Benson and Hendrick v Kog and Kog No. DCCIV-96-30235 Judgment No. D3588

[1997] SADC 3588

Court

DISTRICT COURT OF SOUTH AUSTRALIA

Judgment of His Honour Judge Taylor (ex tempore)

Hearing

18/03/97 to 21/03/97.

Catchwords

CONTRACT - SALE OF LAND - SUB-DIVISION CONDITION Oral Variation - Time to Complete.

Materials Considered

• Phillips v Ellinson Brothers Proprietary 65 CLR 221, considered.

Representation

Plaintiff TREVOR BURNSKILL BENSON:
Counsel: MR G ALGIE - Solicitors: REILLY, BASHEER, DOWNS &; HUMPHRIES

Plaintiff SHEILA HENDRICK:
Counsel: MR G ALGIE - Solicitors: REILLY BASHEER DOWNS &; HUMPHRIES

Defendant OSMAN KOG:
Counsel: MR S ANDREW - Solicitors: STUART ANDREW

Defendant FATMA KOG:
Counsel: MR S ANDREW - Solicitors: STUART ANDREW

DCCIV-96-30235

Judgment No. D3588

21 March 1997

(Civil)

BENSON AND HENDRICK v KOG AND KOG

Civil

Judge Taylor

On 14 March, 1994 an agreement for the sale of land was executed; the vendors being Sheila Benson or Hendrick, and Trevor Benson, and the purchasers being Osman Kog and his wife, Fatma. The land is described in the contract as follows:-

"Allot. 33 in Development No. 751/D002/94.Portion of the land in Certificate of Title Register Book Volume 4174 Folio 889 comprising 6.430 hectares or thereabouts.Being Improved land situated at Government Road, Renmark S.A. 5341 in the Council area of The Corporation of the Town of Renmark."

The land is some six hectares and there is a house property on the land. The sale excluded the house and its land and was therefore subject to conditions.

One of the conditions was that the contract was subject to a special condition, 2 on appendix A, "This contract is subject to the formal depositing of the plan of subdivision of allotment 23 being granted not later than 30 June 1995".

A further condition in the special conditions concern a lease to be entered into.

The consideration for the land and also for plant which is referred to in the agreement is for a total sum of $80,000.

It is common ground that the plan of subdivision referred to in the contract is that in Exhibit P2, that is the house block to have some 3,230 sq m.

It is necessary to consider some history of this matter.

Because of the health of the first plaintiff he decided to sell his fruit block and to keep the house. He consulted Mr Phillips, the surveyor and found that he could have a maximum of 4,000 sq m for the house block, in the event that was unable to be accomplished. It was on 4 November 1993 that he first engaged Mr Phillips to survey the areaand on 4 March 1994 that plan was amended because of problems and a further plan of something like 3,500 sq m was lodged. In any event, a new and different plan of 3,230 sq m was included in the contractand is the plan referred to in thespecial condition.

In September 1994 Mr Warren was appointed agent for the vendor to sell the land and, on 14 September 1994 the agreement was concluded for the sale of the block for $67,800 and for the plant for $12,200 making a total sum of $80,000 to the Kog's.

In accordance with the contract of agreement a lease was entered into containing various conditions and obligations on the lessor. Among those obligations were one:

'The lessee shall work, manage and care for the land and plantings in a good workmanlike manner according to established practice of the local district and shall not permit the land to be impoverished or the plantings to deteriorate, neither shall the Lessee pull out any of the plantings and/or replace with others (with the exception of diseased plants) without the written consent of the Lessor first had and obtained.

Clause 4:

'The Lessees shall have full use of working plant and equipment listed hereunder and shall be responsible for maintaining same in working order and paying for repairs of any kind for the duration of the Lease.'

There was a further condition:

'That the purchasers were able to, during the term of that lease to harvest the crop for their own benefit.'

