Reported Decision : 203 FLR 179 New South Wales Supreme Court CITATION : Bonett v The Barron and Dowling Property Group Pty Limited & Anor [2006] NSWSC 975 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 21-23 August 2006 JUDGMENT DATE : 27 September 2006 JUDGMENT OF : Bergin J DECISION : Plaintiff entitled to declarations of contravention and damages. CATCHWORDS : [MISLEADING OR DECEPTIVE CONDUCT] - Sale of Property for $11 million falsely represented to be 1,366 square metres (only 1,108 square metres) with waterfrontage, foreshore and uninhibited access to the Harbour (no waterfrontage, foreshore or uninhibited access) - Property as sold valued at $11 million at time of exchange and $10.9 million at time of settlement - [DAMAGES] - Whether plaintiff entitled to damages calculated on pro-rata basis per square metre - Whether plaintiff entitled to damages equivalent to value of "missing" foreshore area with attributes of waterfrontage and access - "Rule" in Potts v Miller only a guide - Time of assessment of loss or damage - Whether assessment of loss or damage should be on the basis of the difference between the value of the Property as purchased and the value it would have had if the representations had been true. LEGISLATION CITED : Fair Trading Act 1987 Trade Practices Act 1974 (Cth) Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 94 ALR 719 Clark v Urquhart; Stracey v Urquhart [1930] AC 28 Havyn Pty Ltd v Webster [2005] NSWCA 182 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 Marks v GIO Australia Holdings Limited (1998) 196 CLR 494 CASES CITED : McCullagh v Lane Fox & Partners Ltd [1994] 1 EGLR 48; [1996] 1 EGLR 35 Murphy v Overton Investments Pty Limited (2004) 216 CLR 388 Potts v Miller (1940) 64 CLR 282 Saunders v Edwards [1987] 1 WLR 1116 Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254 Sumy Pty Ltd v Southcorp Wines Pty Ltd (2004) 12 BPR 22,549 Tefbao Pty Ltd v Stannic Securities Pty Ltd (1995) ATPR 41-391 Shaun Keith Alfred Bonett - Plaintiff PARTIES : The Barron and Dowling Property Group Pty Limited - First Defendant Anthony Murray Barron - Second Defendant FILE NUMBER(S) : SC 50145 of 2004 COUNSEL : JC Kelly SC/ ST Fendekian - Plaintiff DL Davies SC/ B McManus - Defendants SOLICITORS : Piper Alderman - Plaintiff Hunt & Hunt - Defendants - 73 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST BERGIN J 27 SEPTEMBER 2006 50145/2004 SHAUN KEITH ALFRED BONETT v THE BARRON & DOWLING PROPERTY GROUP PTY LIMITED & ANOR JUDGMENT 1 The plaintiff in these proceedings, Shaun Bonett, has been the executive director of the Precision group of companies for the last nine years. The business of Precision was described as "direct investment in commercial properties and finance". Prior to his involvement with Precision, the plaintiff practised as a solicitor in Adelaide for seven years in the areas of corporate and commercial law. The plaintiff claims damages for alleged misleading or deceptive conduct by a real estate agency and one of its directors in the course of negotiating the sale of a property known as 20 The Crescent, Vaucluse (the Property) which he purchased for $11 million. The previous registered proprietors, Paul and Linda Hogan (the Hogans), retained the services of real estate agents, The Barron & Dowling Property Group Pty Limited, the first defendant, and in particular Anthony Barron, the second defendant (Mr Barron), a director of the first defendant, to sell the Property. 2 The plaintiff claims that the first defendant represented that the Property had an area of 1,366 square metres, when in fact the area was only 1,108 square metres (the area representation). The first defendant admits that such representation was made and that it was false. The plaintiff also claims that the first and second defendants represented falsely that the Property had a waterfrontage to Sydney Harbour (the waterfrontage representation). It is admitted by the defendants that such representation was made and that such representation was false. The plaintiff also claims that the defendants represented that the Property included the foreshore area (the foreshore representation). The defendants deny that such representation was made. The plaintiff further claims that the defendants represented that if the plaintiff were to purchase the Property, he would have a reasonable prospect of obtaining permission to construct a jetty from the land to the Harbour (the jetty representation). The defendants deny that the jetty representation was made. Finally the plaintiff claims that the defendants represented that if the plaintiff were to purchase the Property, he would be entitled to uninhibited access to and egress from the land to the water (the access representation). The defendants deny such representation was made and also claim that if it was made it was not false or misleading. 3 The plaintiff seeks declarations that the first defendant's conduct contravened ss 52 and 53A of the Trade Practices Act 1974 (Cth) (the TPA) and/or ss 42 and 45 of the Fair Trading Act 1987 (NSW) (the FTA). The plaintiff also seeks declarations that the second defendant's conduct was in breach of ss 42 and/or 45 of the FTA and/or that he was a person involved in the first defendant's contraventions of the TPA and/or the FTA. The plaintiff claims damages for the loss he alleges he suffered, being an unexpected short supply of 258 square metres. The defendants deny that the plaintiff has suffered any loss because the real value of the Property is either the price he paid for it or some higher value. THE FACTS 4 Mr Barron was first introduced to the Property in approximately 2002. At that time his co-director, Kate Dowling, knew the then vendor and Mr Barron knew the Hogans who subsequently purchased the Property in 2002. At the time of the sale of the Property to the Hogans, a survey report was prepared by S J Dixon & Associates Pty Limited, Surveyors, who were engaged by Robinson Legal on behalf of the Hogans. A valuation of the Property was prepared by Ponton Valuations Pty Limited for mortgage security purposes for the ANZ Banking Group. The first defendant retained a copy of the Ponton valuation which included the following: This is a choice/select harbourside/quasi waterfront property, being a site/lot that runs down from, and is set below, its The Crescent frontage, to adjoin a narrow, rocky foreshore/semi tidal waterfront, this rocky strip (approximately some 10 metres wide or thereabouts), being resumed as we understand (from the original/main lot holding as shown on the annexed Deposited Plan) as a reserve strip accessing/linking generally Parsley Bay with nearby Kutti Beach, somewhat slightly to the north. The site area as shown on the Deposited Plan is some 1366m² however this was as we understand the original holding, and it has been reduced by resumption/excising the aforementioned strip to a site area now of some 1,110 m², and this lesser area as per the Title document is the basis upon which the valuation has been assessed/determined for Mortgage Security Purposes in this case. The anomaly between the Deposited Plan and the actual land area is not necessarily an unusual but nonetheless not necessarily common occurrence, where, as apparently is the case with the subject, an elongated strip has been taken along the foreshore for a designated reserve area. The nature of the subject land and that immediately surrounding is such as to make this virtually a waterfront nonetheless, with limited real public access, and the site/landholding, being set up from the rocky foreshore/tidal watermark, provides good privacy/general security and benefits in that regard in this case. 5 In 2003 the plaintiff, who was then living in Adelaide, was considering purchasing a property in Sydney. It was in early October 2003 that Anthony Stewart of Silverstream Pty Limited (Silverstream), who apparently managed the Hogans' financial affairs, contacted the second defendant advising that the Hogans were interested in selling the Property. On 14 October 2003 Mr Barron and Ms Dowling attended the Property for a meeting with the Hogans to discuss the potential sale. On 21 October 2003 Mr Barron wrote to the Hogans expressing an opinion that if the house were to be placed on the market, a figure in excess of $11 million could be achieved. That opinion was said to be based upon "historical waterfront sales" without any allowance for ongoing capital growth. Mr Barron recommended a sale through "expressions of interest" because such method could "invariably (and discreetly) produce the best result". 6 During October and November 2003 the plaintiff inspected approximately one dozen properties that were either waterfront or had water views. The plaintiff was interested in a number of those properties including a property in Wunulla Road, Point Piper which had a jetty. The plaintiff liked the idea of a jetty and formed the intention to purchase a boat at some time in the future to use on Sydney Harbour. 7 In late October 2003 the plaintiff was searching for properties on the Internet and found an advertisement for a home in Vaucluse advertised by the first defendant. He telephoned the first defendant and spoke to Mr Barron. He gave Mr Barron his personal details and advised him he was from Adelaide and that he had seen the particular advertisement on the Internet. Mr Barron informed the plaintiff that the advertised property was no longer on the market and the plaintiff claimed that the following conversation then took place: Plaintiff: I am looking for a top quality property in the eastern suburbs. Either a waterfront property, or one which has water views. A waterfront with a jetty would be very attractive. Mr Barron: That could place you in a price range of $13-14 million. Plaintiff: I appreciate that. Mr Barron: I do have a waterfront in Vaucluse that I think you would like. The owners are looking for a quiet sale and I think they will be sensible about their expectations as to price. I would be happy to give you a private viewing. Plaintiff: That would be good. Thank you. I will ring you in the next few days and we can work out a time. 8 A day or so later the plaintiff telephoned Mr Barron and made a time to inspect the Property the following Saturday afternoon. On 30 October 2003 Mr Barron sent an email to the plaintiff in the following terms: Further to our last telephone conversation, I am pleased to confirm an appointment at 20 The Crescent, Vaucluse at 1.30pm this Saturday. (I am coming from another 'open house' so hopefully I won't be running late!). The house is a classic Professor Wilkinson design and has been fully and faithfully restored by the present owners. It is a waterfront property on a large block of 1366m² and has therefore direct access to Parsley Bay and the harbour. There is a swimming pool, a double garage plus further off-street parking. The accommodation consists of formal living and separate dining rooms. Superb Poggen Pohl kitchen and large family room. There are 4/5 bedrooms (master with ensuite, dressing and bathrooms) As I explained this is an off market arrangement and therefore I would be grateful if this matter could be kept highly confidential. 9 On 31 October 2003 Mr Barron wrote to Mr Stewart of Silverstream enclosing a standard sole agency agreement in respect of the Property. That letter included the statement, "Both Kate and I are looking forward to achieving a great result for the Hogans and I might add that we both think that what they have done to the house is simply fabulous". The agency agreement was signed by the Hogans on 5 November 2003. The first inspection 10 On 1 November 2003 the plaintiff attended the Property with his wife and met with Mr Barron and Ms Dowling. This inspection took approximately 40 minutes which included a tour through the house during which Mr Barron said: This is a Wilkinson house, one of the best of its type. The Crescent is one of the most exclusive streets in Vaucluse. The home is on thirteen hundred and sixty six square metres of deep waterfront land. That is a bigger than average block in Vaucluse. Paul has done a lot of work on the property. It has been renovated throughout and brought up to tip-top condition. You will not need to spend any money. 11 During the inspection the parties went outside the house to an entertaining area at which time Mr Barron said, "You will have unbeatable views over Parsley Bay and Sydney Harbour, facing north-west". Mr Barron then asked the plaintiff whether he would like to go down to the pool and the waterfront. The plaintiff and Mr Barron then left Mrs Bonett with Ms Dowling and proceeded down towards the waterfront. 12 After the plaintiff and Mr Barron had walked through the landscaped area they reached a wooden fence and gate. They then walked through the gate and stepped onto a wooden platform on the other side of the fence, walked along the platform and down a set of wooden steps across a timber boat ramp and onto the rock shelf adjacent to the water's edge. While the two men were standing in that location the plaintiff claimed the following conversation took place: Mr Barron: You might be able to apply for a jetty from here. That is something that is in the discretion of the Waterways Authority but you would certainly be able to make an application. Plaintiff: Good. Mr Barron: Obviously there is no guarantee, but I think if you do it the right way you would have a good chance of getting one. Plaintiff: Thank you, I will do that. I would really like to have a jetty. 13 The plaintiff claimed that Mr Barron then pointed in the direction of the water's edge and said "you will have direct access to Parsley Bay and the Harbour. The property extends to the water". He then turned in the direction of a large cream coloured boatshed on the neighbouring property and said "you might like to do something like this. You have a deep waterfrontage". 14 After looking around for a short while Mr Barron and the plaintiff then started to walk in a westerly direction towards a wharf. As they did so Mr Barron said that Parsley Bay beach was just further up and that the public ferry service to the wharf was to be reinstated after upgrades to the wharf that were currently being undertaken were concluded. When the two men reached a point near the wharf Mr Barron said "the locals use this area a lot. You could almost swim home from here". 15 The plaintiff was very impressed with the Property and asked Mr Barron what was the "asking price". Mr Barron said that it was something in the order of $12 million, but that the plaintiff would be getting "1,366 square metres of Sydney waterfront property" and that "Eastern Suburbs waterfronts are a very good investment". 16 On 3 November 2003 Mr Barron telephoned the plaintiff and asked him what he thought about the Property. The plaintiff said that he was weighing up his options and that he had seen a number of properties with jetties and really liked the idea of having one. Mr Barron then said "the size of the rock area in front of the fence varies depending on the tide, but you can make an application to put a jetty on the rock area which I showed you". The plaintiff asked about the contract and advised that he would be going overseas and would not be moving to Sydney until later the following year. Mr Barron informed him that the contract was in the course of being prepared and that he thought there was flexibility in relation to the time for settlement. Property Description 17 On about 3 November 20003, Mr Barron prepared a draft of a document entitled "Property Description". The document was in the following terms: Situated in one of Vaucluse's most exclusive streets, this two storey Professor Wilkinson designed residence is situated on 1,366m2 of waterfront land facing North West looking into Parsley Bay and Sydney Harbour. Built approximately 35 years ago, and extensively renovated throughout, the accommodation includes entrance hallway with circular stairway leading to first floor. Formal living room, separate dining room. Large open plan Poggen Pohl kitchen leading through to family area. Upstairs are 5 bedrooms (one used as exercise room), three bathrooms (master and guest room each with ensuite bathrooms). two dressing rooms and one laundry. Access to double garage from this level. At swimming pool level, is a low ceiling height storeroom/rumpus room and bathroom leading to area housing airconditioning unit. Underneath the garage is further storage/wine cellar area. The downstairs is heated via a separate gas unit and upstairs is heated/cooled via a reverse cycle air conditioning unit. Inclusions. Fitted floor coverings, blinds, curtains and light fittings excluding chandelier in hallway and wall light fittings in powder room. Included in kitchen are refrigerator, freezer, dishwasher and microwave oven. Excluded is wall mounted TV. The following items are available for purchase: Kitchen table Large sisal rug in formal living room 2 x Oriental rugs in entrance hallway 18 Ms Dowling made a number of amendments to the third paragraph of this draft but also wrote on the top of the document "deep waterfront?". After discussion between Mr Barron and Ms Dowling the document was amended by the addition of the following sentence at the end of the first paragraph: The Crescent is one of the few streets in Vaucluse which benefits from deep waterfrontage. 