Beck v Muir

[2003] QDC 7

DISTRICT COURT OF QUEENSLAND

CITATION:

Beck v Muir [2003] QDC 007

PARTIES:

RACHEL DEBORAH BECK
Plaintiff

v

GAVIN JOHN MUIR AND CAROLYN MARGARET MUIR
Defendants

FILE NO/S:

2715 of 2002

DIVISION:

Civil Jurisdiction

PROCEEDING:

Civil trial

ORIGINATING COURT:

Brisbane

DELIVERED ON:

14 February 2003

DELIVERED AT:

Brisbane

HEARING DATE:

30-31 January 2003

JUDGE:

Boulton DCJ

ORDER:

Judgment for Plaintiff with costs to be assessed

CATCHWORDS:

SPECIFIC PERFORMANCE – Contract for sale of land – time of essence for notice of finance – considerations rendering it inequitable for vendors to terminate

COUNSEL:

Ms SJ Armitage for the plaintiff
Ms D Skennar for the defendants

SOLICITORS:

Harding Lawyers for the plaintiff
Caboolture Legal Centre for the defendants

1. The plaintiff, Rachel Deborah Beck, was the purchaser and the defendants the vendors of a residential property at 7 Mountain Vista Court at Morayfield pursuant to a contract dated 6 April 2002.  The original of that contract is Exhibit 1.

1. The plaintiff and her partner, John Matthews, inspected the property in company with the vendors’ agent, Mr Grainger, over the Easter weekend 29 March to 1 April 2002.   Following some discussion they made on that same day a verbal offer of $157,000 but were told that another contract was in place but was expected to fall over by the following Wednesday.  Mr Grainger said in evidence before me that the earlier contract had already fallen over for failure of finance before he first spoke to Ms Beck at the inspection.  I prefer the evidence of Ms Beck as to the time but accept Mr Grainger on the point that the reason for the contract falling over was lack of finance.  There was no point in Ms Beck waiting until the Wednesday for a form of contract to be drawn if the earlier contract had ceased to exist.

1. I might say that I much preferred the evidence of Ms Beck generally to that of Mr Grainger.  Ms Beck demonstrated a clear and detailed recollection of her meetings with Mr Grainger which accorded closely with the contemporaneous documents.  Mr Grainger, on the other hand seemed more concerned to assert that he had done everything in accordance with proper procedures rather than focus on the particular facts of the case.  Actually his performance in having the contracts drawn up and executed could be described as rather sloppy.  He made two careless errors in filling out the contract and the PAMD forms, one of which lies at the heart of the present case.

1. On Wednesday, 3 April 2002 Ms Beck attended at Mr Grainger’s office and a contract along with PAMD forms was made out and signed with the space for the amount and seemingly the date left blank.  The offer was $157,000.  Mr Grainger went to the vendors and returned to say that they would accept an offer of $159,000.  Ms Beck was unwilling to sign for the increased figure until she had spoken to her bank.  She promised to do so.  On the next day, 4 April, she got that verbal approval from the bank and communicated it to Mr Grainger by telephone.  She made an appointment to sign the contract for the $159,000 on the Thursday.  That appointment did not take place because Mr Grainger phoned on the Thursday to say that the vendors had taken the property off the market.  On the Friday Mr Grainger phoned Ms Beck and said that if she could obtain a letter from her bank confirming finance the vendors would consider signing.  Ms Beck replied that there was no problem obtaining that but that because it was already Friday evening it would have to wait to the following week.  On the Saturday Mr Grainger again phoned Ms Beck and said that the vendors were prepared to execute the contract having been told by him that verbal pre-approval had already been granted.  Ms Beck attended and signed and initialled the documents filled out on 3 April.  It seems that the contract and the PAMD Form 31a may have already been dated 6 April 2002 and that the vendors may have already signed.  The copy taken away by Ms Beck contained the signatures of the vendors and initialling by them also of the $159,000 figure.

