a big influence on my decision to purchase”. He concluded that “the amount of money paid for the blocks compared to our block and size, the amount of slope and everything else” meant that lot 10 “was a superior block, and I reckoned the difference in values was justified”. Moreover, he said that he would not have purchased lot 10 if lots 17, 18 and 19 did not have the height restrictions to govern the construction of any buildings on them because those restrictions were essential to protect the views from lot 10.
251 Mr and Mrs Eckford were attracted to lot 10 by its views and the representation or promise of protection of those views because lots 17, 18 and 19 had already been sold with the building covenants containing the height restrictions binding their owners. I find that Mr and Mrs Eckford were willing to pay $895,000 to acquire lot 10 because they relied on each of the representations. Wilson J stated the test for deciding reliance in Gould v Vaggelas (1985) 157 CLR 215 at 236 as follows (and see too Longmore LJ’s discussion, with which Peter Jackson and Coulson LJJ agreed in BV Nederlandse Industrie van Eiprodukten v Rembrandt Enterprises Inc  1 Lloyd’s Rep 491 at 496-503 -):
1. Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case.
2. If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation.
3. The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation.
4. The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract.
252 In Barton v Armstrong  AC 104 at 118G-119A, Lord Cross of Chelsea for himself, Lord Kilbrandon and Sir Garfield Barwick explained the reason why, as Wilson J identified in his fourth element, it is sufficient at common law and in equity that a fraudulent representation plays only some part in contributing to the formation of a contract. His Lordship said:
Had Armstrong made a fraudulent misrepresentation to Barton for the purpose of inducing him to execute the deed of January 17, 1967, the answer to the problem which has arisen would have been clear. If it were established that Barton did not allow the representation to affect his judgment then he could not make it a ground for relief even though the representation was designed and known by Barton to be designed to affect his judgment. If on the other hand Barton relied on the misrepresentation Armstrong could not have defeated his claim to relief by showing that there were other more weighty causes which contributed to his decision to execute the deed, for in this field the court does not allow an examination into the relative importance of contributory causes.
“Once make out that there has been anything like deception, and no contract resting in any degree on that foundation can stand”: per Lord Cranworth L.J. in Reynell v. Sprye (1852) 1 De G.M. & G. 660 , 708 – see also the other cases referred to in Cheshire and Fifoot’s Law of Contract, 8th ed. (1972), pp. 250-251. Their Lordships think that the same rule should apply in cases of duress and that if Armstrong’s threats were “a” reason for Barton’s executing the deed he is entitled to relief even though he might well have entered into the contract if Armstrong had uttered no threats to induce him to do so.
(bold emphasis added)
253 Here, not only was each of the representations calculated to induce Mr and Mrs Eckford to buy lot 10, I find that each representation played an important part in contributing to their entry into the contract of purchase on 20 November 2007.
254 The context in which Mr Boulter communicated each of the four representations included the significance of the benefit to lot 10 of the height restrictions on lots 17, 18 and 19 under cll 4.5 and 8.3 of the building covenants. Thus, the use of the word “sold” in respect of lots 17, 18 and 19 in the price list conveyed an assurance, in late September 2007 and up to the time of Mr and Mrs Eckford’s entry into the contract of purchase on 20 November 2007, that each of those lots already had been burdened effectively, and not merely potentially, by those height restrictions. The brochure reinforced the importance of the height restrictions. It promised that some lots were offered with “OCEAN VIEWS FOREVER” and stated, in its summary of the building covenants, that they “[g]overn[ed] size…building heights” and provided “[l]andscaping and restrictive covenants to ensure that sea views are never interfered with by another lot…a future buyer to also be governed by those covenants” (emphasis added). That message was conveyed, as well, by the terms of the building covenants themselves. The price list representation reinforced this impression of there being legally binding rights to “OCEAN VIEWS FOREVER”, if Mr and Mrs Eckford bought lot 10, by conveying that each of lots 17, 18 and 19 had been “sold” at the stated prices, even though they were subject to the burden of the height restrictions. This was calculated to emphasise the benefit that the height restrictions had conferred on lot 10 and to reinforce (as it did in Mr Eckford’s mind) the impression that the price of lot 10 of $895,000 was bona fide related to the prices (that the price list recorded) at which lots 17, 18 and 19 had been “sold”.
255 As I have noted above, the use of the word “sold”, including in situations involving the marketing of lots in a subdivision, can be ambiguous. Persons interested in making a purchase, such as Mr and Mrs Eckford, would be conscious that it could mean not only that the contract had been completed, so that the purchaser had become the (legal and beneficial) owner (or registered proprietor), but also that the contracts had been exchanged but were yet to be completed.
256 Mr McLaughlin intended a prospective purchaser (such as Mr and Mrs Eckford) to understand the word “sold” as used in the price list and the “sold” sign on lot 10 to mean or include that a contract for the particular lot had been exchanged. He intended such a purchaser to understand that the contract was a bona fide one that, Six Mile Creek and he believed, would be completed in the ordinary course of sales of vacant residential allotments on a subdivided estate. But Mr McLaughlin did not have that belief, after 25 September 2007, in respect of lots 8, 17, 18 and 19.
257 Here, as the respondents argued, the sale price representation was literally true, in late September 2007 and prior to 1 October 2007, in the sense that there existed executory contracts containing the height restrictions for each of lots 8, 17, 18 and 19 between Six Mile Creek and three purchasers.
258 However, by 25 September 2007, Mr McLaughlin had reached the conclusion that the existing contracts for lots 8, 17, 18 and 19 and the Caruana contracts were “all a joke”, “not worth anything until they settle” and were “bodgy” or “dodgy”. As I have explained, he had good reason for forming that conclusion. Each of those purchasers appeared to have a connection with Mr De Angelis or Pangus, which was also in serious default. As its solicitors, Brennans, asserted on 15 August 2007, Pangus had proffered those purchasers to Six Mile Creek as a means of demonstrating its supposed ability to perform under the put and call option, despite it not having paid $6.925 million on 28 June 2007 or being likely to be in a position to pay it at any reasonably foreseeable time (see  above), a matter they reasserted on 12 October 2007 (see  above).
259 Mr McLaughlin also wanted to continue to use the fact that Six Mile Creek had exchanged the Caruana contracts and contracts for lots 8, 17, 18 and 19 to influence prospective purchasers of other lots to buy those lots because, as he said, “that’s the way that real estate works”. That was an important consideration for Mr McLaughlin, as the controlling mind of Six Mile Creek. He wanted to ensure that there was an appearance of sales of the better quality lots (such as lots 8, 17, 18 and 19) at substantial prices in order to make potential purchasers more inclined to buy and to pay the asking prices in the price list.
260 Mr McLaughlin had discussed with Mr Boulter the unsatisfactory position in respect of the Caruana contracts before Mr and Mrs Eckford’s first visit to the estate. That is because Mr McLaughlin wanted Mr Boulter to be in a position to encourage potential purchasers such as Mr and Mrs Eckford about the possibility of lot 10 being available for purchase (as, in fact, happened). I infer that Mr McLaughlin had also made Mr Boulter aware at the same time that if persons expressed interest in the lots, the uncompleted contracts for which he had told Mr Cumming on 25 September 2007 were “all a joke” (being lots 8, 10, 17, 18, 19, 43, 44, 45, 50 and 57), Mr Boulter could respond to the enquiry the same way as he had to Mr and Mrs Eckford.
261 Moreover, by 1 October 2007, there was no longer a contract for the sale of lot 19 and it was back on the market, which was the same day that Six Mile Creek terminated Mr Caruana’s contract for the purchase of lot 10 (along with his contracts for the purchase of lots 43, 44, 45, 50 and 57) in order to make lot 10 available for Mr and Mrs Eckford to purchase. And, the by now terminated purchaser of lot 19, Bolivar Road was also still the purchaser of lot 8. However, Mr Boulter and Six Mile Creek only informed Mr and Mrs Eckford (and Jason Eckford) that lot 10 was no longer “sold” and said nothing (perhaps because Mr Boulter did not then know) about the concurrent termination of the contract for lot 19. This was known to Six Mile Creek and Mr McLaughlin and, unless corrected, rendered each of the representations false to their knowledge: Briess  AC at 349 (see  above). And, by 10 October 2007, Six Mile Creek had instructed Mr Boulter that lot 17 was “back on the market” (see  above).
262 Thus, the appearance in the price list of the certainty or assuredness of the “sale” of lots, and in particular lots 8, 17, 18 and 19, that the price list representation conveyed, by itself, and also in combination with the three height representations, in the context of the negotiation with Mr and Mrs Eckford and their son, was substantially misleading. Indeed, it was false and Mr McLaughlin knew this. Mr McLaughlin did not believe, on 1 October 2007, when Mr and Mrs Eckford were told lot 10 was available for sale, that those purchasers of lots 8, 17 and 18, would ever be able to raise finance and complete their contracts. And he knew that Six Mile Creek had terminated the contract for lot 19 or would do so (as it did) on that day. In my assessment, while he was not certain that any of the contracts for lots 8, 17 and 18 (and prior to 1 October 2007, lot 19) would complete, his belief, from 25 September 2007, was that this was so highly unlikely, it was “all a joke”, but he intended to keep the appearance of the lots being “sold” in the price list so as to generate interest from members of the public (other than persons associated with Pangus) who could finance purchases of those or other lots.
263 In his seminal speech in Smith v Chadwick (1884) 9 App Cas 187 at 201, Lord Blackburn said:
as a matter of law, the motive of the person saying that which he knows not to be true to another with the intention to lead him to act on the faith of the statement is immaterial. The defendants might honestly believe that the shares were a capital investment, and that they were doing the plaintiff a kindness by tricking him into buying them. I do not say this is proved, but if it were, if they did trick him into doing so, they are civilly responsible as for a deceit. And if with intent to lead the plaintiff to act upon it, they put forth a statement which they know may bear two meanings, one of which is false to their knowledge, and thereby the plaintiff putting that meaning on it is misled, I do not think they can escape by saying he ought to have put the other. If they palter with him in a double sense, it may be that they lie like truth; but I think they lie, and it is a fraud. Indeed, as a question of casuistry, I am inclined to think the fraud is aggravated by a shabby attempt to get the benefit of a fraud, without incurring the responsibility.
(bold emphasis added)
264 Of course, in approaching the purchase of real estate, particularly with a view to then building one’s home, a member of the public in the position of Mr and Mrs Eckford can be expected to act reasonably: Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at 85  per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ.