19 Mr Barron sent this document to the plaintiff as an attachment to his email of 4 November 2003 which included the statement that "Further to our conversation last night I am attaching some more information regarding the above property". That email also advised the plaintiff that the listed price was $12 million but that the defendants had been asked to submit all offers to the Hogans. Mr Jacobs' retainer 20 Kenneth Edwin Jacobs (Mr Jacobs) is a registered real estate agent and the managing director of Prestige Homes of Australia Pty Limited which carries on business as an affiliate of Christies Great Estates. Mr Jacobs apparently provides services to the Precision group of companies and on 12 November 2003 he sent the following email to the plaintiff in relation to the Property: As agreed by telephone, my fee to act on your behalf in the purchase of the above property would be 1.1% inclusive of GST of the total sale price. Could you please confirm your agreement? 21 On 13 November 2003 the plaintiff responded to Mr Jacobs' email simply stating "ok". By this time Mr Jacobs had shown the plaintiff a number of residential properties in the eastern suburbs in October and November 2003 and was in the course of showing him a number of other properties. 22 The plaintiff gave evidence that the terms of the Mr Jacobs' retainer were that he was to assist the plaintiff with negotiating the purchase of the Property and that he was not required to make any particular inquiries or searches in relation to the Property (tr 39-40). He was required to assist the plaintiff with the "commercial negotiation" (tr 40). The plaintiff also said that Mr Jacobs was retained to assist him to locate properties and to conduct negotiations as a go-between with Mr Barron or whichever other agent might be engaged in selling a property (tr 40). The draft contract 23 On 5 November 2003 Mr Barron forwarded a copy of the draft contract for the Property to the plaintiff. That contract included a copy of the Deposited Plan for the Property (DP 3929) with a survey dated February 1902. This was the Deposited Plan referred to in the Ponton valuation showing a site area that converted to 1,366 square metres. The front page of the Certificate of Title that would have shown smaller site area was not included in that contract. 24 The plaintiff wrote by email to Mr Barron on 10 November 2003 thanking him for some floor plans that he had sent to him and advising him that he had read the draft contract. The plaintiff also advised Mr Barron that he had asked Mr Jacobs to act as a buyer's agent and to obtain advice from a valuer. Mr Parson's initial valuation 25 Gregory Parsons, a director of Colliers International Consultancy and Valuation Pty Limited, provided some initial valuation advice to the plaintiff on 14 November 2003. Mr Parsons provided some "calculations" in an email of that date and advised that based on the calculations "the value range is definitely in the $11-$12m range with my narrower fair market range for say a bank within $11.5 to $11.9". This initial valuation appears to have been made on the basis that the area of the Property was 1,366 square metres. The second inspection 26 On 15 November 2003 the plaintiff, Mrs Bonett and Mr Jacobs attended the Property with Mr Baron and Ms Dowling for the second inspection. The second inspection took approximately half an hour and did not include a visit to the waterfront. Mr Barron once again said that the property had an area of 1,366 square metres. The plaintiff offers $10 million 27 Following this inspection the plaintiff decided to make an offer of $10 million for the Property and Mr Jacobs apparently made that offer on the plaintiff's behalf. Mr Jacobs subsequently advised the plaintiff that his offer had been rejected but that the Hogans had counter-offered with $11,250,000. The plaintiff advised Mr Jacobs that he was not interested in that price and that the offer of $10 million stood. Mr Jacobs later telephoned the plaintiff and advised him that the Hogans would not take $10 million and that they were not willing to move from the counter-offer they had made. At this stage the plaintiff was planning to have a holiday in December/January and did not wish to be rushed into a higher price. He advised Mr Jacobs that he thought he would "let it ride for a while". 28 On 24 November 2003 Mr Barron wrote to the plaintiff in the following terms: I am obviously very disappointed to hear that you do not wish to proceed with the purchase of The Crescent which came as a complete surprise. I genuinely felt that both you and Vanessa were very keen on the property and it was only a matter of agreeing on a price. Anyway, I would like to stay in touch and if any more suitable property comes in then I will be in touch. I have to say in conclusion, I do not think that you will get a better property than The Crescent for the money. We have now been instructed to put the house on the market and we are starting to run some more people through this week. In the meantime please let me know if you have a change of heart! 29 On 25 November 2003 the plaintiff responded to Mr Barron's email in the following terms: We are keen on the property. It is beautiful, however has limitations for us. We are seeking a property with: 1. A 4 car garage or more. 2. Larger 3 and 4 bedrooms. 4. A 5th bedroom and guestroom. We did find the driveway issues peculiar. Having said all of that we were prepared to proceed with a purchase at 10m and we thought that we would more than likely find another place in the next 3 to 5 years and sell this one. If you can get around 11m for the property that's great, but with the potential uncertainty in the market and the fact that we might not be long term owners of the property, we resolved that we had made our best offer. I would be pleased to keep in touch. 30 Shortly after this exchange of emails Mr Barron telephoned the plaintiff and advised him that he was disappointed that he had not moved from $10 million. He suggested that the plaintiff should have a "good think" about it and he thought he could get the vendors down to $11 million. He said "you'd be getting a $13 million property for $11 million". The plaintiff advised Mr Barron that he thought that it was a great house but he did not wish to rush. He informed him that he was going overseas and would not be back until the middle of January. Mr Barron advised the plaintiff that he understood but suggested that he should act quickly otherwise he may "miss out". The advertisement 31 An advertisement for the Property was published in the Wentworth Courier, a local newspaper, on 3 December 2003. That advertisement, which the plaintiff read, contained various photographs of the Property and the following description: Situated in one of Vaucluse's most exclusive streets, this two storey Professor Wilkinson designed residence is situated on 1,366 m2 of waterfront land. The Crescent is one of the few streets in Vaucluse which benefits from deep waterfrontage. Facing North West and looking into Parsley Bay and Sydney Harbour, it was built approximately 35 years ago, and recently extensively renovated throughout. The accommodation includes entrance hallway with circular stairway leading to first floor bedrooms. Graceful formal living and separate dining rooms. Study with fireplace. Large open-plan 'Poggen Pohl' kitchen leading through to family room. All entertaining areas open out via French doors to a level lawn and well established gardens and onto beautifully landscaped waterfront terraces. Upstairs are 4 bedrooms, three bathrooms (master & second bedrooms each with ensuite bathrooms and Juliet balconies). Two dressing rooms and one laundry. At swimming pool level, there is a storeroom/rumpus room and bathroom and underneath the double garage is further storage/wine cellar area. 'A METICULOUSLY APPOINTED WATERFRONT RESIDENCE' Further negotiations 32 The plaintiff and his wife returned to Australia from their overseas holiday on 15 January 2004. A week or so after their return Mr Barron telephoned the plaintiff who claimed that the following conversation occurred: Mr Barron: Shaun, The Crescent is still on the market. I think you should really bite the bullet and offer the $11 million. It is an excellent investment and I think in five year's time it will have appreciated well and be worth perhaps $18 million to $20 million. Waterfronts are as rare as hens' teeth and they hold their value even when the market slumps. You would be getting 1,366 square metres of Sydney waterfront property. It would be a pity if you missed out. Plaintiff: I hear what you say. I will have a think about it. 33 After this telephone conversation with Mr Barron the plaintiff decided to offer $10.5 million. He telephoned Mr Jacobs and advised him of his decision and asked him to make that offer. A short time later Mr Jacobs telephoned the plaintiff and advised him that the offer had been rejected and that the owners were sitting on $11.25 million. The plaintiff asked Mr Jacobs to try $10.7 million but that was also rejected. The plaintiff then asked Mr Jacobs to try $10.8 million. That was also rejected but on this occasion there was a counter-offer of $11 million. The plaintiff advised Mr Jacobs that he would accept the $11 million counter-offer but advised that he wanted to negotiate an extended settlement period to the end of May or early June. Mr Jacobs advised the plaintiff that he would see what he could do. Mr Jacobs rang the plaintiff shortly afterwards and said that the Hogans were prepared to extend settlement to 1 June 2004. The plaintiff advised him that he would go ahead on that basis. Contracts exchanged 34 On 22 January 2004 the plaintiff instructed his solicitors in Adelaide, Piper Alderman, to act for him in relation to the purchase of the Property. He sent the solicitors the draft contract and the advertisement from the Wentworth Courier. Contracts were exchanged on 4 February 2004. Discrepancies discovered 35 On 6 April 2004 the plaintiff received a call from Mr Parsons who had prepared a written valuation for the National Australia Bank on 1 April 2004. Mr Parsons advised the plaintiff that there was a "bit of a problem" with the Property in that it was smaller than 1,366m². Mr Parsons advised the plaintiff that some time in the early part of the last century some of the harbourside land was compulsorily acquired. He also advised that because the title was in old terminology there had been a mix-up in the conversion of it to square metres. He also said that the plaintiff had no chance of putting a jetty on the property because that "rocky part" did not belong to him as the land that had been acquired was "public open space". 36 The plaintiff then telephoned Mr Barron who said that he had just heard about the size of the Property. Mr Barron said "I am so sorry. I hope this won't ruin our relationship. If I could buy the property back from you, I would". The plaintiff said that he was very disappointed and that he would have to consider his position. He then sought legal advice. 37 On 5 May 2004 Piper Alderman wrote to Mr Barron in the following terms: We refer to previous communications and to the contract for the sale of the above property exchanged on Wednesday 4 February 2004 for our client, Mr S K Bonett as purchaser, and Mr and Mrs Hogan as vendor for whom you were acting as agent. As you may know, it has come to our client's attention that the area of the property is only 1,106.6m², that there is land separating the boundary of the property from the water and that the property is not a deepwater frontage property. The property was advertised and represented by you to our client as being "situated on 1,366m² of waterfront land" and being in "one of the few streets in Vaucluse which benefits from deepwater frontage". Those representations were made on a number of occasions by you to our client and very much influenced our client's formulation of the sum he was willing to pay to purchase the property. When our client's original offer was not accepted, you emphasised to our client on a number of occasions that the size of the property and the fact that it was deepwater frontage property meant that it was worth in excess of the sums originally offered by our client, and therefore our client should increase the price he was willing to pay to purchase the property. In reliance on the information and representations provided by you to our client, our client eventually agreed to pay the sum of $11,000,000.00. We understand that you have recently spoken with our client about these matters, apologised for providing incorrect information and advising that the misrepresentations were made by you innocently. Our client has no reason to believe that you were aware of the inaccuracies in the representations you were making about the property and our client remains willing to proceed to settlement on the nominated date of 1 June 2004. Nevertheless, the fact remains that our client will now only receive a property of 1,106.6m² in area without deepwater frontage, as opposed to the property he thought he was purchasing namely, a deepwater frontage property of 1,366m² in area. The difference in value could well exceed 20% of the $11,000,000.00 purchase price. The purpose of this letter is: 1. To put you on notice of our client's claim. 2. To seek from you a proposal to appropriately compensate our client for the loss it will suffer as a result of these discrepancies. Naturally our client reserves all its rights against you and Mr and Mrs Hogan, but would prefer to resolve this matter without recourse to the Courts. 38 The solicitors for the defendants requested clarification of the nature of the claim made by the plaintiff and in particular whether it was a claim for compensation under clause 7 of the Contract and, if so, what amount was being claimed. Piper Alderman advised that the claim was not one for compensation under clause 7 but requested a proposal from the defendants prior to settlement. 39 The defendants' solicitors advised that the defendants relied on special conditions 4(a) and 4(b) of the Contract and that there was no intention to make any proposal prior to settlement. Piper Alderman responded advising that they did not consider that those special conditions allowed the defendants to avoid liability and responsibility for misrepresentations and misleading and deceptive conduct. They also advised that whilst the plaintiff was willing to proceed to settlement on the due date he did so on the basis that all his rights were reserved. Settlement occurred on the due date. Proceedings commenced 40 The plaintiff commenced these proceedings on 20 October 2004. The proceedings were heard on 21, 22 and 23 August 2006 when Mr JC Kelly SC, leading Ms ST Fendekian, of counsel, appeared for the plaintiff and Mr DL Davies SC, leading Mr B McManus, of counsel, appeared for the defendants. The claims 41 The plaintiff claims that the first defendant contravened ss 52 and 53A of TPA (and ss 42 and 45 of the FTA) and that the second defendant was "involved" in those contraventions. Those sections provide relevantly: 52. (1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1). … 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 or in connexion with the promotion by any means of the sale or grant of an interest in land: … (b) make a false or misleading representation concerning the nature of the interest in the land, the price payable for the land, the location of the land, the characteristics of the land, the use to which the land is capable of being put or may lawfully be put or the existence or availability of facilities associated with the land; or … (2A) Nothing in this section shall be taken as implying that other provisions of this Division do not apply in relation to the supply or acquisition, or the possible supply or acquisition, of interests in land. 42 Section 82(1) of the TPA provides that a person who "suffers loss or damage by conduct of another person that was done in contravention" of ss 52 and/or 53A "may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention". 