Federal Court of Australia

Fu v Bondi Junction Prime Pty Ltd (No 2) [2025] FCA 221

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The sum of $56,000 be paid from the Litigants’ Fund to the first respondent.

3.    The appellant pay the first respondent’s costs of the appeal, as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

GOODMAN J

A.     Introduction

1    The appellant, Mr Chao Bin Fu, appeals from orders made in the Federal Circuit and Family Court of Australia (Division 2) on 6 June 2024 and 2 October 2024. The primary judge’s reasons for the making of those orders are set out in Fu v Bondi Junction Prime Pty Ltd [2024] FedCFamC2G 513, as published on 6 June 2024 and amended on 26 September 2024 (PJ1) and Fu v Bondi Junction Prime Pty Ltd (No 2) [2024] FedCFamC2G 979 (PJ2).

B.     Background

2    On 3 June 2015, Mr Fu entered into a contract with the first respondent (BJP) – a company developing land in Bondi Junction that was to include an apartment building – for the purchase of an apartment, to be numbered 1103, in that building at a price of $1.6 million.

3    Mr Fu entered into the contract at an event hosted by BJP referred to as the VIP launch. Representatives of BJP and of the second respondent – Park Coast Realty Pty Limited, a real estate agent engaged by BJP for the marketing and sale of the apartments in the proposed apartment building – were present, including Mr Felix Milgrom, one of two directors of BJP.

4    Upon entry into the contract and in accordance with its terms, Mr Fu paid a deposit of $160,000, representing 10 per cent of the purchase price, which was placed into an interest bearing account operated by BJP’s then solicitors.

5    A date for settlement of the purchase was ultimately set as 19 November 2018. Mr Fu declined to proceed with the purchase and failed to comply with a notice to complete, instead commencing the proceeding below.

6    On 6 September 2019, BJP terminated the contract.

7    On 11 November 2019, the apartment was resold for $1,490,000, being $110,000 less than the purchase price in the contract.

8    In the proceeding before the primary judge, Mr Fu sought orders for the setting aside of the contract and for the return of the deposit on the basis that his entry into the contract was the product of misleading or deceptive conduct by the respondents, in contravention of s 18 of the Australian Consumer Law (ACL), being schedule 2 to the Competition and Consumer Act 2010 (Cth). Alternative relief was sought pursuant to s 55(2A) of the Conveyancing Act 1919 (NSW). BJP brought a cross-claim pursuant to which it sought relief based upon the contract, including for the retention of the deposit, and for losses caused by Mr Fu’s failure to complete the contract. The primary judge dismissed Mr Fu’s claim and upheld BJP’s cross-claim.

C.    The salient evidence before the primary judge

9    As will be seen, the central issue on this appeal is whether BJP had reasonable grounds as at 3 June 2025 for making a representation that the apartment building when constructed would comprise 11 floors of apartments (11 floors representation). The evidence of Mr Milgrom on that issue is as follows.

10    Mr Milgrom’s evidence in chief was that he was a director of BJP with personal knowledge of the matters the subject of his affidavit and that:

(1)    promotional materials were prepared for the purposes of the VIP launch, which showed unit 1103 “as one of the units of what was then proposed to be the top floor” of the development;

(2)    as at 3 June 2015, BJP had approval for the construction of a building with 11 residential floors, and accordingly the promotional materials prepared for the purposes of the VIP launch and provided to prospective purchasers were “true and correct”; and

(3)    subsequently, on 30 June 2017, the construction approval was varied to permit the construction of a twelfth floor. That construction commenced in or about December 2017.

11    Mr Milgrom was cross-examined. The evidence referred to in the previous paragraph was not challenged.

12    A passage of cross-examination upon which Mr Fu relies on this appeal is:

Q.    And then you say about two years later at the end of June 2017 there was a change of plan and you gained a permission to add one further level to the building? A. That’s correct.

Q.     Did Mr St Leon work on that? A. No.

Q.     How did that come about? Somebody had to deal with the council, I expect, did they? A. Yes, we dealt with the council.

Q.     And why did you add that level? What were the economics of that, it must have been an economic decision? A. It was a permissible…

Q.     Height? A. I can’t recall if it was permissible height but we submitted and lodged an application for an extra level.

