JUDGMENT No. S84), BZ CATCHWORDS TRADE PRACTICES - Auction of leasehold interest in land for medium density housing - Documents made available to prospective bidders including drawing showing fill resulting from engineering works carried out prior to land being offered for lease - Additional fill discovered on land after purchase - Whether false or misleading statement made concerning the characteristics of the Land. Trade Practices Act 1974 (Cth), ss. S3A, 82 Parkdale Custom Built Furniture Pty Limited v. Puxu Ptv Limited (1982) 149 C.L.R. 191 Norman v. Bennett (1974) 3 Al1L E.R. 351 Abundant Earth Ptv Limited v. R_& C Products Pty Limited (1985) 59 A.L.R. 211 Yorke v. Lucas (1985) 158 C.L.R. 661 Peek v. Gurney (1873) L.R. 6 H.L. 377 PHILLIP & ANTON HOMES PTY. LIMITED v. THE COMMONWEALTH OF AUSTRALTA No. ACT G 15 of 1987 CORAM: Fox, Marling & Pincus 7c. 4 December 1987 Svdnev Ny Sy EN If sear { | - FDECRR Y\ secocpargounteas | A NeTIAMA WON F Loy ' ' ES ww tee wee soomNe - tat all alone a IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACT G15 of 1987 ) ) } ) DISTRICT REGISTRY ) ) GENERAL DIVISTON ) ON_APPEAL from a single judge of the Federal Court of Australia BETWEEN : PHILLIP & ANTON HOMES PTY. LIMITED Appellant AND: THE COMMONWEALTH OF AUSTRALTA Respondent MINUTE OF ORDER JUDGES MAKING ORDER: FOX, MORLING AND PINCUS JJ. DATE OF ORDER: 4 DECEMBER 1987 WHERE MADE: SYDNEY, THE COURT ORDERS THAT: 1. The appeal be allowed. with costs. ae The orders made bv Neaves J. on 16 February 1987 be set aside. In lieu thereof it be ordered that judament be entered for the appellant in the sum of $15,705, with costs. NOTE: Settlement and entry or orders is dealt with in Order 36 of the Federal Court Rules. DS elieaneaemaeneaicieed IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACT G15 of 1987 J ) ) ) DISTRICT REGISTRY ' ' GENERAL DIVISTON 1) ON APPEAL from a sindle judde of the Federal Court of Australia BETWEEN : PHILLIP & ANTON HOMES PTY. LIMITED Appellant AND: THE COMMONWEALTH OF AUSTRALIA Respondent CORAM: FOX, MORLING AND PINCUS JJ. DATE: 4 DECEMBER 1987 REASONS FOR JMDGMENT FOX J. This is an appeal from a decision of Neaves 7, wherein his Honour dismissed an application for damadges by Phillip & Anton Homes Pty.Limited against the Commonwealth of Australia made under s.82 of the Trade Practices Act 1974 ("the Act") for loss or damage alleged to have been suffered as a result of the making of a statement which contravenes s.53A(1) of the Act. At the relevant time s.53A(1)(b) provided as follows:- "S3A.(1) A corporation shall not. in trade or commence, in connexion with the sale or grant, or the possibie sale or qrant. of an interest in land or in See ene er ey ae: ro4 rat Te nts een eee Fo ene wegen ecw ne ow connexion with the promotion by any means of the sale or qrant of an interest in land - {a) eee (b) make a false or misleading statement concerning the nature of the interest in the land. the price payable for the land. the location of the land. the characteristics of the land, the use to which the land 1s capable of being put or may lawfully be put or the existence or availabililtv of facilities associated with the land;" The case proceeded on the basis that the respondent was bound by the relevant provisions of the Act as if it were a corporation for the purposes of the Act. On 6 April 1981 the respondent sold leasehold interests in some land in the Australian Capital Territorv by way of public auction. Included in the auction was land desiqnated as Block 4. section 48 Division of Scullin. The appellant purchased the interest in that land. The auction had been advertised in "The Canberra Times", the advertisement indicating that certain documents were available to interested persons. In one such document the following paragraphs appeared: "Ll. The information provided herein, or 1n anv other plans or schedules made available bv the Commonwealth. is for qeneral knowledge onlv and is in no way to be taken as binding on the Commonwealth of Australia or the National Capital Devlopment Commission. 2. These conditions are for the information of intending bidders for leases of land for Medium Densitv housing offered at auction and should be read in coniunction with the schedules and plans. 3. Prospective lessees are expected to take all prudent steps to ascertain the conditions applying to the block/s." my eo ee spe on Rasa In another document under the heading "General Conditions", cl.11 was in the following terms:- "Reqrading and Fill As part of the enqineering works carried out prior to the blocks being offered for lease some changes to the natural surface have occurred as depicted on Drawing No. 769/76. Prospective lessees are advised to exercise special care in this regard. Neither the Commonwealth nor the National Capital Development Commission their agents or servants shall be liable for any disability on the blocks." Drawing No. 796/76 depicted two comparatively small areas of fill on Block 4, section 48. Prior to the auction, Mr Domazet, the proprietor and managing director of the appellant and a builder by trade, obtained and read copies of the above documents. He had been a builder in the Australian Capital Territory since 1972 and had purchased a large number of blocks of land from the respondent. He testified that, in his experience, the information in such documents was accurate. Mr Domazet had inspected the block in question and concluded that the fill shown on Drawing No. 796/76 would not present any problem in relation to his planned construction of units, except with respect to one corner of the block where he anticipated additional costs for the foundations due to the presence of the depth of fill as depicted on the drawinga. His Honour accepted that, at the time of Mr Domazet's inspection, the land was qrassed over and it was not possible bv visual inspection to discover whether there was anv fill on the wre eet enw eer os land. Mr Domazet did not have any work done on the site to determine whether fill was present. At the auction itself. the auctioneer made specific reference to the fact that the