CATCHWORDS Trade Practices - prosecution for false statements made in promotion of sale of interest in land - defendant engaged in subdividing land for residential purposes - advertisements in newspaper concerning existence of facilities associated with land - whether statements false - construction of advertisements. Trade Practices Act 1974 (Cth.) ss. 53A, 79 KAREEN SHERRY SACKVILLE Prosecutor MANSARD DEVELOPMENTS PTY. LIMITED Defendant W. A. No. G12 of 1981 W. A. No. G 13 of 1981 W. A. No. G 14 of 1981 LOCKHART J. 10 JULY 1981 AT SYDNEY IN THE FEDERAL COURT OF AUSTRALIA ) ) W. A. No. G 12 of 1981 WESTERN AUSTRALIA DISTRICT REGISTRY ) W. A. No. G 13 of 1981 ) Ww. A ) - No. G 14 of 1981 GENERAL DIVISION BETWEEN: KAREEN SHERRY SACKVILLE Prosecutor AND: MANSARD DEVELOPMENTS PTY. LIMITED Defendant ORDERS JUDGE MAKING ORDERS: LOCKHART J. DATE OF ORDERS: FRIDAY 10 JULY 1981 WHERE MADE: AT SYDNEY THE COURT ORDERS THAT: 1. The further hearing of these matters be adjourned to 3 August 1981. 2. If either party seeks to adduce evidence on the question of penalty, such evidence should be in the form of affidavits, so far as practicable, to be filed and served ' on or before 24 July 1981. 3. Liberty to either party to apply on 2 days' notice. IN THE FEDERAL COURT OF AUSTRALIA ) )W.A. No. G 12 of 1981 WESTERN AUSTRALIA DISTRICT REGISTRY )W.A. No. G 13 of 1981 )w ) eA. No. G 14 of 1981 GENERAL DIVISION BETWEEN: KAREEN SHERRY SACKVILLE Prosecutor MANSARD DEVELOPMENTS PTY. LIMITED Defendant REASONS FOR JUDGMENT LOCKHART J. 10 July 1981 AT SYDNEY These are three prosecutions under the Trade Practices Act 1974 ("the Act") heard together by consent. The prosecutor charges in each case that Mansard Developments Pty. Limited ("the defendant"), being a corporation, in trade or commerce, did, contrary to the provisions of s. 79 (1) of the Act, contravene the provisions of s. 53A (1) (b) in that, in connexion with the promotion of the sale of an interest in land, make a false statement concerning the existence of facilities associated with the land. The amended particulars of the charge in matter W. A. G 12 of 1981 are that, on or about 26 April 1980:- 22/2 (a) the defendant was the registered proprietor of land situate at Kelmscott in Western Australia and known as Illawarra Gardens; (b) the defendant was the developer of the said land; (c) the defendant promoted the sale of an interest in the said land by means of a statement in the form of an advertisement published on page 16 in the "Readers Mart" section of "The Sunday Times" newspaper dated 27 April 1980 in the following words: "BLOCK LAND SALE ON SITE TODAY ILLAWARRA GARDENS KELMSCOTT All lots are fully serviced with gas, electricity, water, kerbed roads and deep sewerage and,drainage.*- - MANSARD LAND DIVISION."; and (da) not all the lots in the advertisement referred to in paragraph (c) were serviced with electricity. The amended particulars of the charge in matter W. A. G 13 of 1981 are the same as those in respect of charge G. 12 except that charge G. 13 relates to an advertisement published on page 12 in the "Readers Mart" section of "The Sunday Times" newspaper dated 11 May 1980. ---/3 The amended particulars of charge G. 14 of 1981 are the same as those in respect of charge G.12 except that charge G.14 relates to an advertisement published on page 19 in the "Readers Mart" section of "The Sunday Times" newspaper dated 4 May 1980 and that the advertisement used the expression "elect." rather than "electricity". The defendant does not dispute that "elect." should be understood as meaning "electricity". It is admitted by the defendant that it is a corporation within the meaning of s. 53A of the Act and that the three advertisements were made on its behalf. The material facts are not in dispute. The defendant is a developer of land in Western Australia. One of its projects is called "Illawarra Gardens Kelmscott" or sometimes "Illawarra Gardens Estate Kelmscott". This development is on a large scale and is designed to be undertaken in eight stages. It involves the sub-division of broad acres into a large number of lots for residential purposes together with the provision of land for a primary school and recreation reserves. Kelmscott is about twenty-five kilometres from Perth. In April or May 1980, when the three advertisements the subject of these proceedings were published, the project had reached the point where stages 3a and 4 (and I assume stages l, 2 and 3) had been completed in the sense that the land comprised therein had been sub-divided into lots for residential purposes with the approval of the Town Planning Board; gas, electricity, water, sewerage and drainage were available to those lots; and «2/4 the roads had been formed and kerbed. Some of the lots had been sold and some houses erected. The defendant was (in April - May 1980) selling the remaining lots and promoting their sale. By 27 April 1980, the date of the first advertisement, stage 5 had reached the point where the ninety~six lots included therein had been surveyed and the plans of sub-division lodged witt the Town Planning Board for approval. This was given by the Town Planning Board on 27 May 1980. The roads in stage 5 had been formed and kerbed. Provision had been made for sewerage and drainage to each parcel of land in stage 5. The provision of electricity to the lots is controlled by the State Electricity Commission of Western Australia. Electricity Mains had been provided along Hemmingway Drive (being the southern boundary of stage 5), by 26 April 1980, enabling electricity connections to be made to nine of the lots in the sub-division; but no other electricity services were provided to the lots in stage 5 until March 1981. [ should mention that electricity mains had been provided along Lake Road, being the northern boundary of stage 5; but they allowed connection to lots on the northern side of Lake Road only, none being in stage 5 or any other stage of the Illawarra Gardens project. Although there was no physical impediment to the connection of electricity from those mains to the lots in stage 5 at its northernmost point (lots 1, 45~49 inclusive and 56), the Electricity Commission would not permit electricity to be connected from those mains to those lots because there was a narrow buffer of land running generally across the northern end of stage 5 which separated those lots ef? from Lake Road. The evidence is unclear as to the ownership of that buffer and as to its use; but it appears that some Government instrumentality intended to require it at some future date to be dedicated for purposes of widening Lake Road or possibly for pedestrian access. The point is that the Electricity Commission took the view that, because those northernmost lots did not have direct access to Lake Road, they would not be provided with electricity connections from the mains running along Lake Road. This is the background to the publication of the three advertisements in question. I will set out the advertisement of 4 May in full as an example of all three advertisements. It reads: BLOCKS LAND BALE ON SITE TODAY BEE THE QUALITY | HOMES Displaved by Perth's lead- ing builders, ILLAWARRA GARDENS KELMSCOTT - So Maniard Land a's ision offers a lige selecton of bint, level buildaz sites at an affordable price $9609 to $11 050 You can build with any builder and sell at any time There are absolute}; xO RESTRICTIONS. - AM lots are tuly serviced with gas, elect, wate kerbed roids and deep senerage and drainage You cunt go wrong Ma- warra Gardens is) within 1 &™ of *he new buas-rall transier station, the Kelm- scour V lage Shoppng Cerce and the Kelnsco t Higu Sc? ool with 8.5 hots of pissing fields and the pr ead school on the es a STF THE LAND CONSULT- ANT ON SITE SUNDAY 2-5) PM FOLLOW THE ir ays. AY ue ALBANY iGhW. UP LAKE RD! TO CAMMILLO RD. | MANSARD | LAND 0/6 DIVISION 362 2233 27 390 8226 332 167 It is not disputed by the defendant that the advertisements were means whereby statements were made by it, in trade or commerce, in connexion with the promotion of the sale of an interest in land, and that the statements concerned the existence of facilities associated with the land - namely, electricity. The substantial issue in the case is whether the land referred to in the advertisements included the lots in stage 5. If they are included then plainly the statement that all lots are fully serviced with electricity is false because only nine of the ninety-six lots were serviced with electricity. In my opinion, the expression "fully serviced with...electricity" in reference to lots of residential land in a sub-division means that electricity mains are present in front of the lots which can be supplied with electricity by service leads or connections. The defendant did not suggest any other meaning. The prosecutor contended that the advertisements refer to "all sites" being unsold at the date of publication: of each advertisement included in the general description "Illawarra Gardens Kelmscott"; and that this included unsold lots in stages 3aand 4 and all lots in stage 5,none of which had then been sold. The defendant contended that only unsold lots in stages 3a and 4 are included in the advertisement. It was contended that final approval to the sub-division of the land included in stage 5 was not given by the Town Planning Board until 27 May 1980, that is after the last of the three advertisements