Q.     But what prompted that, that’s what I am trying to understand, if I may? You had designed a building and presented it to the public of 11 stories (sic) or 11 levels. Suddenly out of the blue, two years later we have approval to add one, what was it that prompted that change? A. Developers amend plans constantly.

Q.     I’m asking what it was that prompted that change, could you please explain? More money? A. Yes, of course.

Q.     So it’s an economic decision? A. It’s an economic decision.

(emphasis added)

D.    The primary judgments

D.1    PJ1

13    In PJ1, the primary judge dealt in detail with each of the claims made by Mr Fu and by BJP, including various oral representations that unit 1103 would be a “penthouse”. The primary judge was not satisfied that any of the alleged oral representations were made, as her Honour did not accept the evidence of Mr Fu or his wife. The discussion below focuses only upon the findings which are relevant to the grounds of appeal advanced by Mr Fu, principally whether BJP had reasonable grounds for making the 11 floors representation.

14    At PJ1 [65] to [67], the primary judge stated the following:

65    Where the representation alleged is as to a ‘future matter’, s.4 of the ACL applies which raises the presumption that a representation with respect to any future matter without reasonable grounds is misleading. Here, evidence must be adduced to establish reasonable grounds: see Lin v Zheng [2023] NSWCA 174 at [34]-[36].

66    Put another way, a representation concerning a future matter will not be misleading or deceptive where a promise, or prediction, or opinion does not eventuate, provided that at the time of their making, the maker had reasonable grounds for so expressing the promise, prediction or opinion (see, for example, Bill Acceptance Corporation Ltd v GWA [1983] FCA 280; 50 ALR 242 at 178-179 per Lockhart J; and SPAR Licensing Pty Ltd v MIS QLD Pty Ltd [2014] FCAFC 50 at [18]-[21] per Buchanan J).

67    It is to be highlighted that the relevant time at which a representation should be assessed as being ‘misleading’ or ‘deceptive’, is the time the representation is made: Global Sportsman v Mirror Newspapers Pty Ltd (1984) 2 FCR 82.

15    The primary judge returned at PJ1 [109] to consider the case based upon representations as to future matters.

16    After noting that there was no dispute that as at 3 June 2015, the date of the contract, level 11 was represented therein as the “top floor” of the apartment building (PJ1 [111]), the primary judge found that on 3 June 2015 BJP made the 11 floors representation (PJ1 [112]).

17    The primary judge noted that (relevantly) the 11 floors representation was as to a future matter and that there was a contest as to whether BJP had reasonable grounds for making that representation (PJ1 [113] to [116]). Her Honour then returned to the effect of s 4 of the ACL and case law relevant to the operation of that section (PJ1 [117] to [121]). At PJ1 [123] to [128] the primary judge set out her reasoning as to whether BJP had reasonable grounds for making the 11 floors representation:

123    BJP and PCR have sought to establish reasonable grounds through the evidence of Mr Milgrom, one of the two directors of BJP at the relevant time. In his affidavit evidence, Mr Milgrom said that as of 3 June 2015 his company had approval for the construction of a building with 11 residential floors and accordingly the promotional material exhibited at the time was true and correct. He says that subsequently, on 30 June 2017, the construction approval was varied to permit construction of the twelve (sic) floor. Construction of the Diamond Development commenced in or about December 2017 and the Strata Plan for the Diamond Development (which triggered the obligation on the part of purchases of units in the Diamond Development to complete their contracts) was registered on 5 November 2018.

124    This was the exchange in cross-examination:

But what prompted that, that’s what I’m trying to understand, if I may? You had designed a building and presented it to the public of 11 stories or 11 levels.

Suddenly, out of the blue two years later we have approval to add one; what was it that prompted that change? --- Developers amend plans constantly.

I am asking what it was that prompted that change, could you please explain? More money? --- Yes, of course.

So it’s an economic decision? --- It’s an economic decision.

125    It was not suggested that Mr Milgrom was not someone without personal knowledge of the development. There was no cross-examination of Mr Milgrom suggesting that as at June 2015 BJP had no settled intention to construct the building with 11 floors of apartments. It was not suggested to Mr Milgrom that BJP did not have the intention to construct the Diamond development with 11 floors nor that BJP did not have the ability to do that.

