\d. JUDGMENT No. 59.06 » 84 CATCHWORDS TRADE PRACTICES - appeal - contracc for the purchase of a unit "off the plan" - representations maa by the respondents as to certain features of the proposed unit - respondents' failure to construct the unit in accordance with the agreement - whether knowledge of legal right (as opposed to facts entitling) is necessary to rescind - whether appellants' canduct sufficient to constitute election to affirm - whether the respondents entitlement to damages to be determined by reference to the terms of the contract or the common law. Trade Practices Act i974, 3s. 52, 53 Bu1rlding Act 1975-1984 (91d) Fire Safety Act 1974-1982 (Q1d) The Burlding Units and Group Titles Act 1989 \Qld), s.49 Evidence Act 1976 ( (Q1id) MURRAY NORTON TIPLADY and LAUREL KhOSF TIPLADY v. GOLD COAST CAPLTON PTY LIMITED (Qld Gof cl t4ad) GOLD COAST CARLTON PTY LIMITED v. MURRAY ORTON TIPLADY and LAVREL ROSE TIPLADY (Qld G66 of 1984) McGREGOR, LOCKHART & SPONDER JJ. L OCTOBER. 1984 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY wee ww GENERAL DIVISION ON APPEAL FROM A JUDGE OF THE FFEDFRAL COURT OF AUSTRALIA No. OLD. G69 of 1984 BETWEEN : MURRAY NORTON TIPLADY AND LAUREL ROSE TIPLADY Appellants AND: GOLD COAST CARLTON PTY. LIMLTED Responaent No. 90. G. 66 of 1984 + £ -. BETLOEN : GOLD "VAST CARLTON PTY. LIMITED Cross-Appellant AND: MUPRAY NORTON TIPLADY AND LAUREL ROSE TIPLADY Cross-Respondents ORDER JUDGES MAKING ORDER: McGREGOR, LOCKHART AND SFENDER JJ. DATE OF ORDER: 1 OCTOBER 1984 WHERE MADE: BRISBANE THE COURT OPDEPS THAT: be The appeal cf Murray Norton riplady ani Laurel Pose Tiplady be 'lismissed. The cross avgeal of Gald Coast Carlton Pty Limited be allowed. Judgment he entered for Gold Coast Carlton Fty Limited ain the sum of $151,779.69 instead of 381,770.00. Murray Norton Tiplady and Laurel Rose Tiplady pay the cost3 cf Gold Coast Carlton Pty Limited of the appeal and the cross appeal to be taxed. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY wee ew GENERAL DIVISION ON APPFAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA No. OLD. Gey of 1984 BETWEEN : MURRAY NORTON TIPLADY AND LAUREL ROSE TIPLADY Appellants AND: GOLD COAST CARLTON PTY. "IMETED Respondent No. OLD. G. ¢. of 1984 BETWEEN: GaLD> COAST CARLTON FTY. LIMITED Cross-Appellant AND: MURRAY NORTON TIPLADY AND LAUFEL ROSE TIPLEDY Cros3~-Respondents Coram: McGregor, Lockhart and Spender JJ. Date : 1 October 1984 REASONS FOR JUDGMENT McGregor and Spender Jd. MURRAY NORTON TIPLADY AND LAUREL ROSE TIPLADY (applicants) have appealed against a aecision of a Judge of this Court given on 19 June 1984 whereby their claim Ww . against GOLD COAST CARLTON PTY. LTD. (respondent) for an alleged contravention of s.52 of The Trade Practices Act 1974 ("the Act") entitling them to a return of a deposit of $38,500 was dismissed and damages in the sum of $81,770 were awarded to the said respondent on its cross claim against the applicants. By a contract in writing dated 14 January 1981 the applicants agreed to purchase from the respondent unit No. 56, one of two penthouses each on both the 14th and 15th fioors of a building, "Ocean Royale", to be constructed on land at Old Burleigh Road, Broadbeach in the State of Queensland. The purchase price for the penthouse was $385,000, of which ten percent was payable by way of deposit. At the time the contract was entered into the construction had not commenced and plans in respect of the buiiding had not been approved by the local autaority, the Gold Coast vityv Council. It 18 useful to refer to the facts which are set out in the judgment of the primary Judge. The applicants had called at the office of the respondent's sales agent, St. George Real Estate of Broadbeach, in respect of "Ocean Royale" in about December 1980 or early January 1981. There they were shown a copy of the architect's plans for the proposed building anda preliminary copy of an advertising brochure and were givena photostat copy of the architect's floor plans with respect to unit 56. They were not told that the plans had not been approved by the Council, or even that an application for a building permit had not then been submitted. By the end of that meeting the applicants had formed an intention te buy penthouse unit 56. The front cover of the advertising brochure bore an "Artists impression" of the proposed building which indicated a balcony on the north-eastern corner of the 15th floor, the upper level of penthouse unit 56, with a balustrade consisting of a horizontal rail and spaced vertical bars. Inside the brochure was a statement - "The apartments will be professionally managed by the Broadbeach International Hotel." The floor plans for the penthouses which were given to the applicants showed there was not to be a common lift lobby on the 14th floor in connection with the two lifts in the building; instead, one lift was to open directly into a private vestibule within one penthouse and the other -ento a similar vestibule within the other peninouse, there mre to me separate fire stairs opening directly into these private vestibules. Before the contract was signed and returned by the applicants to the respondent copies cf the advertising brochure were printed anda copy sent to the applicants. The brochure contained floor plans for each of the penthouses with the statement: "Measurements are approximate. Plans are subject to alterations". The "Artists impression" on the front cover of the advertising brochure did not accord with the engineering plans which the respondent had at all material times and which provided for a solid concrete balustrade around the north-eastern balcony on the upper level of penthouse unit No. 56. Though discussions had taken place between the respondent and persons associated 'with Broadbeach International Hotel concerning the management of "Ocean Royale", no agreement had been concluded and the matter remained in a state of negotiation. It was not possible to build the penthouses with the private vestibules proposed consistently with the Building Act 1975-1984 (Queensland) or the Fire Safety Act 1974-1982 (Queensland) although initially this was not known to the respondent or its architect. The contract, signed by the applicants, was received by the respondent with part of the deposit on or about 6 February 1981. The balance deposit, makina $38,500.00 in all, was received on 15 February 1981. In the contract siqned by the parties the "Unit Sold" was described in the following terms:- "UNIT SOLD: No. 56 (Lot 56 in Proposed Building Units Plan No. ) FLOOR: 14 & 15 FLOOR PLAN: In accordance substantially with the Plan in the Tenth Scnedule hereto and edged in blue. The said plan is incorporated in this Agreement for indentification purposes only." Clause 16(c) of the contract made provision for a statement "giving certain particulars in connection with the said unit..." "an accordance with" 3.49 of The Building Units and Group Titles Act 1980 as amended (Queensland), and provided that the statement 3. was "set out in the Twelfth Schedule to this Agreement". The Twelfth Schedule included the following entry: "IDENTIFICATION OF UNIT: Unit 56 on 14 & 15 Floor as identified ain sketch plan in subject agreement (where Bu1rlding Units Plan has been registered, Lot in Registered Building Units Plan No. yo The sketch plan referred to in the Twelfth Schedule was the "Plan in the Tenth Schedule...edged in blue". The Tenth Schedule to the contract consisted of an indication as to the direction the building was to face and four floor plans, a "Ground Floor Plan", a "Typical Floor Plan" and floor plans for the 14th and 15th floor penthouses. Az was noted in his Honour''s judgment, and as the evidence confirmed, the floor olan of the 14th floor in the Tenth Schedule was not as detailed as the architect's plans or the floor plan in the brochure, but did indicate both the private vestibules and the open staircases; a blue line was drawn around the northern sections of the floor plans including the private vestibule within the boundaries of penthouse unit 56. In the Reasons for Judgment of the learned primary Judge the recitals in the contract are set out. We shall not repeat them. Clauses 3(a), 6, 8(a) to (f), and 13 of the contract provided: a "SETTLEMENT : - 3. (a) Settlement shall take place within thirty (30) days ...PROVIDED FURTHER that should the construction of the said building be delayed due in whole or in part to one or more of the following:- (iii) on account of the delay of any local or other authority in giving any necessary approval provided the Vendor has taken all reasonable steps to obtain such approval; DEFAULT: - 6. If the Purchaser fails to comply with the conditions of sale herein set out or any of them then (in addition to any other remedy available to the Vendor) the Vendor may:- (d) Without notice to the F'+chaser resell the said unit by public auct on or by private contract with pewer to vary or rescind any contract for sale and to hy in at any auction and the deficiency in vric® on such resale and the exrenze of snd incidental to repossession and to the present sale and such resale and any abortive attempt to resell together with all rates, taxes and other outgoings accrued due in respect of the said unit at the date of resale thereof which were payable by the Purchaser under the terms of this Agreement shall be paid to the Vendor by the present Purchaser and shall be recoverable as liquidated damaces. The Purchaser will indemnify the Vendor against any loss which the Vendor sustains as a result of the Purchaser's default. TITLE: - 8. (a) The title to the said land described in the First Schedule will be, prior to settlement, under the Real Property Act of Queensland; the title to the said unit will be or is subject to the provisions of the 'Building Units and Group Titles Act 1980' as amended. (b) The Purchaser or his Solicitors may within fourteen (14) days from the date of registration of the subject Building Units Plan deliver to the Vendor or 1ts Solicitors requisitions or objections (1f any) on or to the Vendor's title. All requisitions or objections not so delivered shall be deemed waived by the Purchaser. (c) If the Purchaser shall within the said fourteen (14) days make any valid requisitions or objections on or to the Vendor's title which the Vendor shall be unable or unwilling to remove or comply with, the Vendor or its Solicitors (whether they shall have attempted to remove or comply with the same and notwithstanding any negotiation or litigation in