JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : AUSTLAND HOLDINGS PTY LTD t/a RE-MAX ADVANTAGE -v- INVESTMENTS (WA) PTY LTD & ORS [2005] WADC 70 CORAM : MARTINO DCJ HEARD : 15 NOVEMBER 2004, 17 DECEMBER 2004 & 21 MARCH 2005 DELIVERED : 22 APRIL 2005 FILE NO/S : CIVO 21 of 2004 BETWEEN : AUSTLAND HOLDINGS PTY LTD t/a RE-MAX ADVANTAGE (ACN 009218311) Applicant
AND
INVESTMENTS (WA) PTY LTD (ACN 100911313)
First Claimant
RODNEY BARRY HATTON
MARIA LOUISA HATTON
Second Claimant
Catchwords: Contracts - Vendor and purchaser - Construction and interpretation - Breach of contract - Forfeiture of deposit
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Legislation:
Stamp Act 1921
Result: Second claimants entitled to forfeit deposits Representation:
Counsel:
Applicant : No appearance
First Claimant : Mr M F Rynne
Second Claimant : Mr M Seaman (15 November 2004), Mr G L Kelly (17 December 2004), Mr R C Ioppola (2 March 2005)
Solicitors:
Applicant : Not applicable
First Claimant : Tottle Partners
Second Claimant : Wojtowicz Kelly
Case(s) referred to in judgment(s):
Backstop Nominees Pty Ltd v Goscor Pty Ltd [1990] VR 468
Commercial Banking Co of Sydney Ltd v Love (1975) 133 CLR 459
Commissioner of Stamp Duties (Qld) v Hopkins (1945) 71 CLR 351
Coolmo Pty Ltd & Ors v Dominion Nominees Pty Ltd, unreported; FCt SCt of WA; Library No 990202; 12 April 1999
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 211 ALR 342
Case(s) also cited:
Schenker & Co (Aust) Pty Ltd v Maplas Equipment and Services Pty Ltd [1990] VR 834
Adelaide City Corporation v Altmann (1987) 46 SASR 186
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1 MARTINO DCJ: The Applicant ("Austland") carries on a real estate agency business. Mr Peter Sampson is a real estate agent at Austland and is the person who acted on the transactions the subject of this action.
2 By two contracts for the sale of land by offer and acceptance dated 6 May 2003 the first claimants ("Investments (WA)") agreed to purchase land from the second claimants ("Mr and Mrs Hatton"). 3 Austland acted as agent for Mr and Mrs Hatton on both contracts. Both contracts were on the Real Estate Institute of WA 2002 Revision form of contract and incorporated the Joint Form of General Conditions 2002 Revision ("General Conditions"). 4 One contract was for land known as Lot 4 Lyon Road Banjup ("Lot 4"). The other contract was for land known as Lot 5 Lyon Road Banjup ("Lot 5"). The purchase price for Lot 4 was $1,250,000 and for Lot 5 it was $750,000. 5 Under each contract the deposit payable was $20,000. Investments (WA) paid those deposits to Austland. 6 Settlement of the two contracts has not taken place. Investments (WA) and Mr and Mrs Hatton each claim to be entitled to the deposits. On 28 January 2004 Austland claimed interpleader relief in respect of the deposits. On 12 March 2004 O'Sullivan DCJ granted that interpleader relief and ordered that Austland pay the deposits into court after deduction of its costs and that the claims of Investment (WA) and Mr and Mrs Hatton be determined at a trial on affidavit evidence. 7 In support of its claim Investments (WA) relied upon affidavits sworn by Joseph Tilli on 7 April 2004 and 15 November 2004. Mr Tilli is the financial controller and manager of Investments (WA). Counsel for Mr and Mrs Hatton cross-examined Mr Tilli on his affidavits. 8 In support of their claims Mr and Mrs Hatton relied upon an affidavit sworn by Mr Hatton on 30 April 2004 and an affidavit sworn by Mr Sampson on 4 May 2004. On the hearing of the action I struck out parts of Mr Hatton's affidavit which were hearsay and other parts which were irrelevant. I deferred ruling on Investments (WA's) objection to par 42 and par 43 of Mr Hatton's affidavit which dealt with a notice to produce the transfer of land and contract for the sale of Lot 5 issued by the Office of State Revenue. Counsel for Mr and Mrs Hatton submitted that those paragraphs were relevant to the ability of Investments (WA) to settle
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the contract for Lot 5. I have concluded that these paragraphs are not relevant and should be struck out. 9 Counsel for Investments (WA) did not cross-examine Mr Hatton or Mr Sampson. 10 The parties agreed that on 23 January 2004 Mr and Mrs Hatton sold Lots 4 and 5 to another purchaser. 11 In each contract the buyer was shown as Investments (WA) "and/or Nominee". In his first affidavit Mr Tilli deposed that "the terms of the contract for Lot 4 were the same as Lot 5, save that the settlement date of Lot 5 was 90 days from acceptance." However copies of each contract are annexed to both Mr Tilli's affidavit and Mr Hatton's affidavit. They show that the settlement date for Lot 4 was 90 days from acceptance and for Lot 5 was 120 days from acceptance. I conclude that there is a typographical or similar error contained in the passage of Mr Tilli's affidavit to which I have referred which Mr Tilli has not picked up, and the settlement dates for each of the contracts at the time that they were signed were 90 days from acceptance for Lot 4 and 120 days from acceptance for Lot 5. 