Abram v A.V. Jennings Ltd No. Scciv-02-488

DAVID ABRAMS & ANOR v A V JENNINGS
[2002] SASC 417
Full Court: Doyle CJ, Mullighan and Besanko JJ

DOYLE CJ: I would dismiss the appeal. I agree with the reasons given by Besanko J. There is nothing that I wish to add to his reasons.
MULLIGHAN J: I agree that the appeal should be dismissed for the reasons given by Besanko J.
BESANKO J: This is an appeal from a decision of a Judge of the District Court.
The plaintiff brought an action against the defendants for damages for the wrongful repudiation of a building contract dated 11 November 1998. The Judge held that the defendants had repudiated the contract in April 1999, that the plaintiff had accepted the repudiation and that the plaintiff had suffered loss and damage as a result of the defendants’ conduct. He entered judgment in favour of the plaintiff against the defendants in the sum of $39,447.50 plus interest.
The defendants appeal to this Court. The first defendant is Mr David Abram and the second defendant is Abram Admin. Services Pty Ltd. The defendants put three principal arguments on the appeal.
First, the defendants submitted that the Judge erred in holding that both defendants were parties to the contract. They submitted that the Judge should have held that the contract was between the plaintiff and Abram Admin. Services Pty Ltd. Mr Abram was not a party to the contract and he was not liable in damages to the plaintiff.
Secondly, the defendants submitted that the contract was subject to the defendants obtaining finance. Under the contract, if they did not obtain finance they had the right to cancel the contract. The Judge erred in finding that the condition relating to finance had been satisfied. The Judge should have found the condition had not been satisfied and the defendants had the right, which they exercised, to cancel the contract for non-fulfilment of the condition relating to finance.
Thirdly, and in the alternative to the second argument, the defendants submitted that the contract contained a provision which gave the defendants the right to terminate the contract in the event that the plaintiff encountered subsurface obstructions in the course of carrying out the early stages of the contract. The contract provided that if the defendants exercised the right to terminate the contract for this reason then the plaintiff’s claim was limited to certain items of loss specified in clause 9.2 of the contract. The defendants submitted that the Judge erred in failing to hold that the defendants had exercised the right to terminate the contract under this clause. The Judge noted that the loss under clause 9.2 was $18,644.08.
The Facts and the Judge’s Findings
The relevant events occurred between October 1998 and April 1999 and the following statement of the facts relates to that period.
The plaintiff is a large building company operating in South Australia. It has display homes located throughout the State. Prospective purchasers inspect the homes and then enter into negotiations with the plaintiff. A contract is signed based on standard plans and specifications with such variations as are agreed between the parties. Preliminaries to construction, such as the obtaining of relevant approvals, including building approval, are then sought and obtained. Once these matters are attended to, construction commences. Throughout the process the parties may agree to variations to the contract.
Between October 1998 and April 1999, Mr David Abram represented himself and Abram Admin. Services Pty Ltd. He had contact with a number of employees of the plaintiff who represented the plaintiff at various stages of the process.
Mr Brian Chant, a salesman employed by the plaintiff, had contact with the defendants in October and November 1998. He is no longer employed by the plaintiff. He was not called as a witness by the plaintiff. No explanation was provided for his absence from the witness box.
Mr Robert Howarth, a customer service officer employed by the plaintiff, had contact with the defendants from approximately the date upon which the contract was signed (11 November 1998) to the commencement of work on site in March 1999. He was called as a witness by the plaintiff and the Judge found that he presented in a very honest and straightforward way.
Ms Marina Mendolia, a customer service officer employed by the plaintiff, had contact with the defendants in March and April 1999. She was called as a witness by the plaintiff and the Judge found that she also presented in a very honest and straightforward way.
Mr Abram is an accountant who practises in the Salisbury area. He is married to Mrs Debbie Abram and at the relevant time they lived at 6 Brackenmoor Close, Hillbank. At the relevant time, Mr Abram was the sole director and sole company secretary of Abram Admin. Services Pty Ltd. That company was the trustee of Abram Admin. Services Trust. The trust carries on what Mr Abram described as a service trust operation for his professional practice.
In October 1998, Abram Admin. Services Pty Ltd or Mr Abram entered into a contract to buy vacant land at Lot 25, Breakwater Court, Para Hills. The contract was not put in evidence but the certificate of title shows that Abram Admin. Services Pty Ltd became the registered proprietor of the land in December 1998. Mr and Mrs Abram planned to construct a house on the land and to live in the house. According to Mr Abram, the plan was that Abram Admin. Services Pty Ltd would own the property and lease it to Mr and Mrs Abram. The finance for the purchase of the land and the construction of the house was to be obtained from the Commonwealth Bank of Australia (“the Bank”). The Bank was to take a mortgage over the property. Mr and Mrs Abram were to provide some of the funds for the purchase of the land and the construction of the house either by the sale of other properties they held including 6 Brackenmoor Close, Hillbank, and/or by the sale of shares.
Mr and Mrs Abram gave evidence before the Judge. The Judge found that Mr Abram was a very competent and astute accountant, who would readily understand every provision of a building contract. He had been involved in a number of building contracts on previous occasions. However, the Judge took the view that Mr Abram would take advantage of any situation for his own gain. He found that Mr Abram was reconstructing his evidence, “to rationalise and legally justify his position to terminate the contract”. The Judge said that he had no doubt in preferring the evidence of Mr Howarth and Ms Mendolia where there was any conflict with the evidence of Mr Abram.
The evidence of Mrs Abram did not relate to the principal issues in the action and the Judge did not find it necessary to make a finding about the reliability of her evidence.
The contract was executed on 11 November 1998. Prior to that time there were a number of meetings between Mr Abram and Mr Chant, and various documents which were preliminary to the execution of the contract were prepared by Mr Chant and signed by Mr Abram. I will need to return to these documents because Mr Abram submits that regard should be had to them in determining the question whether or not he was a party to the contract.
The relevant provisions of the contract are as follows:

“THIS AGREEMENT is issued on the ELEVENTH day of NOVEMBER 1998 and will be invalidated if not signed and returned to AV Jennings
within fourteen calendar days of the date of issue and is

BETWEEN

AV JENNINGS LIMITED
(A.C.N. 004 601 503)
of 62 The Parade, Norwood, South Australia 5067

  (“Builder”)

AND

ABRAM ADMIN SERVICES PTY LTD                   DAVID JOHN
ATF ABRAM ADMIN SERVICES TRUST
  ABRAM
  (Director)
OF:    ~~6 BRACKENMOOR CLOSE~~
        107 SALISBURY HIGHWAY
        ~~HILLBANK SA 5112~~
        SALISBURY 5108
  (“Owner”)

1.0

Definitions
In this Agreement:

…

“Owner” means the person(s) or company described above as Owner, and if more than one, means those parties jointly and severally;

…

2.0

Construction of House

The Builder shall in accordance with this Agreement construct and complete the House on the Land in the proper and workmanlike manner required by all relevant legislation and regulations, and (subject to any variations requested and agreed under clause 14.0) in accordance with the details contained in the Plans and Specification.

2.1 The Builder does not accept responsibility for works performed which are not specifically included in this Agreement or written variations signed by the Builder and the Owner.

3.0

Owner’s Conditions

This Agreement, and the Owner’s obligations under it, are subject to satisfaction of the following conditions:

3.1     The Owner receiving finance approval from

        LENDING AUTHORITY

        for a loan of $208,054.00 on or before
        15^TH DECEMBER 1998

~~3.2     Completion of sale of the Owner’s property situated at~~

        for a gross sale price of $
        or such other sum acceptable to the Owner on or before

3.3     (Further special conditions)
        _________________________________________________
        _________________________________________________
        _________________________________________________

4.0

Builder’s Conditions
This Agreement, and the Builder’s obligations under it are subject to satisfaction of the following conditions:

4.1     the Builder receiving from the Owner a copy of a lender’s loan approval, bank guarantee or other evidence assuring the Builder of the Owner’s ability to pay the contract price at the necessary time(s).

…

4.10   Where the Owner is a company, the directors executing a Deed of Guarantee and Indemnity in the form required by the Builder.