126    I accept Mr Milgrom’s evidence.

127    The reasonable basis of making the representation as at 3 June 2015 that the Diamond development apartment building when constructed would comprise 11 floors of apartments, so says BJP and PCR, is that on 3 June 2015 it was intended to construct a building in accordance with the draft strata plan. Further, BJP and PCR submit that under the contract variations can be made and that is what BJP did by seeking approval for an additional floor. Consistent with that entitlement, it served a replacement notice of the Strata Plan on 3 October 2018.

128    In the circumstances, Mr Milgrom’s evidence, coupled with the documentary material referred to, including the draft strata plan attached to the sale contract, demonstrates that as at June 2015 BJP had the intention of constructing the Diamond development with 11 Levels and that Level 11 would be the top floor. I find that BJP had, at the time of making the representations, reasonable grounds for making the representations.

18    Mr Fu’s claim under s 55(2A) of the Conveyancing Act failed for essentially the same reasons (PJ1 [129] to [139]).

19    In the orders made on 6 June 2024 to give effect to PJ1, the primary judge: (1) made a declaration that BJP is “entitled to keep and recover” the deposit; (2) made an order dismissing Mr Fu’s claim; and (3) directed the respondents to prepare a draft short minute of orders to reflect the reasons for judgment in PJ1.

D.2    PJ2

20    Following a further hearing, the primary judge delivered PJ2 on 2 October 2024. PJ2 resolved various controversies concerning the form of the orders. The orders made by the primary judge on 2 October 2024 were in essence: (1) a series of orders requiring Mr Fu to pay (a) various amounts, together with interest and (b) costs to BJP; and (2) an order staying the operation of such orders for 28 days.

21    On 22 October 2024, I extended that stay until the determination of the present appeal or further earlier order, upon the condition that the sum of $56,000 be placed into an interest bearing account in the name of and operated jointly by the solicitor for the appellant and the solicitor for the first respondent; or the Federal Court of Australia’s Litigants’ Fund: Fu v Bondi Junction Prime Pty Ltd [2024] FCA 1222. That condition was met by payment into the Litigants’ Fund.

E.    The grounds of appeal

22    The grounds of appeal which are pressed are addressed below.

E.1    Grounds 1 to 5

23    The first five grounds of appeal are conveniently considered together. Those grounds are as follows (as written):

1.    The primary judge erred by failing to find that the Respondents represented in trade or commerce to the Appellant prior to the execution by him of the Contract for Sale of Land dated 3 June 2015 that the apartment that he was purchasing would be located on the top floor of the proposed apartment building.

2.    The primary judge having found at paragraph [114] of her Honour’s reasons for judgment published on 6 June 2024 (Reasons 1) that the Respondents represented to the Appellant that the apartment building that he was purchasing “off the plan” when constructed by the First Respondent would “comprise of” (sic) 11 floors of apartments erred in law by holding that the Respondents had discharged the onus of proof placed upon them pursuant to S.4 of the Australian Consumer Law (ACL) to establish that the representations found to have been made by them being were made on reasonable grounds and that their conduct was misleading or deceptive.

3.    In the event that her Honour the primary judge had found, as it is respectfully submitted she ought to have found, that it was represented by the Respondents to the Appellant in trade or commerce that the apartment he was purchasing “off the plan” would be located on the top floor of the proposed apartment building, then her Honour ought to have held that the Respondents had not discharged the onus of proof placed upon them pursuant to S.4 of the ACL to establish that the representations made by them being were made on reasonable grounds and that their conduct was misleading or deceptive.

4.    The primary judge erred in concluding that the evidence of Mr Milsom, one of the directors of the First Respondent, was sufficient to discharge the onus of proof placed upon the Respondents to show that the representations made to the Appellant were made on reasonable grounds.

5.    The primary judge erred in concluding at paragraph [130] of Reasons 1 that the circumstances established by the Respondents concerning their decision to add a twelfth floor to the building was justified on the basis of Mr Milgrom’s evidence that “developers amend plans constantly” and that this assertion somehow constituted or contributed to reasonable grounds for the purposes of S.4 of the ACL.

(The references to paragraphs [114] and [130] of PJ1 should be to paragraphs [112] and [128] respectively.)

24    The argument as presented for Mr Fu did not follow closely the contours of the first five grounds of appeal. Rather, the focus of that argument was upon the finding at PJ1 [128] that BJP had reasonable grounds for making the 11 floors representation.