265 Mr Boulter told Mr and Mrs Eckford during their first visit that the purchaser of lot 10 had delayed on settlement and that he would be prepared to speak to the owner to see whether they (the owner) might forego that contract and sell instead to them. Mr Boulter did not suggest that this delaying purchaser (Mr Caruana) was also delaying settlement of five other lots or that the purchasers of lots 8, 17, 18 and 19 were in a similar position. Nothing in the context would have alerted Mr and Mrs Eckford (or, later, Jason Eckford) to enquire whether the other “sold” lots, the contracts for which Mr McLaughlin regarded as “dodgy” and “a joke”, and in particular those with good views and substantial prices (namely lots 8, 17, 18 and 19), were not the subject of completed sales, let alone unlikely ever to be so with the then purchaser as a contracting party.
266 That made significant the omission to inform Mr and Mrs Eckford promptly on, or soon after, 1 October 2007 (and in any event before they exchanged contracts for lot 10) that Six Mile Creek had terminated the contract for lot 19 on 1 October 2007 because its purchaser (Bolivar Road which was also purchasing lot 8) had failed to pay the deposit and that Six Mile Creek was treating lot 17, from 10 October 2007, as being on the market again. Lots 19 and 17 were two of the three lots to the south of lot 10 supposedly already burdened with the height restrictions and appeared in the price list to have been “sold” for $585,000 and $675,000 respectively. Had Mr and Mrs Eckford been told at the first or second meetings that not just the purchaser of lot 10, but also the ones for lots 8, 17, 18 and 19 had delayed settlement, then the highly qualified sense in which Six Mile Creek and Mr McLaughlin used, or authorised the use of, the word “sold” in the price list in respect of lots 8, 10, 17, 18 and 19 and other lots is likely to have become apparent to Mr and Mrs Eckford. And, if Six Mile Creek (through Mr Boulter or otherwise) had told them on or after 1 and 10 October 2007, respectively, of the termination of the contract for lot 19 and the putting of lot 17 back on the market, Mr and Mrs Eckford would have known each of the representations was false.
267 By the time of the exchange of contracts on 20 November 2007, Six Mile Creek and Mr McLaughlin knew that the termination of the contracts for lots 19 and 17 had rendered false, to their knowledge, first, the price list’s statement in late September and early October 2007 that each was “sold”, and secondly, the representation that each of lots 19 and 17 was subject to any height restrictions in the building covenants in respect of any building that could be constructed on it.
268 Mr McLaughlin thought, in about August or September 2007, when he looked at the contract for lot 19 (as well as for lot 8) that it was “bodgy” because, first, the $1,000 initial deposit for lot 19 “wasn’t…that much of a deposit”, secondly, Brennans acted for both Bolivar Road and Pangus and there could be an association between Pangus and Bolivar Road, thirdly, Bolivar Road also had entered into a contract for lot 8 on the same day, with an initial $1,000 deposit for a price of $995,000, which he regarded as an overpayment, committing Bolivar Road to a total payment for lots 8 and 19 of over $1.7 million and, fourthly, Bolivar Road probably “would never find the money to pay for it” and “these contracts will fall over anyhow”. Moreover, Mr McLaughlin knew, by 20 November 2007, that Mr Dial had obtained three extensions of time in respect of the contract for lot 17 but by 10 October 2007, Mr McLaughlin had concluded that that contract was not serious and he had put lot 17 back on the market.
269 Therefore, with that state of mind (including my findings about it at - above), Mr McLaughlin knew that a statement, including in the price list, that lots 8, 17 and 19 had been “sold” was calculated to convey a sense of certainty about each transaction that did not reflect the character of a “sale”. That is because Six Mile Creek had either terminated, or had the right to terminate, those contracts but had chosen instead to keep them on foot (in the cases of lots 8 and 17) in order to suggest to prospective purchasers that there was much higher number of serious purchasers of lots in the estate than Mr McLaughlin believed. Likewise, on 25 September 2007, Mr McLaughlin regarded the contracts for lots 8, 17, 18 and 19 as “dodgy” and a part of the “joke” of which he complained to Mr Cumming. He based that assessment, as he also told Mr Cumming, on his experience because he had “been in the game a long time”.
270 By 23 August 2007, immediately before Bakers wrote to Brennans with the requirement that Pangus pay interest at 15% per annum, Mr McLaughlin and Mr Whitelaw had discussed how and when Six Mile Creek would terminate the put and call option. Mr Whitelaw had told Mr De Angelis shortly before that he “ha[d] to perform or he gets the boot”. Mr McLaughlin knew this and agreed with Mr Whitelaw that Six Mile Creek would give Pangus “enough time to convert his leads to contracts” before making a final decision. Those leads were, or included, the Caruana contracts and the contracts for lots 8, 17, 18 and 19, all of which Six Mile Creek executed on or before 24 August 2007. By 25 September 2007, Mr McLaughlin considered they were “all a joke” and “dodgy”. And, on 28 September 2007, Mr McLaughlin received Mr Caruana’s personal email that apologised because he did not then have finance to complete any of his six contracts. Mr McLaughlin decided to terminate the Caruana contracts on 1 October 2007, along with that for lot 19. That would have changed the status of seven of the 18 “sold” lots in the (14 September 2007) price list shown to Mr and Mrs Eckford (although, of course, one of those terminated contracts was for lot 10).
271 The respondents also argued that there was nothing exceptional in the terms of the impugned contracts that warranted a conclusion that they were not bona fide. They contended that Six Mile Creek had entered into contracts that Pangus called on it to enter under cl 2 of the put and call option with other persons, both before and after August 2007, on similar terms with requirements for initial deposits of $1,000 and “subject to finance” clauses, notwithstanding that these did not comply with Pangus’ obligation (under cl 2 and the definition in cl 1 of “third party contract”) to obtain contracts with a 10% deposit and settlement to occur 30 days after the date of the contract.
272 The respondents’ argument that there was nothing unusual in the impugned contracts, however, failed to engage with the circumstances that, unlike those other instances, each of the impugned contracts was made with a party apparently connected to Pangus in response to Mr Whitelaw’s ultimatum in early August 2007 that Mr De Angelis perform or the put and call option would be terminated. By 25 September 2007, it was obvious, objectively and to Mr McLaughlin, that the impugned contracts would “fall over anyhow”. Accordingly, the other examples of contracts, on which the respondents relied to negate the inference that the impugned contracts were unexceptional, were not of the same character, even though they had some common features. So much is obvious from the conveyancing history of the impugned contracts up to Mr McLaughlin’s observations about them the subject of Mr Cumming’s 25 September 2007 file note, which had no counterpart in evidence in respect of any of the other examples of contracts on which the respondents relied.
273 In Magill v Magill (2006) 226 CLR 551 at 587-588 , Gummow, Kirby and Crennan JJ said:
The modern tort of deceit will be established where a plaintiff can show five elements: first, that the defendant made a false representation [Edgington v Fitzmaurice (1885) 29 Ch D 459 at 483 per Bowen LJ]; secondly, that the defendant made the representation with the knowledge that it was false, or that the defendant was reckless or careless as to whether the representation was false or not [Derry v Peek (1889) 14 App Cas 337 at 374 per Lord Herschell]; thirdly, that the defendant made the representation with the intention that it be relied upon by the plaintiff [Bradford Third Equitable Benefit Building Society v Borders  2 All ER 205 at 211 per Viscount Maugham]; fourthly, that the plaintiff acted in reliance on the false representation [Redgrave v Hurd (1881) 20 Ch D 1 at 21 per Jessel MR; Edgington v Fitzmaurice (1885) 29 Ch D 459 at 483 per Bowen LJ; Arnison v Smith (1889) 41 Ch D 348 at 369 per Lord Halsbury LC]; and fifthly, that the plaintiff suffered damage which was caused by reliance on the false representation [Pasley v Freeman (1789) 3 TR 51 at 56 [100 ER 450 at 453] per Buller J; at 64  per Lord Kenyon CJ; Smith v Chadwick (1884) 9 App Cas 187 at 196 per Lord Blackburn; Bradford Third Equitable Benefit Building Society v Borders  2 All ER 205 at 211 per Viscount Maugham. That “damage” is the gist of the action reflects the development of deceit as an action on the case]. Generally, the elements of the tort have been found to exist in cases which concern pecuniary loss flowing from a false inducement and the need to satisfy each element has always been strictly enforced, because fraud is such a serious allegation.
274 The test for determining whether Six Mile Creek and Mr McLaughlin made the price list representation fraudulently depends on the meaning with which each of them used the words and images that conveyed the particular representations and whether, in light of that meaning, the representation, to its or his knowledge was false or made with reckless indifference as to its truth or falsity: John McGrath Motors (Canberra) Pty Ltd v Applebee (1964) 110 CLR 656 at 659-660 per Kitto, Taylor and Owen JJ (see too Krakowski 183 CLR at 577 per Brennan, Deane, Gaudron and McHugh JJ). They endorsed the following statement of the Privy Council in Akerhielm v De Mare  AC 789 at 805:
The question is not whether the defendant in any given case honestly believed the representation to be true in the sense assigned to it by the court on an objective consideration of its truth or falsity, but whether he honestly believed the representation to be true in the sense in which he understood it albeit erroneously when it was made.
275 As I have explained, Mr McLaughlin’s purpose in allowing Pangus to convert its leads into contracts was so that Six Mile Creek could use those contracts to convey that those lots had been “sold” for the prices specified in the price list in order to influence prospective purchasers, like Mr and Mrs Eckford, into buying a lot themselves. He did so because, as he said, “that’s the way that real estate works”. Accordingly, given Mr McLaughlin’s state of mind as at 25 September 2007 and thereafter, he knew and intended that a person in the position of Mr and Mrs Eckford would understand the price list representation that lots 17, 18 and 19 had been “sold” (either in the sense of a completed sale or of an executory contract that the representor had reasonable grounds to believe would proceed to completion within a reasonable time in the ordinary course) under contracts binding the purchasers to the building covenants, particularly the height restrictions, and for the prices stated. And as at 1 October 2007, when he allowed Mr Boulter to offer lot 10 to Mr and Mrs Eckford, Mr McLaughlin knew that Six Mile Creek had terminated the contract for lot 19 (or was about to do so) so that it could not be described as “sold”.
276 Mr McLaughlin and Six Mile Creek made the price list representation either knowing that it was untrue in the above sense in which he wanted Mr and Mrs Eckford to understand it or recklessly indifferent as to whether the representation, as he understood it (on my findings above), was true or false. At the very least, Mr McLaughlin must have been recklessly indifferent as to the truth or falsity of the price list representation at the times that it was made to Mr and Mrs Eckford because, as at late September 2007, he was very unsure about whether the contracts for lots 17, 18 and 19 would complete, believed that they were “dodgy”, “all a joke”, and would not complete and, on 1 October 2007, he had decided to terminate the contract for lot 19. And he also caused lot 17 to be put back on the market 10 days later because of his lack of belief in the bona fides of Mr Dial’s ability or intention to complete his contract for lot 17.
