Black & v Australand Holdings Pty Ltd

[2000] NSWCA 15

NEW SOUTH WALES COURT OF APPEAL

CITATION:      Black & Ors v Australand Holdings Pty Ltd [2000]  NSWCA 15 revised - 26/04/2007

FILE NUMBER(S):
40803/98

HEARING DATE(S):               8/02/00

JUDGMENT DATE: 24/02/2000

PARTIES:
Richard Black, Sciara Holdings Pty Limited, Johneen De Groot-Black (Nee Brazier) (Appellants) v Australand Holdings Pty Ltd (Respondent)

JUDGMENT OF:       Mason P Priestley JA Fitzgerald JA   

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S):          2045/98

LOWER COURT JUDICIAL OFFICER:     Einstein J

COUNSEL:
P.E. King / M.J. Watts (Appellant)
P. Greenwood SC / A. Ridley (Respondent)

SOLICITORS:
Forshaws Neill (Appellant)
Colin Biggers & Paisley (Respondent)

CATCHWORDS:
Contract for sale of residential unit - "Right of First Refusal" clause - whether there was a breach of the contract - whether conduct amounted to a breach of s52 of the Trade Practices Act - whether the trial judge erred in preferring the evidence of one witness over another - whether a new trial should be ordered.
ND

LEGISLATION CITED:
Trade Practices Act 1974 (Cth)

DECISION:
Appeal dismissed with costs

JUDGMENT:

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA  40803/98
ED  2045/98

MASON P
PRIESTLEY JA
FITZGERALD JA

Thursday, 24 February 2000

BLACK & ORS v AUSTRALAND HOLDINGS PTY LTD

JUDGMENT

1. MASON P:  I agree with Fitzgerald JA.

2. PRIESTLEY JA:                 I agree with Fitzgerald JA.

3. FITZGERALD JA:             In late 1996 or early 1997, the respondent purchased all the units in a building at 11 Gerrale Street, Cronulla (the “old building”) by contracts in identical terms. The appellants were vendors of some of the units in the old building. The respondent subsequently demolished the old building and erected a new block of residential units (the “new building”) on a site comprising 7, 9 and 11 Gerrale Street.

4. Each contract for the sale of a unit in the old building to the respondent contained the following clause 24:

   “RIGHT OF FIRST REFUSAL

   24.          (a)          The parties hereto acknowledge that it is proposed that the [respondent] will construct on the development site a 56 unit development (“the proposed development”).

   (b)          The [respondent] is to give to the Vendor a right of first refusal to purchase a unit in the proposed development contemporaneously providing a similar right of first refusal to each of the other Vendors of a lot in the strata plan of which the property is comprised.

   (c)          The [respondent] shall serve on the Vendor a price list together with approximate details of the size, location, layout and finishes of the units in the proposed development.

   (d)          The Vendor or its nominee shall, within seven days, in conjunction with the other Vendors of units in the current strata plan or their nominees (‘the other Vendors”), be exclusively entitled to nominate a unit in the proposed development which the Vendor or its nominee intends to purchase (“the nominated unit”).

   (e)          If the nominated unit has previously been nominated by one of the other Vendors, the Vendor shall have a further 2 business days of being notified of such other nomination to make a further nomination. If such further nomination has also been previously nominated by one of the other Vendors, the Vendor shall have a further 2 business days in which to make another nomination.

   (f)           The [respondent] shall serve a Contract for such unit on the Vendor.

   (g)          Should the Vendor not exchange Contracts with the [respondent] within seven days of service of such Contract, the Vendors right of first refusal shall lapse and the [respondent] shall be entitled to sell the nominated unit to another person.”

5. In their proceeding against the respondent in the Equity Division, the appellants alleged that clause 24 had been orally varied after the contracts for the sale of units in the old building had been entered into and that, as vendors of some of the units in the old building and assignees of the rights of other vendors in units in that building,[1] the appellants became entitled in the events which occurred to options to purchase a number of units in the new building.

6. Paragraph 17 of the appellants’ Amended Statement of Claim was as follows:

   17.          On or prior to 5 September 1997 the [respondent] entered into an agreement with the [appellants] to amend Special Condition 24 of the Sale Contracts to provide that the Right of First Refusal would be exercised by entering into an option instead of a contract, and in consideration thereof each of the [appellants] agreed to refrain from rescinding any Sale Contracts. The terms of the option were as follows:

   a)            option fee of 10% of the purchase price of the unit with the option fee to be non-refundable;

   b)           the First [appellant] to draft the call-option and forward same in due course to Colin Biggers & Paisley for their client’s approval.