documents available included plans containing information about reqrading and fill. The auctioneer's statement at the commencement of the auction contained the following paragraph:- "Intending purchasers should note, however, that the Commonwealth does not warrant the correctness of the plans and the information shown thereon. Tt is a condition of sale that a purchaser shall not be entitled £o raise any obiection, requisition or claim compensation against the Commonwealth in respect of the existence of regrading, fill or any other disability on the land." At the auction the appellant was the highest bidder. A short time thereafter a lease of the land was granted to 1t under the City Area Leases Ordinance 1936 (ACT). In the course of excavation work at the end of October 1981, it was discovered that there was much more f111 on the block than was disclosed bv Drawing No. 769/76. Tn fact it covered the whole of the rest of the land. That disclosed in the plan was only part, the additional fill being in general deeper than that which was disclosed, being of a depth ranging from half a metre to about one and one half metres. Consequently, the foundation of a number of the units had to be excavated toa greater depth than previously anticipated. This necessitated additional expenditure which is the basis of the clain. The units were subsequently completed and sold. ee Se ee ee =o Tr, On the evidence his Honour found that the fill on the block additional to that depicted on Drawing No. 7A9/7A was not placed on the block as part of particular engineering works ecarried out prior to the block being offered for lease. In that ceaqard, his Honour accepted the evidence of Mr McInernev, an enaineer emploved by the National Capital Development Commission, who inspected the site after excavation work for the foundations had commenced. His Honour found that, in bidding for the land. Mr Domazet acted on the basis that there was no f111 other than that shown on Drawing No. 796/76 and that he did so having read the documents made available by the respondent and having heard the auckloneer's statement. Me Domazet alleged that he would not have bid as much as he did had he known the true situation. It was alleged that by the documents so made available, and in particular, by Drawing No. 769/76, the respondent made a statement which was false or misleading, concerning the characteristics of the land, namely because it implied that there was no fill on the land other than that depicted on the drawing. The question was whether such a representation or statement was made. His Honour said that the drawing 'was not provided without qualification or explanation. Tt formed an inteqral part of the other documents which expressly stated that what was depicted on the drawing were the changes to the natural surface of the land which had occurred as part of the engineering works carried out prior to the blocks being offered for lease. we Vomgee ee . ne Ws It was submitted by the applicant that the clauses exempting the Commonweaith from liability, to which I have earlier referred. did not exclude the operation of s.53A of the Act. However. his Honour held that reaard was also to be had to other statements in accompanving documents, including the statement. set out above, that the information provided was for qeneral knowledge onlv and was not in anv way to be taken as bindina on the respondent, the statement that prospective lessees should exercise special care in reqard to the reqrading and fill and the statement that the respondent was not to be liable for any disability on the land. His Honour took into account that the sites were being offered for medium density housing so that prospective bidders would be experienced builders and developers. He also had regard to the auctioneer's statement that the respondent did not warrant the correctness of the plans. His Honour concluded that the respondent was not making a statement. by implication or otherwise, that there were no areas of fill other than those shown on Drawing No. 769/76. He held that the statement that was made was that there were areas of fill on the block which had resulted from engineering works carried out by or on behalf of the respondent or the National Capital Development Commission. That statement, his Honour held, had not been shown to be false or misleading. His Honour was unable to accept that Mr.. Domazet. a builder of many years experience, would read the drawing and its accompanying documents as making a statement to the effect of that relied upon concerning the characteristics of the land. In mee eet eye rn a ae his opinion, the application failed. His Honour went on, however. to consider what the situation would have been if, contrary to his finding, the respondent had made the statement alleged. He found that sucha statement would have been false and misleading and thus in contravention of s.53A of the Act. He would have assessed damages as the reasonable cost of carrying on additional building work made necessary by the additional fill. He quantified that at $15,705. In mv view the question centres around the effect of clause ll of the qeneral conditions, which I have alreadv set out. I do not think that other more qeneral clauses which relate in the main to the protection of the Commonwealth from liability under certain heads, have any real effect on the conclusion to he reached. When it comes to clause 11 (and to the plan), I must confess that my views about the matter have fluctuated. The question is one of the impression created by the words used and whether a relevant representation or statement is to be implied from them. Because the question is one of impression I have thouqht that a proper course would be merely to affirm the decision of the trial judge. In the end however. I have come to a conclusion concerning the words and their effect which leads me to differ from him. It seems to me that when they are read naturally and in the place in which thev appear in the documents, and with the plan, they are certainly saying that there is fill in certain areas only (which are