43 Section 75B of the TPA (and s 61 of the FTA) provides relevantly that the reference in s 82 to any person "involved" in the contravention is to be read as a reference to a person who "has aided, abetted, counselled or procured the contravention" (s 75B(1)(a)) or who "has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention" (s 75B(1)(c)). The section "requires that the party with alleged accessorial liability have intentionally aided, abetted, counselled or procured the contravention by the principal": Marks v GIO Australia Holdings Limited (1998) 196 CLR 494 at 527 per Gummow J. 44 The plaintiff also claims that the second defendant contravened ss 42 and/or 45 of the FTA. The only relevant difference in the provisions of the FTA is that the word "person" is used instead of the word "corporation". As there is no relevant difference in the principles to be applied I will only refer to the provisions of the TPA. As I have said earlier, the plaintiff claims damages for the loss he alleges he suffered, being an unexpected short supply of 258 square metres. The defendants deny that the plaintiff has suffered any loss because the real value of the Property is either the price he paid for it or some higher value. The disputed representations 45 As I have said earlier the first defendant admits that the area representation was made and that it was false. The defendants admit that the waterfrontage representation was made and that it was false. These admissions were made on the defendants' behalf by Mr Davies (tr 151) notwithstanding that Mr Barron claimed in his evidence that he "still" believed it was a "waterfront property" (tr 97). The three representations in issue are the foreshore representation, the jetty representation and the access representation. The foreshore representation 46 The plaintiff's affidavit evidence (sworn 6 May 2005) was that when he went down to the water's edge with Mr Barron during the first inspection, Mr Barron said "the property extends to the water" (par 26). The plaintiff was cross-examined in relation to the foreshore representation and his evidence included the following (tr 27): Q. It was your understanding, you say, that your property went down beyond the last cliff on to the rock ledge? A. Yes, to the water. Q. To what you understood to be the high water mark? A. Not to the high water, to the water. Q. You thought it went beyond the high water mark to the water? A. That's what Mr Barron told me. Q. I suggest to you he didn't say any such thing and that it is your mistaken recollection subsequently that lead you to that view? A. I don't agree with that and there were a number of other conversations and instances which supported me having that view which I have firmly in my mind now which I can say with complete certainty that he told me that it, the property extended to the water. 47 In further cross-examination the plaintiff gave the following evidence (tr 50): Q. Mr Bonett, I want to suggest to you that at no time did Mr Barron say to you that this property had deep waterfrontage. A. That's completely incorrect. Q. And I want to suggest to you that at no time did he say that the property went to the waterfront? A. He actually took me down and showed me to where it went. Q. And do you say that that was right to the end of the rock ledge? A. Yes. 48 Mr Barron's affidavit evidence (sworn 9 June 2005) in respect of this matter was as follows: 28. To the best of my recollection I did not say the words " The Property extends to the water ". It was my understanding at the time that the Property extended as far as the fence. I never held the view that the rock ledge was included in the Property, and never indicated to Mr Bonett that it did. 49 Mr Barron's evidence in cross-examination was somewhat inconsistent. He said that he "never regarded" the area of the rock ledge between the water and the property as being park area because it gets very wet (tr 85). He then conceded that it was part of the park but only at certain times of the day (tr 85). Ultimately, he accepted that it was part of the park (tr 85). However, in earlier cross-examination (at tr 84) the following evidence was given: Q. Is this right, for your part you believe it was your belief as at 3 November 2003 that this property, 20 The Crescent, did have a deep waterfront? A. Yes. Q. From what you have just said from your discussion with Miss Dowling, it is your belief that she too as at this date believed that the property had a deep waterfront? A. Indeed. Q. Meaning that by that, that it was your belief that the property extended to a point where it was bounded by deep water? A. No. Q. What is your concept of a deep waterfront in this context, what did you have in mind at the time? A. Well, my concept of a deep waterfront is that it has access to a deep waterfront. Okay, as far as I was concerned this is a waterfront property and that there was access to the deep waterfrontage. Q. Is this right; as at 3 November 2003 you had the clearest understanding that there was an area of land public open space between the property and the water? A. Well, I knew that the public could pass in front at varying different times of the tide, yes. Q. You actually knew, I suggest, that there was a strip of land between the property and the water which was part of Parsley Bay Park? A. Right. Q. You are agreeing with me? A. Yes. 50 Mr Barron accepted that he knew that the park was a public reserve and that it had been reserved and dedicated for the purpose of public recreation (tr 86). Mr Kelly cross-examined Mr Barron in respect of the inclusion in the property description document of the sentence in the first paragraph, "The Crescent is one of the few streets in Vaucluse which benefits from deep waterfrontage". Mr Barron gave the following evidence (tr 88-89): Q. And is this right; the end result of your conversation with Miss Dowling when it came to settling the terms of the document that you had before you was that you wished to include in your document words which would convey to a reader your belief which was that this particular property had deep waterfrontage? A. That's correct. … Q. This document in its first paragraph, last sentence, says, "The Crescent is one of the few streets in Vaucluse which benefits from deep waterfrontage"? A. Correct. Q. And what you were intending to convey and believed that you were acquiring by conveying those words was that the property at number 20 The Crescent had a deep waterfrontage? A. No. Q. Were you meaning and intending to convey that other houses in the street may have a deep waterfrontage but not number 20? A. The fact is The Crescent does have several waterfrontages which do benefit from deep waterfrontages. It is certainly a plus feature for any property to have a deep waterfrontage as such, but I didn't imply when we put that in that the property that we had, number 20, benefited from a deep waterfrontage as such. Q. Is this right; after your deliberations with Miss Dowling you had pursuant to the question deep waterfront, you resolved to craft your document in such a way as to suggest that other people in the street might have deep waterfrontages but not necessarily the subject property? A. That's correct. Q. So you were actually intending, were you, to portray the picture which fell short of anyone minded to express an interest in number 20, to the effect that it, unlike the others in the street, didn't have one? A. That's correct. Q. This was rather deliberate on your part, was it, in the writing of that sentence? A. I suppose you could say that, yes. Q. In your various conversations with Mr Bonett you did not at any stage say to him, now look here Shaun, let's not be under any mistake, other houses in The Crescent might have deep waterfrontage but not this one? A. No, I didn't say that. 51 Mr Barron gave the following further evidence in cross-examination in relation to the conversation that occurred during the first inspection on the rock ledge, near the water's edge (tr 92-93): Q. You turned and pointed out a number of features? A. Uh-huh. Q. You pointed, for example, at the substantial cream coloured boat shed which was immediately adjacent to the boundary on the northern side? A. Correct. Q. You said to him words to the effect, "You might like to have something like this"? A. Correct. Q. Immediately in front of this that you pointed and each of you observed what is a cut out slipway in the rock? A. Uh-huh. Q. Leveled with concrete? A. Correct. Q. In pointing out and saying to him you might like to have something like this, you were intending to convey to him by the words you used the impression that he might like to have one of these boat sheds with one of these slipways? A. Correct. Q. Yes? A. Uh-huh. Q. You didn't say to him, "We are now standing in Parsley Bay Park and there is no way in the world that a public reserved space will be made over to you"? A. No. Q. Is this right; at that point you believed that the land did have a deep waterfrontage in your own mind? A. In my own mind. Q. Your mind, in distinguishing, is this right, between waterfrontage and reserve frontage? A. Right. Q. Your mind just blurred those two, is that right? A. I think that's a fair assumption. 52 Mr Barron's evidence was rather incredible in some respects. I have already dealt with the inconsistencies in relation to the park area. In addition to that Mr Barron said that his concept of a "deep waterfront" was that "it has access to a deep waterfront" (tr 84) and yet his cross-examination in relation to the inclusion of the words in the Property Description ("The Crescent is one of the few streets in Vaucluse which benefits from deep waterfrontage") exposed a quite different understanding (tr 88-89). His denial that he intended to convey in that document that the Property had a deep waterfrontage indicates that he understood that there was a difference between deep waterfrontage and mere access to deep waterfrontage. That is so notwithstanding his later evidence that his mind just blurred "waterfrontage" and "reserve frontage" (tr 93). 53 There was other extraordinary evidence. Mr Barron said that he believed that the Property ended at the fence that is some distance from the ledge at the water's edge on which the two men stood during the inspection (tr 104). However he also gave evidence that he had "always" treated the Property "as a waterfront because at any stage during the day with certain tides water does lap the property" (tr 91). He qualified that evidence somewhat by his later answer, "water at a certain tide will lap the property" (tr 91). There was a view of the Property on the first day of the hearing and there is photographic evidence of the position of the fence to which Mr Barron referred in his evidence (Ex A: 465-468). In the photographs there are rowing boats and a water craft lying loose on the timber boat ramp approximately 1 to 2 metres below the fence, suggesting that water does not lap the timber walkway let alone the Property. It is also apparent that if the Property boundary is at the fence there is rock-face jutting out from that position such that even if there were to be a "certain tide" it would not "lap" the Property. 54 Mr Barron had described the property in the 30 October 2003 email to the plaintiff as a "waterfront property" that had "direct access to Parsley Bay and the Harbour". Of course such a description fits within Mr Barron's claimed concept of "deep waterfrontage". He also described the Property in the advertisement as "waterfront land". 55 The plaintiff presented as a highly intelligent man with a capacity to seize an opportunity in cross-examination to put his case. His years as a solicitor, prior to moving into property investment, might have caused him to develop this rather unfortunate attribute but that does not mean that I regard his evidence as unreliable. In fact the plaintiff made reasonable and sensible concessions when pressed by Mr Davies in cross-examination, evidenced, for instance, in the following passage of evidence (tr 33): Q. Let me ask you this; if this property had in fact gone to the water as you thought but its total area in that regard was only 1108 square metres, would you have bought it? A. If it had gone to the water and it was only 1100 square metres? Q. Yes? A. The fact that it would have gone to the water would have meant that I would have had the opportunity to apply for a jetty, which is something that I wanted. So, it probably would be more likely that I would have proceeded with the sale if it had gone to the water and was of 1100 square metres than if it didn't. 56 I prefer the evidence of the plaintiff to that of Mr Barron. I am satisfied that the plaintiff's evidence that Mr Barron informed him that "the Property extends to the water" is to be believed. On balance I am satisfied that the foreshore representation was made. The jetty representation 57 The jetty representation as pleaded in paragraph C 10(d) of the Amended Summons is that "if the plaintiff were to purchase the Property, he would have a reasonable prospect of obtaining permission to construct a jetty from the land to the harbour". The pleaded particulars state that at the first inspection Mr Barron said to the plaintiff: You might be able to apply for a jetty from here. That is something that is in the discretion of the Waterways Authority but you certainly will be able to make an application. Obviously there are no guarantees that you will get it but I think if you do it the right way you have a good chance of getting one. 58 The plaintiff's affidavit evidence was that this representation was made at the first inspection on the rock ledge at the water's edge. The plaintiff gave affidavit evidence consistently with the particulars and also gave evidence that in a telephone conversation on 3 November 2003 Mr Barron said: "The size of the rock area in front of the fence varies depending on the tide, but you can make an application to put a jetty on the rock area which I showed you". 59 The plaintiff was cross-examined in relation to the jetty representation and gave the following evidence (tr 29-31): Q. But you see you were making an assumption at least partly about the property and the existence of the fence on it, weren't you? Namely that it was put there as in a lot of other waterfront properties you had seen as some form of security notwithstanding it did not run along the boundary, is that right? A. I certainly brought good faith into the dealings I was having with the vendor's agent and having had the vendors tell me that the property extends to the water and having been told that I would be able to make an application for a jetty and having been told that I might likely consider constructing a boat shed on the property with having to get a drill into the rocks in order to create a water driveway into the boat shed, I did assume that those statements were going towards the fact that the rock area was included. … Q. Is it something Mr Barron said to you about putting in a concrete driveway and drilling into the rock or is that something you assumed from his reference to the boat shed next door? A. That is something which I took to mean from him suggesting that I might consider doing something next door similar to the boat shed that it would require the driveway being constructed. Q. You, of course, understood that there was some official authority which permitted or did not permit jetties to be constructed on land such as you were looking at? A. Could you please repeat the question? Q. You understood there was some government authority which permitted or denied you the right to put what was on the sort of land you were looking at? A. Yes. Q. Mr Barron only said to you, did he not, I suggest, that you could make application if you wanted to but gave you no further assurances? A. He said more than that. Q. He gave you no assurances about it, did he? A. He said that I could make application but he couldn't give me any guarantees whether I would be successful or not in such application. 60 In his affidavit evidence Mr Barron accepted that he said that the plaintiff might be able to apply for a jetty, that it was in the discretion of the Waterways Authorities and there would be no guarantee. He denied however that he said that if the plaintiff did it the right way he would have a "good chance of getting one". His evidence in cross examination included the following (tr 86-87): Q. You had the clearest possible understanding when you spoke with Mr Bonett that there was no way in the world he would ever get a jetty across Parsley Bay Park, I suggest? A. I never suggested that he could. He asked me whether he could. Q. And you told him clearly, no sir, under no circumstances because this land has between it and the water a part of Parsley Bay Park, you never said anything to that effect did you? A. No, I didn't, no. Q. You knew that he was interested in the prospect of obtaining a jetty? A. It was something that was discussed. Q. Come on Mr Barron, you knew that he was interested in being able to get a jetty? A. Not necessarily, sir, no, I don't agree with you. Q. You say you didn't have any belief that he was vaguely interested in? A. He asked the question, "Can I get a jetty in here?", and all I said was, "You have to apply to the Waterways division". Q. You knew full well when giving that answer or saying any words to that effect that he had no hope of getting a jetty? A. Not necessarily, so. Q. You knew that part of Parsley Bay Park stood between the land and the water? A. I am quite sure there are instances where there are jetties going across park areas in other parts of Sydney. Q. You knew, I suggest, that this park was a public reserve? A. It is an extension of the park in Parsley Bay, yes. Q. You knew that this land had been reserved and dedicated for the purpose of public recreation? A. Oh, yes. Q. You didn't think for one minute that this man ever had a snowflake's chance of getting a jetty? A. I am not in the position to be able to say how Waterways would have considered an application to put in a jetty there. I am not the determining factor. There is always a possibility that he might have been able to but, I mean, I didn't know at the time. Q. What I am suggesting, Mr Barron, is that answer is untruthful. You knew full well that this man didn't have a prayer when it came to a jetty? A. No, I can't say that. Q. You told him, did you, oh well, if you buy the property you might be able to get a jetty? A. I implied as long as he applies to Waterways division, but, I mean, again whether he would be successful or not, I mean, he could apply for anything. 