   Particulars:

   On or about 1 May 1997 Mr. De Souza representing the [respondent], and the First [appellant] representing the [appellants] entered into an oral agreement to vary Special Condition 24 of the Sale Contracts to provide for an option in substitution for a sale contract. A further oral agreement to the same effect was entered into on or about for the 30 August 1997 between Mr. Kalaf representing the [respondent], and the First [appellant] representing the [appellants]. The terms of the agreement of 1 May 1997 and of 30 August 1997 were set out in the letter dated 5 September 1997 sent to the First [appellant] by Colin Biggers & Paisley representing the [respondent].

   The first appellant, Mr Black, is a solicitor. Colin Biggers and Paisley are the respondent’s solicitors and Mr DeSouza is a partner in that firm. Mr Kalaf was employed by the respondent.

7. The appellants were unsuccessful in the Equity Division, and, after judgment, the respondent sold the units in the new building to other persons. Although they have not amended, the appellants’ present claim against the respondent is for damages for breach of contract and / or breach of section 52 of the Trade Practices Act 1974 (Cth). The Court was requested to remit the proceeding to the Equity Division to assess the appellants’ damages or, alternatively, to order a new trial.

8. In this Court the appellants’ primary claim to damages did not challenge the trial judge’s conclusion that clause 24 was not orally varied. The trial judge did not accept Mr Black’s evidence that there had been an oral variation of clause 24, but preferred the contrary evidence of Mr DeSouza and Mr Kalaf. The appellants’ alternative claim for a new trial is based on their contention that the respondent’s assessed bill of costs for the Equity Division proceeding reveals that it did not make full discovery and that some parts of Mr DeSouza’s evidence were incorrect. The appellants argued that they would be entitled to damages at a new trial if Mr Black’s evidence that clause 24 was orally varied as pleaded in paragraph 17 of their Amended Statement of Claim was accepted.

   Breach of contract

9. As noted above, the appellants’ present claim for damages for breach of contract accepted that clause 24 was not orally varied. The appellants also accepted that the respondent complied with subclause 24(c) in mid-January 1998. By subclause 24(d), the appellants and other vendors of units in the old building became entitled to nominate units in the new building which they intended to purchase from the respondent. If that had been done within 7 days, the respondent would have come under an obligation to “serve a contract for such unit on the Vendor”: clause 24(f). Neither the appellants nor any other vendor of a unit in the old building, through whom the appellants claim, ever nominated a unit in the new building which he, she or it intended to purchase. [2] The only “nominations” nominated units in the new building for which options to purchase were claimed.

10. The respondent offered the appellants contracts to purchase the units over which they claimed options, but the appellants refused the contracts of sale and purchase, and, at least until after this appeal was instituted, continued to assert that they were entitled to options. They now acknowledge that, on the trial judge’s findings, that assertion was wrong. In the circumstances, the appellants’ criticisms of the contracts to purchase units in the new building which were offered by the respondent are irrelevant. Because units in the new building were not nominated for purchase, the respondent did not come under an obligation under clause 24(f) to offer contracts for the purchase of units in the new building. The question whether the contracts which it offered would have satisfied its obligation under clause 24(f) if it had had such an obligation does not arise.

    Trade Practices Act.

11. The appellants’ claim to damages for breach of section 52 of the Trade Practices Act, as presented to this Court, was based upon the letter from the respondent’s solicitors dated 5 September 1997 which is referred to in paragraph 17 of the Amended Statement of Claim. That letter provided:

    “In regard to your client’s request to vary clause 24 of the contract to provide for an option instead of a contract, our client has in principle agreed to such a variation. You might draft the call option and forward same to us for our client’s approval. At this stage the only firm instruction we hold is that the option fee will be non-refundable. Once we have received from our client an indication of the purchase price of the new units we shall revert to you.

    We await the draft call option in due course…”

12. The appellants’ Amended Statement of Claim alleged that, by that letter, the respondent “represented that it had or would agree to an amendment of [clause] 24 so as to allow the [appellants] to acquire options in respect of units” in the new building “without having reasonable grounds for the making of those representations”, that “at the time it made the representations … [the respondent] did not intend to provide options at any time to the [appellants]”, and that, by the conduct of the respondent, the appellants suffered unspecified loss and damage. In this Court, the appellants’ loss was described as the loss of an opportunity to obtain options.

