Bajwa Group Pty Ltd v Sharma
[2024] VSC 195
•24 April 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2022 03418
| BAJWA GROUP PTY LTD (ACN 601 030 611) | Plaintiff |
| v | |
| BAHVNA SHARMA & ORS (according to the schedule attached) | Defendants |
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JUDGE: | McDonald J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 27 February to 29 February 2024 |
DATE OF JUDGMENT: | 24 April 2024 |
CASE MAY BE CITED AS: | Bajwa Group Pty Ltd v Sharma & Ors |
MEDIUM NEUTRAL CITATION: | [2024] VSC 195 |
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CONTRACT – Formation – Sale of land – Letter of offer – Agreement to enter formal contract in accordance with terms of letter of offer – Purchaser permitted to provide another entity to enter contract – No vendor’s statement provided – Renegotiation of purchase price subsequent to signing letter of offer – Significant terms not addressed in letter of offer – Letter of offer not a binding and enforceable contract – Sale of Land Act 1962, s 32.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr W Rimmer | Local Lawyers |
| For the Defendants | Mr CR Northrop | ATK Partners |
HIS HONOUR:
Introduction
Since February 2022 the defendants have been the registered proprietors of land at 387 Greigs Road, Truganina (‘the land’). The land is approximately 28.6 acres. Gurpeet Bajwa is the sole director and shareholder of the plaintiff. The plaintiff has been in the business of property development since 2014.
The key issue in the present proceedings is whether a document titled ‘letter of offer’ (‘the letter’) signed by the plaintiff and the defendants and dated 11 April 2022 is a binding and specifically enforceable contract for the sale of the land for a purchase price of $17.5 million. The plaintiff contends that the letter is a binding contract and seeks orders to specifically enforce the contract. The defendants contend that the letter is not a binding contract.
I have concluded that the letter is not a binding contract. The text of the document construed in the circumstances in which it came into existence together with the matters which the letter did not address, are such that a reasonable person would have believed that the parties did not intend that the letter would constitute a binding contract.
Background
In late March 2022 Mr Bajwa was contacted by Rajbir Braich, a real estate agent employed by Raine and Horne. Mr Braich told Mr Bajwa that a parcel of land in Greigs Road, Truganina was coming on the market. Mr Bajwa subsequently inspected the land. He considered that the land had very good road connectivity because it was very close to the Western Highway.[1] Mr Bajwa contacted Mr Braich and told him that he was interested in purchasing the land.[2]
[1]Transcript of proceedings (‘T’) 27 February 2024, T 75 L 4–7.
[2]T 74 L 26–31.
On 1 April 2022 the third and fourth defendants, Rita and Krishan Aggarwal, found a note from Mr Braich on the front door of their residence. In the note Mr Braich introduced himself, provided contact details and stated that he had a potential purchaser for the land.[3] After speaking to the first and second defendants, Mr Aggarwal contacted Mr Braich on 3 April 2022.[4] A meeting was arranged between Mr Braich and the defendants for the evening of 6 April 2022. When Mr Aggarwal arranged the meeting he insisted that Mr Braich bring to the meeting a written offer to purchase the land.[5]
[3]T 158 L 16–20.
[4]T 159 L 16, T 158 L 25–26.
[5]T 159 L 18–19.
Mr Bajwa met with Mr Braich on 6 April 2022 prior to Mr Braich attending the meeting with the defendants later that evening. Mr Braich told Mr Bajwa that if he was interested in purchasing the property he needed to give Mr Braich an offer in writing which he could present to the defendants.[6] Mr Braich told Mr Bajwa that the defendants were seeking $17 million to $17.5 million.[7] During the meeting Mr Braich prepared a Heads of Agreement, based on Mr Bajwa’s instructions.[8]
[6]T 75 L 16–21.
[7]T 75 L 11–12.
[8]T 75 L 30 – T 76 L 2.
The Heads of Agreement, signed by Mr Bajwa and dated 6 April 2022 is set out below:
HEADS OF AGREEMENT
Property: 387 GREIGS ROAD TRUGANINA 3029
Area : 28.6 Acres approx.
Purchaser: Bajwa Group Pty Ltd ACN 601 030 611 and/or nominee
Vendor: BHAVNA SHARMA, RAMNNISH SHARMA, KRISHAN GOPAL AGGARWAL & RITA AGGARWAL
Purchase Price: $17,100,000.00
Deposit: $1,710,000.00 will be payable on expiry of due diligence out of which $10,000.00 will be paid on signing the heads of agreement.