277 Mr McLaughlin agreed in cross-examination that if no deposits at all had been paid for lots 8, 17, 18 or 19 as at September 2007, it would be incorrect to tell members of the public that the lots had been “sold”. Yet that is what occurred. As I have found, the purchasers of lots 8, 17 and 18 had not paid any deposit at all. And Mr McLaughlin knew that to be the case because he gave instructions to Bakers to write to Brennans, as the purchasers’ solicitors, on 19 September 2007 in respect of lot 19 (see  above) and on 20 September 2007 in respect of lot 17 (see  above) about their failures to pay any deposit. Moreover, I infer that he was also aware, based on reports to him from Bakers, Mr Whitelaw and Mrs Sutton that, as at 10 September 2007 (just before his return to Australia), Bakers had written to Brennans about the fact that no deposits had been paid on lots 17 or 18 (see  above), a position which did not alter subsequently.
278 Accordingly, the statement in the price list, that Mr Boulter gave to Mr and Mrs Eckford, that lots 8, 17, 18 and 19 had been “sold” was false to Mr McLaughlin’s knowledge. That is because he knew at that time that no deposit at all had been paid for any of lots 8, 17, 18 and 19. He intended that Mr Boulter and Ken Guy convey to members of the public, including the persons whom Mr Boulter had told him were interested in purchasing lot 10 if he were prepared to terminate the Caruana contracts or that for lot 10, that lots 8, 17, 18 and 19, in fact, were each, at least, the subject of a bona fide contract for sale that had been exchanged with a deposit in the ordinary and usual course of residential real estate sales.
279 The respondents’ use of “sold” in connection with the “sold” prices for lots 8, 17, 18 and 19 stated in the price list was, at the time that Mr Boulter gave the price list to Mr and Mrs Eckford, akin to a similar device in a prospectus that Lord Macnaghten exposed as a fraud in Gluckstein v Barnes  AC 240 at 251-252 when he said:
Surely ordinary persons reading the prospectus, and attracted by the hopes of profit held out by it, would say to themselves, “Here is a scheme which promises well. The gentlemen who are putting the property on the market know something about it, for they were the sole directors and managers of ‘Venice in London,’ which was a very profitable speculation. They have had the whole property valued by well-known auctioneers, who say that it is worth more than is asked for it. True, they secure a profit of 40,000l. for themselves, but then they disclose it frankly, and it is not all clear profit. There is interest to be paid, and all the expense of forming the company. And they have actually agreed to pay 140,000l. down. That sum, they tell us, is ‘payable in cash.’” You will observe those last words, “payable in cash.” Their introduction is almost a stroke of genius. That slight touch seems to give an air of reality and bona fides to the story. Would anybody after that suppose that the directors were only going to pay 120,000l. for the property, and pocket the difference without saying anything to the shareholders? “But then,” says Mr. Gluckstein, “there is something in the prospectus about ‘interim investments,’ and if you had only distrusted us properly and read the prospectus with the caution with which all prospectuses ought to be read, and sifted the matter to the bottom, you might have found a clue to our meaning. You might have discovered that what we call ‘interim investments’ was really the abatement in price effected by purchasing charges on the property at a discount.” My Lords, I decline altogether to take any notice of such an argument. I think the statement in the prospectus as to the price of the property was deliberately intended to mislead the shareholders and to conceal the truth from them.
(bold emphasis added)
280 Likewise here, the use of the word “sold” in the price list representation added an air of reality and bona fides to “sales” that Mr McLaughlin wanted prospective purchasers in Mr and Mrs Eckford’s position to believe had substance, when he believed that those “sales”, being the exchanged contracts, would probably never be completed and, as at 1 October 2007, in the case of lot 19 had been terminated.
281 It was the duty of Six Mile Creek to correct the price list representation because it included an express assertion that lots 19 and 17 had been “sold” with the building covenants, including the height restrictions, after it had terminated the contract for lot 19 on 1 October 2007 and put lot 17 back on the market 10 days later. Six Mile Creek never communicated anything to Mr and Mrs Eckford before they exchanged contracts for lot 10 on 20 November 2007 to suggest that, other than the termination of the existing contract for lot 10, there was any reason for them to think that any of the other properties in the price list, noted as “sold”, either had not already been transferred to the new owner (or could not be transferred (as in the case of lot 19)) or were very unlikely to proceed to a completed contract. This silence was no accident, for the reasons I have explained above, because Six Mile Creek wanted to effect a sale of lot 10 to Mr and Mrs Eckford at the asking price in the price list.
282 As at 1 October 2007, Mr McLaughlin (as Six Mile Creek’s controlling mind) knew that if Six Mile Creek revealed to the potential purchasers of lot 10 (such as Mr and Mrs Eckford) that not only was the previously existing purchaser of lot 10 unable to complete, but also so were the existing purchasers of six other lots, the contracts for sale of which he caused to be terminated on that day, the attraction of the estate in a potential purchaser’s eye would be likely to diminish. He knew that the attractiveness would diminish further if potential purchasers of lot 10 were told that he believed that the contracts for lots 8, 17, 18 and 19 were “all a joke” and “dodgy”. This is because, first, the revelation of the fragility of the supposed “sales” of the “sold” lots or the termination of the contract for lot 19 would suggest that the lots were overpriced or the sale prices in the price list for those lots (especially lots 8, 17, 18 and 19 which the price list said had great or good sea views and building envelopes) were uncommercial or unrealistically high and, secondly, if lots 17, 18 and 19 came back onto the market (as by 10 October 2007, unbeknown to Mr and Mrs Eckford, lots 17 and 19 had), there was no certainty that they would be resold with the height restrictions binding their owner or at the previous “sold” prices.
283 The respondents argued that the balance of the proceeding, other than the claims under the TPA, was statute barred by the six year limitation period in s 10(1)(a) of the Limitation Act. However, as set out above, s 38(1)(a) and (b) of the Limitation Act extends the time from which a period of limitation runs for a common law cause of action in deceit or fraud, and for a right of action that is concealed by the fraud of a defendant or an agent of a defendant, until the plaintiff has discovered the fraud or fraudulent concealment or, with reasonable diligence, could have discovered it. This State legislation is relevant to the deceit claim but has no application to the TPA claims (which I consider below at -).
284 The respondents submitted that Mr Eckford bore, but had failed to discharge, the onus of proving that they had committed the tort of deceit or had fraudulently concealed his right of action so that he was not entitled to postpone the commencement of the limitation period under s 38(1) of the Limitation Act. They argued that Mr Eckford had not established the time when he discovered the alleged fraud or falsity of the price list representation or when, with reasonable diligence, he could have discovered those matters. They argued that because Mr Eckford had not adduced such evidence he could not avail himself of s 38(1)(a) or (b) based on Hutchinson v Equititour Pty Ltd  2 Qd R 99 at 106 - per Peter Lyons J, with whom Muir and Chesterman JJA agreed.
285 They submitted that he had not adduced evidence of how often he had visited the estate following the purchase of lot 10 and when construction of the dwelling on it finished, what he observed then as to the marketing of lots 8, 17, 18 and 19, including any observation of “for sale” or “sold” signs on them, or when he became aware of the price list that Mr Lake prepared.
286 The respondents argued that a finding that Six Mile Creek and Mr McLaughlin had fraudulently concealed the fact that Six Mile Creek had sold lots 17, 18 and 19 without any height restrictions in the building covenants governing development on those lots ought not be made lightly. They contended that when Mr Lake took over the marketing of the estate in late 2008, he recommended that Six Mile Creek change solicitors from Bakers, which it did, and that Mr McLaughlin had testified that he was unaware, until about 22 March 2016, that the building covenants on lots 17, 18 and 19 had changed. They asserted that Mr McLaughlin provided Jason Eckford with the new form of the covenants on 22 March 2016.
287 They said that it was inconceivable that the respondents intentionally concealed the change in building covenants because Mr McLaughlin was being transparent when he emailed the new building covenants to Jason Eckford on 22 March 2016 and it would have been inevitable that Mr Eckford would have discovered the change when an owner of one of lots 17, 18 or 19 built above the relevant height restrictions. The respondents argued that Mr McLaughlin’s denials of being aware of the deletion of the height restrictions from the building covenants, after Mr Lake became the selling agent, should be accepted.
288 Here, Mr Eckford adduced evidence as to how he proceeded, ignorant of the fraud I have found, until Jason Eckford discovered, in February 2016, the actual contract for the sale of lot 18 that contained the new building covenants binding Mr Paul and Ms Wall that did not include the height restrictions (see  above). Until then, the Eckfords had been writing to the respondents seeking assurances about the height restrictions.
289 Indeed, on 16 December 2008, Mr Lake had written to Mr and Mrs Eckford’s architects asking them to adhere to the building covenants (see  above).
290 And, on 27 April 2012, Jason Eckford emailed Mr McLaughlin saying that Mr Lake had told his father that any future purchasers would not be bound by the height restrictions. Jason Eckford told Mr McLaughlin that, given the Eckfords’ earlier emails to him on the topic, he (Mr McLaughlin) would appreciate their concern at Mr Lake’s comment. Jason Eckford asked Mr McLaughlin about his position regarding enforcement of the height restrictions, but received no reply of substance.
291 In my opinion, the earliest time that it could be suggested that Mr Eckford may have been put on enquiry was shortly before 27 April 2012, which is within the six year period before he began this proceeding on 24 February 2017. However, the respondents continued to obfuscate in response to the Eckfords’ subsequent enquiries about the height restrictions until February 2016 (see - above). The respondents did not identify what, other than making the direct enquiries of them that occurred, Mr Eckford could have done to discover their fraud before a purchaser of one of lots 17, 18 and 19 was willing to show them their contract with the building covenants binding them.
292 In Bulli Coal Mining Company v Osborne  AC 351 at 363-364, Lord James of Hereford (for Lords Macnaghten, Morris and himself) giving the advice of the Privy Council, stated the following principle on which a court, exercising equitable jurisdiction, will allow a person to advance a cause of action in a proceeding that has been commenced after the expiry of a statutory limitation period:
Now it has always been a principle of equity that no length of time is a bar to relief in the case of fraud, in the absence of laches on the part of the person defrauded. There is, therefore, no room for the application of the statute in the case of concealed fraud, so long as the party defrauded remains in ignorance without any fault of his own.
The contention on behalf of the appellants that the statute is a bar unless the wrongdoer is proved to have taken active measures in order to prevent detection is opposed to common sense as well as to the principles of equity. Two men, acting independently, steal a neighbour’s coal. One is so clumsy in his operations, or so incautious, that he has to do something more in order to conceal his fraud. The other chooses his opportunity so wisely, and acts so warily, that he can safely calculate on not being found out for many a long day. Why is the one to go scot-free at the end of a limited period rather than the other? It would be something of a mockery for courts of equity to denounce fraud as “a secret thing,” and to profess to punish it sooner or later, and then to hold out a reward for the cunning that makes detection difficult or remote.