respect thereof) may give to the Purchaser or his Solicitors notice in writing of the Vendor's intention to rescind the agreement at or before the expiration of seven (7) days without prejudice to any other rights which the Vendor may have. Unless such requisition or objection shall be withdrawn or waived within such seven (7) days the Contract shall thereupon be rescinded and the Vendor 3hall repay to the Purchaser all deposit and other moneys received by 1t or its Agent on account of the purchase money but without interest costs or damages and the same shall be accepted by the Purchaser in full satisfaction of all claims. If the Purchaser withdraws or waiv's his objection or requisition as aforementioned tien this Agreement shall remain in full force and operate as if such requisition or objection had not been made and the said written notice of rescission had not been given. (d) (1) The Purchaser acknowledges that he has not relied on any representations by the Vendor, the Vendor's Agent or any other person or persons or corporation in and about entering into this Contract other than as set out herein and that the conditions and stipulations hereot constitute the only agreement between the Furchaser and the Vendor. (ii) The Purchaser shall be entitled to premises with measurements and to a standard and specifications substantially in accordance with those set out in the said specifications and plans and the Schedule of Finishes hereinafter set out. (e) Subject to the provisions of Clause 8&(f) hereof the Vendor warrants that the unit entitlement of the respective units in the said building as shown in the relevant Building Units Plan shall be as set out in the Second Schedule hereto. a ae tome em ete we were eee | 8. (f) The Purchaser shall not be entitled to make any objection, requisition or claim for compensation by reason of:- (i) Any minor variations as regards the said unit between the Plan ag produced to the Purchaser and the Bulrlding Units Plan as registered by the Registrar of Titles; (ii) Any alterations in the number, size, location or unit entitlement of the lot or lots in the Building Units Plan (other than the lot or lots hereby 301d) or in or to the common property provided that the unit entitlement of the lot or lots hereby soid and the aggregate unit entitlement of all lots shall not thereby be varied. (iii) Any alteration or variation in the said plans and specifications accordingly. (iv) Any alteration or variation in the said plans and specifications and in the said Schedule of Finishes as' may become necessary during the course of construction by reason or ratters beyond the control of the Vendor which may result from, inter alia, the requirements and directions of any governmental or semi-governmental authority or as may be required by the practical exigencies of construction either py, but without limiting the generality of the foregoing, the dictates of good building practice and/or the availability of materials, PROVIDED HOWEVER that the Vendor = shall take all available and reasonable steps to adhere wherever vossible to the said plans and specifications and Schedule of Finishes. 13. If the Gold Coast City To tncil or other competent authority imposes any conditions on the granting of the Town Planning Permit or Building Permit for the land and building the subject of this Contract which the Vendor shall be unable or unwilling to comply with, then the Vendor may cancel this Contract by written notice to the Purchaser or his Solicitors and on caricellation all moneys paid by the Purchaser shall be refunded without —_— deduction together with any interest accrued in respect of the deposit, and neither party shall have any claim against the other by virtue of this Contract or 1ts cancellation as aforesaid. His Honour made various findings as to matters of fact and law which we will now proceed to set out insofar as they are relevant to this appeal. His Honour found that all of the principal actors were unreliable witnesses, none of whom "would score highly if rated for credibility". It appears from the Reasons that the persons so described included Mr. and Mrs. Tiplady; their son Warren who for part of the relevant time was employed as a salesman by St. George Real Estate; Mr. George Gauci, the respondent's managing director; and Mr. Quarmby, the estate agent's Sales Manager. His Honour said that he had not found it a useful exercise to try to establish an order of preference between these persons as witnesses but he had taken the evidence of each and his views concerning that evidence into account in arriving at what seemed to him on the evidence overall to have been the probable order of events. About February 1981, following an inspection by a Building Inspector at the Gold Coast City Council and an officer of the South Coast Fire Brigade, the respondent was notified that what had been proposed in respect of the private vestibules on the 14th floor was not acceptable. The evidence did not establish that the respondent received that information prior to 1ts execution of the contract between it and the applicants; but it knew goon afterwards. By early April 1981 1t had received rc | re wore se 10. letters from the Gold Coast City Council and also the South Coast Fire Brigade oaiving formal notification that the private vestibules were not acceptable. Following the submission of amended plans, the respondent received, on or about 4 June 1981, a building permit referable to those plans. At about the same time, negotiations concerning the acquisition by Broadbeach International Hotel of the management rights in respect of "Qcean Royale" were terminated. Having regard possibly to a finding by his Honour, this matter forms no part of the respondent's argument before us now. We shall not refer to it further. His Honour found that by the e<d of 1981 or the first week in January 1982, substantial orogre-s had been made in the construction of "Ocean Royale". On the 14th floor, the external entrance doors ta the penthouse units were in place and all walls had been cunstructed subiect to qualifications to which his Honour referred; these included that the internal non-load bearing dividing partitions had not been completed although the metal frames were in place. His Honour said - "Tt was apparent that there wags a common lobby on the 14th floor and that the lifts and the fire stairs opened off the common lobby. The penthouses did not include private vestibules in the form which had been indicated on the plans shown to the applicants. The entrance door to each penthouse opened almost immediately onto an archway which had been constructed between the door and the dining area. The wall containing the archway continued into the dining area around what had previously been depicted as an open staircase, was faced with brick, and contained a section which protruded almost half a metre into the dining area." ro: ll. His Honour found that, as aresult of the alterations, the internal area of penthouse unit 56 had been reduced by five or six square metres; and what had been always a small dining area had been rendered unattractive and of extremely limited use. Hiz Honour aiso made certain findings in respect of the balustrade around the north-eastern balcony, a cupboard in a room designated as a television room and an altered configuration of shower recesses. None of these matters now form any part of either party's argument on this appeal and need not be referred to further. His Honour fourd that the applicants did not learn of the changes in respect of the lobby, private vestibule, and dining area until the end of December 1981 or very early in January 1982 when Mr. Tiplady visted t72 site first with Mr. Quarmby and then with his son, Warren. Hie denour said - "It is sufficient for present purroses to find, as Ido, that by 14 January 1982, the applicants were aware ....of the manner in which the lobby, private vestibule, and dining area on the 14th floor had been constructed...." It is the applicants' submission to this Court that such a finding should not have been made. We will return to this later. Further, his Honour stated that when the applicants became aware of the alterations, they no longer regarded the unit as suitable for use as their residence; and, as they knew, there was no possibility of further alteration to make the unit correspond to 12. what had originally been contemplated. His Honour found that the alteration or variation to the 14th floor in the vicinity of the lifts and stairways had been essential to comply with the law and obtain a building permit. When the applicants learned of the changes tney took no steps at that time to resile from their purchase; nor did they give any indication tnat they might not proceed to complete. On the contrary, his Honour found that they decided to take advantage of the apparently high prices available for Gold Coase units and to teésell at a profit the unit which they had contracted to purchase. On 14 January i982, Mr. Tiplady ccntacted a firm of real estate agents with whom he had had a previous dealing, and indicated that the unit was available fa. resale and a price was fixed. The applicants also contacted other agents. Attempts were made to sell the unit. Mr. Gauci, to whom reference has already been made, became aware of the applicants' proposal to resell and had a conversation with Mr. Tiplady in which the latter confirmed that the applicants aintended to complete ("settle") their contract if they did not resell the unit before the time for completion fell due. This latter finding is also challenged by senior counsel for the applicants and we shall refer to it later. His Honour found that, at this stage, the applicants had made no compluint to the respondent or 1ts agent. He did not accept that they told Mr. Quarmby that they were contemplating legal action or that there was or might be some obstacle to a resale. 