Re Turelin Nominees Pty Ltd v Dainford Limited [1984] FCA 41 (2 March 1984)

FEDERAL COURT OF AUSTRALIA

Re: TURELIN NOMINEES PTY. LTD.
And: DAINFORD LIMITED
No. VG202 of 1982
(1984) ATPR para 40 - 444
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Smithers J.

CATCHWORDS

Trade Practices - misleading and deceptive conduct - representations relating to the view from the unit bought by the applicant, as to whether there would be shelves that would join the balconies of units of the building - and as to whether a balcony of an adjoining unit would join the balcony of the unit - whether such representations induced the applicant to enter into the contract - whether the contents of the sales brochure constituted a warranty - construction of the contract - meaning of the term that the unit was on the 15th level - the description of the unit being on the 15th level constituting a condition of the contract.

Trade Practices Act 1974 ss.52, 53 and 53A.

HEARING

MELBOURNE
2:3:1984

ORDER

1. On 29 October 1982 the applicant validly rescinded the agreement between the applicant and the respondent dated 28 August 1981 and the contract was thereby rescinded.

1. The respondent refund to the applicant the sum of $24,900.00 paid by the applicant to the respondent in respect of the said contract.

2. Costs are reserved.

3. Either party has liberty to apply in relation to costs and generally on 7 days notice.

DECISION

By the statement of claim delivered on 22 December 1982, as amended on 5 December 1983 and 9 December 1983 the applicant sought relief by way of rescission or damages in relation to a contract to purchase from the respondent a residential unit in a high rise building at Surfers Paradise known as "Imperial Surf" on the grounds that:-

1. representations were made by the respondent that:

(a) the unit would have a view which would clear the adjacent building known as Quarter Deck and which would not be interrupted by that building;

(b) that no shelf would join the balconies of the units of the building;

(c) that a privacy wall would be included at the end of the balcony of the unit;

(d) that no balcony would join the balcony of the unit;

2. The respondent gave warranties in the same terms as the alleged representations;

3. There were terms and conditions in the agreement between the parties dated 28 August 1981 in respect of the purchase by the applicant from the respondent of a unit in a building named Imperial Surf to be erected by the respondent at Surfers Paradise that:

(a) the applicant would pay the sum of $24,900 as a deposit;

(b) the building would be constructed in accordance with plans and specifications prepared by the respondent's architect;

(c) that the unit was on the 15th level of the building;

Representation (1)(d) above was added by amendment on 5 December 1983. Notice of intention to so amend was given on 14 November 1983. Paragraph 3(c) was added on 9 December 1983 pursuant to an application made on the previous day.

The relief sought is said to be available to the applicant pursuant to ss.52, 53 and 53A of the Trade Practices Act 1974 (the Act), and at common law.

In fact, because there was no floor or level in Imperial Surf designated by the respondent as the 13th floor or level, the unit in question, although called unit 15D, was actually on the 14th level of the building if one counted from the ground floor and included the ground floor as level number one. As a result the probabilities are that the roof of Quarter Deck, an adjacent building, is about level with the ceiling of unit 15D and its machinery house some 8 - 10 feet above that roof level. Therefore, unless one was looking to the west from a position some floors above the top of Quarter Deck, that building was to some extent an obstruction.

Representation 1(c) is not relied on by the applicant.

I have come to the conclusion for reasons stated hereafter, that the applicant is not entitled to relief in respect of the representations alleged in 1(b) and 1(d). The issues arising in respect of the representation alleged in 1(a) raise questions of difficulty.

The actual view from the unit, if one looked north to the right of Quarter Deck, included a vista of the coast, and if one looked to the left of Quarter Deck it took in a considerable expanse to the west including other high rise buildings, the river and the hinterland. The hinterland and another high rise building may also be seen from the unit over the roof of Quarter Deck but not over the machinery house on the roof. Close behind Quarter Deck is another residential building called Sunseeker, of height comparable to Quarter Deck which, if Quarter Deck were not there, would obstruct the view from the unit but to a slightly lesser extent than does Quarter Deck.

The persons involved in the conversation in which the representation relating to the view is alleged to have been made were Mr. Flintoff, a representative of PRD Realty Ltd (PRD), the agent for the respondent in the sale of all the units in Imperial Surf, and Mr. Paton, the Managing Director of the applicant. In my opinion it is established that Mr. Paton was told that unit 15D of Imperial Surf, but only that unit, was available to his company and that unit was on the north west corner of the building and that it had a beautiful wide view including the beach to the north and the hinterland to the west. He enquired of Flintoff whether it faced Apollo, another high rise development in the vicinity, or Quarter Deck and was told that it faced more to Quarter Deck. Paton asked whether the view from the unit "would clear Quarter Deck" and was told by Flintoff that it should be alright because he believed Quarter Deck had thirteen levels plus the ground floor and the unit in question was on the fifteenth floor of Imperial Surf.