293 The right which their Lordships discussed there is a new right of an injured party to bring an action in equity based on the other party’s unconscientious conduct in acting fraudulently or in concealing that party’s earlier fraud from the injured party. In other words, unless a limitation statute expressly or by necessary intendment otherwise provided, equity gives an injured party a right to bring proceedings after the expiry of a limitation period, that the alleged wrongdoer’s fraud or fraudulent concealment had previously hidden: The Crown v McNeil (1922) 31 CLR 76 at 96-97 per Knox CJ and Starke J and 100-107 per Isaacs J; see too Gerace v Auzhair Supplies Pty Ltd (in liq) (2014) 87 NSWLR 435 at 456  and 457  per Meagher JA (Beazley P and Emmett JA agreeing).
294 Here, the respondents induced Mr and Mrs Eckford to enter into and complete the contract to purchase lot 10 by engaging in conduct that was misleading and deceptive and by making false and misleading representations. Their conduct was also fraudulent in respect of the price list representation. The respondents subsequently, first, sold lots 17, 18 and 19 on conditions that did not bind their purchasers to observe the height restrictions and, secondly, kept that circumstance secret from Mr and Mrs Eckford as well as Jason Eckford who enquired on his father’s behalf.
295 The respondents’ argument that Mr Eckford had to adduce more evidence than he did, namely that in 2016 he discovered their fraud and concealment is contrary to the principle in Bulli  AC at 363-364. If, as the respondents contended, Mr Eckford was at fault (despite their calculated and subtle evasion of his and his son’s enquiries and questions) in not discovering their fraudulent concealment and conduct sooner than he did in 2016, the onus was on them to establish that he was at fault in failing to discover what had happened. He and his son asked Six Mile Creek directly as to the continuing operation of the height restrictions, especially in April 2012, but were not told the truth. As Lord James said, “so long as the party defrauded remains in ignorance without any fault of his own” the bar in the statute does not preclude the cause of action (emphasis added): Bulli  AC at 363.
296 Significantly, the formatting and font of the building covenants in the contracts for lot 10 and those for the more recent sales of lots 17, 18 and 19 are identical, save that the branding and references to the name of the development on each page or, where relevant, in the text, changed from “Avalon @ Coolum” to “Grande Vista Coolum” and, in the latter on pages 3 and 5, the last clauses on each page, namely cll 4.5 and 8.3, have been deleted. Thus, the template and font of the building covenants remained the same, save for changes due to the rebranding and the deletion of the two clauses providing height restrictions.
297 Those changes to the building covenants and the standard contracts for sale of lots on the estate could not have occurred without Mr McLaughlin’s knowledge and approval. After all, the building covenants created a control mechanism over all development of lots on the estate that Six Mile Creek could exercise to achieve the planning purpose specified in cl 1.1 of those covenants, namely “a modern well designed residential estate”. A decision to remove the height restrictions from the building covenants had a significant impact on the overall utility and efficacy of the control mechanism in cl 1.1, not to mention the direct impact on lot 10 and any other lots that had the benefit of the height restrictions.
298 Mr McLaughlin kept a close eye on the realisation of lots and was, as his daughter referred to him, “the Boss” of Six Mile Creek. As his involvement in the giving of instructions to Bakers in the period between his return from Ireland on 12 September 2007 and early 2008 showed, he kept a close eye on the terms of proposed contracts for sale of lots and the progress of any exchanged contracts. There was no suggestion in the evidence that Mr Boulter or anyone other than Mr McLaughlin could give instructions to solicitors (even after Six Mile Creek engaged Ken Guy directly in 2008 after the termination of the put and call option) to change the terms of the building covenants or Six Mile Creek’s standard, or other conditions of, contract for sale of lots. It is implausible that Mr Lake, as a real estate agent, ever gave or had authority to give (particularly without any knowledge or instruction from Mr McLaughlin) the new conveyancing solicitors for Six Mile Creek instructions as to the form of the contracts for sale, including the removal of the height restrictions, on behalf of Six Mile Creek.
299 As noted in  above, I disbelieve the denials of Mr McLaughlin summarised in, e.g. -, - and - above, on which the respondents relied. From 1 October 2009 until about February 2016, Mr and Mrs Eckford, and later Jason Eckford, expressly enquired about, or mentioned in emails to Six Mile Creek and Mr McLaughlin, the height restrictions on lots 17, 18 and 19.
300 The evasion in Six Mile Creek’s and Mr McLaughlin’s responses to those queries is telling. For example, Jason Eckford’s email of 27 April 2012 raised Mr Lake’s assertion to his father that lot 18 had no height restrictions on it (see  above). When responding, Mrs Sutton (who is not alleged to have been aware of any relevant matter on this question) wrote on 27 April 2012 that she would attempt to convey to her father the concerns of Jason Eckford and his father, but nothing happened thereafter. When they followed up on 18 July 2013, she responded on 22 July 2013 that “To date there has been no building proposal received by [our] company”. To Six Mile Creek’s knowledge, based on the objective facts and Mr McLaughlin’s knowledge, that response was evasive.
301 I do not consider that Mr McLaughlin’s email of 22 March 2016, to which he attached the Grande Vista Coolum version of the building covenants and pointed out the absence of any height restrictions in it, supports a finding that, up to then, he was unaware of the change in those covenants that had occurred after the sale of lot 10 to Mr and Mrs Eckford, and the fact that lots 17, 18 and 19 had not been sold prior to 11 January 2008. By 22 March 2016, he knew that Mr Eckford and Jason Eckford had found out that the building covenants for lots 17, 18 and 19 had changed and he needed to give some explanation. What is more revealing is that when Jason Eckford pressed Mr McLaughlin on this belated explanation, Mr McLaughlin took some time before suggesting, in his email of 4 April 2016, a discussion and asserting that “I can not [sic] recall the covenants changing”.
302 All of this occurred after Mr Lake’s attempted deflection of Jason Eckford’s enquiries, on 22 February 2016, following his discussing the matter with Mr McLaughlin, in which Mr McLaughlin instructed Mr Lake to tell Jason Eckford to direct his concerns to Mr Sutton as Six Mile Creek’s and Mr McLaughlin’s lawyer. I infer that Mr McLaughlin’s responses in March and April 2016 were a continuation of his obfuscation in an attempt to suggest that he was unaware of, and not responsible for, the deliberate change to the building covenants that, I find, he authorised for the purpose of facilitating the sale of lots 17, 18 and 19 at higher prices than if they were burdened with the height restrictions. And, it was because lots 17, 18 and 19 had not been sold as at 11 January 2008 that Six Mile Creek could sell them later without the height restrictions. However, Mr Eckford was not to know this and there was no reason for him to believe that Six Mile Creek, as opposed to a purchaser from it, was the vendor of lots 17, 18 and 19 when he may have seen those lots on the market after his purchase.
303 For the reasons above, I am satisfied that Mr Eckford, exercising reasonable diligence, could not have discovered that the price list representation was fraudulent earlier than April 2012 when Mr Lake raised the prospect of Mr Eckford purchasing lot 18. Indeed, even at that time, he had no reason to think that, as at late September 2007, any of lots 8, 17, 18 and 19 had not been “sold” for the prices set out in the price list as the respondents, through (the innocent agency of) Mr Boulter, had represented to him and Mrs Eckford.
304 Mr Eckford had no reason to enquire about when or why a subsequent sale of those lots had occurred and there is no evidence to suggest that anything existed to alert him to the possibility of a fraud in the price list representation. The Eckfords’ enquiries to the respondents about the height restrictions in relation to lots 17, 18 and 19 over the period between 2009 and 2015 did not result in the communication of any information that could have revealed that any, let alone all, of those lots had in fact been sold prior to completion of their contract or that the height restrictions did not bind the owners of those lots. Indeed, the respondents’ argument that, as at September 2007, the price list representation was literally true, because there were exchanged contracts for each of lots 17, 18 and 19, begged the question as to what, subsequently, a person in Mr Eckford’s position exercising reasonable diligence should have done beyond what he, his wife and son did. It hardly lay in the respondents’ mouth to suggest, as Lord Macnaghten chided in Gluckstein  AC at 251 that “if [Mr Eckford] had only distrusted us properly…[he] might have found a clue to our meaning”. The respondents chose, to use Lord Blackburn’s expression in Chadwick 9 App Cas at 201, “to lie like truth”.
305 The respondents submitted that s 82(2) of the TPA precluded the award of any compensation for loss or damage suffered by Mr Eckford under s 82(1) of the TPA because this proceeding commenced more than six years after the day that such a cause of action arose under ss 52 or 53A(1)(b) in respect of their contravening misleading conduct. They contended that Mr and Mrs Eckford suffered loss or damage on entry into the contract of purchase on 20 November 2007, more than six years before Mr Eckford commenced this proceeding on 24 February 2017.
306 I reject the respondents’ limitation argument based on s 82(2) of the TPA. Mr Eckford seeks injunctions under s 80 of the TPA prohibiting Six Mile Creek from granting approval, under the building covenants that currently burden lots 17, 18 and 19, to construct any buildings exceeding the height restrictions that he had been promised would have applied to those lots.
307 There is no time limited by the TPA for commencing a proceeding seeking injunctive or other relief under ss 80 and 87. In Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd (2001) 114 FCR 108 at 122 , Wilcox, French and Drummond JJ held that the time limit in s 82(2) does not, first, go to the jurisdiction of this Court conferred by s 86 of the TPA or, secondly, define the subject matter of the proceeding. Their Honours identified s 87(1) as imposing the conditions (relevant to that appeal) that had to exist to confer power on the Court to make “other orders” under s 87 as the heading to that section described its provisions (at 122 ).
308 They held that the orders for which s 87(1) provided are directed to compensating loss or damage that has been suffered already, or to prevent or reduce likely loss or damage. They distinguished the powers under s 87(1) from the power conferred on the Court under s 80 to make orders in respect of apprehended conduct giving rise to apprehended loss or damage, saying (at 123 -):
So, unlike s 80, s 87(1) does not authorise injunctive relief in relation to proposed conduct unless such relief could somehow prevent or reduce loss or damage flowing from past conduct. It is to be noted that the definition provision of the Act, s 4(2), which covers references to “engaging in conduct”, does not extend that term to proposed conduct. If proposed conduct is to be covered by a provision of the Act that must be specified as it is in s 80.
Compensatory orders which may be made under s 87(1) include orders under s 87(2) for the refund of money or the payment of damages to the person who suffered the relevant loss or damage (s 87(2)(c) and (d)). Each of these orders is only able to be directed to a person who has engaged or was involved in contravening conduct.