had been published; and that, until such final approval was given, there could be no "lot" of land in a sub-division: s. 2 of the Town 22/7 fa Planning and Development Act 1928 -(W.A.): and Lombardo v. Development Underwriting (W.A.) Pty. Ltd. 1971 W.A.R. 188. The defendant contended further that there was no evidence that it had commenced selling any of the lots in stage 5 before 27 May 1980 and, indeed, that there was affirmative evidence that the defendant did not commence selling any of those lots until on or after 1 June 1980. Evidence was led by the defendant from its manager and sales manager, a Mr. Hatch, to the effect that the defendant did not promote or sell any of the land in stage 5 until after 27 May 1980, probably about 1 June 1980, because final approval to the sub-division was not given by the Town Planning Board until 27 May 1980; and that this was deliberate company policy formulated by the defendant's managing director. It may be that the defendant did not intend to promote the sale of lots in stage 5 until after 27 May 1980 and did not intend the three advertisements in question to relate to any of those lots. This is a matter which may be, relevant as to penalty, if any; but it is not relevant to the question of contravention. It is common ground that the truth or falsity of the statements made in the advertisement falls to be determined by reference to the statements themselves viewed in the light of the objective facts. It is also common ground that mens rea is not a necessary ingredient which the prosecutor has to establish: see Given v. C. V. Holland (Holdings) Pty. Limited (1977) A.T.P.R. 40-029, at p. 17,387 (Franki J.); and Sully v. Darwin Bakery Pty. Limited 1981 A.T.P.R. 40-199 at p. 42,737 (Gallop J.). --./8 I accept the contention of the defendant that none of the land included in stage 5 fell within the definition of a "lot" in s. 2 of the Town Planning and Development Act until the plans of sub-division were approved by the Town Planning Board on 27 May 1980; but this does not bear on the truth or falsity of the statements made in the advertisement. I should perhaps add that in Western Australia, parties may agree to sell "lots" included in a sub-division without the approval of the Town Planning Board to the sub-division having been first obtained provided the agreement is entered into subject to the approval of the Board to the sub-division being obtained: s. 20B (1) (b). In my opinion, the land described in the advertisements refers to parcels of land physically laid out as separate building sites within the general description "Illawarra Gardens Kelmscott". The reference in the advertisements to "Illawarra Gardens" as being within one kilometre of the new bus~-rail transfer station, the Kelmscott Village Shopping Centre and the Kelmscott High School, - with 8.5 hectares of playing fields and the Primary School on the estate, supports the conclusion that lots in stages 3a, 4 and 5 fall within the description of "Illawarra Gardens". All of them had been surveyed and the roads in each stage had been formed and kerbed. People going to "Illawarra Gardens Kelmscott", following the publication of each advertisement, would not see building sites divided into stages as such. They would see land, presumably with survey pegs indicating the boundaries of each parcel, some with houses in various stages of construction, roads formed and kerbed and perhaps areas reserved for recreation; some electricity poles, being mains, in various streets and some ~--/9 houses connected to the mains - all within the general description of "Illawarra Gardens Kelmscott". Section 53A (1) (b), so far as relevant, is directed to false statements concerning the existence of facilities associated with land, the sale of an interest in which is being promoted by a corporation. Promotion of the sale of interests in land in sub-divisions for residential purposes is an on-going business activity. To advertise building sites or lots for sale under the general heading of "Illawarra Gardens Kelmscott" is part of the defendant's promotion of all the unsold land covered by that general description. It thus includes parcels of land included in stage 5 as well as stages 3a and 4. Por these reasons the defendant has contravened s. 53A (1) (b). I should add that the defendant did not seek to raise any defence under s. 85 of the Act. That leaves the question of penalty. I will adjourn the further hearing of the matter to 3 August 1981 in Perth to hear evidence and submissions as to penalty. So.far as possible, any further evidence should be by affidavit, subject of course to cross examination. The affidavits should be filed and served by 24 July 1981. :