Both Flintoff and Paton were under the impression that unit 15D was on the fifteenth level of the building. Of course, in promoting the sale of the unit, Flintoff was giving information to Paton as to the height of Quarter Deck designed to enable Paton to make an assessment of the significance of Quarter Deck in relation to the view from the unit on the assumption that unit 15D was on the 15th level counting the ground floor as level one. In doing so Flintoff confirmed the reality of that assumption. Flintoff correctly stated the height of Quarter Deck but made an error in inviting Paton to act on the assumption as to the level of unit 15D. To my mind Flintoff's confirmation of the assumption as to the actual level of unit 15D was capable of misleading and possibly did mislead Paton. Flintoff did not deliberately mislead Paton and in respect of his statements there was no intention to do so. But he did invite Paton to assess the situation by reference to a fact, namely, that unit 15D was on the fifteenth level of the building, when for the purpose of considering whether the view from the unit would pass over Quarter Deck, it could only be considered by reference to its actual level, namely, that it was on the fourteenth level. This was a situation brought about by the respondent by omitting to designate the thirteenth floor of the building as the thirteenth floor and naming it the fourteenth.

The question arising under s.52 of the Act is whether Paton suffered loss or damage by reason of the invitation of the respondent so to assess the view from the unit on the basis that unit 15D was not on the fifteenth level of the building. The question arising at common law is whether the representation was a factor inducing the applicant to enter into the contract. In this respect it is to be remembered that the question is not whether the applicant would have entered into the contract had he known the truth but whether he was induced by what he believed to be the situation as a result of the representation, alone, or in conjunction with other factors. See Smith v. Kay [1859] EngR 38; (1859) 7 H.L. Cas. 750 at 759 and Gordon v. Street (1899) 2 Q.B. 641 at 646; Dominique Strauss and Michael Gotovac v. Canberra Commercial Development Authority unreported decision of the Full Court of the Federal Court on 25 November 1983, Nos. ACTG 73 and 74 of 1982.

In relation to all the issues it is important to consider the background to the transaction, the circumstances in which it was concluded, and the degree of reliance to be placed on Paton's evidence. The interest of Paton in Surfers Paradise started not later than 17 December 1979 when he purchased a unit on the eighth floor of a high rise development called Beach Point. It was purchased through Flintoff. Paton took possession of the unit at the end of January 1980. However, by June 1980 Paton became aware that the respondent intended to develop a property called Chiltern Hunt by erecting a high rise residential building thereon. He spoke to Flintoff about it and as a result wrote to Flintoff on 6 June 1980 forwarding a cheque for $7,000 and couched in the following terms:-

"As per our telephone conversation I enclose herewith cheque for $7,000 payable to "PRD Realty" being approx. 5% deposit on a 2 Bedroom, North East corner apartment Floor 10* in the development to be undertaken on the "Chiltern Hunt" site The Esplanade Surfers Paradise. *(2nd Preference Floor 11, 3rd preference Floor 12) Note: Turelin Nominees, at the above address. is the purchaser.

I will be returning from overseas on Aug 1 and look forward to receiving details of the project as they develop so that some minor adjustments could possibly be made to the fitting of the apartment and that a well positioned and protected car parking space may be selected - ideally a solus position against a wall suitable for a larger car."

He said that Flintoff had said to him that if he were interested he should send a deposit. I do not believe this. At that time there was intense competition between investors and possibly others to obtain units in first class high rise residential buildings. It is quite likely, and in accordance with Paton's general attitude, that he discussed with Flintoff the wisdom of sending a deposit to emphasise his genuineness as a buyer. But at that stage Flintoff was not interested in obtaining a deposit from a potential purchaser of a unit in the proposed development of Chiltern Hunt. It was too early. To my mind the sending of the deposit was an initiative taken by Paton as a step to improve his chances of being "awarded" a unit, he being under the impression that among the contestants for units he was regarded by the respondent or PRD as "one of the little people". It reflected the intensity of his desire to acquire a unit in the proposed development. Flintoff says that Paton had expressed his interest in the development as being for investment. This is denied by Paton but I believe Flintoff. Of course, an investor is to be protected by the law in the same way as other persons but the matter is of importance in this case on the issue of inducement.

Having regard to the fact that Paton had already acquired and taken possession of a unit in Beach Point in January 1980 with which he was happy, and which was only a few doors from the Chiltern Hunt site, his interest in June 1980 in obtaining an interest in the new development does tend to take on the flavour of an investment, especially as the probable prices of units in that development were likely to be very high.

It is common ground that in 1980 and 1981 the market for beach front units at Surfers Paradise was to say the least, buoyant, and that profits were being made by sales of contracts to buy units which were not yet built. To a large extent it fell to salesmen to allocate available units amongst those desiring to buy. It was not a problem of pressing persons to agree to buy. There was every reason for a person desiring to purchase a unit whether as an investment or for occupation to take what steps he could to improve his chances of having a unit allocated to him. But it would seem unusual that a man having six months earlier purchased what he said was a more than suitable unit for occasional occupation by himself and his wife to be taking energetic steps to make sure of purchasing another very expensive unit a few doors away for similar occupation. The stated ground for doing so, namely, that the unit already purchased and only occasionally visited might soon show signs of wear and tear is hardly convincing. To have a notion of upgrading one's standard of occupation might be a good reason. But it is difficult to think that in the above circumstances there was any such real reason.