61 His evidence in cross-examination also included the following (tr 106-107): Q. Is this right, just reverting to the waterside first conversation again: What you were intending to convey to Mr Bonett, by the words that you used, and your actions and your conduct down there at that point of the sales activity, was, if he were to purchase the property, he'd have a reasonable prospect of obtaining permission to construct a jetty from the land to the harbour? A. No. I disagree with that. Q. Is this right: You were intending to convey to him that he would have some sort of prospect? A. That it was a possibility. Q. You weren't talking possibilities in any jesuitical sense, in some form of remote, fanciful, academic possibility, in the way the sky might fall. You were talking about real possibilities? A. No. I just implied that there might have been a possibility. Q. Why can't you agree with me that the possibility that you were seeking to convey to him was at least a real possibility-- A. It was a possibility. Q. --as distinct from a fantasy? A. It was a possibility. Q. A real possibility? A. No. I am not saying real possibility. I would disagree. Q. So, you would have her Honour understand that you were not intending to convey anything so banal as he would even have a reasonable prospect? A. No. Q. You were talking at it in a way, and in terms, in which you were seeking to convey nothing more than an academic possibility-- A. That's correct. Q. -of the most theoretical variety? A. Correct. Q. Of literally a jesuitical variety? A. Okay, yes. 62 Although Mr Barron and the plaintiff differ as to when Mr Barron was advised of the plaintiff's interest in having a jetty, there is no issue that at least at the first inspection the matter was raised. Mr Kelly seems to have redefined the expression "Jesuitical" from the ordinary meaning of "dissembling or equivocating" (The New Oxford Dictionary of English) or "sly, crafty, casuistic (intellectually dishonest)" (The Macquarie Dictionary: Federation Edition) to "remote, fanciful, academic" and/or "theoretical". In those circumstances, Mr Barron's admission that his intention was to convey a Jesuitical possibility is to be understood as an intention to convey a "remote, fanciful, academic" and/or "theoretical" possibility rather than an admission that he was dissembling or equivocating. 63 On the one hand the evidence extracted above at tr 86-87 suggests that Mr Barron did not believe that a jetty was out of the question or a mere academic possibility. Indeed he said that he was "quite sure there are instances where there are jetties going across park areas in other parts of Sydney". On the other hand his evidence at tr 106-107 suggests that he intended only to convey a theoretical possibility. The real question is whether he said that if the plaintiff made his application in the "right way" he would have a "good chance" of getting a jetty. 64 The circumstances surrounding this conversation at the water's edge on 1 November 2003 included the following: Mr Barron believed that the area of the Property was 1,366 square metres; he believed that it was a "waterfront" property; he had already advised the plaintiff by email dated 30 October 2003 that the Property had "direct access" to Parsley Bay and the Harbour and in that regard it was within his so-called concept of a deep waterfrontage; he had advised the Hogans that he was looking forward to achieving a "great result" and he was "working hard" on the plaintiff to persuade him to purchase the Property. 65 Both Mr Barron and the plaintiff agree that Mr Barron said that there were no "guarantees". The use of that expression is peculiar if all that was being suggested was a theoretical or remote possibility. It is probable that the use of that expression was to temper the suggestion that the "chance" of a successful application if done in the "right way" was "good". I am satisfied that it is more probable that not that Mr Barron said that if the plaintiff made the application in the "right way" he would have a "good chance of getting one". 66 Mr Davies submitted that even if I am satisfied that these words were said, they do not amount to the representation as pleaded that the plaintiff would have "reasonable prospects" of getting a jetty. I disagree. It is true that there was the rider that there were no guarantees but, in my view, to suggest that he had a "good chance" in this context means that although it was not certain, he had reasonable prospects of getting a jetty or obtaining approval for a jetty. I am satisfied that the jetty representation was made. The access representation 67 The pleaded representation is that "if the plaintiff were to purchase the Property, he would be entitled to uninhibited access to and egress from the land from the water" (C 10(c)). It is claimed that this representation is implied from Mr Barron's conduct and from the use of his words, "direct access". The plaintiff claimed in his affidavit evidence that Mr Barron had said to him at the first inspection that he would have "direct access to Parsley Bay and the Harbour". Mr Barron gave affidavit evidence that he "may well have said" those words. Of course by this time, 1 November 2003, Mr Barron had already represented that the Property was "a waterfront property" and "has therefore direct access to Parsley Bay and the harbour" in his email to the plaintiff dated 30 October 2003. 68 It appears that the basis upon which Mr Davies maintained (although it seemed to me not vigorously) the denial on the defendants' behalf is the use of the term "uninhibited" in the pleaded representation (tr 151-152). In his cross-examination Mr Barron accepted that at the first inspection he said to the plaintiff words to the effect, "you will have direct access to Parsley Bay and the Harbour" (tr 105). In further cross-examination he gave the following evidence (tr 107-108): Q. Didn't you say to him that you will have direct access? A. That's correct, yes. Q. Meaning that, if he purchases the property, he will have direct access? A. That's correct. Q. If he purchases the property he will have direct access to Parsley Bay and the harbour? A. Correct. Q. But in some sort of sense of there would be at least the theoretical possibility in that regard? A. Correct. Q. Of course, all sorts of things could happen in relation to Parsley Bay Park. For example, the Government could reclaim land and build out picnic facilities and things like that? A. It's conceivably possible. Q. So, when you were conveying to him "You will have direct access to Parsley Bay and the harbour", what you were actually intending to convey to him was nothing more than the jesuitical possibility? A. That's correct. 69 The same observation can be made in respect of the use of the term "Jesuitical" in this evidence as was made in respect of the evidence relating to the jetty representation. The question is whether the use of the words "direct access" meant or implied that the plaintiff would have "uninhibited access". The expression "uninhibited" in this context is to be understood as "without restraint" (The New Oxford Dictionary of English) or "not impeded or restricted" (The Macquarie Dictionary: Federation Edition). I think it is fairly clear that the use of the words "direct access" meant access that was not restrained or inhibited in any way. I am satisfied that the access representation was made. Were the representations misleading? 70 As I have already said, the defendants admitted that the area representation and the waterfront representation were false and there is no proper foundation to maintain that the foreshore representation was other than false. That leaves for decision the questions whether the jetty representation and the access representation were false or misleading. It is accepted that both were representations in respect of a future matter and thus s 51A of the TPA applies. Section 51A provides: (1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading. (2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation. (3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead. 71 The evidence given by Mr Barron in relation to what he intended to convey (as opposed to what was said) to the plaintiff about a jetty was very unimpressive. Here was a licensed real estate agent of some thirty years experience "working hard" to persuade the plaintiff to outlay, at that stage, at least $11 million. I found it extraordinary that he would agree to the suggestion that he was floating mere "remote" and/or "theoretical" possibilities about a jetty with the plaintiff. But that is what he claimed to be the truth. If that be so, there were no reasonable grounds for making the representation. In any event he knew that any jetty would have to cross over Parsley Bay parkland and although he said that he knew of jetties across park areas in other parts of Sydney, that is not a reasonable basis to represent that the plaintiff would have a "good chance" of getting a jetty in front of this Property if he made his application in the "right way". I am satisfied that the jetty representation was misleading. 72 There was no reasonable basis for making the access representation. The plaintiff would not and does not have unrestrained access to Parsley Bay and the Harbour. That access is restrained by the rights of members of the public to stand and/or sit in his way should they wish to do so because it is public recreational land. I am satisfied that the access representation was misleading. Reliance 73 The plaintiff gave the following relevant affidavit evidence in respect of reliance upon the representations: 74. Had I been aware that: (a) the ara of the Property was not 1,366 square metres but approximately 1,108 square metres; (b) the Property did not have a waterfrontage to Sydney Harbour, but instead had an area of public open space between it and the water's edge; (c) the Property did not include the area from the fence down the wooden platform, steps, boat ramp and rock shelf to the water's edge, where I had been shown by Mr Barron; (d) I had no chance of having a jetty; or (e) the Property did not have direct access to the Harbour but was set back from the water's edge by an area of public open space, I would not have gone ahead and purchased the Property as and when I did. 75. When I made my decision to make an offer for the Property of $10 million and later increased that offer, progressively to $11 million, I believed as a result of what Mr Barron had told me in our various conversations and shown to me in the first and second inspections and from what was written in the above emails to me dated 30 October and 4 November 2003 and said in the advertisement that the Property had an area of 1,366 square metres, a deep waterfrontage to Sydney Harbour and included the foreshore area pointed out to me by Mr Barron during the first inspection, and I also believed as a result of what was said and done on those occasions that, if I were to proceed to purchase the Property, I would have a reasonable prospect of obtaining permission to construct a jetty from the Property to the Harbour and I would be entitled to uninhibited access to and egress from the land to the water. They were positive attributes which I believed would not only contribute to my enjoyment of the Property if I became its owner but would also enhance its resale potential and add to its value to me as an investment for myself and my family in the future. In my mind, those features tended to outweigh the negative attributes to the Property about which I had some concern, namely, the car-parking situation and the bedroom accommodation. 76. I am not saying that I would not have been interested in the Property had I known that the area of the Property was not 1,366 square metres but was approximately 1,108 square metres; or did not have a waterfrontage to Sydney Harbour, but instead had an area of public open space between it and the water's edge; or did not include the area from the fence down the wooden platform, steps, boat ramp and rock shelf to the water's edge, which I had been shown by Mr Barron; or that I had no chance of having a jetty; or that the Property did not have direct access to the Harbour but was set back from the water's edge by an area of public open space. The Property was, to my observation, a beautiful home. Had I known any of those matters, however, I would not have been interested in purchasing the Property for $11 million or anything like that sum. I would have looked longer and harder at alternative properties, including the Wunulla Road property to which I have referred, before I made a decision to make an offer; I would have started the bargaining process, if I had started it at all, at a figure less than $10 million; and I would have bargained much harder rather than agree to pay $11 million for a property which did not have all of the attributes which led me to buy at that price and would not be available when I chose to resell. 74 Mr Davies submitted that the real issue in the case is whether the plaintiff suffered any real damage. Notwithstanding that concession Mr Davies did cross-examine the plaintiff in respect of his claim that he relied upon the representations. That evidence is as follows (tr 30-31): Q. I want to suggest to you that the reason you decided to purchase this property was nothing to do with the fact that you were told that it was 1366 square metres, it was because of what you saw about the property and understood generally about its facilities? A. That's not the case, I relied very heavily on the fact that it was a large block of 1366 square metres and that it was a waterfront property. Q. But you liked the block for what you saw, not because it was 13 or 12 or 1100 square metres didn't you? A. At the end of the day I liked the home. It was a home in excellent condition. I had aspirations, and still do, of having a large family. The property presented beautifully. If I had two children, three children maybe it would be, it would have been adequate. If I end up having four or five children, as my wife and I hope to have, it was very much in our mind that we might need to move. This was not a property which had sufficient space for a very large family. My initial hope was to find a property which I could bring up a large family in for the next twenty or thirty years yet. So, I guess to go back to what you put to me, quite the contrary in fact. Whilst the property presented beautifully it had limitations with the size and quantity of the bedrooms and the garaging. They were matters I pointed out to the agent. Having said that, relying on the fact that it was a larger block and that it was a waterfront property I thought that with those additional benefits it still might suit my family's needs over the medium term. 75 In further cross-examination the plaintiff gave the following evidence (tr 33-34): Q. You would understand, would you not, that one doesn't work out per square metre rates for land to buy for homes as opposed to development sites? A. Again, all I can suggest to you is that I believe that waterfronts are quite unique in a class that the square metreage of the land of waterfront is what is specifically used to determine their value. Q. That is your understanding, is it? A. Yes. Q. From things you have learnt in relation to this case? A. Yes. Q. Putting aside your desire to have land to the waterfront and put a jetty on it if you are allowed, you were happy to purchase that property with the improvements on it no matter what the size of it was because you liked the property, its aspect, its improvements and its location? A. No, that's not the case. Q. So you say that if you had known before you entered into the contract that it was only 1100 square metres, putting aside the ability to be able to use the waterfront, you wouldn't have purchased it? A. At the time I was looking at alternative properties. One of those alternatives was a home with a jetty in Point Piper of a similar price range. Rather than speculating all I can say is that if I had known this further limitations to do with the property, given it was a reasonable contemplation of whether I went ahead and purchased it or not, if I did go ahead and still purchase it, it certainly appears to me that I would have done so in a completely much, on better terms shall I say. Q. Let me ask you this; if this property had in fact gone to the water as you thought but its total area in that regard was only 1108 square metres, would you have bought it? A. If it had gone to the water and it was only 1100 square metres? Q. Yes? A. The fact that it would have gone to the water would have meant that I would have had the opportunity to apply for a jetty, which is something that I wanted. So, it probably would be more likely that I would have proceeded with the sale if it had gone to the water and was of 1100 square metres than if it didn't. Q. So, may we understand from that that the significant matter is not so much the area but the going to the water? A. No, they are both significant issues. Q. I thought you said you probably would have purchased it if it had gone to the water notwithstanding it was only 1108 square metres? A. I think what I did say was that if it was 1100 square metres and it went to the water I would have more likely purchased it than conversely, if it was 1100 square metres and didn't go to the water. 