Dunworth v Mirvac Queensland Pty Ltd [2009] QSC 121

SUPREME COURT OF QUEENSLAND CITATION: Dunworth v Mirvac Queensland Pty Ltd [2009] QSC 121 PARTIES: DUNWORTH, Maris Anne (applicant) v MIRVAC QUEENSLAND PTY LTD (respondent) FILE NO/S: 4514/09 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 11 May 2009 DELIVERED AT: Brisbane HEARING DATE: 8 May 2009 JUDGES: Wilson J ORDER: Upon the plaintiff giving the usual undertaking as to damages, the order of the court is that: 1. The defendant be restrained until trial or earlier order from terminating the contract of sale executed between the plaintiff and the defendant on 25 June, 2007 for the purchase of the lot ("the Lot") in the defendant’s Tennyson Reach Development comprised of Apartment/lot number 3301 and the exclusive use areas attached to the Lot, pursuant to clause 13 of the said contract or otherwise on the basis that the plaintiff indicates an intention to not, and/or fails to, comply with a provision of the said contract; 2. The defendant be restrained until trial or earlier order from instructing its solicitors (directly or indirectly), to present the Bank Guarantee provided by the Australia and New Zealand Banking Group Limited to Clarke Kann Lawyers, with the authorisation of the plaintiff, on 9 July, 2007 to the said Bank for payment; 3. The costs of and incidental to the application be costs on the cause. -- 1 of 7 -- 2 CATCHWORDS: EQUITY – EQUITABLE REMEDIES – INJUNCTIONS – INTERLOCUTORY INJUNCTIONS – BALANCE OF CONVENIENCE – where respondent is developer of a staged residential development and seller of a lot in the development – where applicant is buyer of the lot pursuant to a contract – where applicant alleges she was induced to enter into the contract by certain representations made in breach of ss 52 and/or s 53A of the Trade Practices Act 1974 (Cth) – where applicant seeks interlocutory injunction restraining respondent until trial or earlier order from terminating the contact on the basis that applicant indicates an intention not to and/or fails to comply with a provision of the contract – whether balance of convenience favours applicant CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – ALTERATION OF WRITTEN INSTRUMENT – where, by a clause in the contract, settlement must not be earlier than 14 days after respondent gives applicant notice of establishment of relevant scheme under the Body Corporate and Community Management Act 1997 (Qld) – where applicant seeks an interlocutory order varying (by suspending) operation of the 14 day period – whether operation of period should be suspended Body Corporate and Community Management Act 1997 (Qld) Trade Practices Act 1974 (Cth), ss 51A, 52, 53A, 87 COUNSEL: R G Bain SC and C Murdoch for the applicant P H Morrison QC and J Chapple for the respondent SOLICITORS: Hyland Lawyers for the applicant Clarke Kann lawyers for the respondent [1] Wilson J: The respondent/defendant is a developer of the Tennyson Reach Development at Tennyson, a staged residential development to comprise six high rise residential unit buildings and supporting infrastructure. It is in the vicinity of the State Tennis Centre (which is not part of this development). [2] The respondent is also the seller of a lot in the development comprised of apartment/lot number 3301, and the exclusive use areas attached to the lot. It is part of stage 1 of the development which comprises 115 lots. The applicant/plaintiff is the buyer of that lot pursuant to a contract dated 25 June 2007. [3] The purchase price under the contract is $2.155 million. Instead of paying the deposit of $215,500, the applicant provided a bank guarantee in that amount (contract clause 1.3). [4] By clause 13.1, if the applicant fails to comply with any provision of the contract, the respondent may terminate it. -- 2 of 7 -- 3 [5] By clause 3 of the contract, settlement must occur on the settlement date, which must be not earlier than 14 days after the respondent gives the applicant notice of the establishment of the relevant scheme under the Body Corporate and Community Management Act 1997 (Qld). That scheme has now been established, and settlement is due tomorrow, 12 May 2009. [6] The applicant alleges that she was induced to enter into the contract by certain representations made on behalf of the respondent which were false, misleading and deceptive, and made in breach of ss 52 and/or 53A of the Trade Practices Act 1974 (Cth). She has commenced this proceeding claiming (inter alia) an order declaring that the contract is void ab initio, or in the alternative that it not be enforced, and orders directing the respondent's solicitors to notify the bank that the guarantee is no longer required and to deliver up the guarantee to the applicant. [7] The applicant seeks interlocutory orders as follows: (a) an interlocutory injunction restraining the respondent until trial or earlier order, from terminating the contract pursuant to clause 13 or otherwise, on the basis that the applicant indicates an intention not to and/or fails to comply with a provision of the contract; (b) an order varying (by suspending) the operation of the 14 day period in clause 3.2 pending judgment or earlier order; (c) an interlocutory injunction to restrain the defendant from instructing its solicitors to present the bank guarantee to the bank for payment. [8] She has proffered the usual undertaking as to damages. [9] The applicant has sworn that on 22 June 2007 (before she executed the contract) she and her husband attended at the respondent's sales office on site at the Tennyson Reach Development. They met with Angela Patch, a servant or agent of the respondent who was working in the sales office. There was a model of the development there, and Ms Patch gave them a brochure. [10] The applicant informed Ms Patch that she was interested in lot 3301, which was to be constructed at the north-eastern end of the development, on the north-eastern corner of Block F. It was to be on the first (i.e. the lowest) residential level and was to have a wrap around balcony on three sides (front facing the river, side facing the east and rear facing the south). [11] The applicant has deposed: "I noticed that the model depicted a bikeway/walkway along the land between the front balcony of proposed lot 3301 and the river. I recall specifically having a conversation to the following effect with Ms Patch. 