associated with some engineering works), There seem to me to have been two misleading statements. One 1s that "change" 1n the "natural surface" (see cl.11l) would readily be understood to relate to the recent engineering works anly, whereas this was not the fact. Another wav of putting this matter 1s to say that there had only been a limited artificial change, but this would again be contrary to the fact. Then there is the caution announced about fill that prospective lessees "are advised to exercise special care in this regard". This would I think be understood as a warning about the "fill" disclosed on the plan i.e. that which was delineated, and would imply that there was no other. The exclusion of liability for any disability on the blocks" could be taken as referring to the disability disclosed, namely the fill depicted on the plan. The reference made 1s to engineer's fill, but this would not be taken as more than descriptive of particular fill, and- not in any way conveying an implication that there was or might be more fill. The evidence indicates that the additional fill was as mucha problem, or likely to be as much a problem as the enqineer's fill. The total picture seems to me to be one in which the references to change in natural surface. and areas of fill. were misleading statements, having in mand that the whole of the land comprised f111. It is a small matter, but the drawing itself (No. 796/76) refers boldly to "area of fill". As to the quality of the fill, 1t may be, as Mr McInerney said. that the fill on the main body of land would not normally be regarded as ""enaineering fill". There is reference eo crams cer ce Neoed . el ot an en oe re] to the presence in the other fill of foreign objects but plainly on a very large block such as that now in question, they can only form a small part of the fill, having in mind that the block is arassed and that the fill is not discernible to the eve. In short, there must be a lot of soil, beyond "engineer's fill". T find the presence of this other fill rather intriquing. The block, we are told, is relatively flat. On the plan the boundary of the recent engineering fill is marked with dots and the depth at various points 1s indicated. Tt seems probable that the testing to find the boundaries and the depth of the fill was done after the other fill was in place. If the other fill was placed on the site after the engineer's fill the authorities concerned with the sale would be bound to have a recent knowledge of it. It would seem remarkable that in the course of ascertaining these boundaries the presence of the immediately contiquous fill should not have become known. The boundaries of the new fill. which relate to two distinct areas, extend quite some distance and it would seem strange indeed that anyone could carry out a test to fix them and ascertain depths without learning quite a bit about the presence of the old fill. TI do not suggest, and there has been no case made, that any of the officers of the National Capital Development Commission concerned with the present sale had anv knowledge of the old fill, but it seems most likelv that there is some document in existence which at least makes reference to it. Put broadly, it would seem to me likely that the Commonwealth through the National Capital Development Commission, or by some other agency, had knowledge of the extra fill, whenever it was put there. The feces get resp ee syn sere 10. 1 more recent drilling, one suspects, must have made the old fill apparent. All this however, would at the most add up to a matter ef concealment or a case relving on a different section of the Act. [It is not therefore a matter the subject of the present case, and as I have said has not been raised in the course of it. The question is whether there was a misleading statement and in my view there was. IT would therefore allow the appeal with costs. There has been no suggestion that the amount of damages assessed is wrong, and in those circumstances his Honour's orders should be set aside and judament entered for the appellant in the sum of $15,705. I certify that this and the nine (9) preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Fox. Associate: Shot Date: 4 December 1987 e reer mrp oor + or a jorot ee pepe ae ee ete 'oe IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. AcT G 15 of 1987 DISTRICT REGISTRY GENERAL DIVISION BETWEEN: PHILLIP & ANTON HOMES PTY. LINITED Appellant AND: THE COMMONWEALTH OF AUSTRALIA Respondent CORAM FOX, MORLING and PINCUS JJ. DATED: 4 December 1987 REASONS FOR JUDGMENT MORLING J.: This is an appeal from a decision of a judge of the Court (Neaves J) dismissing an application brought by the appellant against the Commonwealth of Australia under s.82 of the Trade Practices Act 1974 ("the Act") for loss or damage alleged to have been suffered by conduct done in contravention of s.53A(1) of the Act. At times relevant to the circumstances giving rise to the appeal, s.53A(1), so far as material, provided as follows: "53A. (1) A corporation shall not, in trade or commerce, in connexion with the sale or grant, or the possible sale or grant, of an interest in land 2. or in connexion with the promotion by any means of the sale or grant of an interest in land - (a) eeee (b) make a false or misleading state- ment concerning the nature of the interest in the land, the price payable for the land, the location of the land, the characteristics of the land, the use to which the land is capable of being put or may law- fully be put or the existence or availability of facilities associated with the land;" The proceedings arose out of the purchase by the appellant from the Commonweaith of a leasehold interest in land in the Australian Capital Territory. It was alleged by the appellant that prior to the sale the Commonwealth made a false or misleading statement concerning the characteristics of the land. The Commonwealth did not dispute, either at the trial or on the hearing of the appeal, that it was at all material times engaged in the business of selling land and that it was bound by the relevant provisions of the