13. The downturn in th. value of Gold Coast units accelerated, prices fell and it became increasingly difficult to find a purchaser for units. His Honour found that the applicants changed their minds and decided to strive to escape from the contract. He found that they consulted their Solicitors shortly before a notice dated 2 June 1982 was forwarded to the respondent purporting to avoid the contract on a number of grounds, though no specific reference was made to the alterations. His Honour was satisfied that the complaint as to the change in the building as constructed and "as depicted in the plan shown to the applicants prior to execution of the contract" was conveyed to the respondents' colicitors, if not by the notice of 2 June 1982, then by a letter dated 9 July 1982 from the applicants' solicitors to the respondent's solicitare By letter dated 4 June 1452, the solicitors for the respondent informed the applicants' solicitors that the respondent did not accept tnat rhe applicants had avoided the contract and that aif the applicants did not complete' the respondent would forfeit the deposit and would pursue its other rights. On 22 June 1982, upon which day the Building Units Plan (No. 5013) in respect of "Ocean Royale" was registered, the solicitors for the respondent called for completion on 23 July 1982. The registered Building Units Plan showed the common lobby on the 14th floor and conformed with what had been constructed. = me ey 14. Other correspondence followed. By letter dated 93 July 1982, to which reference ha3 ..ready been made, the applicants confirmed their intention not' to proceed. By letter dated 16 July 1982 enclosing transfer documents showing a purchase price of $385,000, the respondent again called for completion on 23 July 1982. The applicants did not complete. On 4 August 1982, the applicants commenced proceedings in_ the Supreme Court of Queensland; the respondent commenced separate proceedings in that court on 9 August 1982 and unsuccessfully applied for summary judgment for specific performance in September or October 1982. After further correspondence, by letter dated 10 January 1983, the respondent notified the applicants that it accepted their repudiation of the contract. Mcre detailed reference to this letter will be made later. The respondent's mortgagee, apparently as the respondent's agent, later resold the unit for $225,000, the sale being completed on 3 May 1963. The Supreme Court proceedings were not proceeded with by either party but the respondent delivered a cross-claim in this Court. As mentioned earlier, the applicants' action is primarily concerned with a claim that the respondent had been guilty of false, misleading or deceptive conduct or conduct likely to mislead or deceive as referred to in s. 52 of the Act. The applicants claim to recover the amount of the deposit paid under the contract of $38,500, together with interest, either on 15. 'the basis that the contract has been rescinded by the applicants or ought to be rescinded by the Court pursuant to s.87 of the Act or as damages pursuant to s.82 of the Act in respect of an alleged contravention by the respondent of 3.52 of the Act. The respondent filed a cross-claim which alleged, in summary, that notwithstanding the knowledge of the variation in the floor plan of unit 56, the applicants chose to affirm the contract and elected to remain bound by it; that the applicants persisted in their refusal to complete; that by letter dated 10 January 1983 the respondent accepted the said refusal as a repudiation of the contract and rescinded it whereby it suffered loss and damage, particulars of which were set out. It was further pleaded that the applicants were "precluded from relying upon any representation that may have been made by or on behalf of the respondent" by sub-clauses 8(d) and (f) of the contract. In his Reasons for Judgment, his Honour found that the nature of the balustrade on the north-eastern balcony on the upper level of penthouse unit 56 could be excluded from further consideration for reasons that he gave. No arguments as to the significance of the balustrade in the performance of the contract have been put to this Court; no further reference need be made to it. The remaining matters of complaint before his Honour therefore concerned the lobby, vestibule and dining area on the 14th floor. The learned primary Judge proceeded to consider the respondent's submission that, on 1ts proper construction, the wee Lo. contract entitled the respondent to insist that the applicants pay the full purchase orice and accep® the unit as constructed. His Honour came to the conclusion, the reasons for which need not be considered in detail given the applicants present argument before us. that the applicants were entitled to rescind the contract if and only if the differences between what had been agreed to be transferred and what was available for transfer were substantial. His Honour found that these differences were indeed substantial. He expressed the opinion that, on its proper construction, the contract entitled the applicants toa unit which accorded with the description of the "Unit Sold", the Tenth Schedule, and sub-clause 8(d)(11)} of the contract. He found that the unit aid not meet that descriptian; as constructed it did not accord substantially with the wlan in the Tenth Schedule; the vartation between the reaister2ed building units plan and the plan in the Tenth E€chedule was not "minor"; and the "measurements...standard and specifications" of the unit as constructed did not substantially accord with the architect's plans as at the date of contract. His Honour had no doubt that the unit as constructed was substantially different from that to which the applicants were entitled and that which the respondent was obliged to transfer under the contract; the private vestibule was a most material and important matter as was an adequate dining area. Further, he found that the applicants would not have entered into the contract, certainly not at the price which was agreed to be paid, but for the original proposal in respect of the private vestibule and dining area. He also found that the value of the unit as constructed was at all "ww: ee ee ee eer eo 17. material times considerably less than it would have been had the 14th floor been constructed with a private vestibule and dining area as proposed at the time of the contract. For these reasons his Honour found that when it became apparent, ag it had by January 1982, that the respondent had no reasonable prospect of performing its essential obligation to transfer a penthouse unit constructed substantially in accordance with the contract, the applicants were entitled to give notice of termination. He found that the applicants were not obliged to exercise any such right but were entitled, in the alternative, to require verformance with compensation, an appropriate figure for which he found to be equivalent to 10% of the price of the unit. These findings have not been challenged before this Court. He further found, although 1t was not expressed in such terms, that having ascertained the discrepancies in the unit, the applicants did not (initially) give notice of recission, complain or give any indication that they might not wish to complete, did not give the respondent any opportunity to reduce the price or attempt to resell but. on the contrary, attemoted therselves to resell ata very considerable profit whilst telling the respondent that they intended to complete when settlement was due. Following an extensive review of the authorities in relation to the doctrine of election his Honour concluded that, even on the most technical and restrictive view of its ambit, there did not seem any doubt but that the applicants had "lost their right to rescind". This conclusion has been challenged by the applicants before this Court and we shall later refer to it. eee ro oor —————~a ro wr me ee ee — none 18. 'His Honour found that the applicants knew the facts upon which their right to rescind depended. Even if they were not deemed to know the terms of the contract (authorities to which he referred suggested the contrary), the evidence "contradicted any suggestion that they were ignorant of their legal rights". In our view there was evidence to support this finding. Further, his Honour found that the applicants acted ina way which was clearly and unequivocally consistent only with the ongoing operation of the contract and their possession of rights under it by attempting to resell the unit to which they had no claim except under the contract; the applicants' conduct did not merely assume the continued existence of the contract but exercised rights based on it adverse to the respondent. The latter, his Honour said, was the only party entitled to sell or resell the unit and obtain any available profit unless the applicants were to complete. In addition, he found the applicants took the further step of communicating their attitude to the respondent by netifying their intention to complete. The received view, he said, is that "detriment to the respondent was not essential", for which proposition he referred to Sargent v. A.S.L. Developments Ltd. (1974) 131 C.L.R. 634 at pp.646-647; but in any event he found there was detriment to the respondent to which he referred. 19. The submissions of senior counsel for the applicants, in effect, begin at this stage of the narrative. In argument he agreed that the primary Judge found correctly that the applicants (purchasers) were entitled to rescind by reason of the respondent's (vendor's) inability to transfer substantially that which it had agreed to transfer. He took issue with the finding that the applicants lost that right by election. We shall deal with these submissions in due course. The primary dudge found that the effect of the applicants' election was to keep the contract on foot, with the right (and the obligation) to perform the contract with compensation, his Honour holding that while there was no provision in the contract which exvressly provided for any right to compensation it was a well Known jurisdiction of a Court in Equity in suits for specific performance tc order compensation for discrepancy between what was agreed to be transferred and what can be transferred: Rutherford v. Acton-Adams £1915] A.C. 856 at p.859 (P.C.). He stated that the applicants purported to "avoid" the contract by the notice dated 2 June 1982 signed by their solicitors to which earlier reterence has been made; they no longer had any right to terminate or escape from liability under the contract and, by that notice, they repudiated it. The respondent, he said, was thus presented with an election, which it did not immediately exercise, but by its letter of 4 June 1982 it provided the applicants with an oppertunity to resile from their anticipatory breach. The respondent, he said, later affirmed the contra:t, called fo2r completion and submitted transfer documents. He found that the applicants had been given | ia. | 20. no further ground for rescission by the contractual date for completion on 23 July 1982. Further, when that