The lessors were in occupation of the subject property from 5 October 1994 until the agreement was terminated, that is until 30 June 1995. The contract settlement date provides; the paragraph that I read:

'This contract is subject to the formal Depositing of the Plan of Division of Allotment 23 being granted no later than 30th June 1995.'

Para.9 of the special conditions:

'Settlement of this Contract shall take place within twenty one (21) days of formal Depositing of the Plan of LandDivision.'

It is an agreed fact that the plan of subdivision referred to in the contract was not formally deposited by 30 June and in fact wasn't deposited until some time in January of the next year.

One question I have to consider is whether the provision in the agreement that the contract is subject to the formal depositing by 30 June is whether that date is a critical date. I believe it became sobecause of the history of the parties in this matter. There had been disputes between the vendors and the purchasers concerning the pegging out of the area surrounding the house to be excluded from the fruit block.

The vendors always intended that they retain 4,000 sq m or about an acre, and they were unaware for some reason or another that the plan attached to the contract and the lease related to an area of 3,230 sq m. I accept that both of the purchasers were well aware that it was the smaller area that was going to the house block and consequently the larger area to the subject fruit block and that that was fundamental to their agreement.

Because of this difference there was a great amount of animosity built up between the plaintiff, Mr Benson, and the defendant, Mr Kog. The agent at all times for the vendors was Mr Warren, and Mr Warren from time to time did his best to resolve the differences between the two parties as it developed, because of the issue of where the pegs were.Mr Kog became I am satisfied quite reasonably concerned about the veracity of the plaintiffs because he said that where the pegs were for the 4,000 or the 3,500 m did not relate to what had been shown to him at the time when he'd first looked at the block of land and it had been stepped out in a rough sort of manner by Mr Benson.

In the end, Mr Kog was correct in his understanding of that and a meeting was held in May of 1995 to try and resolve that, and in particular, other matters concerning apricot trays and related matters. There is a difference between the parties as to what extent the dispute about the pegged out land was discussed at that meeting; I am inclined to think that it was discussed, but in any event it was not resolved, and the parties left there with Mr Warren being unable to resolve the matter. Of course, if it had not been resolved the contract would have been at an end because of what the purchasers had bought was only diminished by 3,230 sq m.

Sometime after that May meeting there were discussions between Mr Warren and Mr Benson and Mr Benson being pressured by the bank that had the mortgages on this property to sell as quickly as possible, conceded that the sale had to go ahead in any event, and he was most anxious to have it completed as quickly as possible, and he said 'Yes, tell the purchasers that the 3,230 m is agreed'. Of course whether he agreed or not it was a term of the sale and purchase agreement.

For this purpose a meeting was held on 1 June, and I find that thismeeting is critical to the determination of these proceedings. I find that those attending at that meeting wereMr Warren,Mr Benson and Mr and Mrs Kog; I find that Mr Benson was not obvious to both Mr and Mrs Kog when they arrived, and that they went and greeted Mr Warren and that shortly thereafter Mr Warren came from the house, and there were discussions with Mr Warren and Mr Benson that neither of the purchasers took part in.

I accept the evidence of Mr Benson that subsequent to that, there were conversations between Mr Warren and Mr and Mrs Kog, and Mr Benson didn't hear those conversations.

He was standing away, and part of the reason for that was the then animosity that existed between Mr Benson and Mr Kog. From there, there is a significant difference between the recollections of Mr and Mrs Kog and Mr Warren as to what happened at that meeting.

There is no dispute that at that meeting Mr Warren told Mr and Mrs Kog that the Bensons agreed that the subdivision would relate to the plan which is Exhibit P2, and referred to in the contract; that is the 3,230 sq m. It is also common ground that at that meeting Mr Kog said that he had had difficulty in negotiating his farming equipment around the trees without encroaching on the driveway of the house property, and it was agreed that he would be given what amounted to a irrevocable licence in perpetuity so long as he owned that land, to operate his machinery on part of the house property for that purpose.