1. Ms Beck noticed an error in her copy of the PAMD form before leaving.  She was named erroneously as the seller.  She immediately returned to Mr Grainger with her copy and the original was amended to correct the error and then initialled.  Nothing turns on this aspect of the matter.  Nothing seems to me either to turn on the time that Ms Beck was made aware of the date of the contract.

1. The events of the previous week, however, are significant.  The vendors had lost a contract through failure of finance.  Ms Beck had contacted her bank, obtained a verbal approval and had notified Mr Grainger.  Mr Grainger had then conveyed the information that the vendors had taken the property off the market.  Subsequently he notified Ms Beck of the need for a bank letter and was told that this presented no trouble.  Before the letter could be obtained the vendors agreed to sign that day in advance of the written notice which would not have been available until the following week. 

1. A letter from the bank dated 9 April did come but Ms Beck, apart from telling Mr Grainger on 19 April that the letter had come, did not think to give him the actual letter.  When she told Mr Grainger on 19 April of the written approval his response was “that he knew that we had the finance approval.”

1. Another aspect of these events that should be noted is that Mr Grainger’s participation went beyond merely having the contract executed.  The vendors involved him in communications concerning finance approval and later on, despite the fact that they then had retained solicitors, utilized his services in rectifying an error on the contract document.  That error consisted in the name “Miller” instead of “Muir” as the name of the female vendor in both the contract and the PAMD Form 31a.  As will be seen that error was not detected until the week commencing 15 April.

1. The finance date on the contract was said to be “14 days from the date hereof”.  As the contract was dated 6 April 2002 that was 20 April, a Saturday.  The effective date then was the next business day, 22 April 2002.  This is not in contention. 

1. Clause 3 of the contract provided for finance.  It was as follows:

“3.        Finance

3.1      ...................
             3.2      The buyer must give notice to the seller that:

(1)      ....

(2)The finance condition has been either satisfied or waived by the buyer.

3.3The seller may terminate this contract by notice to the buyer if notice is not given under clause 3.2 by 5 p.m. on the finance date.  This is the seller’s only remedy for the buyer’s failure to give notice.

3.4The seller’s right under clause 3.3 is subject to the buyer’s continuing right to terminate this contract under clause 3.2(1) or waive the benefit of this clause 3 by giving written notice to the seller of the waiver.”

1. Clause 10.4 then provides:

“10.4     Notices

(1)Notices under this contract must be in writing and may be given by a party’s solicitor.

....

(5)Notices given after 5 p.m. will be treated as given on the next business day.

....

10.5     Business Days

If anything is required to be done on a day that is not a business day, it must be done instead on the next business day.”

1. There is no doubt whatsoever that the purchaser failed to give the notice in writing before 5 p.m. on 22 April 2002.  The crucial question concerns the entitlement of the vendors to terminate the contract following that failure.

1. The precise timing of all of the events that followed is hard to determine.  It seems that following the execution of the contract documents by the vendors on 6 April 2002 the document was returned to Mr Grainger to send to the solicitors named on the document.  Mr Harding received from Ms Beck the copy of the document which she had been given and is Exhibit 3 on Monday, 8 April.  He thinks he received a letter from Mr Grainger dated 6 April enclosing a version of the original contract Exhibit 1.  The vendors’ solicitor received a similar notification which is part of Exhibit 10.  Another letter from Mr Grainger of the same date is stamped as being received on 10 April.  It seems likely that the contracts were received by the solicitors on or about that date.  The vendors’ solicitor wrote a letter dated 10 April 2002 to Mr Harding noting contract conditions.  Mr Harding wrote a letter bearing dated 12 April 2002 to Ms Beck notifying her of the receipt of the contract.  He believes that that letter was posted on 14 April 2002.  In the interim it seems that Mrs Muir had received a communication from her solicitor containing the name “Miller”.  Mrs Muir’s recollections were somewhat vague.  She could not recall speaking to her solicitor.  She was asked:

“In any event, you contacted one or other or possibly both?—Possibly.
And you knew at all times that Mr Grainger was the person who was taking the steps to have the mistake on the contract amended; is that correct ?—Yes, he was.
You knew that wasn’t being done by your solicitors?--  Yes.”