Act as if it were a Corporation, as provided in s. 2A of the Act. On 6 April 1981 the Commonwealth sold by public auction a leasehold interest in land known as Block 4, Section 48, Division of Scullin in the Australian Capital Territory. The appellant was the highest and the successful bidder, its successful bid being $171,000. Prior to 6 April 1981 the forthcoming auction was advertised in "The Canberra Times" newspaper. The advertisement indicated that certain ue ire eden an ais 3. decuments concerning the land to be offered for sale and the conditions of sale were available to interested persons. These documents included a document entitled "General Information on Sites for Medium Density Housing" and a document entitled "Residential Land Auction, 6 April 1981. Sites for Lease for Residential Units." The first document contained the following paragraphs: "1. The information provided herein, or in any other plans or schedules made available by the Commonwealth, 1s for general knowledge only and is in no way to be taken as binding on the Commonwealth of Australia or the National Capital Development Commission. 2. These conditzons are for the information of intending bidders for leases of land for Medium Density housing offered at auction and should be read 1n conjunction with the schedules and plans. 3. Prospective lessees are expected to take all prudent steps to ascertain the conditions applying to the block/s." The second document related to a number of specified Blocks only, including Block 4. It contained provisions stating some of the important conditions of the leases offered for sale including provisions for the commencement and completion within specified times of approved buildings in accordance with approved schemes of development and construction of adequate vehicle access roads. In respect of Block 4 the schedule to the second document provided for a building covenant of $198,000 and specified the maximum number of units which would be considered for building approval. sae wee ee ee er lr yrs ~ ore weenie cen ce eee een yes ee ee A et 4, ' Clause 11, which was included under the heading "General Conditions", was in the following terms: "Regrading and Fill As part of the engineering works carried out prior to the blocks being offered for lease some changes to the natural surface have occurred as depicted on Drawing No.769/76. Prospective lessees are advised to exercise special care in this regard. Neither the Commonwealth nor the National Capital Develop- ment Commission their agents or servants shall be liable for any disabilaty on the blocks." Drawing No.769/76, referred to in clause 11, was dated April 1976 and entitled "Scullin ~ Recondit2roned Blocks, Sections 1, 46, 47, 48". It depicted certain shaded areas which, according to the legend on the drawing, were areas of fill. Spot depths were also shown in metres at various places on the drawing. The drawing depicted two comparatively small areas of fill on Block 4, Section 48, one being at the south-western corner where the block fronts Barlow Street, the other being at the south-eastern corner. Prior to the holding of the auction Mr Domazet, the managing director of the appellant, obtained copies of the above documents and read them. He was a builder by trade and had followed the occupation of a builder in the Australian Capital Territory for some years prior to the auction. During those years he or the appellant had purchased from the Commonwealth leasehold interests in a number of blocks of land, including blocks suitable for medium density housing. He gave ee . N wee oes — <3 wd aye ee ' 2° ee tee oe TET a) ory i e ' rm i- ¢ : 5. evidence at the trial that it was his invariable practice before attending an auction to obtain copies of the documents made available by the Commonwealth to intending purchasers and that he was generally familiar with the kind of documentation which was made available prior to the auction held on 6 April 1981. He said that his experience was that the information given in such documents was accurate. Having obtained the documents to which I have referred, Mr Domazet inspected the subject land. He concluded that, except in relation to the south-eastern corner of the block, the fill as depicted on Drawing No. 796/76 would not present him with any problen. He recognized that additional cost would be incurred for the foundations of two units he proposed to construct in the south-east corner, such additional cost being occasioned by the presence of the depth of fill shown on the drawing in that area. He also recognized that a relatively small part of the access road was to be built on the other area shown as containing fill. At the time of his inspection of the land, it was grassed over and it was not possible by visual inspection to discover whether there was any fill on 1t or, if so, the extent of it. Mr Domazet did not have any work done on the site to determine whether fill was present. Immediately prior to the commencement of the auction, the auctioneer read a prepared statement. After making a woes or sop $n oe as 1 ' 6. ' reference to the fact that the documents available included plans containing information about regrading and f111 on the blocks being offered for sale, the statement continued: "Intending purchasers should note, however, that the Commonwealth does not warrant the correctness of the plans and the information shown thereon. It is a condition of sale that a purchaser shall not be entitled to raise any objection, requisition or claim compensation against the Commonwealth in respect of the existence of regrading, fill or any other disability on the land." Mr Domazet acknowledged that he heard and understood the statement made by the auctioneer, and that he had heard similar statements made at earlier land auctions he had attended. Subsequent to the auction a lease of the land was granted to the appellant under the City Area Leases Ordinance 1936. Thereafter the appellant had plans prepared for the erection of thirteen units on the block, including two units to be constructed on the south-eastern corner of the