Further deposit: $1,710,000.00 will be payable at 12 months from signing the contract of sale.
Settlement and Balance: Settlement will be at 40 months and balance will be paid at the settlement.
Other conditions:
·The Purchaser and the Purchaser's authorized representatives are granted the right to enter the property and thereon to take measurements and conduct tests for any purpose related to the Purchaser's proposed development of the Property. These rights are exercisable at any time and from time to time after the Day of sale, notifying the vendor 48 hours prior to any entry.
·Purchaser may provide another entity to enter the contract of sale.
·This sale is subject to 10 business days due diligence from signing the contract of sale.
·Vendor will provide the contract of sale and vendor's statement (for the Vendor's acquisition of the property) to the Purchaser's lawyer as soon as possible after signing this head of agreement. This head of agreement is binding for both the parties for the set terms in this agreement.
·This sale is subject to stratification of Vendor statement and contract of sale.
·This heads of agreement is legally binding. On acceptance of this heads of agreement both parties agreed to enter a formal contract/deed of nomination in accordance with the terms of this heads of agreement.
Mr Braich met with the defendants at the home of the third and fourth defendants on the evening of 6 April. Mr Braich presented the defendants with the Heads of Agreement and also an exclusive authority which appointed him as their real estate agent. After they had had an opportunity to read the Heads of Agreement the defendants told Mr Braich that they were not comfortable with some aspects of the document.[9] At 10.55pm Mr Braich emailed Mr Aggarwal a letter of offer for another property, 942–995 Beattys Road, Grangefields.[10] Mrs Sharma then used this letter of offer as a template to prepare the letter.[11] The letter was signed by the defendants at the conclusion of the meeting with Mr Braich on 6 April 2022.[12]
[9]T 160 L 16–20.
[10]Court Book (‘CB’) 257–258.
[11]T 140 L 11–15, T 160 L 16–24.
[12]T 161 L 18.
The letter is as follows:
Letter Of Offer
Property: 387 Greigs Road Truganina 3029
Site Areas: 28.6 Acres Approx.
Purchaser: Bajwa Group Pty Ltd ACN 601 030 611 and/or nominee
Vendor: BHAVNA SHARMA, RAMNNISH SHARMA, KRISHAN GOPAL AGGARWAL & RITA AGGARWAL
Purchase Price: $17,500,000
Deposit: $1,750,000 will be payable on signing Contract of Sale (COS). COS will be signed within 24 hours of receipt from the Vendor.
Further Deposit: $2,187,500 will be payable at 12 months from signing of Contract of Sale (COS).
Settlement and Balance: Settlement will be at 40 months and balance $13,562,500 will be paid at the settlement.
Conditions:
•The Purchaser and the Purchaser's authorised representatives are granted the right to enter the property and thereon to take measurements and conduct tests for any purpose related to the Purchaser's proposed development of the property. These rights are exercisable at any time and from time to time after the date of sale, notifying the vendor with mutually acceptable notice period.
•Purchaser may provide another entity to enter the contract of sale.
•Vendor will provide the contract of sale and vendors statement (for the vendors' s acquisition of the property) to the Purchaser's lawyer as soon as possible after signing this Heads of Agreement. This Heads of agreement is binding on both parties for the terms set in this agreement.
•This sale is subject to the confirmation that the vendor has not applied for any compensation for this property from Vic Roads.
•On acceptance of this Heads of agreement, both parties agree to enter a formal contract in accordance with the terms of this Heads of agreement.
Following the meeting on 6 April 2022 Mr Bajwa received a telephone call from Mr Braich. He was told that the defendants had agreed to sell the land but that the conditions had changed.[13] Mr Bajwa then met with Mr Braich at his office on 11 April 2022 and was provided with the letter. He signed the letter that day.[14] Following the meeting on 11 April 2022 Mr Braich introduced Mr Bajwa to a solicitor, Pauline Madden, who he retained to act on Mr Bajwa’s behalf in respect of the purchase of the land.[15]
[13]T 76 L 10–12.
[14]T 77 L 12–13.
[15]T 77 L 30 – T 78 L 2.