5.0

5.1

Non Fulfillment of Conditions

In the event that any one or more of the conditions mentioned in clauses 3.0 or 4.0 are not satisfied by the relevant date (or within 60 days after signing of this Agreement, if no date is specified in the condition), then the party entitled to the benefit of the condition may, by notice in writing to the other:

5.1.1 arrange with the other party for a mutually agreed extension of time (for satisfaction of the condition) and/or

5.1.2 arrange with the other party for a mutually agreed variation in the contract price, and/or

5.1.3 waive the condition or
5.1.4 cancel this contract

5.2

A party wishing to cancel this contract under the previous clause must do so within 14 days after the date of failure of the condition.

5.3

In the event of cancellation (for any reason), the Owner will be responsible for payment to the Builder of all costs relating to this Agreement incurred by the Builder up to the date of cancellation (including but not limited to costs in preparation of the Plans and Specification, applying for an obtaining permits and approvals, soil testing and surveys). The Builder may deduct those costs from the Deposit and the balance remaining shall be returned to the Owner.

…

9.0

Sub-Surface Obstructions

9.1     The Contract price does not allow for the Builder encountering any subsurface obstructions, rock or unstable soil during cutting of site where specified, excavation for drainage and/or septic tank or for any other underground service, stormwater or electrical wiring. Any excess work necessary as a result of encountering unstable soil filling, cavities, water or other similar or abnormal conditions shall be treated as a variation the cost of which plus an additional sum of 10% of that amount and a proportion of the Builder’s general overhead costs relating to the excess work necessary (as reasonably determined by the Builder) shall be payable by the Owner on the date of Practical Completion.

9.2     Should the Owner not consent to the variation either party may terminate this Agreement by giving written notice to the other whereupon the Builder shall be entitled to be paid by the Owner the cost to the Builder of all work done plus all materials provided plus an additional sum of 10% calculated on those amounts and a proportion of the Builder’s general overhead costs relating to the work done (as reasonably determined by the Builder).

…

SIGNED unconditionally by the Parties as an Agreement on the

    Eleventh       day of      November    1998
  (Signature of Mr Abram appears here.)
SIGNED BY THE owner               )      ……………….……..
In the presence of                  )      Signature of Owner
(Signature of Mr Chant appears here.)
……………………….  ………………………

Signature of Witness (Consultant)             Signature of Owner

SIGNED by

Robert John Howarth
As Attorney for
AVJENNINGS LIMITED  (Signature of Mr Howarth appears here.)
Power of Attorney No ___________     ……………………
  Signature”