25    The submissions made on behalf of Mr Fu in support of his contention that BJP did not have reasonable grounds for the 11 floors representation were to the following effect:

(1)    the simple question is whether the primary judge was correct when she held at PJ1 [128] that BJP had adduced “evidence to the contrary” within the meaning of s 4 of the ACL;

(2)    the evidence of Mr Milgrom – that “Developers amend plans constantly” – did not constitute such evidence. The import of that evidence was clearly that BJP had no settled intention as at 3 June 2015 to construct an apartment building limited to 11 levels or to construct apartment 1103 on the top level of that building. It was “an economic decision” by BJP to add an additional level to the building. When that is recognised, no reasonable basis for making the 11 floors representation was established; and

(3)    a conclusion that BJP intended, as at 3 June 2015, to construct a building with 11 floors of apartments is inconsistent with Mr Milgrom’s evidence in cross-examination that “Developers amend plans constantly”.

26    I do not accept those submissions, for the following reasons.

27    It is common ground that the 11 floors representation was as to a future matter. As such, that representation is taken to be misleading if BJP did not have reasonable grounds for making it: s 4(1) of the ACL. For the purposes of applying s 4(1) of the ACL, BJP is taken not to have had reasonable grounds for making the representation unless evidence is adduced to the contrary: s 4(2) of the ACL.

28    The relevant principles were conveniently summarised by Thawley J in Girchow Enterprises Pty Ltd v Ultimate Franchising Group Pty Ltd (Final Hearing) [2023] FCA 420 at [15] to [19]:

15    The critical elements of the operation of s 4 to the present case may be stated as follows:

•    a representation about a future matter will be deemed to be misleading or deceptive unless the respondent had reasonable grounds to make the representation;

•    the respondent will be deemed not to have had reasonable grounds for making the representation unless the respondent adduces “evidence to the contrary”;

•    if the respondent does adduce “evidence to the contrary”, then the applicant bears the legal onus of establishing that the respondent did not have reasonable grounds for making the representation.

16    Section 4 of the ACL focusses attention on whether a person in fact had reasonable grounds for making a representation with respect to a future matter, not simply on whether there were reasonable grounds for making a representation. One way of articulating one of the intended effects of s 4 is to say that it “require[s] the representor to identify the facts or circumstances (if any) actually relied upon before turning it over to the trier of fact to decide whether they were objectively reasonable and whether they support the representation made” – see: Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 at [2827(c)] (Jagot J), adopting the language of Mason P in City of Botany Bay Council v Jazabas Pty Ltd [2001] NSWCA 94; ATPR 46-210 at [85] (albeit concerning different statutory provisions); see also: Australian Competition and Consumer Commission v Woolworths Ltd [2019] FCA 1039 at [117] – [131] (Mortimer J) (not relevantly affected on appeal).

17    The applicants referred to Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513, also referred to by Mason P in Jazabas, and Mortimer J in Woolworths, in which Heerey J stated:

If there was a representation as to a future matter, s 51A [of the Trade Practices Act 1974 (Cth)] requires the representor to show:

•    some facts or circumstances

•    existing at the time of the representation

•    on which the representor in fact relied

•    which are objectively reasonable and

•    which support the representation made.

18    The deeming in s 4(2) is only avoided by adducing “evidence to the contrary”; the evidentiary burden created by s 4(2) is not discharged simply by putting forward some evidence relevant to the topic: McGrath v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2; 165 FCR 230 at [191] (Allsop J). The deeming in s 4(2) cannot be avoided, for example, merely by adducing some evidence which is relevant to the objective existence of reasonable grounds.

19    It is for the Court to evaluate whether the evidence adduced is sufficient to constitute “evidence to the contrary”: McGrath at [192]. Whether evidence adduced on the topic is sufficient to constitute “evidence to the contrary” should be evaluated having regard to the evident statutory object of requiring the party or person making the representation to adduce evidence of the actual grounds that the person had for making the representation.

(emphasis in original)

29    His Honour’s summary of the legal principles was undisturbed on appeal: see Husseini v Girchow Enterprises Pty Ltd [2024] FCAFC 143 at [7] (Feutrill J, Sarah C Derrington and Stewart JJ agreeing). See also Australian Securities and Investments Commission v Union Standard International Group Pty Ltd (No 4) [2024] FCA 1481 at [910] to [914] (Wigney J) (with respect to s 12BB(2) of the Australian Securities and Investments Commission Act 2001 (Cth)).