'How high will the apartment be above the ground?' She replied, 'Around three metres'. Ms Patch continued, 'You can get an accurate idea because we have a trestle system here which will give you the height that your apartment will be above the ground level.'" [12] According to the applicant, Ms Patch then arranged for a driver, a young man, to collect them in a vehicle and drive them to where he identified lot 3301 was to be built. He ascended a set of stairs on a trestle and indicated the level at which the -- 3 of 7 -- 4 apartment would be above the walkway, saying it was approximately 3.3 metres above the ground below the proposed lot 3301. [13] The applicant has deposed that she had a discussion with the young man about the bushland adjoining the proposed lot to the east. He advised it was Government land and would remain as bushland. [14] When they returned to the sales office, Ms Patch confirmed what the young man had said about the height of the apartment. She said that if he had said 3.3 metres, that would be correct. [15] The applicant has deposed: "11. Following and based upon my discussions with Ms Patch and with the young man I was satisfied that: (a) the height of the front balcony above the ground level would be 3.3 metres; (b) the bushland along the eastern side of the Lot would remain; (c) a bikeway/walkway would not extend along the eastern side of the Lot; (d) as a result of those things, the presence of the bikeway/walkway along the front of the building would not interfere with the privacy or security of the apartment; (3) the apartment would thus be private, secure and in a secluded bushland setting." [16] She says that the respondent expressly represented the first two of these matters, and impliedly represented the last three of them. [17] The applicant has sworn to having relied on those express and implied representations in deciding to enter into the contract and authorising the provision of the bank guarantee. [18] She has recently visited the lot, as has her husband. She has sworn: (a) that the height of the front balcony above ground level is not 3.3 metres but about 2 metres; (b) that the height of the side balcony above ground level is not 3.3 metres but between 1.5 and 2 metres; (c) that the bushland has been removed along the eastern side of the apartment, and the bikeway/walkway extends along that side on the ground level between 1 and 6 metres from the apartment; (d) that the inside of the apartment is clearly visible to a person standing on the ground level to the east; (e) that a person could easily enter the apartment by climbing on to the eastern balcony; -- 4 of 7 -- 5 (f) that the privacy, security and amenity of the apartment have been significantly reduced by the lower height of the apartment above the ground, the extension of the bikeway/walkway along the side, and the clearing of the virgin bushland. [19] The alleged representations were all as to future matters. The respondent has not denied that the express representations were made, although it has challenged the implied representations. [20] Under s 51A of the Trade Practices Act, where a corporation makes a representation with respect to any future matter, and it does not have reasonable grounds for doing so, the representation shall be taken to be misleading. Further, it shall be deemed not to have had reasonable grounds for making the representation unless it adduces evidence to the contrary. [21] The respondent's Development Director, Mr White, has sworn an affidavit. He has not disputed the change in height, but sought to give some explanation for it. He has sworn that the levels of the pathway in front of the building and adjoining landscaping immediately adjacent to apartment 3301 were affected by the requirements of Energex that the level of the land must be such that there are 750 mm of soil above the Energex cabling. Senior counsel for the respondent referred to clause 6.2 of the contract by which the respondent might make certain changes to the development, including changes required by an Authority such as Energex, even if the applicant were materially prejudiced, and to clause 11.3 which referred to an easement in favour of Energex which would burden the common property in the vicinity of the apartment in question. [22] He also referred to the Community Management Statement annexed to the contract, which was to be registered in the Queensland Land Registry. However, these matters do not show that the respondent had any reasonable basis for the representation that the apartment would be 3.3 metres above ground level. And there is evidence that its height as subsequently constructed was substantially less than that, between 1.5 and 2 metres. [23] The applicant has sworn that the young man represented to her that the bushland along the eastern side of the lot would remain. The respondent has not challenged the making