1. If Mrs Muir’s recollections were sketchy, it can be said that Mr Muir’s recollections were almost non-existent.  That is not to suggest that Mr Muir was doing anything other than his best to recall the events. 

1. It seems then that at some time early in the week commencing 15 April, Mr Grainger telephoned Mr Harding advising him of the errors on the contract and the PAMD Form 31a.  Mr Harding was asked:

“What was the content of the telephone conversation?--  Yeh, Mr Grainger said he’d made a bad mistake with the contract and that it showed the name Miller rather than the name Muir and I think he said he had another client by the name Miller.
Sure?--  And he said, you know, what should he do? and I said this is – you know, I told him it was really bad but I said what needs to be done, of course, is the parties need to initial the changes and it can be fixed up and so I said I’d post the original contract back to him so he could attend to that.?
All right.  And so after that telephone conversation what did you physically do to----?--  Yeah----
----enable the error to be fixed?--  Normally I would’ve put a covering letter with it but I think I was pressed for time and wanted to get it and that, and my recollection is that – that I posted it back the same evening that I received that telephone call----“.

1. Mr Harding telephoned Ms Beck.  It was not clear when or how the vendors’ solicitor was notified.  I note that a letter from that solicitor dated 19 April refers to “Muir sale to Beck” but makes no mention of any attempts to rectify the error. 

1. It seems that the original contract document which had been posted hastily by Mr Harding arrived back with Mr Grainger on Friday, 19 April.  Ms Beck attended on that evening and paid the balance of deposit, also initialling the corrections.  It is noteworthy that the contract provided for the balance of deposit to be payable on approval of finance.  Ms Beck had the conversation about finance approval to which reference has been made above.  Mr Grainger then took the contract documents to the vendor for initialling on the evening of 19 April.  He collected them on Monday morning, 22 April.  That day passed and after 5 p.m. the vendors’ solicitor wrote a letter dated 22 April 2002 terminating the contract.  Neither Ms Beck nor Mr Harding had received notification at that point that the change had been initialled by the vendors and neither had  been provided with a copy of the contract document in its final form. 

1. Counsel for the plaintiff advances an argument based upon ss. 364, 365 and 368 of the Property Agents and Motor Dealers Act 2000 to the effect that compliance with s. 365 was not effected until 19 April 2002. The argument seems to be based upon comparison of Exhibits 1, 2 and 3. Exhibit 1 is the original contract which contains the handwritten initialling to the purchase price of $159,000 which seems to have occurred on 6 April and the handwritten initialling of the alteration of “Miller” to “Muir” on the contract and the PAMD Form 31a which are said to have occurred on 19 April or that weekend. I must say that my inspection of the documents and in particular Exhibit 3 which was the document taken away by Ms Beck on the evening of 6 April suggest that defendants had signed and dated the documents in advance prior to Ms Beck departing with her copy which is Exhibit 3. The only thing seemingly done on 6 April with Ms Beck was the initialling of the purchase price of $159,000, it having been already initialled by the vendors. It appears that Ms Beck initialled the alteration of the sellers’ name, as she contends, on 6 April on the original PAMD Form 31a in Exhibit 1 but did not initial the variation on her own copy Exhibit 3. Nothing turns on this.

1. The plaintiff’s argument then based upon the “cooling off period” appears to be based upon dubious facts.  It also seems to be unnecessary.  The real thrust of the plaintiff’s argument occurs at Page 4 of written submissions where Ms Armitage submits:

“The relevant question is whether the plaintiff’s failure to comply with the formal requirements of Clause 10.4 of the contract for notices to be in writing and given to the defendants or their solicitor gave rise, in the circumstances, to a right to terminate the contract.”