309 Wilcox, French and Drummond JJ held that there was no time limitation specified in the TPA in relation to the exercise of the powers conferred by s 87(1) in relation to a finding that “a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage” (at 123 ). They noted that this was in contrast to the then three year limitation on the exercise of powers in favour of a non-party under s 87(1A) (which relates to an “application of a person who has suffered, or is likely to suffer, loss or damage”) that s 87(1CA) imposed (the three year time limitation in ss 82(2) and 87(1CA) to which they referred in  was amended to six years by the Trade Practices Amendment Act (No 1) 2001 (Cth) Sch 1 items 20 and 31 that received Royal Assent on 28 June 2001, about 3 months after the decision of Gyles J in Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (2001) 109 FCR 528 which the Full Court upheld in this appeal). Their Honours explained that the reason why s 87(1) did not contain any time limitation was that it provided for ancillary relief. Accordingly, they held that, where s 87(1) is invoked in a proceeding, the only time limitations that could operate to affect the exercise of the Court’s powers under it “are those which affect the proceedings, under some other provision of Pt VI, in which the orders under s 87(1) are sought” (emphasis added) (at 123 ).
310 Critically, their Honours held that, if a proceeding is brought out of time under s 82 and the limitation in s 82(2) is pleaded in consequence of which the application is dismissed, “then there will have been no finding of a contravention which is a necessary condition of the exercise of the power under s 87(1)”. They said that the time limitation in s 82(2) did not operate in terms as a jurisdictional limitation, but rather as a procedural bar to a proceeding where the cause of action was defined in s 82(1) (at 123 ).
311 However, the Full Court concluded (at 123-124 -):
It follows that the time limitation under s 82 does not exclude the possibility of orders being made under s 87(1) in a proceeding commenced after the expiration of three years from the date when the cause of action occurred. It may be that the time limitation is not pleaded or for one reason or another cannot successfully be invoked. The question whether a claim for relief under s 87(1) is affected by a time limitation is entirely dependent upon the question whether the proceedings in which it is raised are so affected. In the case of proceedings for injunctive relief under s 80 there is no time limitation albeit discretionary considerations may arise in relation to undue delay in seeking that relief.
It may be true to say that the absence of any time limitation under s 87 itself, in relation to claims for damages under s 87(1), renders the time limit imposed by s 82(2) too easily avoidable. It may also be said that this construction detracts from the logical consistency of Pt VI. So much may be accepted but does not provide a basis for writing into s 87(1) words that are not there. Indeed, to import into the subsection a time limitation on claims for damages under it would be to introduce an element inconsistent with its character as providing relief ancillary to a primary cause of action.
312 It follows that even if Mr Eckford cannot recover on a cause of action under s 82(1) of the TPA because he (and Mrs Eckford) suffered loss or damage on 20 November 2007 (on entering into the contract to purchase lot 10) or on 11 January 2008 (on completing it), and he commenced this proceeding on 24 February 2017, there is no limitation period that prevents him from obtaining primary relief by way of an injunction under s 80(1) of the TPA and ancillary relief, including compensation, under s 87.
313 Each side called an expert to give evidence of the value of lot 10 as at about 20 November 2007 and more recently. Mr Eckford relied on the evidence of John Leeson and the respondents relied on the evidence of Diane Hunt. The valuers gave concurrent oral evidence with Ms Hunt doing so from the United Kingdom. She had to travel there to make arrangements for her late father’s funeral. In assessing her evidence, I have taken into account her difficult personal circumstances, especially because she was testifying early in the morning in circumstances where the funeral was to occur the next day.
314 The valuers gave the following opinions of value for lot 10:
20 November 2007
Land value with height restrictions on lots 17, 18 and 19
$615,000 (incl. GST)
Land value without height restrictions on lots 17, 18 and 19
$525,000 (incl. GST)
15 May 2018
Land value without height restrictions on lots 17, 18 and 19
Dwelling value (agreed by the valuers)
Allotment improvements (agreed by the valuers)
Total land value, dwelling value and allotment improvements
315 The valuers also gave the following opinions of value for lots 8, 17, 18 and 19, Mr Leeson as at November 2007 and Ms Hunt as at 1 September 2007, on the basis that each lot was sold with the burden of the height restrictions being in place. (I have also included the “sold” price in the 14 September 2007 price list.)
Price list “sold” price
316 Mr Leeson also gave a desktop value of $400,000 to $410,000 as at 15 May 2018 for the former Dubbo home of Mr and Mrs Eckford.
317 Mr Leeson had been a registered and certified valuer for 30 years with substantial experience in valuing real property and also providing expert evidence. His reports were well researched and reasoned and he annexed a detailed curriculum vitae. Ms Hunt obtained her valuation qualifications in the United Kingdom in 1979 and 1981 and is registered as a valuer in both Queensland and New South Wales but she did not set out any detail of her experience or career in her report or when she qualified in this country. Importantly, Ms Hunt did not provide any clear reasoning in her report for arriving at the values she gave other than stating, pithily, the features of the properties that she considered as evidence of comparable sales and how those properties compared to lot 10. In giving oral evidence, Ms Hunt was more assertive than reasoned in explaining her conclusions. I formed the view that Mr Leeson was generally a more reliable witness as to value than Ms Hunt and I prefer his evidence to hers.
318 For example, Mr Leeson selected, as a comparable sale, 17 Shanagolden Court, Yaroomba, that was sold on 31 May 2007 for $900,000. That property was 4,000m2 and had a lowset brick dwelling on it that appeared to have been constructed in the 1970s. It was located very close to lot 10 and had an AHD level of between 40 and 45 metres, which lot 10 also features, but was not part of the estate. 17 Shanagolden Court had unimpeded views to the south and south-east that Mr Leeson considered to be similar to those from lot 10. Both valuers agreed that it was a “remainder” lot (i.e. one not included in a subdivision) from the subdivision of the estate. It appears as lot 1 in RP178923 on the extract of the plan of the estate that Mr Boulter showed Mr and Mrs Eckford which I have set out at  above.
319 In 2007, 17 Shanagolden Court had the prospect of being subdivided, with one lot retaining the existing dwelling which Mr Leeson thought had added about $200,000 to the sale price, leaving the unimproved value of that property as about $700,000.
320 In her report, Ms Hunt considered that 17 Shanagolden Court was superior to, and more valuable than, lot 10 for the purposes of comparison. She remarked, erroneously, that as at the time of its sale on 31 May 2007, the property comprised two lots. In fact, it was not subdivided until later, as Mr Leeson’s research revealed. Ms Hunt said in her oral evidence (but not in her report) that it was “rather different from the other blocks in the estate” because it was a remainder lot and she gave this evidence about 17 Shanagolden Court:
MR STUDDY: Ms Hunt, 4000 square metres is a block that is over four times bigger than the 950 square metres approximately of lot 10, isn’t it?
MS HUNT: It is indeed. However […] it is a completely different kettle of fish.
MR STUDDY: And you accept, don’t you, whether there was a description as a homestead of a farmhouse, that in May or – sorry – in November 2007 there was an existing brick dwelling house on 17 Shanagolden Court, don’t you?
MS HUNT: I imagine that there was an existing brick dwelling house on that property, but I didn’t have the benefit of seeing it in 2007.
MR STUDDY: Did you inspect the property in 2018?
MS HUNT: I did. And I noted that it was difficult to see the house and that I noted particularly that the view was greatly disturbed […] because when […] with your back to the property and looked along the street, which is now Shanagolden, what you saw was other blocks of land at the same level approximately as 17 Shanagolden Court. So before you saw the view, you saw other blocks of land, whereas at number 10, as I stated previously, it’s, basically, on the edge of a cliff, so you don’t see any properties from there.
321 Ms Hunt did not look at the elevation level or AHD of 17 Shanagolden Court but she “notice[d] that it was at the top of the hill”. She asserted that the existing dwelling had “no value” because she said a purchaser would probably demolish it. That was despite her also saying that when she visited the estate that dwelling “was difficult to see”. She realised that 17 Shanagolden Court was about four times the land area of the vacant (in 2007) lot 10 but asserted:
MS HUNT: It’s purely about position. If you were able to go to the site and see what I saw, I think that your view would be different from your view and that is that the – the subject property, lot 10, is literally at the edge of a cliff. So you’ve got this fantastic view whereas number 17 Shanagolden Court is back along the road. It’s not on the edge of a cliff in any way. It isn’t a high elevation but it’s [sic] view is dispelled in all directions…it’s very inferior […]
HIS HONOUR: Ms Hunt: you’ve told me that, if you had […] no restrictive covenants on lots 17, 18 and 19, that lot 10 would be worth $595,000; is that right […] in November 2007?
MS HUNT: Yes, your Honour.
HIS HONOUR: Now, the cost of building a house on that would have been how much?
MS HUNT: It depends on the house.
HIS HONOUR: Yes. But if we’re looking at giving no value to the house on lot – on number 17 Shanagolden Close, and that’s worth $900,000 on an arm’s length sale, and you’re looking at what number – lot 10 is worth when it has got no views anymore because it can be built out, can you explain to me how you get to $595,000 for it?
MS HUNT: Yes, your Honour. It’s not correct to imagine that lot 10 has no view under the purple lines area because lot 10, being at the edge of a cliff as it is, is extremely fortunate to be having a view in two directions, not only to the south, and that is the view that would be impeded by the purple line scenario, but also to the east. And so any person who built a house such as this on that block would be able to look out of the window at an ocean view in two directions. And only one […] would be disadvantaged under the purple […] scenario. And still the property would […] very good position, as I put it, today at the edge of a cliff with a view into the distance of the bush and […] the ocean beyond.
HIS HONOUR: Do you have a view about that, Mr Leeson?
MR LEESON: Yes, your Honour. Ms Hunt has referred to it being at the edge of a cliff. The Australian height data does not support that claim. There is – on either 17 Shanagolden Court or lot number 10 Shanagolden Court. They’ve both got the same contours. So the [...] and, your Honour, in my report, at annexure number 19, I do have historical views that relate specifically to 17 Shanagolden Court. They were dated 2006 when the property was marketed, and it shows the unimpeded views to the north and south and it contradicts Ms Hunt’s statements there.
322 The “purple line scenario” to which Ms Hunt referred is the impact of a development on lot 18 on the southern view (to the ocean and beach) from lot 10 assuming that no height restriction in cl 4.5 of the building covenants applied and that a building was constructed to the full extent permitted under the local government planning scheme. This impact is shown in the three figures below from the joint expert cadastral surveyors’ report, with the red line above the blue shading in figure 6 (the blue in that figure being the grey shading in figure 4 that represents the impact of the maximum development of lot 18 in accordance with the height restrictions if they applied).
323 Ms Hunt did not get access to 17 Shanagolden Court to compare the actual views. Nor did she look at any AHD data for it, lot 10 or other properties that she used as comparable sales. Unlike Mr Leeson’s careful research, she said that, because she inspected the relevant properties (in the sense of standing on the street outside), “I was able to determine from my brain” and “my own knowledge” the comparative elevations rather than using contour data or AHD measures. She asserted that, from her visit to the estate, 17 Shanagolden Court did not have a good view because it was on the same level as lot 21.