date for completion arrived, each party had had, but had lost by election, the right to rescind the contract. His Honour expressed the opinion that it ought not be concluded against the respondent that it was prepared to transfer the unit only in return for the full balance purchase price and not in return for a price appropriately abated to provide the applicants with compensation for the discrepancies in the unit. For this conclusion, his Honour referred to authority and the evidence. It 1s not necessary to repeat his reasoning here. He found that the proper inference was that, although calling for a mode of performance to which it was not entitled, and unaware of even the possibility that the applicants were entitled to compensation, the respondent was throughout willing to perform the contract according to its true construction. This conclusicn has ne-+ been challenged before this Court. His Honour concluded that, accordingly, insofar as the dispute between the parties stood only on contract, the applicants were not entitled to the recovery of the deposit and the respondent was entitled to damages for the applicants' non-performance. He found also that despite the applicants' further repudiation when they failed to attend for completion, the respondent did not immediately rescind but elected to affirm and insist cn performance. inne | occ 21. Finally, he ford the respondent accepted as repudiation the applicants' ongoing complete and permanent refusal to acknowledge or perform the contract; the respondent thus had a clear right to terminate the contract when it did by letter dated 10 January 1983. For reasons which he set out, and again which need not be discussed further in view of the way in which this appeal has been conducted, he found that, in the final result, there was no conduct pre-contract by the respondent in respect of the 14th floor which was misleading or deceptive or which was likely to mislead or deceive within the meaning of 3.52 of the Act. He considered further whether the respondent had engaged in conduct which offended sub-s.52(1) of the Act after the contract was entered into; and, if so, what conseyuences followed. He found that the respondent was guilty of a contravention of sub-3.52(1) after the contract was entered into by veason of its failure to ensure that the applicants were informed of the variations and alterations with respect to the 14th floor; but that the applicants suffered no loss or damage by this contravention. These findings as to s.52 of the Act have not been the subject of any examination or criticism by the applicants. The detail of his Honour's calculation and assessment of the quantum of damaqes sald to have been suffered by the respondent has not been questioned before us by applicants' or respondent's counsel; though the respondent's right to any damages 18, of course, disputed by the applicants. They claimed that not only were they entitled to resist any award of damages 22. 'but that, additionally, they 'ere entitled to a return of the deposit. Accordingly, it is not necessary at this point to discuss the components (as opposea to the respondent's entitlement) of the figure awarded to the respondent; except in respect of the primary Judge's reduction of the award by a sum for the value (as opposed to the sum received on the resale) of the unit on behalf of the respondent. To this we shall return. We note, 1n passing, that his Honour said that neither party seemed particularly concerned by the questions raised by the respondent's formulation (by which we understand he meant the details of the award) of its claim. Reference may now be made to arguments submitted by Mr Jackson 0.C.. senior counsel for the applicants. He argued that the primary Judde had found correctly tnat the applicants were entitled t 2. rescind by ceason of the respondent's failure to construct the building in accordance with the contract; but submitted that his Honour was wrong in taking the view that the applicants had, by election, lost the right to rescind. In his submission, the primary Judge should not have found that the applicants were aware of all the changes at the end of December 1981 or very early in January 1982. He referred to the evidence which he said should have induced his Honour not to have made such a finding. It is not necessary here to re-state in detail the evidence upon which counsel relied for this submission. bee st ee ~-- 23. Further, Mr Jackson Q ©. submitted that the case was one in which knowledge of the existence of the legal right to rescind (as opposed to the facts entitling) was necessary. He said there was no evidence of such awareness at the time of any suggested election. He referred to authority including Coastal Estates Pty Ltd v. Melevende (19653 V.R. 433, particularly at p.435 and p.442: Elder's Trustee & Executor Company Limited v. Commonwealth Homes and Investment Co. Ltd. (1941) 65 C.L.R. 603, particularly at p.618. In this regard, he again referred to evidence as to awareness or knowledge which it is not necessary to repeat here. Counsel submitted that the acts treated by the primary Judge as constituting election were the iisting of the unit for gale and informing the vendor that the »surchasers would settle. He submitted that the first was not an cxercise of a right under a contract to purchase but merely involved a_ recognition of it and as such was not sufficient ta constitute an election. As to the second, he said that tne evidence did not show that the applicants (purchasers) had said they would settle but merely that they had the capacity to settle. Mr Chesterman @.C., senior counsel for the respondent (vendor) said there was evidence to support the primary Judge's finding of fact that, with knowledge that the lobby, private vestibule and dining area on the 14th floor of the building had been constructed in a manner other than as depicted, e.g. in the advertising brochure, the applicants had attempted to resell the unit which they had contracted to purchase; and that this — | 24. attempt to resell amounted to an unequivocal election to remain bound by the contract. He submitted that the primary Judge was correct in finding that the applicants lost their right to rescind, however accrued. Mr Chesterman Q.C. submitted that the listing of the unit for resale with the estate agent was the clearest possible evidence of an election to remain bound by the contract. Mr Chesterman Q.C. also made submissions in respect of the cross-appeal. He argued that the learned primary Judge was in error in holding that the value of the unit as at January 1983 was $245,000; that the question of the market value of the unit at the time of resale or any other time was irrelevant because the respondent, on its cross-clair, sought and was entitled to damages assessed under ci.6 of the contract and the primary Judge was wrong in taking the contrary view. The respondent's whole case, he said, was predicated upon the enforcement of rights conferred on the vendor by cl.6; in particular, the letter dated 10 January 1983 expressed the intended claim for damages pursuant to that clause. Further, para.16 of the Amended Defence and Cross~Claim had pleaded a ciaim for damages in accordance with cl.6 and not pursuant to common law. The respondent did not call any valuation evidence but merely proved the price at which the unit was resold. Counsel submitted that even if the trial Judge was entitled (contrary to his main submission) to assess damages on the basis of contract price less value of the unit at the time of the termination of the contract there was no evidence to support his finding that en 25. 'the market value of the unit was then $245,000; that the sale price, viz. $225,000 was the best evidence of its value. There wags no suggestion by the applicants, he said, that the respondent acted unreasonably in not selling the unit earlier after termination. He submitted that the onus of proving a failure to mitigate loss was on the applicants. In reply, Mr Jackson Q.C., for the applicants (purchasers) submitted that the primary Judge was correct in treating the respondent's (vendor's) claim as one for damages for breach of contract, not a claim under cl. 6. He referred to paras. 15, 16 and 17, being the claim for relief, of the Amended Defence and Cross-Claim. Further, he said, the correspondence showed that the applicants' (purchasers' ) repudiation of the contract had been ac epted. He reterzed to the letter of 10 January 1983. He noted the distinction between the two remedies. He referred to Cooper _v. nagar (1958) 100 C.L.R. 510 at p.513~-514: Bullion Sales (International) Pty. Ltd. v. Fitzgerald £19833 1 Qd.R. 215 at p.220. Assuming that the case was properly an action for damages, the Judge was entitled to fix the value as at 10 January 1983 at a figure different from that at which it was sold on 3 May 1983 because the only valuation evidence was that of Mr. Gardiner to the effect that values fell continuously from January 1981 to May 1983 and that evidence was accepted by the learned primary Judge. He submitted that the appeal on the cross claim should fail. 26. We have not attempted to recapture fully all of the arguments of counsel. We will consider first the contention by senior counsel for the applicants that the learned primary Judge was in error in finding that the applicants were aware of the relevant differences in the building as constructed, as opposed to what had been shown on the plan, at the end of December 1981 or early in January 1982. Counsel referred to the applicants' evidence that they denied being so aware until April 1982. He submitted that the evidence as to the period about January 1982 showed only that the unit was different in some respects and not the extent of the difference. Counsel referred to his Honour having made a finding in circumstances in which he was disinclined to accept completely the evidence of any of the principal witnesses on either side. Mr Jackson Q.C. did not conrest the primary Judge's entitlement to make such a finding; but his submission was that the primary Judge could not construct his finding from the evidence, not because there was no evidence, but rather because of the quality of the evidence. Having listened to the arguments of counsel as to the evidence bearing upon the applicants' awareness of the changes in the building as at, for example, early January 1982, and re-read the relevant transcript and evidence of the various witnesses, we are quite satisfied that the primary Judge was entitled to make the finding he did, that by 14 January 1982 the applicants were "aware....of the manner in which the lobby, private vestibule and dining area on the 14th floor had been constructed". 