12 The copy of the contract for the sale of Lot 5 annexed to Mr Tilli's first affidavit shows that it has been amended by adding in hand a new cl 8 which provides that the nominee is Project 2001 Pty Ltd or three other named companies. However that amendment has not been initialled by Mr and Mrs Hatton. Mr Hatton denies that Project 2001 Pty Ltd was nominated on the contract as purchaser. In his evidence in cross-examination Mr Tilli acknowledged that he did not see Mr and Mrs Hatton sign that alteration. I conclude that the addition of cl 8 was not agreed to by Mr and Mrs Hatton and that Project 2001 Pty Ltd is not named as a purchaser or nominee of Investments (WA) on the contract. 13 Investments (WA) and Mr and Mrs Hatton did agree in writing to vary each of the contracts in June 2003. The variation to the contract for Lot 4 allowed Mr and Mrs Hatton to remove all buildings and outbuildings from the land, and it extended the settlement date of Lot 4 so that settlement of the two contracts would occur simultaneously. As a result of that variation the settlement of the two contracts should have occurred on 3 September 2003. 14 Settlement did not take place on that date. Investments WA did not deliver a transfer of Lot 4 or Lot 5 to Mr and Mrs Hatton on or before 3 September 2003.
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15 On 5 September 2003 Mr and Mrs Hatton sent a notice to complete the two contracts to Investments (WA) requiring Investments (WA) to complete the contracts within 10 days. Under the general conditions those notices are deemed to have been served on Investments (WA) on 8 December 2003.
16 Investments (WA) was unable to complete Lot 4. 17 On 17 September 2003 the settlement agents for Investments (WA) provided to the settlement agents for Mr and Mrs Hatton a transfer of Lot 5 from Mr and Mrs Hatton to Project 2001 Pty Ltd. That transfer bore a stamp of the Commissioner of State Revenue that no duty was payable on it. On 19 September 2003 the solicitors for Mr and Mrs Hatton wrote to Investment (WA)'s settlement agents informing them that it was their client's view that the transfer to Project 2001 Pty Ltd is a second transfer of the property which would incur additional stamp duty, the intention of the parties was that the contracts for Lot 4 and Lot 5 formed one transaction and that the properties should be settled simultaneously. 18 In that letter Mr and Mrs Hatton's solicitors wrote: "We confirm that our client is ready, willing and able to settle this matter provided that the terms of the contract are complied with. In order to comply with those terms, it is necessary for the following to occur: 1. That contracts settle simultaneously. 2. That you provide us with a Transfer of Land document with the Transferee being the purchaser on the contract namely Investments (WA) Pty Ltd. By providing us with a Transfer of Land in the name of Project 2001 Pty Ltd we do not consider that your client is ready, willing and able to settle the contracts." 19 On the same day Investments (WA's) solicitors wrote to Mr and Mrs Hatton's solicitors. In that letter they wrote: "Our instructions are that at this stage Investments (WA) Pty Ltd has not been able to settle on lot 4 but is ready, willing and able to settle on lot 5. An attempt to settle lot 5 was made on 18 September 2003 by our client's settlement agent,
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Irdi Settlements, but was told by you that the settlement of lot 5 could not be effected because: We have advised our client that your client is not entitled to refuse to settle lot 5, even though our client may not be able to settle lot 4. The fact that your client has refused without proper reason to settle lot 5 on 18 September 2003, has the result that our client cannot be in breach of his obligation to settle lot 5 and that your client is now no longer able to take any steps to terminate the contract with any of the consequences that flow from that. Our client remains ready, willing and able to settle on lot 5. Can you please arrange a suitable time with our client's settlement agent for the settlement of lot 4 to proceed." 20 On 6 October 2003 Mr and Mrs Hatton by their solicitors sent notices to Investments (WA) purporting to terminate each of the contracts. On 10 November 2003 Mr and Mrs Hatton by their solicitors sent to Austland and Investments (WA) notices claiming the deposit on each contract. 21 Investments (WA) denies that Mr and Mrs Hatton were entitled to terminate the contract for Lot 5 because Investments (WA) was ready, willing and able to settle on Lot 5 by transfer of that land to Project 2001 Pty Ltd. 22 The contracts for Lot 4 and Lot 5 do not provide that settlement of one contract is dependant upon settlement of the other. The contracts originally provided that settlement was to be on different dates. The contracts were amended and the amendments provided for settlement