On 2 May 2022 Ms Madden emailed the defendants’ solicitor, Ali Khanbashi of ATK Partners, and requested him to provide a vendor’s statement under s 32 of the Sale of Land Act 1962 and a contract of sale.[16] On 23 May 2022 Mr Khanbashi forwarded to Ms Madden a draft contract of sale and a draft s 32 statement plus annexures.[17] On 27 May 2022, complying with the request from Ms Madden, Mr Khanbashi sent her the draft contract in Word format. He requested any amendments to the draft to be ‘marked up’.[18] On 27 May 2022 the defendants signed the s 32 statement.[19] On 30 May 2022 Mr Khanbashi forwarded the signed s 32 statement to Ms Madden. The covering email at 10.10am stated that the defendants ‘were considering their right to withdraw from negotiations in accordance with the Heads of Agreement dated 11 April 2022’.[20]
[16]CB 46.
[17]CB 54.
[18]CB 102.
[19]CB 103.
[20]CB 181.
At 10.22am on 30 May 2022 Ms Madden sought an extension of time to respond to Mr Khanbashi’s email.[21] On 1 June 2022 Ms Madden emailed Mr Khanbashi proposing the deletion of six clauses in the draft contract of 23 May 2022:[22] clauses 9, 12, 14, 26, 33.4 and 33.5. Clause 9 relates to the apportionment of land tax liability on the settlement date. Clauses 12 and 33.4 imposed liability upon the purchaser to pay outgoings during the settlement period. Clauses 14 and 26 required the purchaser to pay interest of 16% per annum on any amount overdue for payment. Clause 33.5 required the purchaser to be liable for mowing of grass and general upkeep of the land during the settlement period.
[21]CB 181.
[22]CB 231.
As at 6 June 2022 there was significant disagreement between the parties regarding the terms of the contract of sale. The proposed deletion of clauses 14 and 26 would have had the effect that the annual rate of interest on any amount overdue for payment under the contract would have been 2% rather than 16%. In addition, the parties were at loggerheads as to who should be liable for outgoings and upkeep of the property during the 40 month settlement period. On 6 June 2022 Mr Khanbashi advised Ms Madden that the defendants did not agree to any of the proposed deletions.[23]
[23]CB 233.
On 9 June 2022 three of the defendants met with Mr Braich and Mr Bajwa at the office of the first and second defendants. It is common ground that during this meeting the parties discussed the clauses in the draft contract dated 23 May 2022 relating to responsibility for outgoings (water rates, council rates, land tax) and responsibility for mowing grass and general upkeep of the land during the 40 month settlement period.[24] It is also common ground that by the conclusion of the meeting the defendants had agreed with Mr Bajwa that they would be responsible for the mowing of the grass and general upkeep of the land and payment of water rates, council rates and land tax during the 40 month settlement period. However, the parties disagree as to whether there was any agreement that the purchase price of $17.5 million would be increased to reflect the defendants’ agreement to be responsible for outgoings and upkeep of the land during the settlement period.
[24]T 80 L 29 – T 81 L 8, T 106 L 18–20, T 163 L 22–26.
Mr Bajwa gave evidence that there was no discussion during the meeting concerning the issue of whether the defendants would receive any additional payment for being responsible for outgoings and the upkeep of the land.[25] Mr Aggarwal gave evidence that Mr Bajwa agreed to increase the purchase price of $17.5 million by $150,000 in return for the defendants’ agreement to pay the outgoings and be responsible for the upkeep of the land during the settlement period.[26] I accept Mr Aggarwal’s evidence. Mr Aggarwal was an impressive witness. He had a clear recollection of the meeting on 9 June 2022. That recollection is consistent with the terms of an email which he sent to Mr Khanbashi at 10.53am on 10 June 2022 which included the following:
Hi Ali
With a view to discuss finalised matters related to land tax and other charges, the buyer approached us yesterday morning and we met with them yesterday afternoon. To be honest, we were glad that we met and were able to come to an agreement. Here is the summary of our discussion and items agreed:
(a) we agreed to become responsible for and pay the land tax, council rates, water rates and also for grass cutting on the property. We negotiated and agreed for an increase in the sale price by $150,000 from $17,500,000 to $17,650,000. Please amend our COS to change the sale price and also in relation to payment of land tax, council rates, water rates and for grass cutting on the property, being our responsibility. As regards clauses related to other notices or future liabilities etc, we leave it to your judgement to amend them suitably. We obviously would prefer any liability, unknown at this stage, to remain to their account, eg clause 33.4(b) of Special Conditions Part B.[27]
[25]T 81 L 8.