In relation to the definition of “Owner” as set out above, the words, “ATF Abram Admin. Services Trust” are in Mr Abram’s handwriting and were added by him at the time he signed the contract, as was the correction to the address. In relation to the execution clause, the contract was signed by Mr Abram in the section providing for execution by the owner and his signature was witnessed by Mr Chant. Mr Howarth signed the contract on behalf of the plaintiff.
The contract provided for a price of $209,554.00 and for construction to commence by 26 February 1999 and to be completed by 29 October 1999.
The Judge found that both defendants were parties to the contract. Subject to one matter, he appears to have done so solely by reference to the written document. In other words, he did not have regard to any extrinsic evidence.
Mr Abram gave evidence that he told Mr Howarth that his name appeared on the contract as a director and not as a party to the contract. The Judge rejected this evidence. The Judge went on to say that to suggest that Mr Abram’s name on the contract in the same bold print as the company was there only as a director was a nonsense.
Correspondence and other documents passed between the plaintiff and the defendants at about the time the contract was executed and thereafter until the termination of the contract in April 1999. I will also need to return to these documents because Mr Abram submits that regard should be had to these documents in determining whether or not he was a party to the contract.
At the same time the contract was executed, a financial statement was prepared showing how the defendants were to pay for the price of construction. A non-cash amount of $208,054 is shown on the financial statement as being provided by way of a bank loan subject to approval.
The Bank wrote to the Secretary of Abram Admin. Services Pty Ltd by letter dated 29 October 1998. The land at Lot 25 Breakwater Court, Para Hills, is identified in the letter, as is a loan amount of $293,000 repayable over thirty years. An interest rate and monthly repayment amount is also specified. The letter advises the addressee that the loan application met the bank’s requirements for approval for an amount of $293,000.
The Judge found that Mr Abram provided this letter to Mr Howarth for the sole purpose of satisfying the plaintiff that the condition regarding finance had been met. On the evidence, the Judge was not able to make a precise finding as to when Mr Abram provided the letter to Mr Howarth. Mr Howarth said in evidence that he thought that Mr Abram gave him the letter after the execution of the contract but before a meeting on 17 December 1998 which Mr Howarth called “the final plans meeting”.
Mr Abram and Mr Howarth had a number of meetings after the contract was signed. Variations to the contract were agreed in writing between the parties on 17 December 1998 and again on 19 February 1998. The Judge accepted the evidence of Mr Howarth that Mr and Mrs Abram were keen to embark on the building process more so than the ordinary customer. Mr Howarth carried out a search of the title to the land in February 1999 and noted that the registered proprietor was Abram Admin. Services Pty Ltd and that there was a mortgage in favour of the Bank.
By letter dated 29 March 1999, Mr Abram advised Mr Howarth that they had requested an additional approval for finance from the Bank “subject to our house sale”. He advised Mr Howarth that they were hopeful of a favourable reply but in effect warned that finance might not be forthcoming.
By letter dated 1 April 1999, Mr Abram advised Ms Mendolia that he and his wife had decided to terminate the contract under clause 9.2. Further correspondence between the parties followed and by letter dated 16 April 1999, Mr Abram advised Ms Mendolia of his concern that site works had commenced prior to the receipt of approval for finance.
The Judge found that the true position between the Bank and the defendants concerning the loan was quite different from what Mr Abram had conveyed to the plaintiff. The plaintiff called Mr Gregory Morris who at the relevant time was a relationship manager employed by the Bank. He produced the Bank’s file and gave evidence as to the Bank’s dealings with the defendants. As I have said, the Bank was in fact providing finance for the purchase of the land and the construction of the house and Mr and Mrs Abram were to provide part of the necessary funds either by the sale of other properties and/or by the sale of shares. It seems that after the purchase of the land, the defendants were to provide a contribution of $42,000 before there was any further drawdown of the loan from the Bank. Mr and Mrs Abram had their house at 6 Brackenmoor Close, Hillbank, on the market but it did not sell.
The Judge found that by providing the letter from the Bank dated 29 October 1998 and, by his conduct after the contract was executed, Mr Abram led the plaintiff to believe that the condition regarding finance had been satisfied. At no time prior to March 1999 did the defendants advise the plaintiff of the true nature of the loan approval from the Bank. It was not until 29 March 1999 that the defendants decided that they did not want to proceed with the contract. The Judge found that at all relevant times prior to this date, the defendants, by their words and actions, confirmed the contract. Such conduct amounted to a waiving of the finance condition.
Ms Mendolia had a telephone conversation with Mr Abram on 26 March 1999 after a supervisor had advised her that the plaintiff had found underground rock on the site. It was common ground that a telephone conversation did take place at about this time and that the underground rock which had been discovered had been discussed. However, what was said between Ms Mendolia and Mr Abram was in dispute. Ms Mendolia said that she told Mr Abram of the problem and that it would cost $440 to overcome, and that Mr Abram agreed to proceed. On the other hand, Mr Abram said, on being advised of the problem, he told Ms Mendolia that all work on site should cease immediately.
Ms Mendolia also said that she prepared a written “Variation Request” showing the amount of $440 and that this was faxed to Mr Abram on 31 March 1999.
The Judge preferred Ms Mendolia’s account of the conversation and he found that on 26 March 1999 Mr Abram approved a variation involving an expense of $440 for the removal of underground rock on the site.
The Arguments on Appeal
1. The Parties to the Contract
Mr Abram said in evidence that he had a number of discussions with Mr Chant before 11 November 1998. He said that he explained to Mr Chant that he wanted to carry out the project in the name of the trust.
Mr Abram said that he signed the contract at the plaintiff’s offices at Norwood and that Mr Howarth was present. He did not think Mr Chant was present. Mr Abram said that he told Mr Howarth at the time he signed the contract that he was only named as a director.
Mr Howarth said he was not present at the time Mr Abram signed the contract. Mr Howarth signed the contract on behalf of the plaintiff after it had been signed by Mr Abram. Mr Howarth said that the first time he met Mr Abram was on 17 December 2002 at the “final plans meeting”.