27. In reaching this conclusion his Honour did not refer to the evidence given by Mr. Warren Tiplady in the Supreme Court of Queensland some pages of the transcript of which became an exhibit in the case; for that reason we have not taken it into account. It was, 1t seems, after some earlier discussion, admitted without objection. Once admitted 1t was, in our view, evidence of the facts it stated (cf. Walker v. Walker (1937) 57 C.L.R. 630); unless 1ts use was reduced or qualified by the Evidence Act 1977-1981 (Queensland) or otherwise so that it could be said to bear only upon credibility. A consideration of the transcript and of that Act does not persuade us that its admission, to which finally there was no objection at the trial, was by any ruling of the primary Judge wr terms of that Act so restricread, tts contents would nave offered further support for his Henour's finding On this appeal, n> ground has been taken nor argument presented that if was wrongly received into evidence. It would have supported the respondent's case. However, as his Honour did not rely upon it, it is not necessary in the circumstances here for this Court to consider what significance 1t should be accorded in this appeal. The next argument for the applicants was that i1t was necessary for the respondent to show knowledge on the part of the applicants of the right to rescind the contract (as opposed to the facts entitling). On the question of onus, counsel referred to Coastal Estates (supra) per Herring C.J. at p.437 (to which we would add a reference to the decision of Adam J., ibid, p.454). Assuming the proposition there stated to be sound, 1n our opinion —— eee ee en ae 28. "there was evidence given by e.7 "-, Gauci to which we were referred indicating that the applicants, in this case the male applicant, Mr. Tiplady, had the requisite awareness. See also O'Connor v. S.P. Bray Limited £1936] S.R.(N.S.W.) 248 at p.262, 263: Matthews v. Smallwood £1910] 1 Ch. 777: Fuller's Theatre and Vaudeville Company Limited v. Rofe £1323] A.C. 435 at p.443. The evidence, in our view, justified a finding that at a time when the relevant changes in the building were known to the applicants, they elected to affirm the contract and did so with knowledge of an alternative, e.g. "rescission". However, we have not been persuaded that the authorities in circumstances such as these unequivocally support the view that in order to be held to an election the party to whom the election 15 attributed must be shown to have been aware of his or her alternative legal rights. We accept the aryuments that the onus of co showing is on the party, 1n tnis case the respondent, who «.ntends that an election has been made. In what 183 admittedly a different case, Jordan C.J. in O'Connor v 5.P. Bray Limited (supra) said at p.263 - "Tt has been urged that there must also be knowledge of the legal consequences of the facts and of the leqal rights involved; but this is not borne out by the authorities, and the contention is, I think, based upon an attempt to import into ordinary cases of election rules which are peculiar to the equitable doctrine of election." In our opinion, in Utldeéer's Trustee & Executor Company Limited (supra) at p.618, tne Court was of the view that where the issue was whether an election had been made, 1t was not necessary to show there had been knowledge of the existence of the legal right to elect and of the alternative. Coastal Estates (supra) is distinguishable in that the contract there was induced by fraudulent misrepresentation. In Sargent's case (supra) at p.643, Stephen J. dealt in some detail with Kammins Ballrooms Co. Ltd. v. Zenith Investments (Torquay) Ltd. 019713 A.C. 850. He pointed out that Lord Reid and Lord Pearson concluded that the only knowledge which must he shown so as to bind the lessor, the party alleged to have made an election to waive, was knowledge of the relevant factors and not of the legal position resulting from them; and that Lord Diplock apparently came to the same view, though Viscount Dilhorne seemed to have regarded knowledge of the legal position as necessary. Stephen J., later at pp.643-644, after a consideration of the judgment in Q'Connor v. S.P. Bray Lid. (supra) and Mr. J.S. Ewart's work on the subject, both of which denied there existed a requirement for more than knowledge of the facts giving rise to the legal right, expressed a clear preference for the view of Lord Diplock in Kammins 1.e. one could be held to an election if he knew "of the facts which give rise in law to these alternative rights". His Honour, Stephen J's further reference to American authorities at p.644 led him to conclude that "the clear weight of opinion" appears to require knowledge only of the relevant facts and not of the legal rights. XM. In Sargent, Mason J. .t p.656 said:- "Tf a party to a contract, aware of a breach going to the root of the contract, or of other circumstances entitling him to terminate the contract, though unaware of the existence of the right to terminate....exercises rights under the contract, he must be held to have made a binding election to affirm. ... The justification for imputing to the affirming party a binding election in these circumstances, though he be unaware of his alternative right, is that, having a knowledge of the facts....,he has acted adversely to the other party and that, by so doing, he has' induced the other party to believe that performance of the contract is insisted upon." The primary Judge said that the evidence "contradicted any suggestion that (applicants) vere agnorant of their legal rights". In our opinion there was unequivocal evidence to the effect that the applicants, though with knowledge of a legal entitlement not to do so, intended >and did affirm the contract, thereafter communicating that aintention .to the respondent. The learned primary Judge was entitled to accept such a version of the evidence, as he did. We now turn to consider the appeal by the respondent on the cross-claim. The respondent contended that 1t relied on cl.6 of the contract; consequently as the sum awarded by the primary Judge was not calculated in accordance with that clause 1t was inadequate. Clause 6(d) has already been set out above and need not be here re-stated. 31. The trial Judge treaved the matter on the basis that the respondent's claim was for common law (1.e. unliquidated) damages to which it became entitled on the repudiation of the applicants (purchasers). Thus, from the amount which he found would have been payable by the applicants on completion upon the date when the contract was terminated, his Honour deducted, inter alia, what he considered to be the value of the unit at the termination of the contract (which the respondent retained) rather than the price subsequently obtained on the resale. If the exercise was to examine only the trial Judge's conclusion as to value and as to the components of an award of common law damages, there was, in our opinion, no error by the trial Judge. See e.g. Berry v. Mahony (1933) V.L.R. 314 at pp.322-323. In an exercise where direct evidence or ovrecision in resp.ct of value was not available or was immocsib!2, there was ¢ ff-ciert to support his lonour's findings a3 to valu2. 2s Horcur's talevlation of the sum of unliguidated uamiges yould, we suggest, have been then unimpeachable. However, in our opinion, his Honour was in error in treating the matter as one for common law damages rather than the liquidated sum envisaged by ¢cl.6 of the contract. There are, we suggest, various aspects of this problem. First, one should determine which of the two alternatives (common law damages or cl.6 recovery) the respondent was pursuing. Reference might be made to counsel's opening of the cross-claim to the primary Judge. He said at pp.140-141 of the transcript - 32. ...-As far ag the quantum 1s concerned, at this stage I think all items are admitted save for the item of legal costs, which may become subject to an admission. Tf not, Iwill call ny = solicitor to prove that item. HIS HONOUR: I do not see it at the moment. COUNSEL: Legal costs, 16C; 313260. HIS HONOUR: Would they not have been incurred in respect of the original sale? COUNSEL: No. What that 1s is the mortgagee's costs on resale. Mr. Gauc1l will give evidence he borrowed money to put up the building and because of things that happened, he has come to default on the mortgage and the mortgagee taok over the marketing of the units after the slump in the market, and that is a price - that is the Law Society's Scale of Charges for the mortgagee's sale. The quantum does not aive credit to the applicants for the agents commission that would have been payable on the first sale. The amount in 16B of just under $6900 is the agents commission on the resale, but a larger amount, of course, would have been paid to the agent on the «t1ginal sale and we should qive credit for that." His address was, of course, consistent '2th the Particulars of the Cross-Claim as pleaded, which showed the price received on resale as a deduction from the respondent's entitlement. On this opening, there was no reference to the vaiue of the Unit; all the figures which were liquidated sums proved thcmselves though the liability was in issue. If this does not indicate what was the intention of the respondent as to the remedy 1t pursued, it would be appropriate to consider the "language and acts" of the respondent's legal advisers in their letter of 10 January 1983. See the quotation from the learned article of Mr. Piesse referred to in R.R. Watts The Problem of the Defaulting Purchaser p.17, the article itself, notably at p. 68 and authorities discussed thereafter. 