[26]T 164 L 1–4.
[27]CB 328 (emphasis original).
On 23 June 2022 Ms Madden sent Mr Khanbashi an email seeking confirmation ‘that your clients are proceeding on the basis of a Contract signed after 1 July 2022?’[28] On 24 June 2022 Mr Khanbashi emailed Ms Madden advising, ‘We have been instructed that our client is no longer proceeding with the sale’.[29] On 30 June 2022 Ms Madden wrote to Mr Khanbashi as follows, ‘Further to our recent correspondence we await your client’s decision to proceed with the binding Letter of Offer forthwith’.[30] Ms Madden did not receive a response to this email. On 31 August 2022 Ms Madden advised Mr Khanbashi that the plaintiff would be commencing proceedings without further notice.[31]
[28]CB 238.
[29]CB 239.
[30]CB 242.
[31]CB 243.
Is the letter a binding contract for the sale of the land?
In Masters v Cameron[32] the High Court described three types of cases where the parties who have been in negotiations reach agreement upon terms of a contractual nature and also agree that the matter of their negotiations shall be dealt with by a formal contract:
(i)The parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect;
(ii)The parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document; and
(iii)The parties do not intend to make a concluded bargain at all, unless and until they executive a formal contract.[33]
[32](1954) 91 CLR 353.
[33]Ibid at 350.
In each of the first two categories set out above there is a binding contract to perform the agreed terms irrespective of whether the contemplated formal document comes into existence. In cases falling within the third category there is no binding and enforceable agreement until a formal document has been executed.
In Sinclair, Scott & Co Ltd v Naughton[34] the High Court identified a fourth category of case:
In which the parties were content to be bound immediately and exclusively by the terms which they have agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.[35]
[34](1929) 43 CLR 310.
[35]Ibid at 317.
The plaintiff submits that the letter falls within the fourth category. The defendants submit that the letter contemplates that no binding contract would be entered into until the s 32 statement was provided and a formal contract signed by the vendors and the entity who was to be the purchaser of the land.
The following principles apply to the question of whether the letter is a binding and specifically enforceable contract. First, the meaning of contractual terms are to be ascertained objectively having regard to the language of the contract, and where appropriate, the surrounding circumstances known to the parties.[36] Second, the question of whether the parties intended the letter to be a binding contract is to be determined objectively from the text of the letter, construed in the context of the circumstances in which it came into existence.[37] Third, pre-contractual conduct is relevant and admissible on the question of whether each party by their words and conduct would have led a reasonable person in the position of the other party to believe that the letter was or was not intended to be a binding contract.[38] Fourth, post-contractual conduct is admissible on the question of whether the parties intended the letter to be a binding contract if the conduct constitutes an admission against interest.[39] Fifth, subsequent negotiations between the parties may be relevant to demonstrate the nature and extent of the terms that might be necessary for the conclusion of a binding agreement but which were not included in the letter.[40] Sixth, the absence of a s 32 statement when the letter was signed is not conclusive but ‘may tend to suggest’ that the parties did not intend the letter to constitute a binding contract.[41] Seventh, the importance and extent of matters left unresolved when the letter was signed is an important consideration in determining whether, objectively, the parties intended the letter to be a binding contract.[42]
[36]The Edge Development Group Pty Ltd (ACN 105 329 726) v Jack Road Investments Pty Ltd (ACN 112 898 763) (as Trustee for the Jack Road Investments Unit Trust) [2019] VSCA 91 at [45] (‘Edge Development Group’); Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656–7 [35].
[37]Edge Development Group (n 36) at [46]; Nurisvan Investment Ltd v Anyoption Holdings Ltd [2017] VSCA 141 at [110].
[38]Edge Development Group (n 36) at [46].
[39]Ibid at [47]; Molongo Group (Aust) Pty Ltd v Cahill [2018] VSCA 147 at [132].
[40]Edge Development Group (n 36) at [47]; Nurisvan Investment Ltd v Anyoption Holdings Ltd [2017] VSCA 141 at [110].
[41]Edge Development Group (n 36) at [58]; Molongo Group (Aust) Pty Ltd v Cahill [2018] VSCA 147 at [169].