The Judge preferred the evidence of Mr Howarth. He was entitled to do so and to reject the assertion that Mr Howarth was aware that Mr Abram’s name was on the contract only as a director of Abram Admin. Services Pty Ltd.
On appeal, the defendants seemed to argue that accepting the Judge’s finding that Mr Howarth was not present when Mr Abram signed the contract meant that it was Mr Chant who was present at that time. Mr Chant was not called as a witness and the defendant submitted that the conclusion should be drawn that his evidence would not have helped the plaintiff’s case. It should be accepted (argued the defendants) that Mr Abram made it clear to the plaintiff through Mr Chant that his name was only on the contract as a director of Abram Admin. Services Pty Ltd.
I do not accept this submission. The defendants’ case was that the relevant conversation took place with Mr Howarth. The Judge heard evidence from Mr Howarth and Mr Abram. He rejected Mr Abram’s account. In my view it is not permissible to reason that if the conversation did not occur with Mr Howarth at the time the contract was signed it must have occurred with Mr Chant when Mr Abram did not give evidence to that effect.
The Judge’s finding that no such conversation took place should not be disturbed.
Counsel for Mr Abram submitted that in determining if Mr Abram was a party to the contract the Court could and should have regard to a range of acts by the parties and documents prepared before, at and after the contract was executed. It seems that the Court may have regard to the circumstances surrounding the contract in order to identify the parties to the contract (Young v Schuler (1883) 11 QBD 651; Edwards v Edwards (1918) 24 CLR 312; Mallinson v Scottish Australian Investment Co Ltd (1920) 28 CLR 66 at 75; Perpetual Trustee Co v Bligh (1940) 41 SR (NSW) 33; Prenn v Simmonds [1971] 1 WLR 1381).
Extrinsic evidence may also be admitted if there is an ambiguity. Counsel for Mr Abram submitted that an ambiguity arose from the fact that the word “Director” appeared under Mr Abram’s name. At the relevant time, the Corporations Law provided that a sole director and sole company secretary of a proprietary company could execute a document on behalf of a company (s 182 Corporations Law (1989)). That appears to be how the contract was executed by Abram Admin. Services Pty Ltd in this case. There is no common seal of the company on the contract.
In Giliberto v Kenny (1983) 57 ALJR 283 Gibbs CJ said,
“Extrinsic evidence was admissible to show, as it did, that Mrs Kenny, in agreeing to buy, was acting as agent for her husband as well as herself. As authority for that proposition it is sufficient to refer to Phipson on Evidence, 12^th ed., par. 1907, where it is said:
‘Where, however, it is doubtful whether A signs a document as agent for B, or as charging himself as well, extrinsic evidence … may be given, such evidence going really to the factum of the instrument.’
The principle is discussed by Jordan C.J. in Perpetual Trustee Co. Ltd. v Bligh (1940), 41 S.R. (N.S.W.) 33, at pp. 39-40. The words which were inserted in the contract by the appellant, “To Mr Kenny”, were unnecessary and are inapt, but it has long been established that in construing a contract general evidence of surrounding circumstances is admissible to identify the persons or things referred to: see, for example, the discussion of the principle by Lord Wilberforce in Prenn v. Simmonds, [1971] 1 W.L.R. 1381, at pp. 1383-1384. Such evidence does not justify a departure from the ordinary meaning of words where no ambiguity exists, but in the present case the reference in the document to Mrs. Kenny in one part and Mr. Kenny in the other created a patent ambiguity. The evidence of the mutually-known facts shows that the reference to Mr. Kenny was intended to be a reference to him and Mrs Kenny.”
In Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, Mason J (as he then was) said (at 352):
“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning.”
(See generally the passage from 347 –353.)
Any ambiguity in this case arises from the fact that the word “Director” appears under Mr Abram’s name in the contract. I think that there is sufficient ambiguity to permit reference to the surrounding circumstances within the principle stated by Mason J in Codelfa.
It follows that the Court may have regard to at least some of the circumstances identified by counsel for Mr Abram either under the principle that regard may be had to surrounding circumstances to identify the parties to the contract, or because there is sufficient ambiguity to permit reference to the surrounding circumstances within the principle stated by Mason J in Codelfa.
In Codelfa, Mason J identified what facts and circumstances constitute surrounding circumstances for the purpose of the rule. He said (at 352):
“Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.
It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.
Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.”
The defendants submitted that regard should be had to a number of documents prepared before, at and after the contract was executed.
They referred first to a Personal Interview Form dated 18 October 1998 and signed by Mr Abram. It appears that it was completed by Mr Chant. It refers to Abram Admin. Services Pty Ltd as the customer. Mr David Abram is not shown as a customer. There is no explanation in the evidence as to how it came about that there is an amended version of the Personal Interview Form which has as an addition a reference to “David John Abram (Director)” as a customer. Assuming that as between the parties it is the unamended Personal Interview Form to which regard should be had, nevertheless I do not think that it is a matter of great significance. It amounts at best to a statement that at that time, Mr Abram, and possibly the plaintiff, considered that Abram Admin. Services Pty Ltd would be the other contracting party. It is no more than a stand or position taken by a party (or possibly both parties) in the course of prior negotiations.