33. In our opinion, other "language and acts" of the respondent point clearly to its claim as being an action relying on the contract, cl.6, and not one for unliquidated damages. The letter of 10 January 1983 has been the subject of argument and 13 relied on by both sides. Omitting formal parts, 1t reads - "We refer to previous correspondence herein and note your client's continuing refusal to complete this transaction. We advise that our client does now accept your client's continuing refusal asa repudiation of the Contract, thereby bringing the Contract to an end. We further advise that our client will now be claiming damages against your client pursuant to Clause 6 of the subject Aqreement. It is expected that a Contract will be executed in the near future, and it is further expected that the sale price of same will be in the vicinity of $250,000.00." If one assumed, against ouc preferred view, that the phrase underlined in the first paragraph upon which the applicants' counsel relied could create ambiguity, then the reference in the second paragraph to cl.6 resolves that ambiguity, where, again, there is reference to resale price not value. It is, in our opinion, entirely consistent with the phrase underlined that the actions foreshadowed in the second paragraph of the letter would take place. The contract which was one of purchase by the applicants would, by the resale, so far as the contract was concerned with that object, be indeed brought to an end. The intention announced by the respondent vendor in that letter beyond doubt siagnalled an end to the transaction. It is in harmony with authority that there may still be contractual 34. rights which may be invoked and relied upon by a party even though the contract so far as its main object is concerned is not to be performed. See e.g. McDonald _v. Dennys Lascelles Ltd. (1933) 48 C.L.R. 457 per Starke J. and Dixon J. (as he then was) at pp.469-470, 476-477 respectively. Starke J. said (pp.469-470) "The rescission of the contract....did not operate to extinguish it ab initio, but in futuro, go as to discharge obligations under it unperformed. (Salmond and Winfield, Law of Contracts, (1927), p.320)." Dixon J. said at pp.476-477 - "When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further orrforrance of the eontract, but rights are not divested or discharged which have already been untond-tionally acquived. Riahts and obligations which ari,¢ from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. When a contract 1s rescinded because of matters which affect its formation, as in the case of fraud, the parties are to be rehabilitated and restored, so far as may be, to the position they occupied before the contract was made. But when a contract, which 1s not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for its breach." (Authorities cited). This passage was accepted and quoted in full by Lord Wilberforce in Johnson v. Agnew £19801 A.C. 367 at p.396. 35. The respondent's (vendor's) rights here are accurately described as "causes of action which accrued from its breach" and which "continue unaffected" per Dixon J. (1bid) pp.476-477. The letter of 10 January 1983 announces specifically that the cl.6 remedy is to be pursued. The wording of the Amended Defence and Cross-Claim reflected the respondent's intention (as we have interpreted it) to claim the liquidated sum as cl.6 envisaged. Paragraphs upon which counsel for the applicants relied, viz. paragraphs 15, 16 and 17 of the cross-claim, though they may well have been differently phrased, are, in our opinion, a suitable form of expression for a cl.6 claim. Some significance is attached to "rescind" in para.15. This word has not always been used in the same sense or to convey the same meaning. As to the different senses in which it can be used +e Buckland v. Farmer & Mocdy (a firm) £19781 3 All E.R. 929 re Goff L.J. at p.943: Johnson _v. Aqnew, supra, at pp.392-393. Authorities are also collected in Voumard's The Sale of Land 3rd ed. at p.410 et seq; and see also the reference in The Prohiem of the Defaulting Purchaser at p.16 and the cases yveferred to inMr. Piesse's article at p.62 (see also 6 ALJ 255,291). Its use here is similar to that discussed with reference to the clause considered in Ward v. Ellerton (1927) V.L.R. 494 and Berry v. Mahony, supra. Referring to the former case, Mann A.C.J. in Berry said at ».320 "It was there decided amongst other things that the word 'rescind' in this condition meant no more than determining the contract, and was not used in the sense in which it is used in a Court of equity when giving appropriate relief in the form of a complete restitution of the parties to their original position. Following the decision of the Court in that case, we have here therefore a notice from the vendor that because of the breach the vendor puts an end to the contract." 36. and at p. 321 - "We think that the provision as to resale and as to the recovery of the difference between what 15 obtained by resale and what was contracted to be paid is a provision in the vendor's favour to enable him to determine, 1f he so desires, ina simple and convenient way the amount of his damages, instead of having recourse to a Court of law to ascertain them." rc We note also that in Ward v. Ellerton the clause 6 was similar to the one we are now discussing. In our view the respondent vendor was entitled by the applicants' default to put an end to the contract so as to discharge it from any future obligation it might have had; but to rely on the contract as subsistira for the purpose of enforcing an acquired right; see McDor:la v. Denrvs Lascelles Ltd. «supra)d ab po.469, 470, Further, the particulars of the cross-claim to which we have already referred follow the scneme of cl.6, 1.e. in calculating the deficiency on the resale, then adding any rates paid by the vendor from the contractual date of completion to 3 May 1983 the latter date being expressed to be the "date of settlement of the resrle", AS finally furticularised the respondent's claim for damages for "breacn of contract" was as follows: (a) (b) (c) (d) Ce) (f) (h) (1) (4) This statement 37. Contract price of unit $385,000.00 Less deposit paid 38,500.00 Less agents commission 2,875.00 $336,625.00 Less price at which unit resold 225,000.00 Plus rates paid by cross-vlaimant from 23.7.82 to 3.5.83 (date of settlement of resale) 338.46 Plus maintenance levy paid by cross- claimant from 23/7/82 to 3/5/83 (date of settlement of resale) . 2,857.18 Plus legal costs in respect of resale 1,316.00 Plus agents commission on resale 5,875.00 $122,011.64 Plus interest at twelve percentum per annum (12%) on $336,625.00 from 23/7/92 to 3/5/83 31,430.63 Plus interest at twelve vercentum per annum (12%) on $122,011.64 from 3/5/83 to 16/5/84 15,203.00 $168,645.27 1s completely, we suggest, in conformity witha c1.6 entitlement though 1t seems v%ome items were finally not accepted by hi s Honour. He said, and, ce nape, siqnificantly - bs 9 y "Neither party seemed particuiarly concerned by the questions raised by the respondent's formulation of its clain. Notwithstanding the Court's Rules, the applicants were content to leave their plea in answer to the relevant elements of the respondent's cross-claim to be caught up by a general denial." and later - "There is no room for any suggestion that either party was influenced in the conduct of its case by ary misapprehension eccasloned by the other's pleadings." 38. He referred to the "unsatisfactory" nature of the manner in which the quantification of the respondent's damages was approached. Maybe that which was thought "unsatisfactory" would not have been if it had been recognized as a cl.6 calculation. It 13 further to be noticed that neither party called evidence referrable to the assessment of a claim for unliquidated damages. The respondent did not need to do so because its damages claim was calculated for it by cl.6; and the applicants, again significantly we suggest, did not offer any alternative. This is a case where none of the facts are in dispute as intimated in the respondent's counsel's opening. This Court is in as good a position now es was the primary Judge properly to work out the damages and, in our view, sh-uld do so. In our opinion the respondent's arguments should succeed. The correct order should have been to award a figure to the respondent calculated by deducting the resale price, viz. $225,000, not the value of the Unit. This would increase the amount of the respondent's verdict by $20,600 to $101,770.00. The Orders we propose are - l. The appeal of Murray Norton Tiplady and Laurel Rose Tiplady be dismissed. 2. The cross appeal of Gold Coast Carlton Pty Limited be allowed. las Tussqmenh be sphere }ofle s lid Toxet Warlbore ots met. LO Fam i Sl oL, eT ta cnebeg et a SB Lea Mirgay N-nct o2 TPrelady ard Laurel Poce Pepaady opav tree --f2 1° Gold Coat Dagiton Bre Tompbest oof the appeal ard fo Se orcte AE EAL re a a i oe a _ i I certify that this and the 38 preceding pages are a true copy of the Reasons for Judgment herein of their Honours Mr Justice McGregor and Mr Justice Spender. Nate: 28 Septemper 1984 Ae A ciate iN' THE FEDERAL COUPT OF AUSTRALIA | OUFENSLAND DISTRICT PRUE TRY. : GENERAL DIVISION ' ON APEEAL TPOM A JONGE OF THE PRDEPAL CourT oP AUSTPALTA No OLD. ue% 32) 94 EDTRTE MU"RAY NOFTON TIPLADY AND PAUREL FOS5n TIPLADY Arvellants SNQ GOLD COAST "ALTON PTY. "TMITED respondent 'lo, OLD. 3. "A or 1994 HET UETE T+ aa COPAM: McGREGCe, LOTKFARY » sPENDE® 17. DATE: 1 OCTORS+ Lie PRASON > LOCKHART J. In thie FOP C OD Sei we matter Io nave had the advantige uf reading the reasons for judgment rrerared by Mcureqor and Seender JI. I net rmeed to veveat rhe account of tne tarts and of oroceedings pere:s the rearnet crial furaqde vhieh my be struers have riven I fand - .8@l1f in aregtcmert vw th there cecrelusiens on all yeestiens, butt gn ro awd same reese yahr yg ct ou ar tw It was common aground before us that Murray Norton Tiplady and Laurel Rose Tiplady ("the appellants") were entitled to rescind the aqreement for their purchase of a unit in the building "Ocean Rovale" by reason of the respondent's failure to construct the unit in accordance with the terms of the aqreement. The appellants araued, however, that the trial Judqve erred in finding that the appellants had lost their right to rescind the agreement bv electing to affirm it. Thev challenged this finding in three respects. First. the appellants asserted that the trial Judae should not have found that the appellants were aware of the alterations to the unit by late December 1981 or narly January 1982. It was the appellants' case at the trial that they sere not aware of those chanqges until April-June 1982. There i3 a dearee of conflict of evidence on this question. The appellant. Murrav Norton Tiplady ("Mr. Tipladyv"), aave evidence that. althouqdh he was on the site of the buildina in earlv January 1982. it was then 1apossible to observe any of the matters that were later observable as substantial variations to the construction of the unit as it was provided for Ly the aqreement. The appellants submitted that this evidence of Mc. Tipladv was supported