of the representation or shown that there was any reasonable basis for making it. [24] Whether the implied representations were made depends upon whether in all the circumstances they were reasonable inferences from the express representations. The applicant's case in relation to these implied representations is not as strong as it is in relation to the express representations. This is especially so with respect to the bikeway/walkway and the secluded bushland setting. The applicant has admitted that when she attended the site on 22 June 2007, she was shown a model of the development. Photographs of that model exhibited to Mr White's affidavit clearly show the bikeway/walkway extending along the eastern side of the apartment. -- 5 of 7 -- 6 [25] The applicant has pleaded that she relied on the express and implied representations in entering the contract1 and that each of them was false, misleading and deceptive, or likely to mislead or deceive.2 She has sworn to these matters.3 [26] In my view there is a serious question to be tried as to whether the respondent breached s 52 and/or s 53A of the Trade Practices Act. [27] Under s 87 of the Act, where the Court finds that a person has suffered, or is likely to suffer loss or damage by conduct in contravention of s 52 and/or s 53A, it may make such orders as it thinks appropriate, including an order declaring a contract void ab initio or from a specified date, an order varying a contract and an order for damages. [28] Senior counsel for the respondent submitted that where there has been a breach of s 52 and/or s 53A, the contract remains on foot unless and until the Court exercises its discretion to declare it void. This is clearly correct. He submitted further, that the Court should not make an interlocutory order having the effect of altering contractual rights. But interlocutory orders restraining termination for breach frequently have that effect; that is why an applicant for such interlocutory relief is required to give an undertaking as to damages. In the present case, I am satisfied that the undertaking has real worth. [29] Senior counsel for the respondent submitted further that the applicant has effectively initiated these proceedings as a pre-emptive strike to test whether she has any legitimate basis for avoiding her obligations to the respondent. He submitted that if the Court were to suspend the operation of the 14 day period in clause 3.2 of the contract, she would thereby avoid being in breach of contract and avoid any interest or loss accruing as a result of her non-compliance. As he put it in written submissions: "She will have got a deferral of her obligation to settle under the contract for no consideration." She has sworn to wishing to "elect to purchase the unit" anyway if unsuccessful. [30] I think there is substance in this submission. While I am minded to grant an interlocutory injunction restraining the respondent until trial or earlier order from terminating the contract pursuant to clause 13 or otherwise on the basis that the applicant indicates an intention not to and/or fails to comply with a provision of the contract, I am not minded to suspend the operation of the 14 day period in clause 3.2. [31] The applicant has sworn that if the interlocutory restraining orders were not granted, she would have to sell her family home to fund her purchase of the apartment, and if the bank guarantee were called upon, she would have to pay interest on it. [32] The respondent has submitted that if an interlocutory injunction is granted, final determination of the dispute at trial will be at least six months in the future, and that in the meantime, it will incur holding costs of $100,000. That is a matter which 1 Statement of Claim filed 29 April 2009 (Court Document number 1), para 15. 2 Statement of Claim filed 29 April 2009, paragraph 16. 3 Affidavit of applicant filed 30 April 2009 (Court Document number 4), para 11-15. -- 6 of 7 -- 7 could be compensated in damages pursuant to the undertaking proffered by the applicant if the injunction were wrongly granted. [33] The outcome of this application turns on where the balance of convenience lies, and that is not an easy question in all the circumstances. The relative strength of the applicant's claim has a bearing upon it, and I should say that on the material before me, it is quite strong. [34] I have concluded that the balance of convenience does favour the applicant. [35] Accordingly, I am prepared to make orders giving the relief sought in paragraphs 1, 3 and 4 of the application. Addendum [36] The parties having agreed on the terms of a draft order - UPON THE PLAINTIFF GIVING THE USUAL UNDERTAKING AS TO DAMAGES, THE ORDER OF THE COURT IS THAT: 1. The defendant be restrained until trial or earlier order from terminating the contract of sale executed between the plaintiff and the defendant on 25 June, 2007 for the purchase of the lot ("the Lot") in the defendant’s Tennyson Reach Development comprised of Apartment/lot number 3301 and the exclusive use areas attached to the Lot, pursuant to clause 13 of the said contract or otherwise on the basis that the plaintiff indicates an intention to not, and/or fails to, comply with a provision of the said contract; 2. The defendant be restrained until trial or earlier order from instructing its solicitors (directly or indirectly), to present the Bank Guarantee provided by the Australia and New Zealand Banking Group Limited to Clarke Kann Lawyers, with the authorisation of the plaintiff, on 9 July, 2007 to the said Bank for payment; 3. The costs of and incidental to the application be costs on the cause. -- 7 of 7 --