In June 1980 Paton had asked for a two bedroom unit. Anything less than this would be a down grade rather than an up grade. He had asked for a north east corner unit. Anything different meant the loss of some of the north beach coast view. That view was undoubtedly dramatic and could never be built out. Yet when Paton was offered a unit in the north west corner of the building and was told he must decide about it forthwith, he did not, according to his evidence, know or even ask if it were a two bedroom unit. He sent off his deposit still, according to him, in ignorance of that matter. At that stage, according to him, neither he nor his wife knew whether the unit had two bedrooms. It is to be noted that he sent off not a holding deposit of $1000 or $2000 as had been suggested by Flintoff but the whole 10% of the purchase price, namely, $24,900. Of course he knew he could recover his deposit if he did not enter into the contract, but there was no lack of enthusiasm despite his ignorance as to the number of bedrooms or the unavailability of a north-eastern corner position. In fact it was a one bedroom unit. It is my belief that Paton was told by Flintoff by telephone, when Paton was told the unit was allocated to him if he wished to have it, that it was a one bedroom unit but it did not reduce his enthusiasm to purchase it.

When on 21 August 1981 Paton, according to his evidence, ascertained definitely that it was a one bedroom unit, he nevertheless signed the contract forthwith. Immediately thereafter one finds him writing to Flintoff disclosing a knowledge of "one plus one" units, and discussing whether the unit could be provided with an additional bedroom by building a wall in a particular way, delineated on a plan. The purpose was not put as being for the occupation of the unit by himself and his wife, but for its presentation for sale "when it comes for you to sell it".

Thus although, for fourteen months, Paton had a vision of acquiring a two bedroom unit in the north east corner, yet, no doubt because of the state of the market, he accepts a one bedroom unit with a north west aspect. Clearly he understood he had to take what he was offered or give up the opportunity to acquire an Imperial Surf unit. Indeed, he was asked "was the fact that Flintoff made it clear to you that it was very difficult to get units, you were prepared to take pretty much what was offered, is that the truth of the matter?" and he answered "yes". The next question began "In your letter" and Paton cut it off by saying "within reason".

It is clear, so far as Paton was concerned, that, at the time he purchased the unit he had well in mind the prospect of selling the unit at a time in the not too distant future for a profit. He says he had in mind only the long term change of position that might arise with respect to any property in which he might happen to be living years in the future. I find this difficult to accept. The situation was that when presented with a one bedroom unit rather than a two bedroom unit his mind went swiftly to the prospect of selling the unit; whether to turn it into a two bedroom unit forthwith and illegally, for the purposes of Flintoff selling it when the time came. Hardly a five year plan.

It is against such considerations that one has to consider the evidence of Paton as to the effect upon his mind of Flintoff's statements concerning unit 15D being on the 15th level as an inducement to purchase the unit. Was it a material factor influencing him to decide to enter into the contract?

In relation to all the issues an assessment of the credibility of Paton is most important. His credit is affected in a number of ways. First, he stated that one of the conditions on which he would insist before he bought a unit was that there should be no shelf providing physical means of access from a unit adjoining his. It was the custom of the respondent to build its residential buildings with a continuous shelf right around the building at the floor level of each floor. In fact the court was told that such a shelf is built because of safety regulations. It was poured when the concrete floor was poured. Part of the shelf was used as a balcony floor, but parts were left without tiles or railings. For the appropriate person, it certainly provided access to the balcony of the next unit.

According to Paton he had decided at all relevant times, and quite firmly, that he would not purchase a unit where a shelf outside an adjoining unit was adjacent to the balcony of the unit in question. At the same time he understood that all buildings previously erected by the respondent, of which he knew, were built so that there was a shelf, at least, and perhaps a balcony, of an adjoining unit adjacent to the balcony of each unit. Thus when he wrote to Flintoff in June 1980 and when he subsequently spoke to Flintoff about acquiring a unit in a new development he knew, that if the development was a Dainford development, it was highly likely he was wasting his time and Flintoff's time unless the respondent proposed to alter its mode of construction by eliminating the shelf. He had no reason to think that the respondent might make a change in respect of the construction of Imperial Surf. The probability was the other way. Yet never at any time did Paton say to Flintoff that he would only buy a unit if the shelf adjoining the balcony of his unit were omitted. He spoke of the view and the size of the unit which were subject to negotiation, but failed to enquire about what was to him, a vital element, namely, the existence of an adjacent shelf or balcony. The notion of a business man paying out a substantial sum on the off chance that an unlikely event, the omission of adjacent shelves, might occur, when the fact might have been ascertained promptly by a simple question is quite incredible. The following passage is relevant:-

"Q. When you sent up your $24,000, what reason did you have to think that this unit, 15D, would turn out not to have a shelf adjoining your balcony? --- I did not know that it would not and I had to wait until I examined the plans.

You had no reason, did you, to think one way or the other? --- It could have had a shelf or it could not have had a shelf.

In fact, all the ones you had seen did have adjoining shelves, did they not? --- Yes, sir, and that is why I wanted to check.