13. The trial judge found that “..the parties .. did not intend to vary the [clause] 24 right of first refusal by providing for an option unless and until all terms, including the period for exercise of the option, had been agreed upon”, and that “Mr Black’s failure to forward a form of draft call option is an important fact to be taken into consideration.” Mr Black did not forward a draft in the period of more than 4 months between 5 September 1997 and mid-January 1998. The appellants did not prove that the contents of a letter of 5 September 1997 did not accurately represent the respondent’s then intention, or that, because it misrepresented the respondent’s intention, the appellants lost the opportunity of obtaining options.

14. On the trial judge’s factual findings, including his opinion of Mr Black’s evidence, the appellants’ claim for damages for breach of contract and / or breach of section 52 of the Trade Practices Act must fail.

    New trial

15. Lawyers have a duty to ensure scrupulous care and accuracy in discovery, the preparation of bills of costs and their evidence. There is reason to doubt whether that duty was fully discharged on this occasion, but in view of the way the issue arose and was presented in the appeal, this court is not in a position to reach any conclusion about it.

16. Paragraph 17 of the appellants’ Amended Statement of Claim accepted that the oral agreement to vary clause 24 did not go beyond the position accepted by the respondent in Colin Biggers and Paisley’s letter of 5 September 1997. All parties continue to accept the accuracy of that letter, which is supported by a considerable body of earlier and later documentary evidence, including letters from Mr Black and the appellants’ solicitors, Forshaw Neill, and documents prepared by Mr Black. Irrespective of the trial judge’s opinion concerning the relative merits of Mr Black and Mr DeSouza as witnesses, [3] his Honour correctly described the letter of 5 September as the “high point” of the appellants’ case on the alleged oral variation.

17. As his Honour correctly apprehended, that letter left at least the date by which any options granted by the respondent had to be exercised to future negotiations.

18. The appellants made no attempt to advance the negotiations prior to mid-January 1998 when , they accept, the respondent triggered clause 24(d) by service of documents under clause 24(c) as, the appellants accept, it was entitled to do.

19. The appellants’ response, then and thereafter, was to insist that clause 24 had been orally varied. Their difficulty became manifest as they asserted a number of different option periods on 20 January 1998 and subsequently.

20. The appellants submitted that the period for exercise of the option is not an essential term of an option agreement because the law will imply a term that the option is available for exercise for a reasonable time. I will assume that there might be instances where such an implication into a concluded option agreement would be appropriate, although it would be necessary to be able to identify criteria for the assessment of a reasonable period, a task which could not have been satisfactorily performed on the evidence in this case.

21. However, the appellants’ submission does not meet a more fundamental problem. The lack of agreement on the period for exercise of any options is a persuasive indication that, as the language of the letter of 5 September 1997 suggests, there were to be further negotiations before the parties concluded an agreement to vary clause 24, which, if finalised, would be formalised in writing. Especially in the absence of an agreement concerning the period for exercise of an option, a conclusion that the parties intended to be immediately bound prior to the anticipated further negotiations is unwarranted.

22. The trail judge reached the correct conclusion, and his acceptance of Mr DeSouza’s evidence in preference to the evidence of Mr Black was not vital to that conclusion. There has been no miscarriage of justice and there is no justification for, or purpose in, an order for a new trial.

23. The appeal should be dismissed, with costs. [4]

END NOTES
[1]  The trial judge noted in his judgment that this claim was not pressed in submissions, and it was not mentioned in oral argument in this Court.

[2] This statement is subject to a presently immaterial qualification in relation to unit 33 in the new building. The First appellant made a late attempt to purchase unit 33 at an undervalue, but its claim on that basis was not pressed in this Court

[3] His Honour also accepted Mr Kalaf’s evidence, which also contradicted Mr Black’s evidence of an oral variation of clause 24 in so far as that claim might have gone beyond the terms of the letter of 5 September.

[4]cf Commonwealth Bank of Australia v Quade (1991) 178 CLR 134, 142-143. See also Stead v State Government Insurance Commission (1986) 161 CLR 141.

Revision Reason: End Notes hyperlinks created -- (26/04/07)

LAST UPDATED:     26/04/2007