324 As Mr Leeson exposed, because Ms Hunt did not go onto 17 Shanagolden Court, she did not realise that in places where historical photographs appeared to have been taken in marketing it in 2006, the views appeared to be good and the AHD data showed that it was up to five metres higher than lot 21 (which is directly to the east of lots 19 and 20).
325 Another property that Ms Hunt used as a comparable sale was 4 Laguna Court, Coolum Beach, that had sold for $405,000 on 21 May 2007. She said that this was 2.5km from the estate in a low lying area close to the beach. She did not know that it had an AHD of five, again relying on her own perception of its contour height. She noted in her report that it was an inferior property to lot 10. However, there were no views of the kind offered by lot 10 from 4 Laguna Court and, as Ms Hunt said, “You have to cross the main road to get to the beach and…the beach is not easily accessible from there because there’s some bushland”. Ms Hunt’s use of 4 Laguna Court as a comparable sale, when it was not reasonably relevant or comparable, was an example of her less reliable approach than that of Mr Leeson.
326 In addition, Ms Hunt approached her November 2007 valuations on the basis that the whole estate was unique, newly on the market and was being marketed in stages. She thought that those features would attract a premium for properties like lot 10. In contrast, Mr Leeson approached his task on the basis that the whole estate had been on the market for about six months, as was the fact. When I asked Ms Hunt if it would have affected her valuations of lots 8, 10, 17, 18 and 19 if she knew that the whole estate had been on the market for six months by November 2007, she said that it possibly would and that developers “very, very, very rarely if ever put all of the lots on the market at one time”, rather than doing so in stages. And, when I asked her to make the same assumption as Mr Leeson had, namely that the whole estate had been marketed at the same time from a site office on lot 10 in the previous few months, she initially resisted making the assumption, saying “I don’t think I could assume that from the fact”. In the end, she agreed that her view of the value of lots at the top of the estate (namely lots 8, 10, 17, 18 and 19) would have been affected had she known that they had been on the market and not sold for six months, and that she would have valued lot 10 at less than $810,000 as at 20 November 2007, but then she said that “the difference in value would be minimal”. I do not accept that evidence.
327 Mr Leeson observed from the fact that the deposited plan was registered for the whole estate that the estate was marketed as a whole. He said that if a development were sold in stages, the developer only needs to incur the expenses for a particular stage to satisfy the requirements necessary for a plan of subdivision to be approved and registered for that stage and could develop the balance later. Of course, once the developer had a stage or the whole project registered, then it would be marketed. (Indeed, this was what Ms Hunt referred to as well when saying that developers very rarely marked a large estate as a whole). This is an example of Ms Hunt’s less measured and researched approach. The fact is that the whole estate had been on the market since about June 2007.
328 Ms Hunt did not include in her report any indication of whether she had valued the properties on the estate as at 2007, as inclusive or exclusive of GST. The valuers were in dispute as to whether Ms Hunt had told Mr Leeson, when they unsuccessfully met to seek to produce a joint report, that she had not taken GST into account. Ms Hunt’s omission to advert in her report to the GST that was included in the 2007 sales (and needed to be included in a valuation of lots for sale by Six Mile Creek, as vendor) leads me to think that she did not take GST into account in her 2007 valuations.
329 In my opinion, Ms Hunt’s approach to valuation and her selection and evaluation of what she regarded as properties that gave a guide to the value of lot 10 was unscientific, at times prone to exaggeration and unpersuasive. I found Mr Leeson’s evidence, in contrast, to be well researched, thoughtful and reasoned and I prefer it to Ms Hunt’s.
330 I am satisfied that, at the time that Mr and Mrs Eckford purchased lot 10, it had a value inclusive of GST of $615,000 (if the four representations were true) and $525,000 if it was sold without the benefit of the height restrictions in cll 4.5 and 8.3 of the building covenants. This value also happens to accord closely with the minimum resale price of $600,968 for lot 10 in the put and call option that the two developers (Six Mile Creek and Pangus) struck based on Mr Whitelaw’s averaging exercise that I described in  above. As I have found, lot 10 did not have the benefit of the height restrictions because there were no bona fide contracts in respect of lots 17, 18 and 19 at the time of purchase of lot 10.
331 During the concurrent evidence, the valuers agreed that the value of the dwelling on lot 10 was $500,000 and of the improvements was $25,000. They differed only on the current value of lot 10 by $50,000 but I accept Mr Leeson’s lesser value, being $500,000. Accordingly, I find that the present value of lot 10 is $1,025,000.
332 I also accept Mr Leeson’s values for lot 8, 17, 18 and 19 as at November 2007 (on the basis that each lot had the burden of all the building covenants and height restrictions which benefited lot 10 when it was sold on 20 November 2007).
333 Mr Eckford claimed that he and Mrs Eckford would never have entered into the contract to purchase lot 10 had they not been misled by each of the representations. The respondents denied that this would have been the case, but argued that even if this were so, Mr and Mrs Eckford would have kept looking around Coolum or the Sunshine Coast for another property and would have incurred similar expenditures in acquiring such a property and built a dwelling of similar standard. They contended that Mr Eckford had to give credit, in the process of calculating any award of compensation or damages, for the benefits he and his late wife had had from living at lot 10 since the completion of the dwelling. The respondents said Mr and Mrs Eckford had had the benefit of living on lot 10 since the construction of the dwelling on it was completed and therefore, an allowance should be made and the damages should be reduced to reflect that benefit. They said that they had not been able to identify any precedent for such an allowance, but noted that the Full Court had held in ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1 at 186  that the approach to an award of damages had to be flexible and best adapted to give the injured claimant an amount which will most fairly compensate for the wrong suffered provided that it works no injustice.
334 The respondents submitted that any judgment sum should be significantly less than the difference between what Mr and Mrs Eckford had outlayed in acquiring lot 10 and constructing their dwelling and what it is currently worth, because of that benefit.
335 The respondents accepted that Mr and Mrs Eckford had incurred the amounts of the purchase and construction cost claims in items 1 and 2 (see  above) and that those expenditures were reasonable. They also agreed on the methodology to calculate the sum for the interest claim in item 3 but disputed how this figure should be calculated. The respondents said that interest should be after deducting the value of lot 10 at the present time from items 1 and 2. In essence, the dispute on the interest claim between the parties, if I were to adopt a “no transaction” method of assessing damages, is whether interest should be calculated on the total of items 1 and 2 from the times that the expenditures occurred (as Mr Eckford seeks) or, as the respondents contend, on the net sum of items 1 and 2 less the present value of lot 10 of $1,025,000 (that I have now found).
336 Mr Eckford asserted that, contrary to his son’s email of 18 March 2016 in which Jason Eckford said that he had “gifted to Gale and Derek the land purchase price…and stamp duty” (being item 1 of the damages claim), the loan deed should be treated as having created a loan on which Mr Eckford is liable for interest payable on item 1 at the same rate as the Court’s prejudgment interest rate.
337 The respondents contended that Mr Eckford was under no present obligation to pay Jason Eckford any amount under the loan deed. They referred to cl 1.6 of the loan deed that created the liability of the borrowers to repay the loan with accrued interest within six months of any party giving notice in writing to bring the loan deed to an end. The respondents argued that no such notice has been given. Next, they submitted that the liability to repay with interest depended on an event that may never occur, namely the election of a party to give notice under cl 1.6.
338 The respondents also argued that the loan was repayable on demand and “that the debt which constitutes the cause of action arose instantly on the making of the loan” on 27 December 2007. They noted that, because cl 12 made the law of New South Wales the governing law of the loan deed, s 16 of the Limitation Act 1969 (NSW) prescribed a limitation period of 12 years for “a cause of action founded on a deed…running from the date on which the cause of action first accrues to the plaintiff…”. They contended that if Jason Eckford were to give a notice under cl 1.6 now, his father would have no liability to repay the loan and interest until January 2020, which would be more than 12 years after the making of the loan deed. Last, they submitted that any liability of Mr Eckford is contingent and he has not suffered any actual loss, relying on Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 524-527.
339 I reject the respondents’ arguments. The entitlement to compensation under ss 82 and 87 of the TPA arises if a person in Mr Eckford’s position suffers loss or damage by a contravention of s 52(1) and or s 53A(1)(b). So long as the contravening conduct or misrepresentation is a cause of the loss or damage, the injured party is entitled to the statutory remedy of compensation in the amount equivalent, so far as money can provide, to the whole of that loss or damage. In I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at 130 , Gaudron, Gummow and Hayne JJ said (see too at 128 , and also 121  per Gleeson CJ, 135-138 - per McHugh J, and 175  per Callinan J):
As was recognised in Henville v Walker [(2001) 206 CLR 459 at 474 , per Gleeson CJ; at 481-483 -, per Gaudron J; at 493 , per McHugh J; at 507 , per Gummow J; at 510 , per Hayne J], there may be cases where it will be possible to say that some of the damage suffered by a person following contravention of the Act was not caused by the contravention. But because the relevant question is whether the contravention was a cause of (in the sense of materially contributed to) the loss, cases in which it will be necessary and appropriate to divide up the loss that has been suffered and attribute parts of the loss to particular causative events are likely to be rare. Further, it is only in a case where it is found that the alleged contravention did not materially contribute to some part of the loss claimed that it will be useful to speak of what caused that separate part of the loss as being “independent” of the contravention.
(bold emphasis added)
340 Gleeson CJ identified the reason why it is sufficient to attract the remedial provisions in ss 82 and 87 if the misleading conduct in contravention of s 52 is a cause of the injured party’s loss or damage in I & L Securities 210 CLR at 121-122  (and see too at 129-130 - per Gaudron, Gummow and Hayne JJ, 138 - per McHugh JJ and 179-180  per Callinan J) as follows:
The relevant purpose of the statute was to proscribe misleading and deceptive conduct in circumstances which included those of the present case. In aid of that purpose, the statute provided for compensation, by an award of damages, to a victim of such conduct. The measure of damages stipulated was the loss or damage of which the conduct was a cause. It was not limited to loss or damage of which such conduct was the sole cause. In most business transactions resulting in financial loss there are multiple causes of the loss. The statutory purpose would be defeated if the remedy under s 82 were restricted to loss of which the contravening conduct was the sole cause.
341 Jason Eckford never sought that his parents or, after his mother’s death, his father pay any interest on the principal sum that he had advanced them to buy lot 10, being the purchase claim in item 1 of the damages claim. He gave evidence that when he wrote to Mr McLaughlin on 18 March 2016, saying that he had “gifted” that sum to his parents, he did so because he had run out of money and, after explaining his situation to Centrelink, it had informed him that it would treat the loan as a gift for the purpose of assessing his claim for benefits. But, as Jason Eckford said in cross-examination, he expected to be repaid the balance when lot 10 was sold, after his father had bought a new house in Dubbo. He said that he had not taken any steps to force his father to pay interest, that their plan was to sell as soon as lot 18 is developed and that he would be paid the loan and interest on it when lot 10 was sold.