1. There are aspects of the vendors’ conduct in the present matter that may be thought to constitute waiver – the withdrawal of the demand for a bank letter as a pre-condition for signing the contract in the first place and further the response of their agent, Mr Grainger, on 19 April to the plaintiff’s statement that she had received a bank letter.  The principle though is somewhat wider than waiver.  The learned author of Spry on Equitable Remedies 5^th Ed. under the heading The Specific Performance of Contracts – Conditions as to Time says at p. 211:

“Waiver should not be regarded as the sole basis on which a court may hold that time ceases to be of the essence in equity.  The governing principle is that time ceases to be of the essence in equity if circumstances arise that render it unjust that it should be so regarded.  So, for example, misleading conduct or supervening unfairness or other such considerations may render it inequitable that a purported rescission should be treated as effective in equity.”

1. Counsel for the plaintiff advanced an argument based upon relief from forfeiture citing the decision of the High Court in Legione v Hateley (1983) 152 CLR 406. However, in a footnote to the abovementioned passage from Spry, the learned author comments:

“The decision in Legione v Hateley (1983) 152 CLR 406 was rested on equitable estoppel and relief against forfeiture, but a preferable basis for that decision would have been that, in view of the misleading conduct in question, time had ceased to be of the essence in equity in the relevant respect. Similar considerations apply to Stern v McArthur (1988) 165 CLR 489. Compare Union Eagle Ltd v Golden Achievement Ltd [1997] 1 WLR 341.”

1. The case for the plaintiff becomes even more compelling when regard is had to the mistake made by the vendors and their agent in inserting an incorrect name into the contract and PAMD Form 31a and having both documents executed in that incorrect form.  It was not suggested before me that this was anything other than a genuine mistake but it was a mistake that Mr Harding, in fairness to his client, needed to have rectified.  Not to rectify it then and there as a matter of urgency could have resulted in later complications of a practical kind.  Mr Harding acted with commendable speed posting the document back to Mr Grainger without taking the time to write a covering letter.  The simple process of amending the document was carried out quite readily but neither Mr Harding nor Ms Beck were informed of that fact on 22 April.  Mr Harding was informed on the following day after the purported termination of the previous day and did not actually see the amended original until a week later. 

1. Again the principle is well established and is in accord with the passage in Spry above.  It was referred to by de Jersey CJ in GK and MJ Sommerville Pty Ltd v Winbirra Developments Pty Ltd QCA No. 2421 of 20002.  In the leading judgment of the court delivered on 27 September 2002, he said:

“The law is well established that a party cannot, in terminating a contract, rely on non-fulfilment of a condition, if that party’s own act or omission brought about that non-fulfilment. 
As put by the High Court in Suttor v Gundowda Pty Ltd (1950) 81 CLR 414, 441:

‘... If the stipulation be that the contract shall void on the happening of an event which one or either of them can by his own act or omission bring about, then the party, who by his own act or omission brings that event about, cannot be permitted either to insist upon the stipulation himself or compel the other party, who is blameless, to insist upon it, because to permit the blameable party to do either would be to permit him to take advantage of his own wrong...

...

The provision in question is to be construed as making the contract not void but voidable.  The question of who may void it depends on what happens.  If one party has by his default brought about the happening of the event the other party alone has the option of avoiding the contract.”

See also Perri v Coolangatta Investment Pty Ltd (1982) 149 CLR 537, 566 and Gange v Sullivan (1966) 116 CLR 418.

1. At the time of the purported termination by the vendors, time had ceased to be of the essence in equity as far as compliance with the finance notification was concerned.  The purported termination was ineffective.  I find for the plaintiff in the action and order that the abovementioned contract dated 6 April 2002 be specifically performed.  I will hear submissions as to the appropriate form of order.  Unless persuaded otherwise the plaintiff should have her costs of and incidental to the action to be assessed. 

1. It was submitted on behalf of the defendants that there was an obstacle to the granting of specific performance in that since the purported termination the defendants have carried out some improvements to the residence which they continue to occupy.  These improvements appear from the evidence of the female defendant to be in the form of some air-conditioning and some paving.  I have heard no evidence as to the precise mode of installation of either. 

1. The defendants should be permitted to remove such improvements only if such removal can be effected speedily and the premises returned to the condition they were in at the time of contract.  If this cannot be done then the defendants should bear the loss involved.  The amount is not large.  It was quite ill-considered to effect such improvements in the face of a specific performance action and the presence of a caveat over the property.