by Mr. Richards. the architect. whose evidence was accepted bv the trial Judqe. Other evidence was aiven touching this question by the appellant Laurel Rose Tipladv ("Mrs. Tipladv"). Mr. Gauci who is the manaqing director of Gold Coast Carlton Pty, Limited ("the respondent"), Mr. Ouarmby, the sales manager of St. Georae Real Estate of Broadbeach which 1s the respondent s adqent for sale of "Ocean 3. ' Rovale", and Mr. Warren Tipladv, the son of the appellants who. for part of the relevant time, was emploved as a salesman by St. George Real Estate. More than one conclusion was open on this evidence to the trial Judae. It was doubtless open for him to find that Mr. Tipladv knew early in January 1982, havina then visited the site. that the building was well advanced, and therefore that he should have been alerted to the fact that there were or would be substantial changes to the unit, but that he did not realise the true effect of this until April 1982. However, his Honour was not very impressed by the credibility of certain of the witnesses. He said: "It was a feature of this case that all of the principal actors were unreliable witnesses. Those who agave evidence included Mr. and Mrs. Tipladv, their son Warren. who for part of the relevant time, was employed as a salesman by S*, George Real Estate, Mr. George Gauci. the respondent's manaqing director and Mr. Quarmbv. None would score hichly if rated for credibilitv. I have not tound it a useful exercise to trv to establish an order of preference between these persons as witnesses but have taken the evidence of each and my views concerning it into account in arriving at what seems to me on the evidence overall tec have been the probable order of events." There was ample evidence before his Honour to support the conclusion to which he «ame namelv. that the appellants were aware of all the relevant chanacs to the building by late December 1981 or earlv Januarv 1982. It has not been established that iis Honour erred in reachina that conclusion. +. The second respect in which 1t was submitted that his Honour erred on the question of election was in his Honour's acceptance of certain conduct of the appellants namelv, the listing of the unit for cale and statements of Mr. Tipladv that the appellants would complete their purchase of the unit, as constituting their election to affirm that purchase of the unit. It was submitted that the evidence did not entitle the trial Judae to conclude that the appellants had listed the unit for sale; all that it established was that thev had the capacity to do so, so that they merelv recoaqnised the existence of the contract and did not affirm it. The trial Judae found that on 14 Januarv 1982 Mr. Tiplady had been in touch with a real estate aqency at Surfers Paradise and said to the aaencv that the arpvellants' unif in "Ocean Rovale"" was available for resale. H13 Honour found also that the appellants had been in touch with other agents and that further attempts were made to sell the unit. We were referred in araument to the evidence bearing on this finding in support of the assertion that the appellants had done no more than take steps to make preliminarv inquiries of real estate aqents as to whether the unit could be listed for sale. However, in mv opinion there was sufficient evidence to support the findina of the trial Judae which in essence was that the appellants attempted to resell the unit. The evidence relatina to the question whether Mr. Tiplady had said that the appellants would settle their purchase of the unit from the respondent is somewhat uncertain and = sparse. The principal evidence in support of the Mr. Gauci in these terms: "On this occasion in Januarv, where did 'ou see Mr. Tipladv: in what part of the buildina?--In the fover, he come up in the lift. Did you have a discussion with him?--Yes. What was said?--I asked him about how the sale was qoing and he said there was no one interested at that staqe. Was anything else said?--That there was also a discussion made reaardina work when I was overseas and Kamahi would be interested in buying his penthouse, too. Were vou at all concerned?--Verv mich. What was vour concern?--Myv concern was whether he could sell. Did vou speak to him about that?--Yes. What did vou sav and what did he 3av?--fle said he could settle - 1f he did not sell it, he could not sell it. Did you see Mr. Tiplady on the site on one "ther occasion?~--Yes, I had seen them «on another occasion. I had seen Mr. Tipladv quite a few times. not everv time I had seen him did I speak to him, on the times [ made contact with him - - - Did you ever see Mr. Tipladv on the site - -?---In April - - - Did vou see him in April?---Yes Of what vear?---1982. Did you speak to him then?---Yes. What was said?---He was 3ettlina. trial Judae's sonclusion was that aiven bv That is a bit crvptic. Tell me what vou said and tell me what he said?---I asked him whether he was going to settle, had he heen in contact with Kamahl, and so forth, and he had not. and I asked him when was he qoina to settle, if he could afford to settle. And what did he say?---Yes." A little later in his evidence Mr. Gauci sald: "And what about the conversation with Mr. Tiplady when the question of his Listindg the unit for sale came up - what about those conversations?---That concerned me, and this is why I did ask Mr. Tiplady whether he was sellina the penthouse, because that is what I had heard. And vou have had those conversations pretty much in mind throuqhout?---Yes, vory much, because when Mr. Tipladv said to me. ves, he is selling 1¢, ani then telling me hen fhe market was quiet he had no interest on it. and then tellina me he would be tall.ina to Kamahl when Kamahl came back, to see if he wanted to buv his as well - vou would not rordqet that, would vou? You did not fust think of those conversaticns recentlv?---No, sir; no, 31r. You had them very much in mind for some time?---Yes, very much, verv sericuslv. ves." Mr. Tiplady denied in substance that he had ever said that the appellants would complete their purchase of the unit. Although the evidence is unsatisfactory in some respects, it must be remembered that the trial dudae had the benefit of seeing the witnesses and assessing their answers in the light of the evidence as a whole. In my view it has not been established that his Honour erred in concluding that Mr. Tipladv told Mr. Gauci that the appellanrs intended to complete the aqreement if they did not resell the unit before the time for completion fell due. It has not been established that the trial Judae erred in concluding that the acts of the appellants constituted an election to affirm the aqreement. The third respect in which it was submitted that his Honour fell into error on the question of election lav in his finding that the appellants knew. at the time of their election to affirm the aqreement, of the existence of the right to rescind it. This branch of the appellants' arqument involves two elements: first. whether the case is one wherein knowledae of the existence of the riqght to rescind is necessary in law and, second, whether there was anv evidence of such knowledge at the time of the election. I do not find it necessarv to consider the first question because I am satisfied that no case has been established for interfering sith the trial Juddae's finding that the appellants knew of their riaht to rescind at the time thev elected to affirm the aqreement. The appellants submitted that the trial Judae made inconsistent findinas which were critical to the question whether anv knowledge could be imputed to the appellants of their right to rescind the contract. Having found that the appellants made attempts to sell the unit in Januarv 19A2 and that thev were confident they would be able to resell the unit at a profit "and did not wish any complications to be introduced into their transaction with the respondent", the trial Juddae then found: "There was no basis for optimism. The downturn in the market accelerated and grew more severe, prices fell, and 1t became increasingly difficult to find purchasers for units." The applicants changed their minds and decided to strive to escape from the contract. They consulted their solicitors. I find that they did so shortly before a notice dated 2 June 1982 was forwarded to the respondent purporting to avoid the contract. Considerable inaenuity and imaqination were employed in the drafting of the grounds relied upon which, however, failed to make any identifiable reference to the alterations to the unit which the applicants had contracted to purchase. Nonetheless, I am satisfied that the applicants did inform their solicitors of those alterations and, in the same month. an architect was enaaged on behalf of the applicants to inspect the unit and report..." Later in his reasons for tludagment his Honour found: "In view of the absence of any wider suggestion in the respondent's defence I have consiiered only the doctrine of election. On even the most technical and restrictive view of its ambit, there does not seem any doubt that the applicants lost their right to rescind. They knew the facts upon which their rights to rescind depended. Even if they were not deemed to know the terms of the contract ... the evidence contradicted any suqgestion that they were lanorant of their leqal rights. Although I do not accept critical aspects of the applicants' version, their own case was that they went to their solicitor immediatelv on discoverv of changes to the unit. (The solicitor was not called.) The applicants were not required to elect as soon as they knew what the respondent was constructing and why, but they did not merely stand idle; and the respondent's allegation of election is not founded merely on the applicants delay ..." It was submitted that the inconsistency lay between the trial Judge's finding that the appellants consulted their solicitors shortly before 2 June 1982 and then told them of the alterations to the building and his later finding that the appellants' own case was that they went toa solicitor immediately they discovered the changes to the unit. In these circumstances it was said that the Judge's finding that the evidence contradicted anv suaqqestion that they were iqnorant of their legal riqahts in about January 1982 could not stand. In mv opinion his Honour was expressing the opinion, in the passages cited above, that the appellants informed their solicitors shortlv before 2 June 1982 of the changes that had been made to the unit, and that they did so in the context of a consultation whereby thev soudht to escape from the contract. It does not seem to me to be a fair readina of his Honour's reasons to sav that he in substance found that this was the first and only occasion on which the appellants told their solicitors of the ctanges to the unit. I recoanise, however, that there 1s no positive finding made bv his Honour that the appellants consulted their solicitors on this subiect in or about Januarv 1982 immediately after thev discovered the changes to the unit. I think what his Honour was) saving was that, from whatever source they aleaned it. the appellants knew in or about Januacy 1982 - after they had discovered the changes to the unit - of their riaht either to rescind or to affirm the contract. Whether that knowledge was aained bv them from consultations with their solicitor or otherwise is not clear. Nevertheless, his Honour was satisfied on the whole of the evidence that, whatever mav have been the source, the uppellants knew then of their rights. 