The defendants referred to the fact the land was purchased by Abram Admin. Services Pty Ltd and that this was known to Mr Howarth. However, I do not think it is appropriate to put any weight on this fact because it is clear that Mr Howarth only became aware of the fact in February 1999, that is, some months after the contract was signed.
The defendants referred to the fact that the contract was signed only once by Mr Abram. I do not think it is appropriate to put any weight on this fact. It is not inconsistent with a finding that Mr Abram was signing both for himself and for Abram Admin. Services Pty Ltd.
The defendants submitted that there are three documents which were brought into existence at about the time the contract was signed which are of particular importance on this issue. These documents are as follows:
1A Financial Statement in the name of Abram Admin. Services Pty Ltd dated 11 November 1998 and apparently signed or initialled by Mr Abram.
2A Receipt for the Deposit paid under the contract in the name of Abram Admin. Services and dated 19 November 1998.
3A Certificate of Insurance under Part 5 Division 3 of the Building Contractors Act 1995 issued in the name of Abram Administrative Services Pty Ltd. Mr Abram is not named in the Certificate of Insurance.
I do not find the fact that Abram Admin. Services Pty Ltd paid the deposit of any great significance. One of the parties had to pay it, and the fact that Abram Admin. Services Pty Ltd did so, does not mean Mr Abram was not a party to the contract. The other documents, being the Financial Statement and Certificate of Insurance, provide support for the defendants’ argument but they are by no means decisive. The Certificate of Insurance in particular is a fairly powerful consideration in favour of the defendants’ argument. By reason of the Building Work Contractors Act 1995, the plaintiff could not proceed with the construction work unless there was a policy of insurance complying with Division 3 Part 5 of the Act in force in relation to the building work and a certificate of that insurance had been provided to the building owner (s 34). One of the requirements for the policy of insurance was that it insure each person who is, or may become, entitled to the benefit of the statutory warranty in respect of the building work (s 35(1)(a)). One of the groups entitled to the benefit of the statutory warranty are the other parties to a domestic building work contract with a building work contractor (ss 32 and 3). One would have expected to see Mr Abram’s name on the Certificate of Insurance if he was a party to the contract.
The defendants also sought to rely on documents prepared after the contract was signed, including the following:
1.Letter from the plaintiff to Abram Admin. Services Pty Ltd dated 4 March 1999 advising of the plaintiff’s intention to commence work.
2.Variations to the contract where the client is identified by the plaintiff as Abram Admin. Services Pty Ltd.
The extent to which the subsequent conduct of the parties may be taken into account is unclear. (See, for example, the discussion in Contract Law in Australia 4^th ed. Carter and Harland paras. [712] and [718].) Even if I am able to take these matters into account I would put very little weight on them in the circumstances of this case. As to the letter referred to in number 1, I note that it was sent to an address which was also the residential address of Mr and Mrs Abram. The nature of the documents referred to in number 2 above was such that the precise description of the parties was not vital.
I have also considered whether any assistance is to be gained by having regard to the more general circumstances surrounding the contract including the commercial purpose of the transaction.
First, it might be said that a party in the plaintiff’s position is likely to have wanted more security than that involved in contracting with a trustee company. Clause 4.10 of the contract envisaged the obtaining of a Deed of Guarantee and Indemnity from the directors in a case where the owner is a company. No such Deed was obtained in this case. However, I do not think that much weight can be placed on that consideration because Mr Howarth conceded that the failure to obtain such a Deed may have been an oversight on his part.
Secondly, Mr Abram is an astute and competent accountant who had previously been involved in three or four building contracts. He gave evidence that at the time he signed the contract he inserted the words “ATF Abram Admin. Services Trust” after the name of Abram Admin. Services Pty Ltd. He also corrected the address for the company. He clearly read the contract carefully. The plaintiff is a large and well-established building company. To my mind, it is difficult to imagine that two commercially astute parties would have signed a contract in the form of this contract without intending that Mr Abram be a party to the contract. This is a powerful consideration in favour of the plaintiff’s argument.
Thirdly, there would be nothing surprising in finding that Mr Abram was a party to the contract. He and his wife planned to live in the house on the property. Mr Abram did give some general evidence about perceived tax benefits to be gained by the property being owned by Abram Admin. Services Pty Ltd and then leased to Mr and Mrs Abram, but there was no evidence that there was a cogent reason (either known to the plaintiff or not) why Mr Abram should not be a party to the contract.
In the result, I do not think the surrounding circumstances provide much assistance in terms of resolving the issue. There are factors pointing either way.