342 In Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 105-106 -, Gaudron, McHugh, Hayne and Callinan JJ said:
“It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty.” [Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 at 457, per Dixon CJ, Williams, Webb, Fullagar and Kitto JJ] To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet “[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts” [South Australia v The Commonwealth (1962) 108 CLR 130 at 154, per Windeyer J].
Because the inquiry about this last aspect may take account of the subject matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances [South Australia v The Commonwealth (1962) 108 CLR 130 at 154; Placer Development Ltd v The Commonwealth (1969) 121 CLR 353 at 367, per Windeyer J], not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so. Because the search for the “intention to create contractual relations” requires an objective assessment of the state of affairs between the parties [Masters v Cameron (1954) 91 CLR 353 at 362, per Dixon CJ, McTiernan and Kitto JJ; ABC v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548-549, per Gleeson CJ] (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word “intention” is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened [Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 348-353, per Mason J; Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436; 186 ALR 289]. It is not a search for the uncommunicated subjective motives or intentions of the parties.
In this context of intention to create legal relations there is frequent reference to “presumptions”. It is said that it may be presumed that there are some “family arrangements” which are not intended to give rise to legal obligations… For our part, we doubt the utility of using the language of presumptions in this context. At best, the use of that language does no more than invite attention to identifying the party who bears the onus of proof.
(bold emphasis added)
343 The loan deed provided that interest on the principal would accrue at yearly rests and be added to the balance outstanding and that each parent would instruct his or her executors to ensure that, except for his or her interest in the estate passing to the other, the loan and accrued interest would be repaid to Jason Eckford, after the death of the survivor, before the estate was otherwise distributed to any beneficiaries. Thus, the parents and son agreed that, effectively, the loan would be for the term of the life of the surviving parent but subject to any party giving six months’ notice of termination and that, in the meantime, interest would accrue, compounding on annual rests. Thus, the parents would not be required to pay the amount of interest until the loan was terminated or the surviving parent had died.
344 The evident purpose of the loan deed was to protect Jason Eckford’s rights in respect of his compensation payment that he was lending to enable his parents to acquire the land for their “dream home”. While the terms of the loan deed evinced the sympathetic support that he, as a son, wanted to give his parents, they also reflected the recognition of all three family members that Jason Eckford would need to have back, for his later life, that money and interest that it could otherwise have earned. In a colloquial, but not a legal, sense, the loan deed reflects a “gift” in that Jason Eckford intended that his parents could have the use of the money effectively for their lifetimes, and he would receive it back with interest after the surviving parent had died. But, the legal effect of the loan deed, and the intention of the parties, was to create a clear legal relationship that, if need be, Jason Eckford could enforce: Ermogenous 209 CLR at 105-106 .
345 Accordingly, since the express purpose of the loan deed (in cll 1.2 and 2.1) was that Mr and Mrs Eckford had to use the loan to acquire lot 10, they assumed a legal liability to repay the loan, with interest, to Jason Eckford upon the death of the surviving parent or a demand. It follows that Mr and Mrs Eckford incurred the liability to pay interest under the loan as a direct consequence of their decision to buy lot 10 and the ongoing liability for interest is an element of the damage that Mr Eckford has suffered by reason of his entry into the purchase of lot 10.
346 I reject the respondents’ argument that the loan deed created simply a debt repayable on demand. The nature of the parents’ obligation under the loan deed to repay was not that of a debt repayable on demand, but of a debt payable only after the surviving parent had died, subject to a right to accelerate the time for repayment by giving a notice under cl 1.6. Where a debtor promises to pay a debt upon an event occurring in the future, such as two years after a demand or “as soon as we can get our affairs arranged” (Chasemore v Turner (1875) LR 10 QB 500), time does not begin for limitation purposes to run until the cause of action accrues on the happening of the event, viz. the latter of two years after the demand or when the affairs have been arranged (Head v Kelk  SR (NSW) 340 at 345 per Herron J, 350-352 per McClemens J, 354 per Brereton J; Waters v Earl of Thanet (1842) 2 Ad & El 757 at 769 [114 ER 295] per Lord Denman CJ, Williams Coleridge and Wightman JJ).
347 In Waters 2 Ad & El 757, the Earl promised to pay the full amount of his debt and interest “whenever my circumstances may enable me to do so, and I may be called upon for that purpose” (at 762). The Court of Queen’s Bench held that the cause of action accrued and time began to run when the debtor’s circumstances had enabled him to pay although that was unbeknownst to the creditor (at 770). This accords with what Mason CJ, Dawson, Gaudron and McHugh JJ held in Wardley 175 CLR at 533, namely that a cause of action for recoupment of money advanced, ordinarily, accrues when the claimant’s economic interest is infringed or lost or when recoupment becomes impossible.
348 Here, the debt for the loan and interest is not yet payable because, first, Mr Eckford is still alive and, secondly, his son has not yet made a demand for repayment under the loan deed. Therefore, no cause of action for repayment of the loan has yet arisen to which s 16 of the Limitation Act 1969 (NSW) can apply.
349 However, Mr Eckford has a contingent liability to repay the loan with interest that he incurred by the contravening conduct (or fraud) of the respondents and can claim relief so as to be in a position to discharge it when the time for payment arises. While the liability is at present contingent, the contingency will be fulfilled, at latest, when Mr Eckford dies and his estate must discharge it when it, then, will be an actual liability. This is not a case where the contingency may never occur – death is a certainty. Therefore, because Mr Eckford intends to sell lot 10 and is mortal, he or his estate will have to repay the loan with interest at some time, since Jason Eckford will need to recover his compensation money.
350 Given my conclusion on the loan claim, Mr Eckford only pressed the interest claim in respect of the construction cost claim in item 2. The respondents argued that any prejudgment interest should be calculated on the net sum of damages (excluding the loan claim) (being the difference in value between the total of the purchase (less the land value as at 20 November 2007) and construction cost claims in items 1 and 2 and what lot 10 is now worth). Broadly speaking, that net sum, on the respondents’ argument, is (taking into account my findings as to value and subject to any precise calculation of interest):
Less land value as at 20 November 2007
Loss on purchase claim
Construction cost claim
Total loss on purchase claim and construction cost claim (excluding loan claim)
Less current land value, dwelling value and allotment improvements
351 The purpose of an award of prejudgment interest is to compensate the successful judgment creditor for the loss of use of the relevant judgment sum over all or part of the period before judgment as the Court sees fit: Haines v Bendall (1991) 172 CLR 60 at 66 per Mason CJ, Dawson, Toohey and Gaudron JJ. They said (at 66-67) that the wide discretion conferred by provisions such as s 51A of the Federal Court Act 1976 (Cth) must be exercised in accordance with legal principle conformably with the cause of action on which a successful party recovers so as to do no more than assist to restore that party to the position he, she or it would have been in but for the circumstance giving rise to the liability of the judgment debtor. They said (at 66) that “An award of interest up to the date of judgment is an award of interest in the nature of damages”.
352 The problem with calculating interest in the way that the respondents posited is that it would fail to compensate Mr Eckford for the loss of use of his (and his late wife’s) money that they invested in buying land and building a home that they would never have bought and built had they not been misled and deceived or defrauded. Their investment in both the land and building work involved a significant net capital loss of over $800,000 before any consideration of the question of interest (being the difference between the total of the purchase and construction cost claim of about $1.85 million and the present value of lot 10 of $1.025 million). On the respondents’ argument, the approximate prejudgment interest on the net sum (i.e. the difference between the price paid for lot 10 and its then value of $525,000, and the construction cost claim, less $1,025,000) from 20 November 2007 to the present is about $255,000.
353 If interest is calculated at the Court’s prejudgment interest rate on the total of about $1.3 million from 1 January 2011 (by which time the building work on lot 10 appears to have finished), it would amount to over $700,000, nearly three times what the respondents suggested as appropriate.
354 Thus, on the measure of damages for the tort of deceit, Mr Eckford will not be restored to the position he would have been in had the fraud not occurred, if prejudgment interest were calculated as the respondents propose. That is because he cannot now receive the value of the money he and his wife expended in 2009 and 2010 in constructing a dwelling on lot 10 if he is only paid interest on a lesser sum than he and she actually expended.
355 Having regard to the broader scope for assessing damages or compensation or other remedies under ss 80, 82 and 87 of the TPA than that under the common law, Mr Eckford’s damages or compensation under that Act should be calculated from when he (and his wife) actually suffered the loss or incurred the expenses: cf. Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at 403  and 407 - per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ; HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 at 666  per Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ. Thus, in Murphy 216 CLR at 403  and 407 -, the Court said:
the difference between price and value will often be an important element in assessing the damage suffered by a person who, by a misrepresentation, has been induced to buy an item of property. As the trial judge said, there may also be questions of consequential damage. It would be wrong, however, to assume that in every case of misrepresentation (leave aside other forms of misleading or deceptive conduct) the only kind of damage which may be suffered, and compensated or redressed by orders under Pt VI of the Act, is any difference between price and value or any consequential losses. In particular, care must be exercised before seeking to apply what it described as the “rule in Potts v Miller” [(1940) 64 CLR 282. See also Toteff v Antonas (1952) 87 CLR 647 at 650-651] to claims made for relief under Pt VI of the Act. This is especially so when it is recalled that while the only monetary remedy for the tort of deceit is damages, a far wider range of remedies is available where contravention of the Act has caused or is likely to cause loss or damage to a party to the proceeding…
In the present case, analogies with the tort of deceit appear to have led to an assumption, at least at trial, that a person can suffer only one form of loss or damage as a result of a contravention of Pt V of the Act.
The Act’s references to “loss or damage” can be given no narrow meaning. Section 4K of the Act provides that loss or damage includes a reference to injury. It follows that the loss or damage spoken of in ss 82 and 87 is not confined to economic loss [Marks (1998) 196 CLR 494 at 513 , per McHugh, Hayne and Callinan JJ; at 526-527 -, per Gummow J]. What kinds of detriment constitute loss or damage, when a detriment is to be identified as occurring or likely to occur, and what remedies are to be awarded, may all raise further difficult questions. Especially is that so when it is recalled that remedies may be awarded to compensate, prevent or reduce loss or damage that has been or is likely to be suffered by conduct in contravention of the Act.
(bold emphasis added)
356 Here, Mr Eckford did not suffer one loss as a solidary event. His complaint is not that he and his wife paid more than lot 10 was worth and, therefore, this expense in itself caused him loss. Rather, his complaint is that, had the misrepresentations not been made, he and she would never have bought lot 10 at all, would not have borrowed from their son, and would not have invested in building their house on it. And, he argues that he only found out about the true position in 2016. Thus, Mr Eckford is entitled to be compensated under the TPA on the basis that he (and his wife) lost the use of the money (leaving aside the loan claim which is separately recoverable) that they invested in building a house on lot 10.