76 Mr Davies also suggested to the plaintiff that he relied upon Mr Jacobs. He was cross-examined in the following way (tr 53-54): Q. In your discussions with Mr Ken Jacobs before you found out about the true position in relation to this property, did Mr Jacobs tell you that the prospects of getting a jetty were unlikely in any event? A. I don't recall but he may have. I don't rule it out either. Q. Does that mean that the getting of a jetty was not a very significant matter for you when deciding whether or not to purchase this property? A. No, that's not what it means. If you want me to elaborate I will. Q. Was it a significant matter? A. Having the possibility of getting one was a significant matter, yes. Mr Jacobs showed me numerous waterfronts around Sydney, a number of them had jetties. We might well have had a discussion that houses on the waterfront have the possibility of applying for jetties and that it was an application which wasn't necessarily an easy one to make. Whether we had one about this particular property or not I couldn't say. Q. Did you understand from Mr Jacobs and/or any other person that the relevant government authority was endeavouring to restrict the number of jetties that were being built into the harbour? A. I can't say whether I understood that from Mr Jacobs or not but I had a general understanding that it was not an easy task to have a successful application for a jetty and that it might in fact, you know, take many years to get one, if at all. 77 The plaintiff's solicitor's file was inspected and Mr Davies advised the plaintiff that there was nothing within the solicitor's file to evidence any enquiries being made of the Waterways Department/Authority in relation to the prospect of having a jetty at the Property. The plaintiff gave evidence that he was not sure whether it was his lawyers or himself who may have made contact with the Waterways Authority to make an inquiry (tr 54). 78 Mr Davies further tested the plaintiff in respect of his reliance upon Mr Jacobs and/or Mr Parsons in the following manner (tr 54-57): Q. When you found out about the true position in relation to the land did you tell your solicitors that you did not want the consultants that you had engaged paid until the matter was satisfactorily resolved? A. I may have. Q. Was that because you felt that the consultants had let you down in that regard? A. No it was because I felt that I had been let down and I wanted to investigate, I wanted to investigate exactly how this happened. Q. But one possibility was, was it, that it was your consultants, either Mr Parsons or Mr Jacobs, or both, who had let you down? A. When you are, at the time I was very disappointed with what had occurred, with what I had found out and I wasn't jumping to any conclusions. I wanted the matter properly looked at. Q. But you see you told us yesterday that it was only Mr Jacobs retainer to locate properties for you and then engage in negotiations, is that right? A. That's correct. Q. So, he could not have been at all responsible for this according to your evidence, could he? A. That's correct. Q. But nevertheless you said neither he nor Mr Parsons presumably was to be paid until the matter was satisfactorily resolved? A. Certainly with respect to Mr Parsons I paid all his accounts. I know that for certain. I think the real issue with Mr Jacobs was more about him being a gentleman about the matter and respecting my position that I wanted this matter satisfactorily sorted out before I made any payment to him. I wouldn't call what occurred to be a successful purchase. Q. But Mr Bonett, this is not about Mr Jacobs being a gentleman, this is about your statement to your solicitors that you did not want your consultants paid until this matter had been satisfactorily resolved, isn't it? A. I acknowledge that I may have made that statement, yes. Q. I suggest you did so because Mr Jacobs' retainer was far higher than you have said? A. No, no. The retainer with Mr Jacobs was to assist me, assist me in the negotiation of the property in order to achieve a successful purchase. I guess from my perspective what occurred was not a successful purchase. Q. But that wasn't Mr Jacobs' fault according to your evidence now, was it? A. It wasn't his fault, but he might, from my point of view the outcome that occurred was not a successful purchase. Q. You see, there was no reason not to pay Mr Jacobs because of what you had found out unless Mr Jacobs had some role in advising you or ought to have advised you about the nature of this property, was there? A. From my point of view Mr Jacobs' fee was contingent upon a successful outcome. … Q. Did Mr Jacobs advise you that this was a waterfront property? A. I didn't ask for Mr Jacobs to verify the fact that it was a waterfront property, I believe Mr Jacobs harboured on the same view that I did that it was a waterfront property. Q. Did Mr Jacobs advise you it was a waterfront property? A. No. … Q. In fact he told you, didn't he, that it was unlikely, that's all he said, unlikely that you would be able to put a jetty there, didn't he? A. As I said to you before, he may have. Q. He didn't say to you it would be impossible because you don't own to the waterfront, did he? A. I'm sure I would remember that if he had. Q. So that in that way you relied on Mr Jacobs about the property you were purchasing, didn't you? A. No. Q. Not at all? A. I relied on Mr Jacobs in terms of assisting me with the negotiation process, not with any investigations he made of the property. I never asked him to make any investigations on the property. 79 Mr Davies contrasted the fact that Mr Parsons had been paid and Mr Jacobs had not to suggest that Mr Jacobs' retainer was inclusive of making investigations and effectively advising the plaintiff. Mr Jacobs gave evidence and was cross-examined. He said that he believed that the Property was an actual waterfront up until the time that the discrepancy in the land size was discovered. Mr Jacobs was not cross-examined at all in relation to the breadth of his retainer. It was not suggested to him that he had an obligation to advise the plaintiff in respect of the nature of the land, the size of the land, whether it was a waterfront and/or the likelihood of him obtaining a jetty. 80 There is no suggestion in this case that the plaintiff's own conduct was so dominant in the causal chain as to be regarded as the real or effective cause of any loss or damage: Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 94 ALR 719 at 744 per Hill J. As I have said before Mr Davies accepted that the real issue in the case is whether the plaintiff suffered any loss or damage. However, for abundant caution I have dealt with the question of reliance having regard to the cross-examination of the plaintiff and his witnesses. 81 The plaintiff's evidence in cross-examination focused mainly on the reliance he placed on the area representation and the waterfront representation. Although separately made, the foreshore representation and the access representation seem to me to have some overlap with the waterfront representation. I have no doubt that the plaintiff relied on each of those representations. He was led by the defendants to believe that he would be purchasing a waterfront property of 1,366 square metres that included the area of the rock ledge to the water that would give him uninhibited access to the water. I am satisfied that he relied on each of those representations. 82 The jetty representation is in a different category. I accept that the plaintiff was attracted by the prospect of having a jetty and that he had the idea that he would purchase some type of watercraft in the future for use on the Harbour. However, realistically, I am satisfied that the plaintiff knew there were no guarantees that he would be able to obtain approval for a jetty and he would have to take his chances, even though Mr Barron had suggested they were "good" if he made his application in the "right way", whatever that might mean. Indeed he said that prior to exchange of contracts (tr 54): I do remember some enquiry being made with the Waterways department, whether this was my lawyers or whether I picked up the phone and had a chat with someone, I don't think I can say definitively. I wasn't out to make any application in a hurry, so the answer I gave was to the best of my knowledge. It might well have been that I picked up the phone to make that enquiry. 83 The plaintiff did not give any evidence in relation to the outcome of the "enquiry" or the "chat", but this evidence supports the conclusion that he knew it was a matter for the relevant authority as to whether he obtained approval for a jetty. The fact that he was not in a "hurry" to make an application is also relevant to the consideration of whether he relied on this representation. On balance I am not satisfied that the jetty representation was relied upon by the plaintiff. On the other hand, this evidence is certainly consistent with the plaintiff having the understanding that the Property included the foreshore area. 84 I am satisfied that the plaintiff relied on each of the representations, except the jetty representation, and was induced thereby to enter into the Contract. Contraventions 85 The first defendant, by the conduct of its agent Mr Barron, misled or deceived the plaintiff in contravention of s 52 and s 53A of the TPA in respect of the area representation, the waterfront representation, the foreshore representation and the access representation. The area representation was a contravention of s 52 and each of the other representations concerned the characteristics of the land and/or the location of the land in contravention of s 53A of the TPA: see Trade Practices Act Review Committee Report to the Minister for Business and Consumer Affairs, 1976, par [9.79]. 86 The second defendant, Mr Barron, made the waterfront representation, the foreshore representation and the access representation in contravention of s 45 of the FTA. I am also satisfied on the evidence extracted earlier in respect of each of those three representations that Mr Barron was a party to, or involved in, the first defendant's contraventions of s 53A of the TPA. Valuation evidence Terence Michael Dundas 87 The plaintiff relied upon the evidence of Terence Michael Dundas, a principal valuer of Egan National Valuers (NSW). Mr Dundas is an associate of the Australian Property Institute and a registered real estate valuer. Mr Dundas' report included the following: We have been requested to provide our opinion of the difference in value of the freehold land, comprising No 20 The Crescent, on the basis it provided an area of 1,107 square metres, firstly with waterfrontage, and secondly without waterfrontage but fronting to the subject waterfront reserve. I am advised the loss suffered by the diminution in area (ie the loss of 259 square metres) will be assessed elsewhere. This diminution does not form part of this assessment. 88 Mr Dundas assumed that the waterfrontage would be identical to that which currently exists at high water mark, that is, across a rock shelf in its natural state with the rock shelf forming part of the freehold property. He referred to the "well accepted principle in real estate" that direct waterfrontage is a very desirable asset in high demand on Sydney Harbour close to the City in limited supply. As a consequence he concluded that waterfront properties command premium prices. 89 Mr Dundas described the valuation rationale he adopted as follows: To arrive at the value of the adjoining land with and without waterfrontage, I have endeavoured to locate sales of otherwise comparable properties sold at similar times, with and without waterfrontage. Such information is rare and comparison is by no means straight forward; many factors other than waterfrontage do impact upon the value of residential property in these prestigious locations. In making my comparison between the subject property and the comparable sales, I have made an allowance for the ability of the freehold land to utilise the waterfront, even though it is separated from it by a reserve. The subject property still enjoys some use of the waterfront, as well as direct access to it. Several of the sales referred to have a lesser potential to utilise the waterfront. In making our comparison between comparable sales, we have adjusted the sales prices so as to adequately reflect the comparability of each property. 90 Mr Dundas considered four properties: (1) 2 Bayview Hill Road, Rose Bay (2 Bayview Hill); (2) 19 Bayview Hill Road, Rose Bay (19 Bayview Hill); (3) 10 Carrara Road, Vaucluse (10 Carrara Road); and (4) 22 Carrara Road, Vaucluse (22 Carrara Road). 91 The property at 2 Bayview Hill sold in May 2002 for $8.32 million. The site has a direct waterfront and enjoys "gun barrel harbour views" to the Harbour Bridge and the city skyline. It has an area of 780 square metres however it has little privacy and is overlooked by adjacent premises. Mr Dundas increased the price of the sale by 5% to make allowance for its limited privacy and also the fact that it was a battleaxe shape and was affected by an easement. He thus increased the sale price to $8.736 million. 92 The property at 19 Bayview Hill sold in March 2002 for $7.75 million. It has an area of 740 square metres. It has a waterfront reserve on its boundary with a bushland walking track extending along the reserve. The property is elevated above the waterfront and there is little ability to use the waterfront. 93 The property at 10 Carrara Road sold in October 2001 for $7 million. It has an area of 1,043 square metres. It has similar views to both 2 and 19 Bayview Hill and was also adjacent to the waterfront reserve with a bushland walking track on the reserve. It has some ability to use the waterfront and sold in a rising market. Mr Dundas was of the opinion that its value may well have increased slightly in five or six months to $7.35 million. 94 The property at 22 Carrara Road sold in June 2002 for $7.5 million. It is 1,062 square metres in area. It has similar views to the other properties and limited ability to utilise the waterfront because there is a substantial distance between the land and the waterfront. 95 Mr Dundas adopted a decrease of 13% in relation to the Property because the adjoining land had a greater ability to utilise the reserve land and privacy was not impacted to the same degree. His report included the following: I have also inspected sales of other properties in close proximity, both waterfront and waterfront reserve, however drawing comparisons is extremely difficult. I consider the most meaningful comparison can be drawn from the sales listed above. Therefore by way of comparison to the subject property, I have considered: Actual sale price assuming direct waterfrontage and an area of 1,366m² in 4/2/2004. $11,000,000 Less value of improvements (say) $3,000,000 Therefore Land Value of 1,366 m² of waterfront $8,000,000 Rate per m² $5,856.5 Therefore by reference solely to area value of 1,107 m² of waterfront land = 5,856.5 x 1,107 m² $6,483,000 Say $6,500,000 Reduction in value 13% $845,000 As noted earlier the assessment of the difference in the value of waterfront and non waterfront land is not readily provable. It is apparent however waterfrontage sites are more valuable. Accordingly, should one "stand back" and objectively consider two hypothetical properties, ie each of equal size, typography etc, but one with waterfrontage and the other being a reserved waterfront, a difference in value of 13% on land values of $6,500,000 is considered a fair and reasonable assessment of such difference. 14.0 ASSESSMENT : I am of the opinion the difference in value of the land adjoining the subject land (ie Part of Lot 18, Section 1 Deposited Plan 3929), with and without water frontage, on the basis described herein, as at 2 March 2005, is the sum of Eight Hundred and Forty Five Thousand Dollars ($845,000) . 