block. Excavation works for the foundations for the units commenced towards the end of October 1981. In the course of that work it was discovered that there was much more fill on the block than was disclosed by Drawing No. 769/76 and, in consequence, it was necessary to excavate for the foundations for a number of the units to a greater depth than would otherwise have been the case. Measurements of the depth of the fill at a number of locations on the block were taken by Mr Domazet. Work me MOCIM TD A 7. ceased on the site and Mr Domazet approached the Department of the Capital Territory seeking rescission of the contract of purchase because of the presence of the fi11 and a refund of the price paid. The Commonwealth declined to rescind the contract and to refund the purchase price. Thereafter the appellant proceeded with the building work, completed the units and sold them. The learned trial judge found that there was on Block 4, Section 48 a substantial amount of fill additional to that depicted on Drawing No 769/76 and that its presence necessitated additional expenditure by way of building cost. He further found that the fill on the block additional to that depicted on the drawing was not placed on the block as part of the engineering works carried out prior to the block being offered for lease. In this regard he accepted the evidence of Mr McInerney, an engineer employed by the National Capital Development Commission, who inspected the site after the excavation work for the foundations had commenced. According to Mr McInerney, the additional £111 consisted of poor quality material containing rubbish and debris. This material was not, in his opinion, properly described as clear fill which he would have expected it to have been 1£ it had resulted from the engineering works carried out in the construction of roads and the provision of services in the area. crn eae weeene The trial judge accepted that in bidding for the land, Mr Domazet acted on the basis that there was no fill on the land other than that shown on Drawing No. 769/76 and that he did so having read the documents made available by the Commonwealth to prospective bidders and having heard and understood the statement read by the auctioneer at the commencement of the auction. It was the appellant's case at the trial that by making the documents (particularly Drawing No. 769/76) available to prospective bidders the Commonwealth made a statement, which was false or misleading, concerning the characteristics of the land, namely that there was no fill on the land other than that depicted on the drawing. An alternative claim, originally made, that those for whom the Commonwealth was responsible knew that there was fill on the land additional to that depicted on the drawing was not pursued at the hearing. The absence of such knowledge was not, however, fatal to the appellant's claim based on s.53A of the Act. The learned trial judge rejected the appellant's contention that the Commonwealth made any statement, which was false or misleading, concerning the characteristics of the land. On behalf of the appellant it was argued that Drawing No. 769/76 would be understood by those receiving it as expressly making a statement that, in relation to Sections 1, 46, 47 and 48, Division of Scullin, there were no areas of fill where the sections were not shaded. Alternatively, it was eye wee soo . SA iil ai heat: vena ateen ad 9. argued that a statement to that effect was to be implied from the express statement which the drawing made that the shaded areas were areas of fill. On either approach, so it was submitted, the drawing should be understood as making the statement relied upon. His Honour rejected these submissions. He thought that there would have been much to be said for the view that the drawing conveyed the statement ascribed to it by the appellant if it had been provided without qualification or explanation. However, he thought that taking into consideration all the surrounding circumstances, including the statements that the information provided was for general knowledge only and that prospective lessees should exercise special care in regard to regrading and fill, the Commonwealth had not made a statement, either expressly or by implication, that there were no areas of fill on the land other than the shaded areas shown on the drawing. Senior counsel for the appellant advanced two substantial arguments in support of the appeal. First, he submitted that Neaves J. should have held on the evidence before him that some of the £il1 found on the land outside the shaded areas on Drawing No. 769/76 was the result of engineering works carried out by the Commonwealth. It was argued that if such a finding had been made, it must have been concluded that Drawing No. 769/76 was, 1n effect, a misleading statement, since the delineation of areas of fill resulting Cee ee 10. from engineering works carried the implication that those were the only areas of such fill. In my opinion it was well open to the trial judge to find that the fill resulting from the engineering works was confined to the shaded areas on Drawing No. 769/76. The appellant did not call any evidence on this issue. The only evidence was that of Mr McInerney, an experienced engineer and the head of the Municipal and Urban Development section of the, National Capital Development Commission. In substance, his evidence was to the effect that the fill found on the land outside the shaded areas on the drawing was the result of illegal dumping of what he variously described as "rubbish or something like that" and "poor quality material". Included in this material he said there was "evidence of other bits and pieces of old cans and things like that". It is true that he conceded in cross examination that he was unable to say whether the material was "building debris from the engineering works" but it fairly appears from a reading of the whole of his evidence that he was of the opinion that the fill found on the land outside the shaded areas on the drawing was not the result of engineering works. As I have observed, no evidence was called