Why did you not mention to them, it was no good if it had an adjoining shelf? --- That is why I immediately requested the plan to be able to examine it and it was not given to me. (p.59 transcript)

When ultimately, without a word to the respondent on the subject, Paton set out on 21 August 1981, in Melbourne, to satisfy himself about the existence or non-existence of a shelf adjacent to his unit, his evidence is that he did it by deduction from a comparison of the floor plan shown on the Imperial Surf brochure with that shown on the brochure of Peninsula, an adjoining development. The brochure of Peninsula indicated in relation to certain floors that there was a shelf but no balcony outside certain units which adjoined the balcony of an adjoining unit. From this Paton inferred that if in relation to Imperial Surf there was a similar situation it would be shown on the floor plan of the Imperial Surf brochure. But this reasoning involved an unsafe assumption. According to Paton's statement of his position, there he was, about to sign a contract to pay $249,000 for a unit in a building yet to be built but which he intended not to buy unless there was no shelf adjoining the balcony of that unit. From the Imperial Surf brochure he could not be sure whether there was such a shelf or not. But there, in the same room, was a senior representative of the respondent. The matter could be put to rest by a simple inquiry to him. And if he could not answer forthwith there was time, even that afternoon, to ring the respondent's office in Surfers Paradise. But instead of dealing with this vital matter in this common sense manner Paton, according to his testimony, preferred to do it by comparing the floor plans of the two buildings. It is my opinion that no business man would have dealt with such a matter in such a way, and I do not consider that Paton did so. Apart from the inherent improbability of the scenario described by him there is the evidence of Mr. Bandy, a director of the respondent. He said that he did not have with him in Melbourne, on the afternoon of Paton's visit to him, any Peninsula brochure containing the floor plan of any floor of the Peninsula development. In his room, and available to be picked up by visitors were the outside covers of what would eventually be the Peninsula brochure and an artist's impression of the contemplated Peninsula building, but no floor plans. Mr. Bandy's evidence was that the floor plans arrived from the printer about an hour before he left Brisbane for Melbourne. Although, as Igather, he took one copy of them to Melbourne in his papers, none were put in the brochure covers. He was not cross-examined on this point and I believe Bandy. Accordingly, I consider that Paton's story of his comparison of the two brochures and the inference he drew from observing that a shelf or shelves as distinct from balconies were delineated on the Peninsula brochure floor plans is quite false.

This is a very important matter because I must infer from it that Paton's evidence is fundamentally unreliable. The situation must be that the Peninsula brochure floor plans became available to Paton after he had signed the contract, and that after comparison with the Imperial Surf brochure floor plan there was an appreciation of the inference that is suggested might be drawn. In some way Paton sufficiently persuaded himself to enable him to swear as above to the events at the Wentworth Hotel on the afternoon of 21 August 1981. Without hard words, once it is clear that Paton is revealed as capable of invention of this kind and implementation of it on oath, his credit is fatally wounded.

There are other matters going to his credit. When he telephoned Flintoff in February 1983 he was taping the conversation. Flintoff gained the impression that Paton might be taping it and asked if that were so. Paton answered "no". He was asked twice and twice he said "no". This was a direct untruth told by Paton to Flintoff. It occurred in the course of what was put forward by Paton, as between himself and Flintoff, as a friendly call in which Paton had gone to the length of paying flattering compliments to the honesty of Flintoff. It is doubtful whether Paton did in February 1983 regard Flintoff as an honest man. He said he now thinks that Flintoff deliberately refrained from sending him the architect's plans of the unit because at some stage he received information that they were available on 1 August 1981. Paton said that he had no intention of using the tape recording in the case, but rang Flintoff "just to double check with him that I was right in my facts, just to make sure", "I wanted to be sure of what he had said". He was asked ". . . you were trying to gather evidence?" he answered, "I was not I was checking my facts were right, I wanted to ask him the questions, I wanted to hear him". He said he rang and taped the conversation on his own initiative, "purely for my own checking of facts".

If this is to be believed it indicates that Paton was not sure about what he had been told by Flintoff about Quarter Deck. Paton says that what he had been told was a critical factor influencing him to buy the unit. If it were it is strange that Paton had doubts as to whether his recollection was sound and required confirmation. If, at the time of the conversation, what was said had not really been important to him it could be that Paton was wondering what was said and thought he would see if Flintoff could respond to some flattery and remind him of something that might be useful to him. The destruction of the tape is also a disturbing incident and the evidence as to what had happened to it was most unconvincing.

There were various passages concerning the purpose for which Paton was interested in buying unit 15D, and indeed, other projects, which bear on Paton's credibility. His denial of interest in other projects seem to be in conflict with the evidence. He denied that he had asked Flintoff to send him brochures of other developments. His letter to Flintoff of 19 December 1982 in which he indicated he would be happy to receive information from him as to other developments is explained as just a courtesy; "I suppose I wanted to be kept informed of what was happening but I did not want to buy anything, so therefore he had to think I was a possible prospect otherwise he would not have sent me anything".

Other specific matters might be mentioned. In general I found Paton less than satisfactory as a witness. Frequently he was reluctant to answer questions directly. Alert and watchful he was adept at turning questions away. He was given to arguing around difficult matters in hand. The passage in the evidence set out above concerning his interest or lack of interest in adjoining shelves may be referred to.

The Representations Alleged

Unit Levels

I turn first to the representation concerning the relative heights of unit 15D and the top of Quarter Deck. It is true that Paton did ask whether the view from the unit would clear Quarter Deck and that Flintoff said that the situation would be alright because the unit was on the fifteenth level and Quarter Deck had fourteen floors, that is thirteen floors plus ground floor. If one assumed that the ceiling heights of the two buildings would be the same and the ground floors were level, the inference would be that the floor of 15D was about level with the roof of Quarter Deck with the machinery house on top of it extending about one floor height above. On this basis the eye level of a person standing in 15D would be a few feet above the roof of Quarter Deck and a few feet below the top of the machinery house. If Paton had given attention to what he was told and had made this calculation he would have had this situation in mind when he entered into the contract. He would have known that Quarter Deck was a distinct interruption of the view. It made the distance at which the eye, looking over the roof, would see ground level, much more distant than if it were not there, and of course still more distant if one looked over the machinery house. Yet this was the situation which Paton, if he gave attention to the details, must have accepted and, as indicated, it involved considerable interruption of the view. It contradicts the representation as pleaded: it contradicts Paton's statement in evidence that if in any way there was interruption he would not have bought the unit.