I return then to the terms of the contract itself. If the intention of the parties was that Mr Abram not be a party to the contract it is difficult to see why it was thought necessary to include his name in the box describing the owner. It would be understandable if Mr Abram’s name and position were included in the contract as the contact person for the company, or in the execution clause as the person executing the contract on behalf of the company, but that is not the context in which Mr Abram’s name and position appear in the contract. In other words, it is difficult to know why Mr Abram’s name appears where it does on the contract if it was not the intention of the parties that he be a party to the contract. He may well have been the company’s agent and had the ability to execute documents on its behalf, but I cannot see why that would lead to the insertion of his name in the box describing the owner. Furthermore, to say that he was named in the contract as a director does not take the matter very far because one needs to go on and ask why, assuming it was not intended that he be a party to the contract, he was named at all. I cannot think of any persuasive reason why Mr Abram’s name would appear on the contract in the place in which it does unless it was intended that he be a party to the contract.
On the balance of probabilities, I think the Judge was right to find that Mr Abram was a party to the contract.
2. The Condition Regarding Finance
As I understood it, the defendants’ principal submission in relation to this argument was that the letter from the Bank dated 29 October 1998 could not reasonably have been seen by the plaintiff as satisfying the condition regarding finance and that the defendants’ conduct after the execution of the contract was not unequivocally to the effect that either the finance had been obtained, or that they had waived the condition regarding finance.
The defendants pointed to the fact that the Personal Interview Forms completed before the contract was signed made it clear that the purchase of land as well as the construction of a house was part of the defendants’ proposal and that the proposal as a whole was subject to finance. The purchase price of the land is shown on the Forms at $115,000.00. The defendants also pointed to the fact that the letter from the Bank predates a quotation from the plaintiff dated 2 November 1998 and the date upon which the contract was executed. The defendants also pointed to the fact that they never obtained a loan of $208,054 as required by the contract. In fact, they obtained a loan of 85% of the cost of the purchase of the land and the construction of the house. They agreed to contribute 15% of the cost, a sum which was initially estimated to be in the order of $42,000. They were to raise this sum by the sale of shares and/or the sale of properties including the property at 6 Brackenmoor Close, Hillbank.
There are two answers to these submissions.
First, under clause 5 of the contract, the defendants were given the right to cancel the contract if finance was not obtained by 17 December 1998 or a mutually agreed extension of that date. The Judge found that between December 1998 (if not earlier) and late March 1999 the plaintiff believed that the defendants had obtained finance. In those circumstances, there can be no question of a mutually agreed extension of time. By reason of clause 5.2 of the contract the defendants had 14 days after 17 December 1998 to cancel the contract. They did not exercise that right. In the absence of the exercise of that right, or either of the rights in clauses 5.1.1 or 5.1.2 of the contract, in my opinion, the defendants waived the condition regarding finance.
Secondly, even if the foregoing is not a correct interpretation of the contract there was nevertheless ample evidence to support the Judge’s finding that by their conduct over a number of months the defendants waived the condition regarding finance.
Mr Abram gave the letter from the Bank to Mr Howarth sometime between 11 November 1998 and 17 December 1998. He did so for the sole purpose of assuring the plaintiff that the condition regarding finance had been satisfied. The letter from the Bank contains details of an arrangement that appears to satisfy the condition regarding finance. There is nothing in the letter that suggests qualifications or difficulties with the offer of finance.
The plaintiff on receiving the letter, and thereafter until late March 1999, believed the condition regarding finance had been satisfied. At no time prior to March 1999 did the defendants inform the plaintiff of the true nature of their funding arrangement with the Bank.
The defendants took steps to confirm and proceed under the contract. They made it clear that they were anxious to proceed. They authorised post-contractual variations on 17 December 1998 and 19 February 1999 respectively. They did not respond to a letter from the plaintiff dated 4 March 1999 advising them that the plaintiff was ready to begin construction work.
In my opinion, the defendants clearly waived any reliance on the condition regarding finance and the Judge’s finding to that effect should not be disturbed.
3. Repudiation or Termination under Clause 9.2
The defendants’ principal submission in relation to this argument was that the Judge erred in finding that Mr Abram agreed to the additional work during the telephone conversation with Ms Mendolia on 26 March 1999. They pointed to two matters which they said strongly suggested that Mr Abram would not have agreed to the additional work on 26 March 1999. First, it was submitted that it was unlikely Mr Abram would have agreed to the work when he had the opportunity to terminate the contract. The evidence was (said the defendants) that at about this time Mr Abram was looking for the means to terminate or cancel the contract. Secondly, it was submitted that the fact that a written document requesting approval from the defendants for the work necessitated by the discovery of rock was sent to the defendants by facsimile transmission by Ms Mendolia on 31 March 1999 was strong evidence that Mr Abram did not agree to the variation five days earlier on 26 March 1999.