to rebut Mr McInerney's opinion. The appellant carried the onus of establishing that there was fill from engineering works in areas other than in the shaded areas shown on the drawing. Putting the matter at its lowest, the appellant did ee er le ieee ocr ree pose er ree : wen eee ° : = + ya 11. not discharge this onus at the trial. I therefore think that the appellant's first argument fails. The second, and more substantial, argument advanced by senior counsel for the appellant was that the trial judge was in error in not finding that Drawing 769/76 amounted to a representation that the only areas of fill on the subject land were the shaded areas on the drawing. There is much to be said in support of this argument. I see the force of the submission that a person reading the drawing might well conclude that the only areas of fill on the subject land were the shaded areas shown on the drawing. Indeed, I think that such a conclusion would almost inevitably be drawn by a person who read the drawing alone, without reference to _ the accompanying documents. But I do not think it is permissible to read the drawing in that way. What must be done is to read it as part, and in the context, of all the material furnished to the appellant and other prospective purchasers. Clause 11 of the General Conditions states in unequivocal terms that the changes to the natural surface of the land as depicted on Drawing No. 769/76 were brought about "as part of the engineering works carried out prior to the blocks being offered for lease". That statement was correct. It was only misleading if the statement carried with it the inference that a representation was also being made that there were no other areas of fill on the land. But I do not think etn TG a wore reas H ooo 12. , such an inference can be drawn when regard is had to all the statements made to intending purchasers prior to the auction. As appears from the statements in the documents to which I have already referred, the information provided in the plan was stated to be "for general knowledge only and is in no way to be taken as binding on the Commonwealth of Australia or the National Capital Development Commission". At the auction, it was stated that the Commonwealth did not warrant' the correctness of the plans and the information shown thereon. In fact, the information shown on Drawing No. 769/76 was correct in that the drawing correctly showed the areas on the land affected by fill obtained from engineering works. The real question is whether the drawing (read in the light of the other material) gave rise to the inference relied upon by the appellant. In Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited (1982) 149 C.L.R. 191 at p.199 Gibbs C.J., speaking of conduct alleged to be in contravention of s.52 of the Act, said: "The conduct of a defendant must be viewed as a whole. It would be wrong to select some words or act, which, alone, would be likely to mislead 1f those words or acts, when viewed in their context, were not capable of misleading. It is obvious that where the conduct complained of consists of words it would not be right to select some words only and to ignore others which provided the context which gave meaning to the particular words." I think this dictum is of equal application to conduct alleged to be in contravention of s.53A. Lr tn er ee oes yet et eres > ~ -t ¥ x t Ly t i Eg iG é ee , + t H + is f $ 13. In my opinion Neaves J. was correct in finding that, having regard to all the material given to prospective purchasers, the drawing did not make any statement which was false or misleading. In addition to the wording of clause 11 and of the other statements to which I have referred there are some other circumstances surrounding the sale of the land which assist me in reaching this conclusion. The appellant, and other persons likely to be bidding for the subject land, were experienced developers. The subject land was about 2 acres in area and it might have been expected that not all the sub-surface of it would provide a satisfactory foundation for buildings without considerable excavation of trenches. Since the land was grassed over, purchasers would have had no reason to assume that the Commonwealth knew the nature of the substratum of the land save in those areas where the Commonwealth had placed filling. To my mind, these circumstances make it difficult to read clause 11 of the General Conditions and Drawing No. 769/76 as conveying the implication that the Commonwealth was making the statement to prospective purchasers that there was no fill on the land save as shown on the drawing. It is difficult to see why a purchaser would have felt justified in drawing the conclusion that the Commonwealth was making such a statement when, so far as the evidence discloses, the Commonwealth had no knowledge of the nature of the substratum of the land under the grass cover and did not claim that it had any such knowledge. ee ence cage te ve wes oe ee 14, An intriguing feature of the facts proved at the trial 1s that nearly all the subject land had been filled to some extent. It is surprising that the Commonwealth did not have knowledge that this was so. Nevertheless, the appeal must be determined on the basis that the Commonwealth did not know that the land had been filled otherwise than as shown on the drawing, since the allegation that it knew the full extent of the filling was not pursued at the trial. For relevant purposes, the Commonwealth must be treated as being in the same position as a private owner of the land with knowledge only that part of it had been filled. Suppose the subject land had been owned, not by the Commonwealth, but by a person who knew only that part of it had been filled in the course of constructing, say, a tennis court. It would be difficult to find that such an owner had made a misleading statement if he had informed the purchaser of the nature and extent of the filling of which he was aware and further informed him that he did not warrant the correctness of the information given. To hold a vendor liable in such a case would be, in effect, to