When Paton agreed to buy he was under the impression that the unit was on the fifteenth level. That was the error in what he had been told. In itself that was of no significance to Paton. It was not material to him whether the unitwas on the fifteenth or the fourteenth floor, except in relation to the view from the unit. And it was not of importance in that respect unless Paton was interested enough to go through the exercise of working out the precise relationship between the unit floor and roof levels. If Paton had done this it would have been easy for him to have given evidence of it. Even if he had gone through the mental exercise of realising that the view would necessarily be obstructed to some extent on the levels stated to him and relied on that being the limit of obstruction, the situation would have been in the realm of reality. But for the purposes of this litigation he was not satisfied with that situation. His evidence was that he had been told in effect that there was a difference of one complete level between the floor of the unit and the roof of Quarter Deck.

I am of the opinion that Paton would not have been surprised if he had not been allotted any unit in Imperial Surf. When he received the news that a unit was allotted to him he was elated. I am not satisfied that he did not ask the questions about Quarter Deck more as a demonstration to Flintoff that he was not to be oppressed rather than to get detailed information. He emphasised repeatedly in evidence that he believed he was regarded as one of the little people and of little importance to PTD. It is this that explains the tone of his communications with Flintoff in 1980 and 1981 and his excessive payments on account of deposits. I think he accepted Flintoff's assurance that notwithstanding Quarter Deck the view would be alright. That was what he wanted to hear because he very much wanted that unit. Thus he accepted the unit although it fell below his requirement of being on the north-east corner and having two bedrooms. Had it been on the north-east corner there was the problem of view interruption by Apollo which was 28 floors high. This he proposed to handle by going up to the fifteenth floor. Clearly an obstruction would have remained. I think that he paid scant attention to what Flintoff said about the height of Quarter Deck. In October 1982 when the respondent's solicitors stated in reply to a letter from the applicant's solicitors that Quarter Deck had sixteen or seventeen floors the latter's solicitor answered, not that that was nonsense because Paton had been assured that Quarter Deck had thirteen floors, but, because the assurance was that the view from unit 15D was not obstructed by Quarter Deck. I think it probable that at a later stage Paton remembered that Flintoff had said something about Quarter Deck having thirteen floors. If developed, this provided a foundation that there was a two floor difference between the top floor of Quarter Deck and the unit. I think there is truth in Paton's assertion that one reason at least for ringing Flintoff in February 1983 was to be doubly sure the thirteenth floor had been said. It is to be noted that in saying what was on the destroyed tape of that conversation he said that Flintoff repeated his statement that there were thirteen floors. Not only does Paton insist that Flintoff told him that Quarter Deck had thirteen floors, but he says that in the conversation between himself and Flintoff of August 1981 he took Flintoff as saying that even if there were a machinery shed on Quarter Deck, which brings it up to fourteen floors, the view would still clear it. Of course it could not "clear it" in the sense that Paton uses that expression. What is clear is that if Paton had tried to work out the significance of what he says Flintoff was saying he would have realized this. But Paton was not interested in doing this. He had Flintoff's assurance that the view would be alright: he had his unit and that was that. It follows that I reject Paton's emphatic assertions that Flintoff told him, in effect, that there would be a one floor difference between the floor of unit 15D and the top floor of Quarter Deck and a view over Quarter Deck even taking the machinery house into account. Paton is an intelligent man but has no qualms about various kinds of deceit. He is prepared to outwit the building authorities by adding a room contrary to their restriction and to sell the unit with one illegal bedroom therein. He is prepared to lie to Flintoff when asked whether he was taping the conversation with him. He is emphatic that he was buying for occupation and not for investment although every objective factor suggests the contrary. He is prepared to concoct the story of comparying floor plans in the Peninsula brochure with those of the Imperial Surf brochure. It would not be difficult for one so free, to distort, perhaps by self deception, when reconstructing what occurred in his critical conversation with Flintoff, and its significance to him. With all this I take into account the demeanour of Paton: his alert argumentative method of giving evidence, and his reluctance to answer questions directly. I cannot feel that he spoke truthfully. In this I am aware, as was his Honour Mr. Justice Mann of the Supreme Court of Victoria, who on one occasion drew attention to the fact, that when he disbelieved a witness he was always aware that because of the nature of human relationships and conduct that there was a possibility that he might be wrong. On one occasion he added ". . . but if I am wrong on this occasion then it may be said that never did truth stalk in so strange a garb". I do not say that this is fully applicable in this case but although I am aware of the possibility of error, I am also aware that I do not have any doubt that my lack of satisfaction that the applicant relied on what he was told by Flintoff about the relative heights of unit 15D and Quarterdeck or upon the fact that Flintoff had said that his reasoning proceeded on the basis that Unit 15D was on the fifteenth level and Quarter Deck had thirteen floors plus a ground floor, is well founded.