96 Mr Dundas gave evidence in cross-examination that he assumed that the 1,107 square metres extended to the waterfront and he then performed the exercise of looking at an identical 1,107 square metres property but with a waterfront reserve in front of it (tr 63). He then reached the figure of $845,000 by endeavouring to make a comparison between one waterfront and three waterfront reserve properties (tr 63). He agreed that using such a small number of properties may invite error but claimed that the exercise was by no means a simple thing because it is very difficult to find a significant number of properties that can be compared in some reasonable way (tr 63). He gave the following further evidence in cross-examination (tr 71-73): Q. What you have done, you first made what I think you have agreed is an arbitrary judgment to the waterfront by increasing its value by five per cent, then comparing that with the prices of the non waterfront properties as if they were all otherwise equal, is that right? A. That's correct. Q. One of those properties at least, 22 Carrara Road, according to you had a residence on it that actually added a value to the land whereas you regard the other three properties as land value only? A. Yes. 22 has a rather substantial house on it which is in reasonable condition, I think added value to the land. The house at number 10, the house is not in good repair, it is quite a large two storey house similar to most of them but it is not in good repair and I don't think it adds any value at all to the land. The other two properties were having residences constructed upon them when I looked at them, they were obviously bought to acquire the land. Q. So, there is another arbitrary aspect to it, isn't there, that you have decided that the property at 10 Carrara had improvements with no real value but the property at 22 there was some added value from the improvements? A. Correct. Q. And then having done that you have taken the difference in prices between them and reached those three percentages which you have then averaged at 15.7? A. Correct. Q. Then you have said, well, the subject land 20 The Crescent, has better access to the water, so you say that wouldn't have been such a decrease between waterfront and non waterfront so you have upped it, as it were, to 13 per cent difference? A. Downed it. Q. But there is a lesser difference between the waterfront and the non waterfront to that extent? A. Correct. Q. Of course, first of all your average of 15.7 per cent has been arrived at from three sales only? A. Correct. Q. You then adjust it in another arbitrary fashion? A. Correct. Q. So the figure you end up with has got at least three, possibly four arbitrary aspects to it about which there could be large differences of opinion? A. Correct. Q. So, wouldn't it have been more appropriate at least for you to have said that there was a range of different values of difference that you were valuing on 20 The Crescent? A. I think that is almost an accepted principle with valuation that there is a range of values. … Q. Wouldn't a better exercise have been to have valued 20 The Crescent at 1100 square metres waterfront and 1100 square metres non waterfront by comparison with sales in The Crescent and other adjoining streets? A. It may have been, that's just another way of coming to the same figure. Q. But you wouldn't necessarily have come to the same figure if you had compared sales in the Vaucluse area rather than the four you chose with the method you chose, would you? A. Maybe I would, I don't know, I never did the exercise. Q. Because you were not asked to do so? A. That's right. Q. What I am asking you is wouldn't that have been a better indication of whether or not there was any difference in value had this property been waterfront or waterfront reserve? A. I don't think so, this is basically an accepted way of arriving at these particular aspect of assessing what the waterfront is worth. I know of no other way of doing it in terms of valuation. 97 In re-examination Mr Dundas gave evidence that it is generally accepted that the valuation figure may vary by 10% in either direction (tr 78). Terence John Davis 98 The defendants relied upon the evidence of Terence John Davis, a registered valuer and principal of T J Davis & Associates Pty Limited. Mr Davis was instructed to prepare a valuation of the freehold interest in the Property and provide his expert valuation opinion of: (a) the market value of the Property on or about 4 February 2004 (the date of exchange of contracts); (b) the market value of the Property on or about 1 June 2004 (the date of settlement); and (c) the current market value of the Property as at 2 August 2005 (the date of his inspection). Mr Davis defined market value as the "estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties have each acted knowledgeably, prudently and without compulsion" (par 17). 99 Mr Davis analysed the sales of four properties in The Crescent, Vaucluse, eight properties in other streets in Vaucluse and one property in Double Bay in the primary comparison sales method ("Sales"). He then analysed the sales of two other properties in Vaucluse (one in The Crescent), two properties in Watsons Bay and two in Point Piper in the secondary comparison sales method ("Other Sales"). 100 Mr Davis utilised two approaches to valuing the Property. His report included the following: Principal Methodology 83. I have valued the Property at each of the valuation dates, principally using the comparison sales method of valuation. The Property has been compared to the Sales and adjustments have been made for relativity. I have had regard to differences in a number of determinants of capital value including (but not wholly confined to): a) Location; b) Nature and quality of improvements; c) Nature and topography of allotments; d) Available views across Sydney Harbour; e) Timing of sales relative to valuation dates. 84. In respect of the timing of sales, it is common valuation practice to adjust the sale prices of comparison sales for movements in market values which have occurred before or after the valuation date(s). In this respect I have relied upon a capital growth index for houses in Postcode 2030 (Vaucluse), prepared by Residex ("the Index") … 85. Whilst adjustment of prices for individual properties for market movements may not depict a wholly appropriate equivalent price in each instance, in my opinion such adjustment is preferable to the comparison of the Property with sales whose prices are not adjusted for market fluctuations. The Index applies to the broad house market in Vaucluse which, as referred to above, may not, during the period during and around the valuation dates, have performed homogeneously. In my opinion, the market for premium properties in the nature of the Property would have suffered less detrimentally than the broader Vaucluse house market (which includes less valuable properties). 86. I have generally utilised the same sales for each of the valuation dates, and the prices of each sale have been adjusted for market fluctuation as between the index figures for the nearest quarterly date to the sale and valuation dates. Such adjustment includes both inflation and deflation in the sale prices of Sales relative to each valuation date. 87. In respect of valuation date as at 2nd August 2005, I have not utilised some of the earlier Sales as adjustment of such sales for market fluctuations may, over a long period, compromise the accuracy of my current valuation figure. 88. In respect of the Other Sales, I have not adjusted these for market fluctuations and have only taken broad cognisance of them in assessing my valuation figures. Alternative methodology: 89. I have, by way of an alternative check methodology, valued the Property using summation analysis. This methodology derives capital value by addition of: a) The vacant land value of the Property; and b) The depreciated replacement costs of the existing improvements on the site. 90. I have assessed the underlying land value of the Property with reference to our analysis of the Sales and Other Sales. The current replacement cost of the improvements has been assessed with reference to current building costs for this type of building and associated facilities. In this respect of have had regard to published building costs schedules in "Rawlinsons Australian Construction Cost Handbook 2005". 101 Mr Davis valued the Property as follows: as at 4 February 2004, $11 million; as at 1 June 2004, $10.9 million; as at 2 August 2005, $11.1 million. Joint Statement 102 Mr Davis and Mr Dundas met on 21 August 2006 and produced a joint statement in the following terms: POINTS OF AGREEMENT: The two valuers agree as to: · Their instructions in this matter are at cross purposes. They have been requested to prepare vastly different assessments in relation to No 20 The Crescent, Vaucluse; · Being waterfront reserve it is not possible to construct maritime facilities for the exclusive use of No 20 The Crescent at High Water Mark; · All factors being equal waterfront properties are more valuable than waterfront reserve properties. · The isolation of the value of waterfrontage within any particular property is very difficult, and highly subjective, valuation exercise; · No 20 The Crescent has good access to the waterfront across the waterfront reserve. The two valuers disagree as to: · As to the methods of comparison as to the establishment of the market value of waterfrontage. However the valuers do agree that comparison of "paired" sales is a valid approach to the establishment of the value of waterfrontage; · Mr Dundas is of the opinion the evidence he has relied on is the best evidence available. Mr Davis is of the opinion the process of comparison is too tenuous to yield a reliable answer to the valuation exercise. 103 In cross-examination Mr Davis agreed that "comparison of paired sales" is a process in which one is aiming to find, for modelling purposes, two sales which have as many characteristics which are the same leaving, if possible to find, one single distinguishing feature, relevantly, whether they have a direct waterfrontage or a waterfront reserve frontage (tr 110). The theory behind paired sales analysis is where one assumes that everything is perfectly equal bar one factor, the difference in the value is attributable to that one factor (tr 115). Mr Parsons 104 The defendants also relied on the valuations that Mr Parsons provided to the National Australia Bank dated 1 April 2004 and 31 May 2005. In the first valuation of 1 April 2004 (Ex 7) Mr Parsons reported that: After weighing up all relevant factors we consider the market value of the subject property lies in the range of $11.0 to $12.0 million and have adopted the purchase price of $11,000,000 for the mortgage purpose of valuation. 105 The second valuation of 31 May 2005 (Ex 8) included the following: After weighing up all relevant factors we consider the market value of the subject property lies in the range of $13 to $14 million and have adopted $13,400,000 for the mortgage purpose of valuation. Loss or Damage 106 The plaintiff particularised his losses in paragraph 24 of the Amended Summons as follows: (a) Loss occasioned by reason of deficiency in area. The plaintiff was prepared to pay $11,000,000 for 1,366m2, namely, $8,052.70 per m2, but received only $1,108m2. On that basis the unexpected cost to the plaintiff of the short supply of land was 258m2 @ $8,052.70 per m2, namely: $2,077,596. (b) Loss occasioned by reason of deficiency in other attributes, relevantly, water frontage, jetty and riparian rights: To be calculated by reference to the premium which attaches to land in and around Vaucluse with direct waterfrontage as per the Valuation Report of Egan National Valuers (NSW) dated 2 March 2005, a copy of which has been served: $845,000. 107 The defendants submitted that "the rule" in Potts v Miller (1940) 64 CLR 282 is applicable to the assessment of loss and damage in the circumstances of this case. Potts v Miller was a case in which the appellant had claimed he was induced into underwriting and subscribing for shares in a company that was about to be incorporated, Australian and New Zealand Theatres Ltd, by the respondent's fraudulent misrepresentation. The company was to take over and operate the theatrical and concert aspects of the business carried on by JC Williamson Ltd but unfortunately it failed. In a claim by the appellant against the respondent the jury found in the appellant's favour and awarded him 1,312 pounds. On appeal, the Full Court of the Supreme Court of New South Wales held that the appellant had failed to establish that he suffered any damage directly resulting from the fraud alleged by him. The appellant appealed to the High Court. 108 The High Court (Dixon and Williams JJ, Starke J dissenting) dismissed the appeal. Dixon J analysed the lack of precision in the appellant's case at trial and the failure of the trial judge to point out the appellant's difficulties in achieving an award in his favour. Dixon J said at 296-297: The third question arising in the appeal relates to the evidence of damage. According to the findings of the jury, the plaintiff acted upon the supposed representations. What he did was first to enter into an underwriting agreement, next to extend it, and thirdly to accept an allotment of shares. In an action for fraudulent misrepresentation inducing the representee to purchase bank stock and pay calls thereon, Lord Campbell said that the proper mode of measuring the damages was to ascertain the difference between the purchase money and what would have been a fair price to have paid for the shares in the circumstances of the company at the time of purchase ( Davidson v Tulloch [(1860) 3 Macq. 783, at p.790]). The measure of damages in an action of deceit consists in the loss or expenditure incurred by the plaintiff in consequence of the inducement upon which he relied, diminished by any corresponding advantage in money or money's worth obtained by him on the other side. Lord Campbell's statement means that where the corresponding advantage consists in shares their value should be ascertained at the time of their acquisition. 109 Dixon J referred to a number of cases establishing the "inflexible rule" in instances of the purchase or allotment of shares in consequence of deceit, that the defendant "shall receive credit for the fair or real value of the shares estimated as at the time of the allotment or purchase" (at 297). His Honour then cited, at 297-298, Clark v Urquhart; Stracey v Urquhart [1930] AC 28 in which Lord Atkin said (at 67): I find it difficult to suppose that there is any difference in the measure of damages in an action of deceit depending upon the nature of the transaction into which the plaintiff is fraudulently induced to enter. Whether he buys shares or buys sugar, whether he subscribes for shares, or agrees to enter into a partnership or in any other way alters his position to his detriment, in principle, the measure of damages should be the same, and whether estimated by a jury or a judge. I should have thought it would be based on the actual damage directly flowing from the fraudulent inducement. 110 In suggesting that in the purchase of shares the "rigidity of the rule" is alleviated by two qualifications, Dixon J referred to "fair or real value" and "real" or "true value" (at 299). His Honour distinguished the "value of the shares at the time of allotment" from the "market price" (at 300) and concluded at 300: But as the authorities stand, the plaintiff in a case of the present description must establish that the "fair," "real" or "intrinsic" "value" of the shares he subscribed for was at the date of allotment less than the face value for which he made himself responsible, and the amount recoverable is the excess. 111 Dixon J held that the evidence was insufficient to show that at the relevant date, the "fair value" of the shares was less than their "face value" (at 301). 112 The defendants contend that in this case there is no suggestion that the "real value" of the Property purchased is otherwise than its "market" value. It was submitted that the Potts v Miller rule should be applied in this case for the following reasons: (a) exchange of contracts for the sale of the Property occurred on 4 February 2004 with the contract stipulating a price of $11 million and completion occurred on 1 June 2004; (b) the defendants' valuer, Mr Davis, valued the property as at the date of exchange at $11 million and at that time he was aware of the actual land size and the existence of the waterfront reserve; (c) Mr Davis valued the property at the date of settlement at $10.9 million but also expressed the view that within one year the value was $11.1 million; (d) Mr Parsons provided valuations to the National Australia Bank of $11 million as at 1 April 2004; and (e) the plaintiff has not tendered any evidence to contradict the values or to suggest that the "market value" as at the date of exchange should have been any different from $11 million. It was submitted that the "real value" of the Property at the time of the purchase was $11 million and that is what the plaintiff paid for the Property. Thus, it was submitted, there is no difference between the "purchase money", or the price paid, and the "real value". In those circumstances it was submitted that the Court would not depart from the "usual" rule. 113 In Murphy v Overton Investments Pty Limited (2004) 216 CLR 388 the Court said at 403, [31]: … the difference between price and value will often be an important element in assessing the damage suffered by a person who, by a misrepresentation, has been induced to buy an item of property. As the trial judge said, there may also be questions of consequential damage. It would be wrong, however, to assume that in every case of misrepresentation (leave aside other forms of misleading or deceptive conduct) the only kind of damage which may be suffered, and compensated or redressed by orders under Pt VI of the Act, is any difference between price and value or any consequential losses. In particular, care must be exercised before seeking to apply what is described as the "rule in Potts v Miller " to claims made for relief under Pt VI of the Act. 114 The loss in Murphy v Overton was an unexpected expense that arose when the appellants' liability to contribute to outgoings for the Heritage Retirement Village expanded to include items that were not included in the budget which induced them to buy into the Village. At 415-416 [74] the Court said, "The appellants did establish that they had undertaken an obligation which, in the events that happened, proved to be larger than the respondent's misleading conduct led them to believe". 