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to be on the same date. However even with those amendments there is nothing in the contracts to show that settlement of one contract is dependant upon settlement of the other contract taking place. "It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe." : Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 211 ALR 342 at [40] 23 In my view Mr and Mrs Hatton were not entitled to insist that the settlement of the two contracts take place at the same time or that settlement of Lot 5 depended upon Investments (WA) settling on Lot 4. 24 Clause 3.2 of the General Conditions provides that the buyer must sign the transfer and deliver the transfer to the seller or the seller's representative a reasonable time before the settlement date. 25 Clause 3.3(a) is in the following terms: "The Buyer must arrange for: (1) the Contract to be stamped; and (2) the Transfer to be stamped before the Transfer is delivered to the seller" 26 Clause 24.1 provides that if the buyer is in default under the contract and has failed to comply with a default notice or repudiates the contract the seller has the right in cl 24.2 in addition to any other right or remedy. One of the rights in cl 24.2 is to terminate the contract. Clause 24.3 provides that if the seller terminates the contract it may elect to forfeit the deposit. 27 Clause 24.14 provides that if the seller is in default and has failed to comply with a default notice or repudiates the contract the buyer has the rights in cl 24.15 in addition to any other right or remedy. One of the rights in cl 24.15 is to terminate the contract. Clause 24.16 provides that if the buyer terminates the contract the deposit must be repaid to the buyer. 28 Investments (WA) did not deliver a stamped transfer of Lot 4 before the settlement date of 3 September 2003. Mr and Mrs Hatton's notice to
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complete the contract for the sale of Lot 4 dated 5 September 2003 constituted a default notice. Investments (WA) did not remedy the default. On 6 October 2003 Mr and Mrs Hatton terminated the contract for the sale of Lot 4 and by their notice of 10 November 2003 they elected to forfeit the deposit. Mr and Mrs Hatton are entitled to the deposit of $20,000 in respect of Lot 4. 29 On 17 September 2003 Investments (WA) did deliver to Mr and Mrs Hatton a transfer for Lot 5. That transfer showed the transferee to be Project 2001 Pty Ltd. It had a stamp that no duty was payable on it. 30 In fact, stamp duty was payable on the transfer. As Project 2001 Pty Ltd was not named as purchaser of the contract for the sale of Lot 5 the proposed transfer was a separate and distinct transaction so that each of the contract and the transfer were liable to full ad valorem stamp duty: s 74(2) Stamp Act 1921. 31 The word "stamped" is not defined in the General Conditions. In my view a reasonable person would take the word as referring to the Stamp Act 1921 At the time the contract for the sale of Lot 5 was entered into relevant definitions in s 4 of the Act were: " 'Stamped', in relation to an instrument or paper, applies to an instrument or paper – (a) to which an adhesive stamp is fixed; (b) on which a stamp is impressed by means of a die; or (c) to which an adhesive coupon is affixed; 'Stamp' means – (a) an adhesive stamp; (b) a stamp impressed by means of a die; or (c) an adhesive coupon, for denoting any duty, fine or fee; 'Duty' means the stamp duty for the time being chargeable by law." 32 In my view the transfer delivered by Investments (WA) was not stamped within the meaning of cl 3.3(a) because it was not stamped with
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the duty chargeable by law. The copy of the contract for the sale of Lot 5 that was stamped included cl 8 providing that the nominee was Project 2000 Pty Ltd or three other named companies. I have concluded that the contract between Mr and Mrs Hatton and Investments (WA) did not include that clause. 33 I conclude therefore that when the Commissioner of State Revenue stamped the transfer that no duty was payable the Commissioner was under a misapprehension as to the facts. In general the question of whether an instrument is duly stamped or as to what stamp is required is to be determined by what appears on it face: Coolmo Pty Ltd & Ors v Dominion Nominees Pty Ltd, unreported; FCt SCt of WA; Library No 990202; 12 April 1999, Backstop Nominees Pty Ltd v Goscor Pty Ltd [1990] VR 468; Commissioner of Stamp Duties (Qld) v Hopkins (1945) 71 CLR 351. 34 However, the facts of this case displace that general rule because I have concluded that the contract that was stamped by the Commissioner included a clause (cl 8) that had not been agreed to by the parties. 35 In my view Commercial Banking Co of Sydney Ltd v Love (1975) 133 CLR 459 does not assist Investments (WA). That authority establishes that the Stamp Act imposes a duty on instruments, not transactions and does not purport to avoid transactions for want of payment of duty. In this case the contract required Investments (WA) to deliver a stamped transfer. It has failed to do that. 36 I conclude therefore that Investments (WA) did not remedy its default and that Mr and Mrs Hatton were entitled to terminate the contract for the sale of Lot 5 and forfeit the deposit as they did. 37 For these reasons Mr and Mrs Hatton are entitled to the deposits on both contracts.
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