Zhang v VP302 SPV & Ors [2009] NSWSC 73

Zhang v VP302 SPV & Ors [2009] NSWSC 73

A binding contract was formed as plaintiffs' solicitor had ostensible authority to exchange contracts. However, representations in advertisements by the agent regarding the property's future value were misleading; there were no reasonable grounds for claims that property values would double in five years. Plaintiffs, naïve purchasers and recent immigrants, did rely on these representations, materially inducing their entry into the contract. The contract was thereby unjust at the time it was made, entitling the plaintiffs to rescission and return of the deposit.

Jurisdiction
Australia
Judgment Date
23 February 2009
Procedural Posture
Civil Equity / Final Judgment After Trial
Outcome
Judgment for plaintiffs in part; contract rescinded; return of deposit ordered; claim against third defendant dismissed; first defendant's cross-claim dismissed.
Legal Topics
['misleading or Deceptive Conduct' 'ostensible Authority' 'rescission of Contract' 'unjust Contracts' 'agency' 'sale of Land']
['contract Law' 'equity' 'trade Practices'] ['misleading or Deceptive Conduct' 'ostensible Authority' 'rescission of Contract' 'unjust Contracts' 'agency' 'sale of Land']

Case Brief

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Procedural Posture

Civil Equity / Final Judgment After Trial

Legal Issues

  1. 1 ['Whether a binding contract for sale of land was formed despite lack of actual authority for some terms' 'Whether misleading or deceptive conduct under s 52 Trade Practices Act 1974 (Cth) and s 42 Fair Trading Act 1987 (NSW) occurred' 'Whether there were reasonable grounds for future value/predictions in advertisements' 'Whether the contract was unjust under Contracts Review Act 1980 (NSW)' 'Whether the plaintiffs were entitled to rescission/return of deposit']

Ratio Decidendi

A binding contract was formed as plaintiffs' solicitor had ostensible authority to exchange contracts. However, representations in advertisements by the agent regarding the property's future value were misleading; there were no reasonable grounds for claims that property values would double in five years. Plaintiffs, naïve purchasers and recent immigrants, did rely on these representations, materially inducing their entry into the contract. The contract was thereby unjust at the time it was made, entitling the plaintiffs to rescission and return of the deposit.

Court Disposition

Judgment for plaintiffs in part; contract rescinded; return of deposit ordered; claim against third defendant dismissed; first defendant's cross-claim dismissed.

Orders

  • ['Order that the contract dated 11 September 2003 between plaintiffs and first defendant be rescinded.' 'Judgment in favour of plaintiffs against first defendant in the sum of $117,451.05 plus interest from 26 August 2005 at prescribed rates.' "Plaintiffs not to execute judgment against first defendant's assets...