115 The plaintiff claims that his loss and damage is the expenditure of money for 258m² of land that he did not receive. It was submitted that the cost to him of an unexpected short supply is damage, conformably with the reasoning in Murphy v Overton, because it is a cost and it was unexpected, generated by misleading conduct referable to the supply side of the contract rather than its payment provisions. It was submitted that this case is stronger on its facts than Murphy v Overton in that the appellants got what they paid for in that case but in this the plaintiff did not. 116 The defendants relied upon a passage from Santow JA's judgment in Havyn Pty Ltd v Webster [2005] NSWCA 182 in support of their submissions that the "usual" Potts v Miller rule should apply to the assessment of loss and damage under s 82(1) of the TPA. In Havyn the managing agent for the sale of a block of 6 flats owned by Ms Webster (the vendor) prepared a brochure in which the statement was made that each flat was "approximately 63 square metres". On the back of the brochure there was a disclaimer that the information in the brochure was supplied to the agent and that they had "no reason to doubt its accuracy, however we cannot guarantee it". The successful bidder at the auction, Mr Meyerratken, relied upon the representation as to the approximate area in making his bid. Havyn Pty Ltd, a company associated with Mr Meyerratken and the vehicle that was to develop the property, entered into the contract with the vendor. 117 The vendor served a notice to complete and prior to the date for completion the purchaser sought an extension of time in which to complete because it was having difficulty in obtaining finance. The vendor granted an extension of time and during that period the purchaser discovered that the area of each of the flats was substantially less than the represented 63 square metres. The purchaser lodged a caveat and alleged that the notice to complete was ineffective. At the appointed settlement date the purchaser still lacked sufficient funds to settle. Various negotiations ensued but broke down and the vendor terminated the contract. 118 The proceedings included a claim by the purchaser for a declaration that the vendor had made false and misleading representations as to the size of the units together with a claim for damages suffered by the purchaser in reliance on the misrepresentations. The trial judge held that the purchaser had failed to prove that the vendor or her agent did not actually hold the belief that the figure of 63 square metres was approximately accurate or that there was no adequate foundation upon which that belief could be held. The trial judge also held that even if he had found there was misleading or deceptive conduct he would have denied relief on the ground of causation on the basis that the purchaser had failed to take reasonable care for his own interests and had sought to rely on particular words in the brochure which his Honour held did not have the misleading or deceptive character. 119 On appeal, Santow JA, with whom Tobias JA and Brownie AJA agreed, held that the purchaser had succeeded in establishing that the vendor engaged in misleading and deceptive conduct in contravention of s 42 of the FTA. The purchaser abandoned any claim for damages for loss of profits and its only claim was for wasted expenditure and for return of the deposit. In that regard the case is distinguishable from the facts of this present case. Santow JA analysed the relevant provisions of the FTA and the authorities on the basis that there was no relevant difference in the primary operative provisions between the FTA and the TPA. In respect of the claim for recovery for monetary compensation, Santow J said: 117 In terms of the scope of recovery of monetary compensation pursuant to ss68 or 72(2) FTA (ss82 or 87 TPA), the following propositions emerge from the authorities (significantly Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388, Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494, Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 and Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1): (a) Once causation is established, the measure of relief available under s82 is not to be confined by analogy to breach of contract, tort or equitable remedies (the width of the potential application of s82 points against a narrow inflexible construction): Murphy v Overton Investments Pty Ltd (supra) at 407 per curiam; Marks v GIO (supra) at 509 per McHugh, Hayne & Callinan JJ, at 528 per Gummow J; Gates v City Mutual Life Assurance Society Ltd at 14, per Mason, Wilson & Dawson JJ; Wardley Australia Ltd v Western Australia at 526; (b) Although often the amount of loss or damage caused by a contravention of s52 for misrepresentation will coincide with what would have been awarded in an action for deceit, the question is what damage flowed from (in the sense of being caused by) the contravention: Marks v GIO at 512 [41] per McHugh, Hayne & Callinan JJ. (c) It is necessary to identify the detriment which is said to be the loss or damage which has occurred (s82) or which is likely to occur (s87): Wardley at 526-532 per Mason CJ, Dawson, Gaudron & McHugh JJ; Murphy v Overton Investments (supra) at 407-8 [46] per curiam. The language of the statute does not support any assumption that loss in this context should be necessarily singular, or be incurred either on capital account or on revenue account: Murphy v Overton Investments at 408 per curiam. (d) Economic loss caused by a contravention of the Act may take a variety of forms: Wardley at 527 per Mason CJ, Dawson, Gaudron & McHugh JJ. But where it is caused by misleading or deceptive conduct, it is central that the plaintiff has sustained a prejudice or disadvantage as a result of altering his or her position under the inducement of the misleading conduct:; Marks v GIO at 513-4 per McHugh, Hayne & Callinan JJ. (e) Such loss is usually quantified by comparing the value of what was acquired (based on the price freely contracting fully informed parties would have offered and accepted for it) with what was paid, in order to assess whether the party misled could have acted in some other way (or refrained from acting) which would have resulted in him or her obtaining greater benefit or incurring less detriment: Marks v GIO at 514-5 per McHugh, Hayne & Callinan JJ. Detriment in this connexion refers to ascertainable detriment actually sustained, not merely the detriment of having entered into the contract, because risk of loss is not itself a category of loss unless and until that risk becomes ascertained or ascertainable; Wardley at 527-8 per Mason CJ, Dawson, Gaudron & McHugh JJ; Murphy v Overton Investments at 407-8 [46]. (f) Thus the loss can be described as akin to "reliance loss", and the measure of damages is that which applies in relation to torts (especially deceit and negligent misstatement), although it is the plain words of the statute which are ultimately determinative and it should not be assumed that the common law rules apply to all claims for relief under the Act: Gates at 13 per Mason, Wilson & Dawson JJ, Murphy v Overton Investments at 403, 407 per curiam. (For the common law principles on damages for misrepresentation, see Potts v Miller (1940) 64 CLR 282 and Toteff v Antonas (1952) 87 CLR 647 at 650-1 per Dixon J, and the cases therein cited.) (g) A measure of damages for reliance loss will generally not include damages for loss of an expectation or profits, unless it be shown, for example, that reliance has deprived the innocent party of the opportunity of entering into a different contract in respect of which he would have made a profit: Gates at 13 per Mason, Wilson & Dawson JJ; cf Kyogle Shire Council v Francis (1988) 13 NSWLR 396, at 413-14 per Mahoney JA, at 417-18 per Clarke JA; see also Sellars v Adelaide Petroleum NL (supra) (standard of proof for lost opportunity). (h) The measure of damages may vary depending upon whether the innocent party elects to affirm or rescind the contract, as it affects the terms of the comparison of what was acquired with what was paid for it: cf, eg Argy v Blunts & Lane Cove Real Estate Pty Ltd (t/as Blunts of Lane Cove) (supra) at 749-756. It is, however worth repeating that in all cases, it depends upon proper identification of the relevant loss or damage actually sustained and the application of the Act to compensate for that loss. 120 Santow JA referred in subparagraph (e) to the method of quantification of loss that is "usually" employed and cited Potts v Miller in subparagraph (f). The case cited in support of such "usual" approach was Marks v GIO Australia Holdings Limited (1998) 196 CLR 494. That was a case in which the appellants claimed they were misled as to the interest rate that would be applied to their loans with the respondent. The appellants were misled to believe that interest was to be charged at a specified base rate plus a fixed margin of 1.25% when in fact the respondent sought to increase the rate to 2.25%. At first instance the appellants succeeded but lost on appeal to the Full Court of the Federal Court. The High Court (Gaudron J, McHugh, Hayne and Callinan JJ, Gummow J, Kirby J dissenting) dismissed the appeal. McHugh, Hayne and Callinan JJ said at 514-515 (footnotes omitted): 47. The bare fact that a contract has been made which confers rights or imposes obligations that are different from what one party represented to be the case does not demonstrate that the party that was misled has suffered loss or damage. The contrary view (which had been adopted by the Full Court of the Federal Court in Jobbins v Capel Court Corp Ltd ) was rejected by the majority in Wardley . 48. A party that is misled suffers no prejudice or disadvantage unless it is shown that that party could have acted in some other way (or refrained from acting in some way) which would have been of greater benefit or less detriment to it than the course in fact adopted. Thus, the party that is misled will have suffered loss if a chose in action which was acquired was worth less than the amount paid for it. There may well be other ways in which it might suffer loss or damage. For example, consequential loss may be suffered. But no loss of that kind was alleged in this case and, putting that kind of loss to one side, we focus only on loss said to be suffered by the making of the contract. 49. It is necessary, then, to determine whether the value of what was acquired is less than what was paid. How is value to be assessed? It is to be assessed objectively, not according to what either or both of the parties to the contract believed that it would obtain from the contract. That is, the value of what in fact was acquired is to be identified according to what price freely contracting, fully informed parties would have offered and accepted for it. It is only by comparison with the value assessed in this way that there can be an assessment of whether the party that is misled could have obtained some greater benefit or incurred less detriment. What is important is what that party could have done, not what it might have hoped for or expected. Some examples may serve to illustrate the point. 50. If a person agrees to pay $50,000 for goods which the vendor falsely represents are worth $100,000 but which are, in fact, worth $50,000, what loss has the purchaser who is misled suffered by agreeing to buy (assuming no more is known)? If a person agrees to pay interest at the rate of 10% for a loan which the lender falsely represents would ordinarily command interest at a rate of 15% but which, in fact, would ordinarily command interest at 12%, what loss has the borrower who is misled suffered by agreeing to borrow (again, assuming no more is known)? And so the examples could be multiplied. 51. The reason that neither of these persons suffers a loss is that viewed objectively each obtained rights having a value (a value determined objectively) at least equal to what it paid for those rights. It is only if some alternative (less detrimental or more beneficial course) were available, that it can be said that the contract which was made was less valuable to the party that was misled than had been represented - for it is only then that a comparison of value can be made. 52. The fact that each of the misled parties in the examples given may have thought that it was to obtain some advantage from the transaction is not to the point. The contravening conduct has left the party that was misled no worse off than it was before the contravention occurred 121 Gummow J cited with approval Lockhart J's statement in Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 at 529-530 that: It is important that rules laid down by the courts to govern entitlement to damages under s 82 are not unduly rigid, since the ambit of activities that may cause contravention of the diverse provisions of Pts IV and V is large and the circumstances in which damage therefrom may arise will vary considerably from case to case. 122 Gummow J said at 529: 103. As I have indicated earlier in these reasons, what was said by this Court in Gates (and Kizbeau Pty Ltd v W G & B Pty Ltd ) does not determine that the measure of compensation which is recoverable in an action under s 82 is confined by analogies with tort or otherwise. The measure of damages recoverable in actions of a varied nature for which s 82 provides is not to be determined on the basis that the appropriate guide in most cases will be found by asking what would have been the measure if the common law did what it does not do, namely treat as a tort any facts which happen to give rise to an action under s 82. Analogy, like the rules of procedure, is a servant not a master. 123 It is apparent that in Havyn the Court of Appeal was not referred to the then recent decision of the High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 in which the Court said at 656-657: 35. The approach of subtracting value from price is commonly employed where the acquisition of land, chattels, businesses or shares is induced by deceit. It has also been commonly employed under s 82 of the Act. It is sometimes described as the rule in Potts v Miller [(1940) 64 CLR 282]. Even in the areas in which that approach is often applied, and even apart from cases in which consequential losses have been recovered, the "rule" is not universal or inflexible or rigid. This perception is not novel. It has existed at least since the judgment of Dixon J in Potts v Miller and has been quite plain since that of Gibbs CJ in Gould v Vaggelas [(1985) 157 CLR 215 at 220-221]. Even Jordan CJ, who called the rule "well settled", acknowledged that it was only a "rule of practice". The flexibility of the rule can be seen by reference to a number of its characteristics. 124 In HTW Valuers, with reference to Marks v GIO Australia Holdings Ltd, Henville v Walker (2001) 206 CLR 459, I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 and Murphy v Overton Investments Pty Ltd, the Court said at 667 (footnote omitted): 65. … The deduction of true value at the acquisition date from the price paid is no more than a guide to the assessment of damages under s 82. Section 82 does not in terms refer to that method, and the width of s 82 permits other approaches to the assessment of damages so long as they work no injustice. 125 One such "other" approach that the plaintiff propounds as appropriate in this case is that adopted by Hodgson J, as his Honour then was, in Tefbao Pty Ltd v Stannic Securities Pty Ltd (1995) ATPR 41-391. In that case a developer/purchaser was induced by misleading conduct of the vendor's agent into believing that the subject property (Lot 1), comprised 12 acres, or possibly 12.5 acres, when it comprised only 10.75 acres. Lot 1 was purchased at the same time as three other Lots that the developer believed had a combined area of 24.85 acres. Hodgson J said at 40,343: The total actually paid for the four blocks, in the belief that they were about 24.85 acres in all, was $1,251,000.00, giving an average of $50,346.00 per acre. The true area was 23.6 acres which, at $50,346.00 per acre, would give just over $1,188,000.00. On that basis, it seems to me that the cross-claimants would have suffered an actual loss of $63,000.00 by reason of the deficiency in the acreage. 126 It seems to me that Hodgson J only utilised the pro-rata analysis of cost per acre for the purpose of limiting the plaintiff's damages. His Honour had before him a valuation of the true value of Lot 1 at $480,000 that compared to the purchase price of $570,000, the difference being $90,000. That evidence was consistent with the Potts v Miller approach. However that alleged loss of $90,000 was for a difference between 10.75 acres and 12.5 acres being 1.75 acres. His Honour held that the plaintiff was not led to believe it was 12.5 acres but rather 12 acres and the damages were adjusted to $63,000 to accommodate that limitation, that is a difference of 1.25 acres. In effect, there was a partial application of the rule in Potts v Miller with the pro-rata approach being adopted to limit the damages to the 1.25 acres at $63,000. 