[42]Edge Development Group (n 36) at [60].
The question of whether the parties intended the letter to be a binding contract is to be determined objectively from the text of the letter construed in the context of the circumstances in which it came into existence. I have set out earlier in this judgment the circumstances in which the letter came into existence. When Mr Braich attended the meeting with the defendants on the evening of 6 April 2022 he provided the defendants with a Heads of Agreement signed by Mr Bajwa. The defendants made two deletions from the Heads of Agreement in the course of preparing the letter. First, a provision in the Heads of Agreement, ‘$10,000 will be paid on signing the Heads of Agreement’, was deleted. Second, a provision, ‘this Heads of Agreement is legally binding’, was deleted. Each of the matters deleted by the defendants were consistent with the letter having no immediate effect as a binding contract. The deletion of these matters would have conveyed to a reasonable person in the position of Mr Bajwa when he was given a copy of the letter signed by the defendants and told by Mr Braich that the ‘conditions have changed’, that the letter was not intended to have effect as a binding contract.
The plaintiff submits that the letter sets out the essential terms of a binding contract of sale, stipulating the property, the price and the parties. I accept the plaintiff’s submission that the letter identifies the property and its sale price. However, the identification of the parties to the contract is not clear. The letter identifies the purchaser as ‘Bajwa Group Pty Ltd ACN 601 030 611 and/or Nominee’. However, the letter also states: ‘Purchaser may provide another entity to enter the Contract of Sale’. Under this clause, if the plaintiff provided another entity to enter the contract that party would be liable to comply with the terms of the contract in lieu of the plaintiff.
In Molonglo Group (Australia) Pty Ltd v Cahill [2018] VSCA 147 (‘Molonglo’) a document titled ‘Agreement to Purchase’ contained a nomination clause in the following terms:
The Purchaser may nominate a substitute or additional purchaser but the named Purchaser remains personally liable for the due performance of all of the Purchaser’s obligations under this Agreement.[43]
The Court of Appeal stated:
The nomination clause. This clause is a cogent indication that the document was intended to be an immediately binding contract for the sale of the Property. That is because the stipulation that ‘the named Purchaser remains personally liable for the due performance of all the Purchaser’s obligations under this Agreement’ indicates that the document creates immediately enforceable substantive rights and obligations in relation to the sale of the Property rather than setting out procedural parameters for further negotiations.[44]
[43]Ibid at [32].
[44]Ibid at [163(e)].
Under the terms of the letter, in contradiction to the nomination clause in Molonglo, the right retained by the plaintiff to provide another entity to enter the contact of sale has the effect of that the letter does not create immediately enforceable substantive rights and obligations in relation to the sale of the land because the identity of the party liable for payment of the purchase price was not known on 11 April 2022. This supports a finding that the contract of sale referred to in the letter was not to be in substitution of a pre-existing contract constituted by the letter. Rather, a contract of sale for the sale of the land came into existence only upon entering the formal contract.
These are no immediate and enforceable substantive rights created by the letter. The deposit is payable on signing the formal contract. The right to access the property to take measurements and conduct tests is only exercisable after the signing of the formal contract.
The letter is not described as a contract anywhere within its terms. One of the clauses in the letter states:
This sale is subject to the confirmation that the vendor has not applied for any compensation for this property from Vic Roads.[45]
If the parties intended the letter to be a binding contract this clause could readily have stated ‘this contract is subject to the confirmation’.
[45]CB 43.
If the letter did constitute a binding contract the defendants would have been obliged to sell the property to any entity put forward by the plaintiff irrespective of whether that entity had the financial resources to pay the deposit and the balance of the purchase price. This is an objective circumstance known to both the plaintiff and the defendants when the letter was signed. A reasonable person in the position of the plaintiff and the defendants would not have believed that they intended the letter to be a binding contract when the identity of the party liable to pay the purchase price, and the capacity of that party to make the payment, was not known. A reasonable person reading the text of the letter would have believed that the parties did not intend to create a binding contract until a formal contract of sale was executed which identified the party liable to comply with the obligations under the contract.
The importance and extent of matters left unresolved by the letter is relevant to whether, objectively, the parties intended the letter to be a binding contract. When the parties signed the letter, no s 32 statement had been provided to the plaintiff. The absence of a s 32 statement is not conclusive. However, the absence of a s 32 statement may tend to suggest that the parties did not intend the letter to be a binding contract.