There are a number of answers to these submissions. First, the Judge found that it was not until 29 March 1999 that the defendants decided that they did not wish to proceed with the contract. That finding was amply supported by the evidence. Mr Abram gave evidence that on about 29, 30 or 31 March 1999 he sought advice from a friend who was a builder about the means of avoiding the contract. He then looked carefully at the provisions of the contract with a view to bringing it to an end.
Secondly, the evidence supports a finding that Mr Abram asked for the written document requesting approval from the defendants for the work necessitated by the discovery of rock after he had decided that he wanted to terminate the contract and with a view to using it as a basis to terminate the contract. Ms Mendolia said that she sent the document to the defendants as a matter of routine. Mr Abram’s request for the written document occurred after he had agreed to the additional work on 26 March 1999.
Finally, the defendants’ challenge to the Judge’s finding faces the formidable obstacle that the finding was based on the Judge’s assessment of the witnesses. The Judge saw and heard Ms Mendolia and Mr Abram and he preferred the evidence of Ms Mendolia. Her evidence was supported by a contemporaneous note. There is no suggestion the Judge misused the advantage he had in seeing and hearing the witnesses (Devries v Australian National Railways Commission (1993) 177 CLR 472).
I think the Judge’s finding that on 26 March 1999 the defendants agreed to the additional work necessitated by the discovery of rock was correct.
It follows that the letter from the defendants dated 1 April 1999 constituted a repudiation of the contract which was accepted by the plaintiff.
Conclusion
In my opinion, all of the arguments raised on the appeal fail and the appeal should be dismissed.

[2002] SASC 417

13 December 2002