10. The respondent cross appealed from the trial Judae's award of damaqes to the respondent in the sum of $81,770.00. His Honour treated the respondent's claim as one for damages for breach of contract and not a claim under clause 6 of the aaqreement. The appellants souaht to uphold this approach to the question of damaqes, but the respondent arqued that its claim should have been determined as a claim under clause 6. It was common around before us in araqument that this was the only point presentlv in issue between the parties on the question of damages and that, if his Honour correctly treated the claim as one for damages for breach of contract, then he correctlv awarded the sum of $81,770.00 as damages: but that. if the claim should be treated as one under clause 6, then the respondent's damages should be increased bv $20,000.00 to $101.770.00. The respondent's cross-claim, so far as it is presently relevant. alleges as follows:- "14. In breach of the said contract the cross-respondents did not pav the cross-claimant anv part of the balance purchase price on the due date for settlement and did not otherwise settle the contract. 15. The cross-respondents persisted in their refusal to complete the said contract and by letter dated 10th Januarv 1983 from the cross-clatmaint's solicitors to the cross-respondents' solicitors the cross-claimant accepted the said refusal as a repudiation of the said contract and rescinded it. 16. As a result of the cross-respondents' repudiation of the said contract the cross-claimant has suffered loss and damaae, particulars of which are:- 1h. (a) Contract price of unit $385,000.00 (b) Less deposit paid . 38,500.00 (c) Less aqents_commission 9,875.00 $336,625.00 (d) Less price at which unit resold 225,000.00 (e) Plus rates paid bv cross-claimant from 23/7/82 to 3/5/83 (date of settlement of resale) 338.46 (f) Plus maintenance levy paid by cross-claimant from 23/7/82 to 3/5/83 (date of settlement of resale) 2,857.18 (a) Plus leaal costs in respect of resale 1,316.00 (h) Plus aaents commission on resale 5,875.00 $122,011.64 (1) Plus interest at twelve percentum per_annum (12%) on $33,625.00 from 23/7/82 to 3/5/83 _ 31,430.63 (4) Plus_interest at twelve percentum per_annuum (12%) on $122,011.64 from _3/5/R3 to 16/5/84 _15,203.00 $148,645.27 17. And the cross-claimant cross-claims aqainst the cross-respondents for ONE___ HUNDRED SIXTY-EIGHT THOUSAND ST HUNDRED AND FORTY-FIVE DOLLARS AND TWENTY-SEVEN CENTS ($168,645.27) damages for breach of contract." The letter dated 10 January 1983 from the respondent's solicitors to the appellants' solicitors mentioned in paragraph 15 of the cross-claim is in the following terms, omitting formal parts: "We refer to previous correspondence herein and note your client's continuing refusal to complete this transaction. We advise that our client does now accept your client's continuing refusal as a repudiation of the Contract, thercby brinaing the Contract to an end. We further advise that our client will now be claimina damaqes aqainst vour client pursuant to It is expected Clause 6 of the subiect Aareement. that a Contract will be executed in the near future, and it 1s further expected that the sale price of same will be in the vicinity of $250,000.00." 12. Paragraph 15 of the cross-claim and the first paragraph of the letter of 10 January 1983 lend force to the submission of the appellants that the true nature of the respondent's claim is one for general damages for breach of contract. But the correspondence between the solicitors. culminating in the letter of 10 January 1983, must all be examined to determine the true nature of the respondent's cross-clain. Paraqraph 16 of the cross-claim was relied on by both the appellants and the respondents in support of their respective submissions. In my opinion paraaraph 16, which details the particulars by which the respondent fashioned its claim for damages, is neutral on the question of the true nature of the claim itself. Paragraph 17 was also relied 'ipon bv the appel_ants and the respondent in support of their respective contentions: but it too seems to me to be neutral. In their letter of 4 June 1982 the solicitors for the respondent said to the solicitors for the appellants: "If your client does not in fact proceed to settlement, our client will be forfeitinda the deposit monevs paid. and will pursue its further riahts set out in the subiect Aareement." By letter of 22 June 1982 the respondent's solicitors purported to fix Fridav 23 Julv 1982 as the date for settlement following the reaistration of the Building Units Plan on 22 June 1982. The letter said: 13. "This letter is to serve as notice pursuant to the provisions of clause 3(a) of the subiect Aqreement." Other correspondence was exchanged between the solicitors for the parties, but the letters from the respondent's solicitors were all written, it seems to me. on the footina that completion was to take place on 23 Julv 1982. In their letter of 26 July 1982 the solicitors for the respondent wrote to the solicitors for the appellants statina in effect that, as settlement did not take place on 23 July 1982 when the respondent was readv willing and able to settle the agreement, the appellants were therefore in breach of their "obliaations pursuant to the said Agreement". The last paraqraph of that letter said: "We hereby qive notice that our client requires completion of the Contract strictlv in accordance with the terms thereof. We have received instructions from our client to prepare and file Writs seeking the specific performance of the Contract and damages in lieu of or in substitution for specific performances, or in the alternative, damaqes for breach of the Contract." On 13 December 1982 the solicitors for the respondent wrote to the solicitors for the appellants noting that the appellants had: ».. breached such Contract by not completing on that dav and at the present time vou remain in breach of the said Contract. We write to inquire whether vou now intend to fulfil vour obligations and complete settlement of the said Contract, or whether vou still persist in vour refusal to do so. Please let us have vour replv setting out vour intention within five (5) davs of the date hereof. If we do not hear from you within that time we will assume that vou do in fact continue in vour refusal to perform your obliaations pursuant to the said Contract." 14. Then came the letter of 10 January 1983. Clause 6 of the Contract is in the following terms: DEFAULT 6. If the Purchaser fails to comply with the conditions ofsale herein set out or any of them then (in addition to any other remedv available to the Vendor) the Vendor may:- (a) Forfeit to the Vendor the monevs paid on account of the purchase price by the Purchaser to the extent of ten per centum (10%) of the total purchase price. (b) Without notice to the Purchaser cancel this Contract and resume possession of the said unit. (c) Sue the Purchaser for breach of contract. (d) Without notice to the Purchaser resell the said unit bv public auction or bv private contract with power to vary or rescind any contract for sale and to bid at any auction and the deficiency in price on such resale and the expense of and incidental to repossession and to the present sale and such resale and any abortive attempt to resell together with all rates, taxes and other outgoings accrued due in respect of the said unit at the date of resale thereof which were payable by the Purchaser under the terms of this Aqreement shall be paid to the Vendor by the present Purchaser and shall be recoverable as liquidated damages. {e) Do all or any of the above thinas at its option. The Purchaser will indemnify the Vendor against any loss which the Vendor sustains as a result of the Purchaser's default." I note that clause 6, when defining the riahts of "the vendor", upon "the purchaser's" failure to comply with the conditions of sale, specificallv confers the riaht upon the vendor, without notice to the purchaser, to "cancel this Contract": also to "Sue the Purchaser for breach of Contract". These words aive, I think, some 15. clue to the true construction to be aiven to the letter of 10 January 1983. As I said earlier. the first paraqraph of that letter uses the lanauage traditionally associated with a vendor's election to rescind an agreement followina the repudiation by the purchaser of his contractual obligations. But the second paraqraph makes it plain that the respondent is purporting to claim damages pursuant to clause 6 of the aaqreement and the reference to the expected sale price. upon the resale of the unit, of $250,000.00 obviouslv relates to the right of the respondent as vendor to resell the unit to recover the deficiency in price on resale pursuant to sub-clause 6(d) of the aaqreement. These considerations outweigh in my view the lanquage of the first paraqraph of the letter of 10 January 1983. Notwithstanding paraqraph 15 of the cross-claim, I think the better view is that the claim for damaqes brought bv the respondent should be treated as one under clause 6 of the aqreement and not for unliquidated damages for breach of contract following the repudiation bv the appellants of their contractual obliaqations. I would dismiss the appeal, but allow the cross appeal. I aqree with the orders proposed by the other members of the Court. | certfy that this and the preced ng pages are a true copy of the Reasons fer Judgment herein of hs Honour ie Justice Lockhart , . a ' ese a ae {es Cn Associate