Shelf Adjoining the Unit Balcony

I turn to the allegation, as pleaded originally, that there was a representation that there would be no shelf adjoining the unit balcony. The suggestion throughout the evidence is that this was vital. Yet although the letters of Paton prior to August 1981 reveal an interest in height, view, and bedrooms, nowhere is there any written suggestion of the shelf. It only emerges in writing in Paton's solicitor's letter of 8 October 1982 to the respondent that a shelf requirement was ever mentioned.

I have referred above to the efforts of Paton to secure a unit in Imperial Surf which continued from before June 1980. Yet, on what Paton says, as mentioned above, they were all quite futile unless, contrary to the practice of the respondent the shelves surrounding each floor were omitted. It is incredible that an intelligent man like Paton, having any interest in the matter, would not enquire whether there was any chance that the adjoining shelf could be omitted in relation to the unit he might be awarded. Yet there is no enquiry. And as indicated above when asked about the matter Paton gave an explanation that to my mind bordered on the incredible. I have no hesitation in finding that the alleged representation as to the absence of an adjoining shelf was never made and the presence or absence of such a shelf played no part as an inducement to the applicant to purchase the unit.

Balcony Adjoining the Balcony

There was a representation that the unit would not have a balcony of another unit adjoining the balcony of unit 15D. This representation was in the brochure which was made available to Paton in circumstances that he would have been entitled to treat the delineation of the floor plan which showed balconies as indicating where the balconies would be in the contemplated building. Paton no doubt saw the balcony lay out and if he was interested he would have seen that there would be no balcony adjoining his balcony. The question is whether it is established on a balance of probabilities that this was a factor inducing him to purchase the unit. I am not satisfied that it was. It may be that Paton was pleased to see that there was no adjoining balcony but it was not that alone, or in conjunction with other factors, which was a factor in inducing Paton to proceed with the purchase. Paton had jettisoned the north-eastern corner and a two bedroom unit in order to obtain unit 15D. There was a motive which transcended those things which he had said he wanted. There was similarly a motive which was operative irrespective of the never mentioned matter of balcony or no balcony and made that matter quite irrelevant. When Paton states to the contrary I am unable to accept his testimony. His motivation was the intention to acquire a unit in Imperial Surf on a rising market. In August 1981 unit 15D fitted this requirement.

Credibility of Flintoff and Holt

As appears above I have accepted the evidence of Flintoff that he told Paton that Quarter Deck had thirteen floors plus the ground floor. I have taken into account in my assessment of Flintoff as a truthful witness that on occasion he did contradict himself. I think that on occasion he lost concentration. But his general demeanour gave me the distinct impression that he was being fundamentally honest and that I could trust him on critical matters. The correspondence between the solicitors concerning the number of floors in Quarter Deck and the inaccuracy in the respondent's answers to interrogatories do not, in my view, reflect on Flintoff's credit. Also I regard Mr. Holt as a witness of truth.

Warranties

It is put by the applicant that the respondent warranted that the unit would have a view which would clear Quarter Deck and would not be interrupted by Quarter Deck, that no shelf would join the balconies of the units of Imperial Surf and, that no balcony would join the balcony of unit 15D, and that the applicant entered into the contract to purchase unit 15D in consideration of those warranties.

In my view there was nothing in the conversation between Paton and Flintoff of August 1981 relating to the view which, whatever representations were made, can be construed as a promise by Flintoff on behalf of PRD, or any promise whatever. No promise was sought and none was proffered and nothing in the circumstances suggested that any such promise was sought or proffered.

The alleged warranties concerning the shelf and the balconies must be found, if at all, in the contents of the brochure which was presented to Paton before he signed the contract, or in the contract.

The brochure submitted to the applicant indicated the lay out of the units and passages and lifts of all the units on the floor of the unit or units on offer. The relationship of the unit the subject of the contemplated purchase by the applicant to other units on the floor was shown. In that relationship there was a substantial gap between the end of the balcony of the adjoining unit nearest to the balcony of unit 15D and the balcony of that unit. It may be a question whether the terms of the brochure constituted a warranty to the applicant, as a potential purchaser of a unit to whom the brochure was proffered, that, on a purchase by him of a unit delineated on the relevant floor plan in the brochure, the structure of the unit or units adjoining a unit purchased would be as shown on the floor plan. But I do not consider that the brochure was in any sense a warranty. It was a representation that the respondent intended to build units as delineated and that units so delineated were on offer from the respondent. I consider however, that the contract and the incorporation therein of the plan marked "A" does contain a warranty that there was no balcony adjoining the balcony of unit 15D. This warranty was broken and the breach would sustain a claim for damages. The issue is, however, absorbed in the declaration, that hereinafter referred to the contract is rescinded.

Claims Pursuant to Sections 53 and 53A

Claims which might have arisen under these sections were not specifically argued before me. For reasons appearing in the foregoing such claims as may be valid are absorbed by my findings above in respect of the warranty concerning the provision of an adjoining balcony and the relief granted in respect of the failure of the respondent to perform or offer to perform the contract to sell a unit, type D, on level fifteen to the applicant.

Negligence

By paragraph 15 of the Statement of Claim it is pleaded that in making the representations referred to in paragraph 4 of the Statement of Claim as amended the respondent was negligent and in breach of the duty of care owed by it to the applicant.