Mr Warren says that one of the purposes of the meeting was to accomplish the agreement as to the boundaries, but he also saidthat he thought that it was not possible to have the plan completed by 30 June. I find that his evidence on this matter was moreless certain than he suggests.In his evidence-in-chief he doesn't say with certainty what the arrangement was, although he becomes more certain as the matter proceeds.Inhis letter to Mrs Brown, Exhibit P21 of 6 June 1995 to give effect to theJune 1stagreements his emphasis is on the amended plan be accepted i.e. the plan of Exhibit P2 being accepted, and of the necessity for a licence or of some such agreement to allow Mr Kog to encroach on the house property land.

He does say in his second paragraph of that letter: 'After much delay and discussion it was agreed last Thursday by both Mr Benson and Mr and Mrs Kog that the boundaries as detailed on the amended plan dated 30 June 1994, and which is the plan described in the Contract and the Lease Agreement is the one they will use and settle on, as soon as that can be arranged.'

That is the only mention that he says there, relating to that matter:

'As soon as that can be arranged.'

He then in his final paragraph uses these words:

'I have advised Mr Benson to formally advise David Phillips on behalf of him and his wife that he should proceed with all haste to having this amended Plan approved by all Statutory authorities so that Settlement can take place as soon as practicable. It will certainly not occur by 30 June and therefore I believe that two things need to be addressed one may be is an extension of the Lease Agreement and secondly is depositing of the Plan of Land Division was to have occurred before 30 June 1995.This was a condition of the Contract. As I see it this particular Plan in question has not been formally deposited because of disagreement.........'

Then he goes on to say:

'I believe that perhaps we might enter into an Agreement, not only to extend the Contract and the formal depositing of the Plan but also to extend the Lease Agreement.'

Then he goes on:

'It is a fairly ticklish situation in terms of the animosity between the parties and I am not too sure whether we should tackle it in the manners suggested above or not. If you have any views on it please let me know.'

There is no evidence of what those further views might be; I understand from Mrs Brown that she recollects having a conversation with Mr Warren after that event.

I believe that Mr Warren in giving his evidence of those conversations that took place on the land on 1 June 1995 spoke of what he believed the situation was, but with hindsight. I find that there was not the certainty in those conversations as he attested to in his evidence, and his equivocations about it in the letter of 6 June are consistent with what I believe his recollecting with hindsight when giving his evidence concerning those matters, although Mrs Kog goes some way to concede what Mr Warren in fact put to the Kogs but not as to their agreement.

I find that where there is any disagreement in the evidence between Mr Warren and particularly Mrs Kog, I accept the evidence of Mrs Kog. Her recollections of that meeting is that she remembers that the matter could not be concluded by 30 June, and she volunteered to say 'What is three weeks to allow it to take place?' Mr Warren says that that conversation didn't take place,I accept the evidence of Mrs Kog concerning that.

I accept the evidence of both Mr and Mrs Kog that no date was given beyond 30 June, but Mrs Kog understood and accepted the evidence of Mr Warren that it could not be completed by that date.

I accept the evidence of Mrs Kog that Mr Kog never at any time assented to the variation from the date of 30 June. I accept his evidence that he understood and it was explained to him by Mrs Kog, and that he made it quite certain and clear that he didn't accept that date. I don't believe that Mr Warren misled the court on that, I thinkprobably that he didn't understand what the position of Mr Kog was in relation to that, and he was listening more to Mrs Kog and her statement, although he doesn't acknowledge that it was limited to about three weeks.

The agreements drawn by Mrs Brown are of course not in accord with the undertaking concerning the licence on the property. I am satisfied that the proposed licence to continue over Mr Benson's land was a condition that prompted Mrs Kog to say 'Two or three weeks won't matter' because everything else had been resolved.