make him an insurer of the purchaser against the risk that there might be more filling on the land than was known to exist. In the present case, the appellant must have known that there may be features such as an underground spring, loose rock, or other physical qualities in the sub-so1l which might make it necessary for it to incur extra expense in constructing mee een © 15. the foundations of buildings on the land. The possibility that the land had been filled in areas other than those shown on the drawing was but one of the possibilities which the purchaser could have investigated prior to purchase. Its failure to do sa does not establish that it was negligent. It may well have been reasonable for it not to have expended money on investigating such possibilities prior to purchase, if the cost of doing so was not warranted by the slight risk of finding a fault in the sub-stratum which could, in any event, be overcome by the expenditure of a relatively small sum of money. I do not think that the absence of a finding in this case that the appellant was negligent improves its case against the Commonwealth. The circumstances in which a person who makes a false or misleading statement may escape liability because of a disclaimer made by him have been considered in many of the eases. See, for instance, Norman v Bennett (1974) 3 All E.R. 351, and Abundant Earth Pty Limited v R_& C Products Pty Limited (1985) 59 ALR 211 at 217. The real question here is not whether the statements made in the documentation and by the auctioneer constitute a disclaimer which relieves the Commonwealth from the consequences of a misleading statement made by it. Rather, it is a question whether those statements, when considered in conjunction with Drawing No. 769/76 (which, read literally, makes no misleading statement) should he rece rerieriree ay aye ee 16. ' treated as negativing the inference which the appellant seeks to draw from the drawing. I think they should. For the reasons I have given, I am of the opinion that the appeal should be dismissed with costs. I certify that this and the fifteen (15) preceding pages are a true copy of the Reasons for Judgment of his Honour Mr Justice Morling. Associate: (CMT1OrrAsw Date: 4 Decemrer 1987 Vy deerme oo ary pin weeny pee + = Tate . , enmenentiteds teameunsousomaanremieedines bod IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION ACT G15 of 1987 eed ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: PHILLIP & ANTON HOMES PTY. LIMITED Appellant AND: THE COMMONWEALTH OF AUSTRALIA Respondent CORAM: FOX, MORLING & PINCUS JJ. DATE: 4 DECEMBER 1987 REASONS FOR JUDGMENT PINCUS J.: The principal issue in this appeal is whether the learned primary judge was right in holding, as he did, that no misleading statement was made. That is, in the end, a factual question, but its resolution raises a recurring problen. The facts are explained in the reasons of Fox J., which I have had the advantage of reading. The problem to which I allude is well exemplified here and it is to give effect to two principles which may appear to conflict in their application. The first is that, as is now accepted, effect may not be given to provisions purporting to contract out of liability for misleading statements. The second is that the allegedly misleading statement must not be looked at in isolation but in its context: Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. (1982) 149 C.L.R. 191 at p.199 per Gibbs C.d. If that context consists of or includes indications that the maker does not truly vouch for the statement in question, it may not be misleading. Indications to that effect may be conveyed in a variety of ways; an instance is mentioned in Yorke v. Lucas (1985) 158 C.L.R. 661 at p.666, namely a respondent corporation's making it clear that it purports to do no more than pass on information supplied by another. So that if a respondent passes on information which is misleading when considered in isolation, but does not assert or imply that the information is accurate or complete, it may escape liability. A vendor in such a case as the present might have said: "I have a plan in my possession showing fill on the land but do not know if it is right or can be relied on; you may have it if you wish." Here, the respondent vendor hardly conveyed that impression. It produced from its official records an apparently accurate plan of fill on the land, showing its boundaries and spot depths. The legend was: "Area of fi11 shown thus" opposite a cross-hatched area and "spot depths shown thus - 1.2 m". The plan was one purporting to originate from the National Capital Development Commission and was dated April 1976, only five years before the sale. wee pee 3 ner pan NS oroaS i BERIT gr ees oy en a seg yore er - A ' : ' % = wy eave In fact the fill was much more extensive than shown and had been deposited not merely in two corners of the block as shown but over most of it, and to substantial depths. It can hardly be disputed that the plan, considered by itself, gave a very misleading notion of the extent of the problem created by the fill. The respondent says, however, that reading the various general and specific qualifications and disclaimers made and given, the plan may be seen not to have been put forward as a true indication of the fill on the site. The evidence showed that buyers such as the appellant do not ordinarily test before purchase to determine the extent of filling on a site. There was no finding that the appellant was guilty of imprudence; but the learned trial judge held that the appellant's principal, a Mr. Domazet, had not formed his view that there was no fill on the block except that shown on the plan as a result of any false or misleading statement. Counsel for the respondent said that the erroneous view formed by Domazet was a mere assumption. The basis of that contention was that the written material made it unreasonable to take so much from the plan. That material fell into two categories. Firstly, there were general disclaimers, not especially applying to the content of the plan. For example, as the learned