It appears to me that the relationship between the respondent and the applicant on 1 August 1981 was such that if the respondent undertook to answer an enquiry on behalf of the applicant as to the effect of the presence of Quarter Deck on the view from the unit designated unit 15D there was a duty on the part of the respondent to take reasonable care to ensure that any information given by it to the applicant, and on which it was reasonable to think that Paton might rely in making up his mind whether or not to purchase the unit, was correct. This is not a case where special skill was required to answer the enquiry. A knowledge of facts was what was involved. It is not a case of advice given by a person whose business it was to give such advice. It was, however, a case where it was the business of the respondent to state facts relative to a decision to buy or not to buy where the respondent essayed to do so. The relationship appears to me to satisfy the tests enunciated by Lord Wilberforce in Anns v. Merton London Borough (1978) A.C. at p.751 and 752:-

"Through the trilogy of cases in this House - Donoghue v. Stevenson [1932] UKHL 100; (1932) A.C. 562, Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1963] UKHL 4; (1964) A.C. 465. and Dorset Yacht Co. Ltd. v. Home Office [1970] UKHL 2; (1970) A.C. 1004, the position has now been reached that in order to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist. Rather the question has to be approached in two stages. First one has to ask whether as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter - in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise: see Dorset Yacht case [1970] UKHL 2; (1970) A.C. 1004 per Lord Reid at p. 1027. Examples of this are Hedley Byrne's case [1963] UKHL 4; (1964) A.C. 465 where the class of potential plaintiffs was reduced to those shown to have relied upon the correctness of statements made, and Weller & Co. v. Foot and Mouth Disease Research Institute (1966) 1 Q.B. 569; and (I cite these merely as illustrations, without discussion) cases about "economic loss" where, a duty having been held to exist, the nature of the recoverable damages was limited: see S.C.M. (United Kingdom) Ltd. v. W.J. Whittall & Son Ltd. (1971) 1 Q.B. 337 and Spartan Steel & Alloys Ltd. v. Martin & Co. (Contractors) Ltd. (1973) Q.B. 27."

The relevant information conveyed to the applicant was that the effect of Quarter Deck upon the view from the unit could be assessed on the basis that Quarter Deck had fourteen floors including the ground floor and that unit 15D was on the fifteenth level. At the material time the applicant had no knowledge of the level on which the unit was located apart from such inference as Paton might draw from its description. He could not know from the description how many levels it in fact was from the ground. But when Flintoff said to him in substance that he could judge the effect on the view from the unit of the existence of Quarter Deck on the basis that unit 15D was on the fifteenth level, on the 15th floor, and Quarter Deck had thirteen floors plus the ground floor, Flintoff knew that he was speaking to a person entitled to assume that he was saying that the fifteenth level or floor was a level or floor situated at a height approximately level with the top of Quarter Deck excluding the machinery house and that he knew that the unit was in that sense on the fifteenth level of the building counting the ground floor. Flintoff knew that some buildings of the respondent had no floor called the thirteenth floor. It was, therefore, not reasonable on his part to act on an assumption that this was not the case in Imperial Surf. Accordingly, I think that in inviting the applicant to assess the situation on the basis that unit 15D was on the fifteenth level of the building Flintoff acted negligently.

If therefore the applicant had acted by reference to the fact as stated by Flintoff and entered into the contract and had suffered damage thereby I think there would have been a case for relief. But as stated above I am not satisfied that the applicant did so act. The situation in this respect resembles that in relation to representation 1(a) in the statement of claim. I am therefore not satisfied that he suffered damage by reason of Flintoff's statement as to the level of unit 15D.

Breach of Contract

I come then to the allegation that it was a term and condition of the agreement between the applicant and the respondent for the sale of unit 15D in Imperial Surf that that unit was on the fifteenth level of the building and that in breach thereof that unit was not on the fifteenth level of the building.

The contract provides that the respondent shall sell to the applicant and the applicant shall purchase from the respondent "the estate in fee simple in the said unit". The said unit is described as follows "unit sold - Lot 67 as outlined on the plan marked "A" annexed hereto and hereafter referred to as "the said unit". The words "fifteenth level D type" appear in the handwriting alongside this description. Then follow the following provisions:-

"NOTE: PLEASE OUTLINE UNIT SOLD AND CAR SPACE ON ANNEXED PLAN AND MARK PLANS WITH CORRECT LEVELS. Car No. 2.

WHEREAS: (a) The Vendor is or is entitled to be the registered proprietor of certain land described in the First Schedule hereto (hereinafter called "the land").

(b) The Vendor intends to construct a multi-storey building to be called "Imperial Surf" on the Land in accordance with plans and specifications to be prepared by the vendor's architect.

(c) The Purchaser wishes to purchase from the Vendor the estate in fee simple in that part of the said building hereinbefore referred to as "the said unit".

(d) A separate freehold title to the said unit is to be conveyed to the purchaser by virtue of the "Building Units and Group Titles Act 1980" (hereinafter called "the Act")."

Attached to the contract is the plan marked "A". It purports to show floor plans of units on various levels. There are "Levels PE & I" referring apparently to levels where penthouses were to be located. Then there are sketches of particular floor layouts of various levels. The unit D of the unit layout for levels 2 - 30 is drawn over in red and initialled apparently by Paton and a representative of the respondent to identify the unit the subject of the contract. There is no further identification of the unit the subject of the contract.