An objective circumstance known to both parties when the letter was signed was that the land was a development site. As a consequence of the absence of a s 32 statement there were important matters which had not been disclosed to the plaintiff which had the potential to impact upon the plaintiff’s capacity to develop the site. First, the letter did not disclose that the plaintiff had entered into a commercial lease agreement on 21 March 2022 in respect of a building located on the land, for a period of three years from 1 April 2022 with an option to renew the lease for a further 12 months.[46] Second, the letter did not disclose that the property had a Deferred Growth Areas Infrastructure Contribution (‘GAIC’) liability of $1,372,523.84.[47] Third, the letter did not disclose that the property was subject to an environment mitigation levy of $131,939.16.[48]
[46]CB 169-170.
[47]CB 144.
[48]CB 132.
Mr Bajwa gave evidence that when he signed the letter he was aware, based on his previous experience as a property developer, that the land would be subject to GAIC liability.[49] He also understood that the obligation to pay GAIC could be deferred until the land was developed , but that it did not have to be deferred.[50] Prior to signing the letter on 11 April 2022 Mr Bajwa did not make any inquiries as to whether the defendants had exercised the option to defer GAIC liability until the land was developed.[51] When he signed the letter, his understanding based on his previous experience was that when the liability to pay GAIC crystallised it would be less than $250,000.[52] The actual liability was more than $1.3 million. Mr Bajwa accepted that before signing a document requiring payment of millions of dollars, the first question a property developer would ask a vendor selling 28 acres of land ripe for property development would be ‘what is the position with GAIC?’.[53] Mr Bajwa’s only explanation for his failure to make any inquiry regarding GAIC was that it was not something that was on his mind at the time.[54] The absence of any inquiry by Mr Bajwa about GAIC liability prior to signing the letter is a matter that would lead a reasonable person to believe that the parties did not intend the letter to constitute a binding contract.
[49]T 110 L 25-30.
[50]T 111 L 11-15.
[51]T 112 L 6-7.
[52]T 119 L 24-26.
[53]T 111 L 17-23.
[54]T 112 L 26-27.
In addition to the matters referred to above there were other important matters which were unresolved when the letter was signed on 11 April 2022. There were two matters which were the subject of negotiation between the parties and their legal representatives subsequent to 11 April 2022. First, the question of who would be liable for council rates, water rates and land tax during the 40 month settlement period between the signing of the Contract of Sale and settlement. Second, the question of who would responsible for mowing of grass and upkeep of the land during the 40 month settlement period. In a draft contract dated 23 May 2022 prepared by the defendants’ solicitor the contract provided that the plaintiff was liable for all rates and charges affecting the land as well as the mowing of grass and upkeep of the property.[55]
[55]Clause 33.4 and 33.5 of draft contract dated 23 May 2022, CB 76–77.
On 9 June 2022 Mr Bajwa agreed to increase the purchase price of $17.5 million by $150,000 in return for the defendants accepting that during the 40 month settlement period they would pay all rates and charges affecting the land and would also be responsible for mowing of grass and general upkeep of the property. The plaintiff’s agreement to increase the purchase price is significant in two respects. First, it is objective evidence that when the letter was signed the scope for further negotiation regarding the terms of the Contract of Sale was significant and there was uncertainty as to the outcome of what those negotiations would be.[56] Second, the plaintiff’s agreement to increase the purchase price by $150,000 is an admission against interest because it is inconsistent with the plaintiff’s contention that a binding contract with a purchase price of $17.5 million had been concluded on 11 April 2022. The agreement to increase the purchase price by $150,000 is admissible evidence which supports a finding that the parties did not intend the letter to be a binding contract.
[56]Cf Edge Development Group (n 36) at [60].
The plaintiff’s primary submission is that there was no agreement on 9 June 2022 for the plaintiff to pay the defendants an additional $150,000. In the alternative, the plaintiff submits that if there was an agreement it is not inconsistent with the plaintiff’s contention that the letter was a binding contract for the sale of the land for $17.5 million. The plaintiff submits that if there was an agreement for payment of $150,000, ‘the mode of payment would be to add it to the purchase price in the final contract but the amount itself represented not a new purchase price, as in a renegotiated purchase price, it represented the agreed base purchase price to which the parties were still committed, just that there was an additional payment that would be paid at settlement’.[57]
[57]T 231 L 30 – T 232 L5.