trial judge pointed out, one of the respondent's documents giving information about the land to be sold said: eoreec gs Tr a te ween Sree pet — aweore ae ee ~— "l. The information provided herein, or in any other: plans or schedules made available by the Commonwealth, is for general knowledge only and ig in no way to be taken as binding on the Commonwealth of Australia or the National Capital Development Commission." It is not clear to what extent his Honour relied on such general statements in order to arrive at his conciusion. In my opinion, general disclaimers of liability of the sort just quoted should be of little weight in determining whether information in fact supplied is misleading. That is so because such disclaimers are so common in commercial documents- that a reader is not likely to take their presence as a particular indication that the information supplied is not thought to be reliable. A more powerful argument in favour of the respondent was based on two statements specifically related to the plan discussed above. The first, under the sub-heading "Regrading and Fill" and the heading "General Conditions" was provided by the respondent well before sale; it read: "As part of the engineering works carried out prior to the blocks being offered for lease some changes to the natural surface have occurred as depicted on Drawing No. 769/76. Prospective lessees are advised to exercise special care in this regard. Neither the Commonwealth nor the National Capital Development Commission their agents or servants shall be liable for any disability on the blocks." The plan was of course that which showed the extent of fill. The respondent''s point was in essence that no reasonable person having read the passage just quoted would take the plan to convey information about the whole extent of fill on the land; such a erm teL tr .¥ © reading of it would overlook the reference to "engineering works" and the possibility that other, much more widespread, changes had been made to the surface by filling. I mention this further, below. The second statement of a specific kind was included in a sheet read out by the auctioneer on the day of sale: "Plans containing information about regrading and filt on the blocks being offered for sale in Scullin are contained in the schedules. Intending purchasers should note, however that the Commonwealth does not warrant the correctness of the plans and the information shown thereon. It is a condition of sale that a purchaser shall not be entitled to raise any objection, requisition or claim compensation against the Commonwealth in respect of the existence of regrading, fill or any other disability on the land." The only details as to the physical characteristics of the land, not detectable by mere inspection, were those on the plan. The statement that no warranty was given would not, in my opinion, tend to make a purchaser who had studied the plan (as Domazet had) particularly suspect its accuracy or completeness. If he had inferred, reasonably enough, that the houndaries and depth of the fill had been determined carefully on behalf of the National Capital Development Commission by taking cores, he would not reject that inference when he heard the auctioneer's statement; he would tend to assume that the statement was routine, part of a standard procedure. That leaves the last and most important question, namely whether the sentences headed "Regrading and Fili", which I have quoted, make the plan other than misleading. etme oes . : ' -——.- moran, aoe oe - mee Oe = - - + ~ eq eo oe It would hardly occur to readers of those sentences with the plan that there might have been a survey of the boundaries and depth of the fill from a certain source which revealed nothing of adjacent (and presumably superjacent or subjacent) fill from another source. Counsel for the appellant made the point that it is not known whether there were in truth two distinct depositions of fill. Putting that aside, informing the reader that the changes in the surface depicted in the drawing had a stipulated cause would not alert him or her to the possibility that the plan gave a totally misleading picture of the extent of fill on the site. The reader, if paying close attention to the precise words used, might note that they did not say expressly that the site was not covered with fill from a source other than engineering works, but would surely tend to dismiss that thought as fanciful. Much weight was placed in argument on the following sentence, urging prospective lessees to "exercise special care in this regard". The words "this regard" grammatically refer back to the changes depicted in the drawing, but do not in any way suggest that the drawing might be erroneous. Had the respondent delivered the misleading plan knowing of its incompleteness and with intent to deceive purchasers, that would of course be fraud, as being "such a partial and fragmentary statement of fact" as to make what is stated false: Peek v. Gurney (1873) L.R. 6 H.L. 377 at p.403. That would have been so, I think, no matter what forms of disclaimer were used. Here, it may seem to some, fraud not having been alleged or proved, that it ig rather hard on the respondent to attach liability tv it in wee - oe pe ee ee = respect of the plan showing only part of the Fitl on the land. IT am nevertheless obliged, respectfully, to differ from the opinion of the learned trial judge as to whether the use of the plan was, in all the circumstances, misleading. I think it was and, there being no question raised as to the damages, I would allow the appeal and enter judgment for the appellant in the sum assessed. I agree with the orders proposed by Fox J. "7 wera Te G 3 ccet rg 7, 0 rat ag or . "srt ia fo fae st Pincus SLEEPY Aszeoc' 253 David 4 December 1987 Counsel for the Appellant: Mr. T. J. Higgins with Mr. B.A. Meagher Solicitor for the Appellant: O'Neills Counsel for the Respondent: Mr. J. F. Boultbee Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: Canberra: 27 October 1987 Date judgment delivered: Sydney: 4 December 1987 oO sane po rp ere a " ro oe eo ' wore v