A plan prepared by the architects in respect of what is described therein as "levels 3-30 total 27 floors" was put in evidence. That plan shows the details of the construction of the units to be constructed on those levels. There was put in evidence also a section plan of the proposed building prepared by the architects and approved by the Gold Coast City Council on 14 August 1981. That plan shows that in numbering the levels or floors no floor or level was numbered "13". "Floor 13 deleted" is a note on the section plan. The floors or levels shown thereon include three levels below ground floor, and forty floors or levels, including the ground floor numbered one to forty one. The entrance foyer on the ground floor is marked "level one". The submission on behalf of the applicant is that the unit D on the fifteenth level of the building is the unit which the respondent has sold to the applicant by the terms of the contract of 28 August 1981 and that the respondent is unwilling or unable to transfer that unit to the applicant and must be regarded as having refused to do so. I am of the opinion that this submission is sound. The transfer submitted to the applicant is for a unit located actually on the fourteenth floor or level of Imperial Surf. Also when Paton complained to Flintoff about the level on which the unit offered to him was located Flintoff informed him a unit on the eighteenth floor was available and he could have that. The case appears to me to have proceeded and been argued on the basis that the applicant cannot have unit D on the actual fifteenth level. Presumably it was sold to another person.

Mr. Hampson argued for the respondent that the words stating that the unit was on the fifteenth level have to be read as referable to a unit which was, according to the applicant's designation of its units, in fact on the fifteenth level. He contended that this followed from the reference in the contract to the architect's plans and perhaps from the omission of the thirteenth level from the price list of units in the brochure.

I am unable to accept these submissions. It appears to me that the identity of the unit sold must be established by the provisions of the contract. The relevant provisions are set out above. Certainly there is a reference to plans and specifications to be prepared by the respondent's architect. But that provision is part of the definition of the obligations of the respondent with reference to the building to be erected and to the various units to be incorporated therein. It does nothing to identify the floor or level of the building which is referred to in the contract as the fifteenth level. The contract recites the intention of the respondent to construct Imperial Surf "in accordance with plans and specifications to be prepared by the vendor's architect". But at the same time it provides by clause 3(f) that the purchaser shall not be entitled to make any objection, sequestration, or claim for compensation by reason of:-

"(1) any minor variations as regards the said unit 'between the plan' as produced to the purchaser 'and the building unit plan as requested by the Registrar of Titles'."

Thus the contract contemplates that a plan will have been produced to the purchaser before the contract is signed. The only documents which might be comprehended within the expression "plans produced to the purchaser" were the floor lay out of Imperial Surf contained in the brochure mentioned above and "the plan marked "A" annexed to the contract. Whichever, if either, of these plans are incorporated into the contract in this indirect way does nothing to identify the location of the fifteenth level. The brochure of Imperial Surf contained a price list of the units on the various levels of the building and it omits any reference to a level designated as level thirteen. But the price list was not a plan in the sense that that word is used in clause 3(g) of the contract. Also, I think it is quite irrelevant to the identification of the level on which according to the contract, the unit sold is to be found. Further, the plan in the brochure does not refer to the price list. I do not think that an inference is to be drawn from the evidence that Paton appreciated that the floor plan of levels "2 to 30" contained in the brochure omitted prices for floor thirteen.

To my mind the expression "fifteenth level D type" in the contract is part of the description of the unit sold. It is clear that in the case of a transaction concerning real estate to be bounded by dimensions in space the level at which that estate will be is essential to its description and identification. Doubtless that is why the words concerning the level were inserted in the contract. Those words have to be construed. There is, in my opinion, nothing in the contract to indicate that they should bear meaning other than their natural meaning. At the same time it is necessary to supply some further words. Inevitably the words used pose the question "fifteenth level of what?" The answer must be the fifteenth level of the contemplated building counting the ground floor as the first level, or the fifteenth level from the bottom level of the building. The words must be construed in the light of the consideration that they relate to a building to be erected on designated land where its multi storeys will rise above the ground where its first level would be. It appears to me that so construed the words refer to the fifteenth level of the building conceived of as resting on the ground. The building as completed does have levels below the ground floor level. Whichever of the two possible constructions is the correct one, and I see no other possible construction, the only unit which the respondent is willing to transfer to the applicant is a unit which is not on the fifteenth level. Accordingly there was a term in the contract that the unit sold was on the fifteenth level of the building and there has been a breach of that term. To my mind that term was a condition. It went to the very identification of the item which was the subject of the sale. Accordingly, apart from the question as to whether a unit on the fourteenth level was less in value than the same class of unit on the fifteenth floor, or whether the view from a unit on the fifteenth floor is materially better than that from a similar unit on the fourteenth floor, the applicant is entitled to avoid the contract. It is the case also that the value of the unit offered to the applicant was at all times worth less than a similar unit one floor higher up. And I am satisfied that having regard to the better view to the west from the unit in question, had it been on the fifteenth level, compared with that of a similar unit on the fourteenth level, the unit sold is and was at all times, of substantially less value than a similar unit on the fifteenth level.

Accordingly the applicant's recission on 29 October 1982 of the contract of 28 August 1981 was a recission it was entitled to effectuate and which was effective although it was sought to be justified on grounds other than the breach of the condition as to its location. A declaration that the contract was so rescinded should be made and the respondent should be ordered to pay to the applicant the sum of $24,900 which the applicant paid to it as deposit on the transaction sought to be effectuated by the contract between the parties.

I reserve the question of costs. I give liberty to apply in the matter of costs and generally.