127 The plaintiff also relied upon my decision in Sumy Pty Ltd v Southcorp Wines Pty Ltd (2004) 12 BPR 22,549. In that case the area of the property (80 acres) was misdescribed in the contract (equal to 100 acres) and the discrepancy was not discovered until some years after completion. The plaintiff in that case accepted that "the usual measure of damages for misrepresentation inducing a purchase of property is the difference between price and value, but submitted that it is wrong to assume that this measure is always to be applied" ([99]). Sumy was decided before the High Court delivered its reasons in HTW Valuers declaring that such an approach is "only a guide". In any event the passage in Sumy relied upon by the plaintiff is as follows: 101 The evidence in this case is that the plaintiff would not have entered into the contract at the particular price had it known that the area was only 80 acres instead of 100 acres. It calculated the purchase price it was willing to pay on the basis of an area of 100 acres. The plaintiff claims that its damage is really in the nature of consequential damage, that is, that it is now only able to develop and yield profit on 80 acres, when it should have been able to yield profit on 100 acres. The plaintiff was never going to be able to obtain 100 acres at this particular site. There is no evidence that any comparable site was available to it to purchase that would yield anything like the extraordinary increase in the value of the land over the 6-year period. 102 The plaintiff was able to purchase the land for half of its true value at the time the contract was entered into. I am satisfied that in this case it is appropriate to measure any damage the plaintiff has suffered as the difference between the price it paid and the value of the land at the time it paid the price. The consequence is that the plaintiff is not entitled to any damages because the value was far greater than the price it paid. 103 If I am wrong in that conclusion an appropriate measure of damages may be the difference between $1,625,000 paid on the basis of 100 acres and the amount for 80 acres assessed on a pro rata basis at $1,300,000, being $325,000 plus interest. 128 The plaintiff claims that he was prepared to and did in fact pay $11 million for 1,366m² of land (equating to $8,052.70 per square metre) but received only 1,108m² meaning that he paid $8,052.70 per square metre for 258m² that he did not receive, totalling a loss of $2,077,596. It was submitted that such method of calculation accords with the method of assessment employed in Tefbao and the alternative approach suggested in paragraph [103] of Sumy. 129 The plaintiff submitted that it is irrelevant that the value of the Property even at 1,108m² may have been equal to the price that he paid for it because the defendants are not entitled to take the benefit of the plaintiff's bargain to cushion their damages. Mr Kelly embarked upon the following suggested analogy: Assume that a plaintiff is induced to purchase "1 dozen" eggs on special at $2.40 per dozen but finds that there are only 11 eggs in the carton when he arrives home. He suffers a loss for the unexpected short supply of 1 egg, namely, 20 cents. It is not open for the defendant to say that the price of a dozen eggs is normally $3.60, the value of the 11 eggs received was $3.30 and the plaintiff suffered no loss because the value he received exceeded the price he paid. The fallacy in that argument is that it does not compare like with like. The plaintiff bargained for a dozen eggs at a good price; not a dozen eggs at market price. 130 It was also submitted that the value of the short supplied egg is to be assessed by reference to the price paid not the market value of 30 cents. If 30 cents were used, the plaintiff would be making a profit of 10 cents from the defendants' contravention, as distinct from being compensated for his loss. The plaintiff conceded that he was not entitled to damages for loss of expectation or loss of profit unless it be shown that reliance had deprived him of an opportunity of entering into a different contract under which he would have made such a profit. That is not the position in this case. It was submitted that the plaintiff is entitled to retain the benefit of his bargain and he is not obliged to yield any part of the bargain to the defendants. 131 The plaintiff claimed that this is a case of a clear cut contravention causing him to do something that he would not otherwise have done, that is, causing him to bind himself to a contract where he had an obligation to make a payment larger than he was led to believe he was obliged to make. He was led to believe that he was obliged to make a payment of $11 million for 1,366 square metres but his obligation was much larger. He was obliged to make a payment of $11 million for 19% less land. It was submitted that the defendants' conduct caused him to be in a situation in which what he received is less than that for which he bargained. 132 The plaintiff's evidence was that if he had been aware of the true position in respect of the area, the waterfrontage, the foreshore, and the access, he "would not have gone ahead and purchased the Property as and when [he] did". He also gave evidence that he was not saying that he would not have been interested in the Property had he known the true position but that he would "not have been interested in purchasing the Property for $11 million or anything like that sum". His evidence was that if he had known the true position he would have started the bargaining, if he started it at all, at a figure "less than $10 million" and he would have "bargained much harder rather than agree to pay $11 million for a property which did not have all the attributes which led [him] to buy at that price". 133 The defendants submitted that this evidence does not assist the plaintiff. It was submitted that he has not proved any "actual" damage and has not established that he could have purchased the Property for less than $11 million. When the true position was discovered the plaintiff attempted to negotiate a better price but the Hogans would not move from the contracted terms. That position does not really assist the defendants because at that time the plaintiff was obliged to complete the contract and I am satisfied that the advice he received in relation to the non-availability of a compensation claim under the contract was correct. There was no suggestion that the plaintiff's completion of the contract affected any relevant issue in the proceedings. 134 In McCullagh v Lane Fox & Partners Ltd [1994] 1 EGLR 48 (affirmed on appeal [1996] 1 EGLR 35) the plaintiff and his wife saw an advertisement for a house "occupying a unique position on the River Thames, … gardens of nearly one acre and a private 90' river frontage. Front and rear gardens of nearly 1 acre". During the inspection of the property the agent informed the plaintiff and his wife that the true area was 0.91 acres. The plaintiff agreed to purchase the property for £875,000. The true area was in fact half an acre. The plaintiff gave evidence that if he had been told the true area he would have "reduced his offer, but more probably not continued with the purchase". In the present case the plaintiff did not go so far as to say that he would not have continued with the purchase of the Property. In McCullagh the plaintiff contended that the true value of the property did not exceed £550,000. Coleman J did not accept the plaintiff's expert's valuation at that price and concluded that the purchase at £875,000 "was not at a price in excess of its market value" and accordingly the plaintiff had suffered no loss because he had paid "no more than it was worth with the area that in truth it had". The defendants in this case contend that the plaintiff has not suffered any actual loss or damage because he has paid no more than the Property is worth with the area that it in truth has. 135 Mr Kelly submitted that if one were to apply the rule in Potts v Miller the damage suffered by the plaintiff would be masked and the just and true assessment of loss would not occur. It was submitted that to apply the Potts v Miller rule in the circumstances of a short supply is to gift to the defaulting defendant the benefit of the bargain that was struck. It was also submitted that, as in Murphy v Overton, the loss was a pure unexpected cost, in this case there has been a pure unexpected short supply that is compensable. The unexpected expense in Murphy v Overton was compensable as damage and it was submitted that this is the perfect corollary of unexpected short supply, in other words, the other side of the identical coin. It is submitted that the actual loss identified is the cost specifically paid for what was not supplied, calculated as $8,052.70 per square metre as a pro-rata amount in the same way as referred to in paragraph [103] in Sumy. 136 The plaintiff makes no claim for consequential loss. In Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254 Lord Steyn said at 284 (referred to with approval in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd at 667 par 63): It is right that the normal method of calculating the loss caused by the deceit is the price paid less the real value of the subject matter of the sale. To the extent that this method is adopted, the selection of a date of valuation is necessary. And generally the date of the transaction would be a practical and just date to adopt. But it is not always so. It is only prima facie the right date. It may be appropriate to select a later date. … Moreover, and more importantly, the date of transaction will be simply a second order rule applicable only where the valuation method is employed. If that method is inapposite, the court is entitled simply to assess the loss flowing directly from the transaction without any reference to the date of transaction or indeed any particular date. Such a course will be appropriate whenever the overriding compensatory rule requires it. … There is in truth only one legal measure of assessing damages in an action for deceit: the plaintiff is entitled to recover as damages a sum representing the financial loss flowing directly from his alteration of position under the inducement of the fraudulent representations of the defendants. … In an action for deceit the price paid less the valuation at the transaction date is simply a method of measuring loss which will satisfactorily solve many cases. It is not a substitute of the single legal measure: it is an application of it. 137 Although the plaintiff has given evidence that he would not have purchased the Property at $11 million had he known the true situation, he has not given evidence of the maximum amount he would have paid for the Property. Importantly he has not given evidence that if the vendors would not have moved off, say, $10.9 million, he would not have purchased it. It is not possible to know whether the vendors would have reduced their counter-offer below $11 million. The plaintiff did not give evidence that he utilised a calculation of dollars per square metre in deciding to purchase the Property at $11 million. He did say that he understood that the square metreage of waterfronts was specifically used to determine their value, but he accepted that this was an understanding that he had learnt in relation to this case. He did not suggest that he utilised it in a formula or calculation in making his offer. His evidence, which I accept was truthful evidence, was that the area of the Property and the waterfrontage were "relied very heavily on" by him in his decision to purchase it (tr 30-31). I accept that he had the area and waterfrontage in mind when he made the offer. 138 The misleading representation as to area was in breach of s 52 of the TPA. The misleading representations in relation to water frontage, foreshore and access were in breach of s 53A of the TPA. The plaintiff is entitled under s 82 of the TPA to "recover the amount of the loss or damage" he has suffered. The strict application of the rule in Potts v Miller may allow an agent to escape liability to pay damages to a person that was induced into buying a property smaller than represented and without the misrepresented attributes (a foreshore, waterfrontage and uninhibited access to the water) that were important in the decision to buy, if the value of the smaller property without the important attributes is equal to the amount paid. That approach would seem to allow agents to embellish their sales pitches to include all sorts of attributes to the property that do not exist, so long as the price paid for the property, absent the attributes in the sales pitch, is equal to the real value of the property. That may be another very good reason why comparison between price paid and real value is only a guide in measuring loss. However it must be remembered that there is no punitive aspect to the provisions of s 82 of the TPA and the section is concerned solely with the recovery of the amount of the loss or damage suffered: Marks v GIO per Gaudron J at 501, [9]. 139 I am of the view that to measure loss at a dollar figure per deficient square metre would work an injustice in this case. I have already explained why Tefbao is distinguishable. The observations I made in paragraph [103] in Sumy related to a developer who claimed consequential loss and are inapposite and in any event were qualified by: (a) the approach that I had adopted in comparing price paid to value being wrong; and (b) the use of the word "may". 140 There is a degree of overlapping in the misrepresentations. The difference in area was really the amount of land in the foreshore area with its attributes of waterfrontage and access. The bargain the plaintiff was induced to make by the defendants' contraventions, if the representations had been true, would have been a better bargain than the one he actually achieved. He would have had a larger property with a waterfront, the foreshore and access, with the foreshore area valued by Mr Dundas at $845,000. He would have therefore paid $11 million for a property worth $11.845 million. The plaintiff claims that this is the loss that he suffered. This approach may present as rather attractive, particularly when one has regard to the prospect, referred to above, of an agent avoiding liability for payment when the sales pitch has been riddled with representations in contravention of the TPA and/or FTA. Such a measure is the difference between the value of the property as purchased and the value it would have if the representations were true. This would be a development that has hitherto not been approved: Marks v GIO per McHugh, Hayne and Callinan JJ at 514-515 pars 50-51; Smith New Court Securities Ltd v Scrimgeour Vickers per Lord Steyn at 281 (not entitled to the benefit of the bargain measure); see also Holmes v Jones (1907) 4 CLR 1692. 141 As attractive as the approach may be, I do not think that the High Court's further loosening of the tether that previously tied the rule in Potts v Miller to the assessment of loss or damage under s 82 of the TPA in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd means that it is appropriate to measure the loss on the basis of the difference between the value of the property as purchased and the value it would have had if the representations had been true. If that is wrong and it is permissible to measure loss or damage on this basis, then the plaintiff's loss would, on one view of the evidence, be $845,000, notwithstanding the difficulties Mr Dundas encountered in the valuation exercise. 142 The contract for the purchase of the Property had a deferred or delayed settlement date. In such circumstances it is permissible to assess the loss at the date of the settlement: Saunders v Edwards [1987] 1 WLR 1116 per Kerr LJ at 1124 and Nicholls LJ at 1130. In any event, I am of the view that the appropriate time at which to assess loss in the circumstances of this case is at the date of settlement. The price paid was $11 million and the value at settlement was $10.9 million. Applying the "guide" provided by the so-called usual rule in Potts v Miller and in the absence of evidence from the plaintiff of the maximum amount below $11 million he would have paid for the Property, I am satisfied that the appropriate measure of the plaintiff's loss or damage is $100,000. The fact that the Property has increased in value since the purchase is not a matter that in this case impacts upon the plaintiff's entitlement to recover the amount of that loss. Conclusion 143 The plaintiff is entitled to the declarations he seeks except in relation to the jetty representation. The defendants are liable to the plaintiff for damages in the amount of $100,000. The parties are to bring in Short Minutes of Order including agreed orders as to interest and costs. The matter is listed at 9.30 am on 4 October 2006 for that purpose. If the parties are unable to agree on interest and/or costs orders I will hear argument on that day. *********************** 27/09/2006 - Amendment to paragraph 124 - Paragraph(s) 124 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.