As to the handshake, I accept the evidence of Mrs Kog that this was given after the agreement of the pegs had been arrived at and before any discussion about not completing by 30 June and it was her attempt to make the two people who would be working in the area friends, because at that stage it was anticipated that the contract would continue.I accept and I find that time was the essence of this agreement, particularly following the delays to agree the boundary and the circumstances of the pegs.

Having regard to the case of Phillips v Ellison65 CLR 221 I am satisfied that there would be no need for an agreement to an extension of time to be in writing. It merely relates to mode and manner but of course it must be certain what has been agreed.

There is no certainty what was agreed and in fact just a few days after the event the defendants refuted the matter when Mr Kog refused to sign the agreement purporting to give effect to the oral variation.

It seems to me that Mr Warren in dealing with Mrs Kog whom he believed and I quite accept she is well versed in English having been here since a child, but that Mr Kog had some difficulty with Englishwas therefore not reasonable to accept that there was an understanding that there had been an agreement to extend the time performance of the lease without getting something in writing from Mr and Mrs Kog, not for the purpose of the statutory requirements because I find that there was no statutory requirement to be in writing, but to evidence what their verbal agreement was on that date.

There is so much conjecture on the matter and when I say I accept the evidence of Mrs Kog, particularly of what her husband saysI believe that Mr Warren was reconstructing the event at some time after.

I find that because of all of those matters that the original term of the contract continued, that the matter be completed by 30 June.

There was no agreement that this be varied and that was a fundamental term of the agreement.

The termination of the agreement given on 11 July 1995 was an effective termination of the agreement andno damages flow to the plaintiffs because of the termination of the agreement.I find that really the circumstances that led to that were in the hands of the plaintiff in any event and what really led up to all of those disputes was the difficulty over the pegging of the allotment.

I next deal with the provision in the lease agreement of the obligations of the defendants which I referred to. Before I deal with that I will mention something about the witnesses who gave evidence in this trial.

Mr Benson, I believe that he gave the evidence to the best of his knowledge as to his understanding of the meeting of May and of June. I believe that he exaggerated in some degree on the degeneration of the property.

I accept the evidence of Mrs Benson is her limited knowledge of the matter and her evidence of degeneration of the property isnot very significant.

Mr Warren gave evidence and he was the agent for the vendors and was seeing the matter from their viewpoint. I have told what I accept of his evidence. I accept his evidence that the property was in good heart when he put it on sale on the first occasion when it was purchased by the Kogs.

I accept the evidence of Mr Phillips and Mrs Brown. There is no dispute on their evidence.

I accept the evidence of Mr Kog concerning his words that the matter had to be finished by 30 June but I don't accept his evidence that there was no diminution of the property during his occupation. I believe his evidence isn't consistent with what view I take of that matter. I accept his evidence that at that meeting of 1 June what was required was a registerable licence to turn on that property. I accept all of the evidence of Mrs Kog except I believe that she is mistaken concerning the condition of the property as being the same as it was as when they went there, but her evidence is uncertain on that because that was not something that she had not paid particular attention to. I do not accept the evidence of the last witness Mr Erkekli of how he found the property to be. I accept his evidence that he saw Mr Benson on occasionsworking on the property.

I have done the best I can to make an assessment of the evidence which was given to me by both Mr Benson and the dispute of that evidence and of course his agreement that some of the workings related to work he had to do in any event.

I allow the sum of $3,000 to make goodthe tractor.

I allow the sum of $100 for items taken from the shed.

I allow the sum of $5,000 under all of the heads which have been related to me concerning impoverishment of the property.

I allow the sum of $100 for rates.

There is thereforejudgment for the plaintiff for the sum of $5,500.I order that the plaintiffs will have their costs but to be taxedor agreed but only in relation to a judgment for that sum.

As to all other costs incidental to the preparation of the whole matter and all other trial costs each party will bear their own costs.

Although an Extempore Judgment it has not been finally settled and copied to counsel until 4th April, 1997.