I reject the plaintiff’s submissions that the price of $17.65 million which was agreed at the meeting on 9 June 2022 was not a renegotiated purchase price. The email from Mr Aggarwal to Mr Khanbashi on the morning of 10 June 2022 includes the statement: ‘we negotiated and agreed for an increase in the sale price by $150,000 from $17,500,000 to $17,650,000. Please amend our COS to change the sale price and also in relation to payment of land tax, council rates, water rates and for grass cutting on the property, being our responsibility’.[58]
[58]CB 328.
The occasion for the renegotiation of the purchase price was the agreement of the defendants to be liable for outgoings and grass cutting during the settlement period. The defendants were compensated for accepting liability for expenses not dealt with in the letter by an increase in the purchase price. The renegotiation of the purchase price is inconsistent with the letter constituting a binding contract for sale of the land for $17.5 million. Further the renegotiation of the purchase price is a tangible demonstration of the fact that when the letter was signed there were significant matters which had not been addressed in the letter which needed to be the subject of further negotiations.
MAGA Investments Vic Pty Ltd Contract: 30 May 2022
It is necessary for the sake of completeness to make reference to a document which purports to be a contract for the sale of the land between the defendants as vendor and MAGA Investments Vic Pty Ltd ACN 659 236 647 ATF MAGA INVESTMENTS UNIT TRUST and/or nominee as purchaser (‘MAGA contract’).[59] The plaintiff as trustee of the Bajwa Family Trust owns 33 of the 120 units in the MAGA INVESTMENT UNIT TRUST.[60] The balance of the units are owned by seven other entities.[61] MAGA Investments Vic Pty Ltd was incorporated on 6 May 2022.[62] The cover page of the contract features the logo of the defendants’ solicitors, ATK Partners. It is common ground that the defendants’ solicitors did not draft the contract.[63] It is common ground that the contract was drafted by Mr Braich using a Word version of the 23 May 2022 draft contract which had been forwarded to Ms Madden by Mr Khanbashi.[64]
[59]CB 183.
[60]T 94 L16.
[61]CB 264.
[62]T 96 L 1.
[63]T 174 L23-30.
[64]T 279 L 28 - 280 L 6.
The contract is signed by Mr Bajwa and is dated 30 May 2022.[65] Clauses 33.4 (payment of outgoings) and 33.5 (mowing of grass and upkeep of property) have been deleted and initialled by Mr Bajwa. The contract was not provided to the defendants or their solicitor at any time prior to the commencement of this proceeding.[66] Nor was the contract provided to Ms Madden.[67] Mr Bajwa thought Mr Braich was going to take the contract to the defendants and get them to sign it.[68]
[65]CB 185.
[66]T 280 L 39 – 281 L 1.
[67]T 104 L2-8.
[68]T 105 L 23-25.
I accept Mr Rimmer’s submission that the MAGA contract does not constitute an admission against interest by Mr Bajwa which informs the question of whether the letter is a binding contract. The defendants were unaware of the existence of the MAGA contract until after the commencement of the current proceedings. Although Mr Bajwa’s conduct does not constitute an admission against interest, it does demonstrate the operation of the clause in the letter which permitted the plaintiff, as purchaser, to provide another entity to enter the contract of sale. For the reasons set out earlier in this judgment, the plaintiff’s right to put forward another entity to enter the contract is inconsistent with the letter creating immediately enforceable substantive rights and obligations.
Conclusion
The letter does not constitute a binding contract for the sale of the land from the defendants to the plaintiff. The plaintiff’s claim will be dismissed. On 24 June 2022 the plaintiff lodged a caveat on the title of the land claiming an interest in the land pursuant to the letter. The Court will order that the caveat be removed. I shall provide the parties with an opportunity to make submissions on the costs of the proceeding. My provisional view is that the plaintiff should pay the defendants’ costs on a standard basis to be taxed in default of agreement.
SCHEDULE OF PARTIES
S ECI 2022 03418
BAJWA GROUP PTY LTD ACN 601 030 611
Plaintiff
AND
BHAVNA SHARMA
First Defendant
RAMNNISH SHARMA
Second Defendant
KRISHAN GOPAL AGGARWAL
Third Defendant
RITA AGGARWAL
Fourth Defendant
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0
5
0