357 Mr Eckford is entitled to interest under s 51A on the construction cost claim from the respective dates on which he and his wife made the expenditures comprising it up to judgment.
358 Mr Eckford claimed $71,000 as damages for, what his submissions asserted as, a loss of a capital gain on the Dubbo property that he and his wife sold. However, he did not make any submissions elaborating what that claim was or how it arose and I do not understand it. If the sale of the Dubbo property realised a $71,000 capital gain, Mr and Mrs Eckford had that to spend in the construction of a new dwelling on lot 10 which has been taken into account in the sums to which I have found Mr Eckford entitled to recover with interest. If he buys a new home using the damages he is awarded and later sells it, he will retain the capital gain. I cannot understand how he has suffered a loss in respect of the $71,000.
359 The respondents also contended that Mr Eckford failed to mitigate his loss because he did not agree to accept the offer of an easement over lot 18, benefiting lot 10, that they had negotiated in November 2017 with the current owners of lot 18 that would limit the maximum height of any building constructed on it to that in the height restrictions. Mr McLaughlin gave evidence that the respondents only offered the easement to Mr Eckford on 4 October 2018, nearly a year after it had been executed.
360 I reject that contention. The proferred easement applied only to lot 18 and then only to the height of any building constructed on it. It did not extend to, first, the height of any trees or vegetation on lot 18 and, secondly, to lots 17 and 19. Mr Eckford had commenced this proceeding over 18 months before the offer of the easement in which he sought relief on the basis that he and his late wife would never have entered into the purchase of lot 10 had the misrepresentations not been made. His loss is that he purchased lot 10 when he would never have done so, had the respondents not misled and deceived him and defrauded him. Lot 10 is still affected by the absence of the entirety of the height restrictions over all of lots 17, 18 and 19 and the proffered easement does not undo the transaction, being the relief he claims.
361 I also reject the respondents’ argument, for which they could cite no authority, that Mr Eckford should give credit for the benefit of living in the dwelling on lot 10 since it was built. Nothing in the TPA suggests that he should give such a benefit. Although not strictly analogous, Earl of Halsbury LC debunked a similar argument in respect of a claim for contribution by an insurer bound to pay for repairs to a ship in dry dock in respect of the insured using that opportunity to have its work done on the ship to bring her into class, in Ruabon Steamship Company v London Assurance  AC 6 at 12-13 as follows (and see too per Lord Macnaghten at 15 and Mahoney v McManus (1981) 180 CLR 370 at 376-377 per Gibbs CJ and 387 per Brennan J):
My Lords, in all the cases that I have referred to, and in all the observations made by the learned judges, the liability of each of the persons held to be bound to contribute is assumed to exist either by contract or by some obligation binding them all to equality of payment or sacrifice in respect of that common obligation. But this is the first time in which it has been sought to advance that principle where there is nothing in common between the two persons, except that one person has taken advantage of something that another person has done, there being no contract between them, there being no obligation by which each of them is bound, and the duty to contribute is alleged to arise only on some general principle of justice, that a man ought not to get an advantage unless he pays for it. So that if a man were to cut down a wood which obscured his neighbour’s prospect and gave him a better view, he ought upon this principle to be compelled to contribute to cutting down the wood. Or if a man built a wall so as to shield his neighbour’s house from undue wet or danger from violent tempests, he ought to be entitled to contribution because his neighbour has got an advantage from what he did.
My Lords, I can find no authority for any principle which includes this case. The heads of “average,” “principal and surety,” “joint debtor,” “or ownership of lands,” all of which are liable in execution and only one of which has been made the subject of execution, are intelligible heads of the law and are included within well-known and ascertained principles. This case seems to me to go entirely beyond those ascertained principles, and to an extent for which it would appear there is no authority. No statute has authorized it; no principle of the common law comprehends it…
362 In effect, the respondents, having tricked Mr and Mrs Eckford into buying lot 10 and causing them to build a dwelling on it seek to have him pay what effectively would be rent for living where he would never have lived had they dealt with him transparently. The damages necessary to put him in the position where he should have been should not be reduced.
363 As Lord Macnaghten said in Ruabon  AC at 15, “there is no principle of law which requires that a person should contribute to an outlay [here, the damages or compensation that the respondents must pay Mr Eckford] merely because he has derived a material benefit from it” (or the expense which the damages or compensation recoups).
364 A consequence of granting the injunctions that Mr Eckford seeks under s 80(1)(a)(i) would be the impact that restraint would have on the rights of the owners of lots 17, 18 and 19 to seek, and obtain, Six Mile Creek’s consent to, or approval of, development on each lot consistent with the version of the building covenants (in the contracts between Six Mile Creek and the purchaser of each of those lots from it) that did not include the height restrictions. In Lawrence v Fen Tigers Ltd  AC 822 at 862 , Lord Sumption JSC observed (see too Meagher, Gummow & Lehane’s Equity, Doctrines & Remedy (5th ed) at [21-005]:
An injunction is a remedy with significant side-effects beyond the parties and the issues in the proceedings. Most uses of land said to be objectionable cannot be restrained by injunction simply as between the owner of that land and his neighbour. If the use of a site for (say) motocross is restrained by injunction, that prevents the activity as between the defendant and the whole world. Yet it may be a use which is in the interest of very many other people who derive enjoyment or economic benefits from it of precisely the kind with which the planning system is concerned. An injunction prohibiting the activity entirely will operate in practice in exactly the same way as a refusal of planning permission, but without regard to the factors which a planning authority would be bound to take into account. The obvious solution to this problem is to allow the activity to continue but to compensate the claimant financially for the loss of amenity and the diminished value of his property.
365 His Lordship’s observations are apposite considerations affecting how the discretion under s 80(1) should be exercised as to whether to grant an injunction and, if so, on what terms. The impact on a third party of the grant of an injunction, at least at the interlocutory phase of a proceeding, is a relevant consideration in equity and under a statutory power: Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 41-43 - per Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ. In my opinion, the impact on a third party is also a relevant consideration for a court when exercising the power to grant an injunction under s 80(1), just as is the availability of another means of addressing the harm for which the person seeking the injunction is entitled to have as a remedy.
366 Mr Eckford has a present right to seek relief under s 80(1) because of my findings that Six Mile Creek (and Mr McLaughlin) contravened ss 52(1) and 53A(1)(b). That right is in the nature of a right to the grant of a discretionary remedy and Mr Eckford is entitled to seek such a remedy because of the significant consequences for him and the value of lot 10 of the contravening conduct.
367 The impact of the procedural bar imposed by the limitation in s 82(2) on a claim to recover loss or damage under s 82(1) is unlike the exercise of the Court’s discretion not to grant an injunction under s 80(1). That is because the procedural bar in s 82(2) has the effect of preventing the Court granting relief at all under s 82(1) since, in that situation, there is no power to do so, whereas the refusal of the grant of an injunction under s 80(1) in the exercise of the Court’s discretion is an exercise of an existing power to grant or withhold the relief.
368 Here, the additional powers to grant relief under s 87 are not available on Mr Eckford’s claim under s 82(1). This is because he (and his late wife) suffered damage at latest when they completed the purchase of lot 10 on 11 January 2008 (when they could no longer rescind the contract of purchase) which was then worth less than what they paid for it. In that situation, s 82(2) operates to deny to the Court the power to make any orders under s 82(1). However, because Mr Eckford has the present right to obtain relief under s 80(1), the Court has jurisdiction and power under s 87(1) to grant him relief “whether or not it grants an injunction under s 80”: cf. Mayne Nickless 114 FCR at 123-124 -. Here, the respondents did not argue that Mr Eckford had delayed in seeking relief (as opposed to his being out of time to do so under s 82(2)) so as to preclude the favourable exercise of the discretion to grant an injunction under s 80(1).
369 However, it would not be appropriate to grant injunctions that imposed (indirectly), in effect, the provisions of cl 4.5 of the building covenants on the owners of lots 17, 18 and 19, as bona fide purchasers for value without notice, by constraining Six Mile Creek (directly) from granting approval for development that their contracts of purchase did not prohibit, in circumstances where Mr Eckford can be compensated sufficiently under s 87 for the loss or damage he has suffered. Because I am satisfied that Mr Eckford is entitled to seek relief under s 80, it follows that s 87(1) confers power to grant relief under that section “whether or not [the Court] grants an injunction under s 80”.
370 In my opinion, Mr Eckford is entitled to compensation from Six Mile Creek in an amount that will restore or refund to him the purchase price of lot 10 and associated costs (without prejudgment interest) (under s 87(2)(c)), and his outlays in constructing the dwelling on it (plus prejudgment interest) and that will meet the total of his accrued contingent liability to Jason Eckford for interest that, in the future, he, or his estate, is certain to have to meet under the loan deed (under s 87(2)(d)) (cf. Murphy 216 CLR at 403 , 407 -), less the present value of lot 10 of $1,025,000. He is also entitled to compensation in the same total amount from Mr McLaughlin (all under s 87(2)(d)) because Mr McLaughlin was involved in the contraventions by Six Mile Creek.
371 The measure of damages for the tort of deceit, where a fraudulent representation to a purchaser induces the purchaser to buy a property, can be quantified by, first, the difference between the price paid and the actual value of the property, or, secondly, the loss suffered by the purchaser as a consequence of reliance on the fraudulent representation: Magill 226 CLR at 588 ; Gould 157 CLR 215. Importantly, there is no unique or inflexible measure of damages for deceit: Astonland 217 CLR at 657  and 661 .
372 In my opinion, the measure of damages for the tort of deceit here should be measured by the second of these approaches, as in Gould 157 CLR 215. Mr and Mrs Eckford lost more than merely the difference between the purchase price and acquisition costs of lot 10 and its actual value on 11 January 2008 (i.e. $936,304.26 less $525,000). That is because they subsequently expended more money, when they constructed a dwelling, incurred the liability for interest under the loan deed and suffered the diminution in the value of lot 10 (from $615,000) because Six Mile Creek could sell, and later sold, lots 17, 18 and 19 without those lots being subject to the height restrictions.
373 Accordingly, I am of opinion that the measure of damages for the claim in deceit should be the same as that I have awarded under s 87. This is to accommodate the fact that a simple calculation, being the difference between the purchase cost and true value, would not put Mr Eckford in the position that he would have been had the respondents not induced his purchase by their fraudulent representation. He is worse off because after giving credit for the present value of lot 10, he has been out of pocket for the purchase and construction cost claims since those were incurred many years ago and he (or his estate) will be liable to Jason Eckford for the principal and interest due under the loan deed.
374 I will direct the parties to prepare draft orders to reflect the findings above. These should provide for interest up to judgment. The respondents must pay Mr Eckford’s costs.
Dated: 20 August 2019