30    BJP did adduce evidence to the contrary, within the meaning of s 4(2) of the ACL, thereby discharging its evidentiary onus. The evidence of Mr Milgrom – a director of BJP who had personal knowledge of the matters the subject of his evidence – included in particular unchallenged evidence which was accepted by the primary judge that as at 3 June 2015, BJP had approval for the construction of a building with 11 residential floors. Mr Milgrom did not – as was submitted on behalf of Mr Fu – in his evidence expressly state that BJP relied upon the council approval in making the representation but this is implicit in his evidence and is readily to be inferred from the circumstances surrounding the making of the 11 floors representation including: the fact that BJP was a property developer; and the correspondence between the levels approved and the levels referred to in the promotional materials and in the draft strata plan attached to the contract.

31    The cornerstone of the submissions on behalf of Mr Fu on this appeal (but not before the primary judge) was the answer that Mr Milgrom gave under cross-examination that “Developers amend plans constantly” (see [12] above). It was contended that this answer demonstrated that BJP had no settled intention as at 3 June 2015 that the apartment building when constructed would comprise 11 floors of apartments.

32    I accept that, on one view, there may be a tension between: (1) the proposition that BJP intended as at 3 June 2015 to construct an apartment building with 11 floors of apartments; and (2) the proposition (proffered in answer to a question concerning a change that occurred two years later) that “Developers amend plans constantly”. Such a tension might have been deployed in cross-examination to undermine Mr Milgrom’s evidence that the promotional materials were true and correct in circumstances where BJP held council approval for the construction of a building with 11 floors of apartments (for example, to suggest that as at 3 June 2015, BJP did not intend to construct a building with 11 floors of apartments). However, this did not occur and Mr Milgrom’s evidence that the promotional materials were true and correct on the basis of the council approval remained unchallenged and provided an objectively reasonable basis for the 11 floors representation.

33    In these circumstances, the primary judge did not err in finding that BJP had reasonable grounds for the making of the 11 floors representation. With respect, her Honour’s finding was correct.

34    I note that grounds 1 and 3 suggest error on the part of the primary judge in failing to find that the respondents represented to Mr Fu that the apartment that he was purchasing would be located on the top floor of the building (top floor representation). The submissions on behalf of Mr Fu did not address in any detail this aspect of grounds 1 and 3, focussing instead upon the contended error by the primary judge concerning the adduction of contrary evidence for the purposes of s 4(2) of the ACL with respect to the 11 floors representation.

35    In my view, the primary judge was satisfied that the top floor representation was made. As noted at [16] above, the primary judge (at PJ1 [111]) operated on the basis that it was common ground that the top floor representation had been made. Further, her Honour’s analysis of whether there were reasonable grounds was undertaken by reference to both the 11 floors representation and the top floor representation, as is clear from her Honour’s conclusion at PJ1 [128] that the evidence established that “as at June 2015 BJP had the intention of constructing the Diamond development with 11 Levels and that Level 11 would be the top floor. I find that BJP had, at the time of making the representations, reasonable grounds for making the representations” (emphasis added).

36    Thus, there was no error of the kind suggested in grounds 1 and 3; and if there was it was not material in circumstances where the 11 floors representation and the top floor representation were inextricably linked and, for the reasons set out above, BJP had reasonable grounds for making both representations.

E.2    Ground 6

37    Ground 6 is as follows:

6.    Acting upon the errors of the primary judge identified in appeal grounds 1 to 5 above, her Honour misapplied the provisions of S.55(2A) of the Conveyancing Act 1919 (NSW) in refusing to order the return to the Appellant of the deposit paid by him under the Contract.

38    Ground 6 is expressly premised upon the establishment of errors in accordance with grounds 1 to 5. As Mr Fu has failed on grounds 1 to 5, it follows that ground 6 must also be dismissed. It is unnecessary to consider the further reasons put forward on behalf of BJP as to why the discretion under s 55(2A) of the Conveyancing Act ought not be exercised favourably to Mr Fu.

F.    Conclusion

39    For the reasons set out above, the appeal should be dismissed. The stay will cease to be operative by dint of the dismissal of the appeal. The sum of $56,000 paid into the Litigants’ Fund should be released to BJP. I will make orders accordingly.

Associate:

Dated:    20 March 2025