PLAINTIFF SEEKS FOR SPECIFIC PERFORMANCE DUE TO ALLEGED MISLEADING REPRESENTATIONS

Xu v Lindsay Bennelong Developments Pty Limited [2020] NSWSC 1692 (27 November 2020)

This case involves the plaintiff seeking specific performance against the third respondents due to the misleading representations made by Bennelong who sold a parcel of lot (which was developed as an apartment) to the plaintiff who was expecting the apartment to contain two parking spaces.

Facts:

Bennelong sold TFM the undeveloped parcel of land by contract of sale (TFM Contract). Prior to the sale of the undeveloped land to TFM, the plaintiff (Ms Xu) and her husband (Mr Keqi Zhang), who is not a party to these proceedings, had entered into a contract (the Xu Contract) for the sale of a particular lot (Lot 36) which was to be created on registration of a strata plan once the development was completed. On the sale of the land to TFM, the parties entered into a Novation Deed (the Novation Deed). TFM was directed subsequently that Ms Xu would be the sole purchaser.

The claims by Ms Xu in the present proceedings arise out of the fact that what TFM ultimately transferred to her was an apartment (by then known as Apartment 40, being Lot 36 in the registered Strata Plan) with a single car parking space, instead of with a tandem car parking space (as had been shown on the draft strata plan annexed to the Xu Contract (the Draft Strata Plan)), or two car parking spaces (as found in the notation on the floor plan contained in the marketing brochure provided to Ms Xu and confirmed by email before her entry into the Xu Contract).

Ms Xu seeks specific performance of the Novation Deed, by an order that TFM transfer a second car space to her (there is at least one that would still be available for that purpose or an order akin to such specific performance under ss 237 and 243 of sch 2 of the Competition and Consumer Act 2010 (Australian Consumer Law).

Issue: Should the court grant the order sought by Ms. Chu?

Law:

• Competition and Consumer Act 2010 ss 84,  87CD,  137B; sch 2 ss 4,  18,  29,  30, 236, 237, 243

Analysis:

While representations were clearly made to Ms Xu by Bennelong (and later by TFM) as to what was promised in the Xu Contract, the court considers that, insofar as those were representation of fact, they were not misleading or deceptive (at least in the sense that the Draft Strata Plan at that stage provided for allocation of a car space that would accommodate two cars); and, insofar as those representations were of future matters, the court finds that they are not misleading or deceptive as there was a reasonable basis for the making of those representations at the time they were made (based on the evidence adduced by Bennelong).

The court does not accept that it was a promise that Ms Xu would have the property as depicted on Draft Strata Plan. Furthermore, to the extent that the representation was as to a future matter (namely, that the building would be built in accordance with the draft plans), and that what Bennelong would convey to Ms Xu was the Property as depicted in the Xu Contract, not only was that representation clearly to be understood by a reasonable person in Ms Xu’s position as being subject to the terms of the Xu Contract, but the court also considers that Bennelong has satisfied the evidentiary onus of putting forward evidence that it had reasonable grounds for the making of such a representation (and Ms Xu appears to accept as much).

The time at which a representation is to be determined as being false or misleading (or not) is at the time it is made (not whether a prediction or promise as to the future turns out ultimately to be correct). Albeit, that in relation to a claim based on the characteristics of the land, it may be that it is not until the land is conveyed that it is realised that the earlier representation as to characteristics had been misleading or deceptive.

From the time of the August 2016 Letter (in which Bennelong offered rescission of the Xu Contract), it cannot plausibly be said that Ms Xu reasonably relied on any promise by Bennelong as to the development of the building (or conveyance of an apartment in the building to Ms Xu, with or without car spaces). That is because such a representation is entirely inconsistent with Bennelong’s then advice that it was not viable for it to carry out the development. From that time, it must have been clear to Ms Xu that (absent some change of position) Bennelong would not be the ultimate developer for the Encore Development. Moreover, Ms Xu’s evidence makes clear that she decided not to enter the Deed of Rescission proffered by Bennelong because she thought that another developer would take over the property.  It is abundantly clear that Ms Xu signed the Deed of Novation, not in reliance on any promise made by Bennelong or anything it said or did at the time, but in reliance on the promise made by TFM in the Novation Deed that, in effect, it would honour the obligations of the vendor under the Xu Contract (as Substitute Vendor).

Conclusion: For the above reasons, court orders that plaintiff’s claim against both of the defendants be dismissed.

#Contracts