Brooke v Bauer

Link copied
Case Copied 19 min read

DISTRICT COURT OF QUEENSLAND

CITATION:

Brooke v Bauer [2020] QDC 165

PARTIES:

Peter Brooke

(Plaintiff/Respondent)

v

Holger Bauer

(Applicant/Defendant)
FILE NO/S:

D361 of 2019

DIVISION:

District Court at Southport

PROCEEDING:

Application

ORIGINATING COURT:

District Court at Southport

DELIVERED ON:

17 July 2020

DELIVERED AT:

Southport

HEARING DATE:

19 June 2020

JUDGES:

Kent QC DCJ

ORDER:

1.   That the claim and statement of claim, and the amended claim and statement of claim, be struck out, without leave to re-plead;

2.   That the caveat lodged by the respondent on Lot 338 on RP 159048, County of Ward, Parish of Gilston, Title Reference 15706040 be removed;

3.   That the proceeding represented by the remaining orders sought in the application continue as if commenced by claim;

4.   That the applicant file points of claim thereupon within 7 days of the date of this order;

5.   That the respondent file and serve points of defence within 28 days of service of the points of claim;

6.   That the applicant file and serve a reply, if any, within 14 days of service of the points of defence;

7.   That disclosure and other steps in the proceeding be made in accordance with the procedures and time limits as prescribed by the Uniform Civil Procedure Rules 1999 (Qld) for an action commenced by claim;

8.   Costs reserved.

CATCHWORDS:

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - OFFER - OPTION FOR VALUABLE CONSIDERATION OR UNDER SEAL - EXERCISE OF OPTION - EFFECT OF EXERCISE AND RELATED MATTERS - where the respondent purported to exercise an option for the purchase of property in the applicant’s control - where the option did not mention a deposit - where the option was conditional upon the plaintiff securing funds from an unspecified overseas deal - where the defendant’s response was vague as to whether it conveyed an intention to create an enforceable contract - where the option was open ended as to time - where the other registered proprietors were not parties to the litigation - where the plaintiff did nothing to exercise the option for some two years after the fact - whether the option to purchase the property was supported by valuable consideration - whether the option is contractually binding.

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - MATTERS NOT GIVING RISE TO BINDING CONTRACT - VAGUENESS AND UNCERTAINTY - AGREEMENT SUBJECT TO FURTHER AGREEMENT OR ARRANGEMENT - where the respondent purported to exercise an option for the purchase of property in the applicant’s control - where the offer was vague and open ended as to time - where the option was conditional on events largely out of the control of the parties - whether the option constituted a contractual promise.

PROCEDURE - JUDGMENTS AND ORDERS - IN GENERAL - CLASSIFICATION - FINAL AND INTERLOCUTORY - where the applicant applies under r 171 of the Uniform Civil Procedure Rules 1999 (Qld) for orders striking out the claim and statement of claim without leave to re-plead…

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Brooke v Bauer and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2020] QDC 165
Decision Date

CaseChat Overview and Summary

In Brooke v Bauer, the dispute centered around the validity of an option agreement for the purchase of a property in Mermaid Waters on the Gold Coast. The applicant, who managed the property on behalf of his elderly mother, had previously leased the property to the respondent. The crux of the legal battle was whether the respondent's email, purporting to record an agreement for an option to purchase the property, constituted a binding contract. The court was tasked with determining if the option was supported by valuable consideration, particularly given the conditional nature of the agreement and the vagueness surrounding the timeline and specifics of the transaction.

The court examined the nature of the agreement, the conditions stipulated in the respondent's email, and the absence of any definitive terms regarding the deposit, timeline, and method of securing funds for the purchase. The respondent's email was conditional on securing funds from an unspecified overseas deal, and the agreement was open-ended as to time. Additionally, the respondent did not exercise the option within a reasonable timeframe, leading to questions about the enforceability and binding nature of the agreement. The court also considered whether the email conveyed an intention to create a legally binding contract or if it was too vague to be enforceable.

The court concluded that the option agreement was not supported by valuable consideration and was too vague to be enforceable as a binding contract. The open-ended nature of the agreement, combined with the conditional terms and the respondent's failure to act within a reasonable timeframe, led the court to determine that any potential option had lapsed or was not intended to be binding. Consequently, the court ruled that the claim and statement of claim, along with the amended versions, be struck out without leave to re-plead. The court also ordered that the caveat lodged by the respondent be removed and directed that the remaining proceedings continue as if commenced by a claim. The court reserved costs and set out a timeline for the filing of points of claim, defence, and reply, as well as the disclosure process.

Orders

Orders of the court

1. That the claim and statement of claim, and the amended claim and statement of claim, be struck out, without leave to re-plead;

2. That the caveat lodged by the respondent on Lot 338 on RP 159048, County of Ward, Parish of Gilston, Title Reference 15706040 be removed;

3. That the proceeding represented by the remaining orders sought in the application continue as if commenced by claim;

4. That the applicant file points of claim thereupon within 7 days of the date of this order;

5. That the respondent file and serve points of defence within 28 days of service of the points of claim;

6. That the applicant file and serve a reply, if any, within 14 days of service of the points of defence;

7. That disclosure and other steps in the proceeding be made in accordance with the procedures and time limits as prescribed by the Uniform Civil Procedure Rules 1999 (Qld) for an action commenced by claim;

8. Costs reserved.

Background

Background to the litigation

This is an application, primarily, by the defendant to strike out the claim and statement of claim as not disclosing a reasonable cause of action pursuant to Rule 171 of the Uniform Civil Procedure Rules (“UCPR”). The discretion conferred by the rule should only be exercised in clear cases, bearing in mind that the evidence necessarily at this stage is untested.[1][1]See for example Royalene Pty Ltd v Registrar of Titles [2007] QSC 7059 at [6].Background The action concerns a house situated at 118 Oceanic Drive, Mermaid Waters, Gold Coast. The property is registered in the name of the applicant’s mother as tenant in common as to a one half interest, and her late husband’s two children (now proposed to be joined as second and third defendants) as tenants in common in the other half interest. They hold their interest pursuant to their late father’s will. The situation arose as follows:- Previously, when the applicant’s mother (Helga Schuler) was married to Hellmut Schuler, the property was registered in their names as tenants in common in equal shares;- When Helmut passed away, his sons Siegfried and Wolfgang were his executors. The will provided that Helga have a life interest. Those parties have been registered proprietors as tenants in common since at least 2001[2];- Helga does not live in the property. She is 97 years of age, cared for in a nursing home, and requires the income from the property for her maintenance.[3][2]See the affidavit of the applicant, court file document no. 4, paragraphs 3-11 and exhibit 4 thereto[3]Ibid paragraph 11 The applicant holds a power of attorney to manage the rental of the property on behalf of his mother who has the right to income from the property pursuant to the life interest. In this context the applicant has managed rental of the property for this purpose for some time. In April 2016,[4] the applicant rented the property to the respondent for an initial six month period.[5] Afterwards he seems to have remained in occupation as a tenant at will; presently a monthly tenancy at will. The applicant, amongst other things, wishes to bring this tenancy to an end, and a notice has been given to the respondent plaintiff in that regard[6].[4]See the affidavit of the respondent plaintiff, court file document no. 5, paragraph 3[5]Document 5 of the exhibits to Mr Bauer’s affidavit[6]Ibid document 10, 21/1/2020 The genesis of the present dispute, however, is that on 4 September 2017 the respondent sent an email to the applicant purporting to record an agreement for the grant of an option to buy the property. The email is in brief terms. The text is as follows:“Hi Bob, as discussed and agreed I note the terms of the option for me to purchase the property at 118 Oceanic Drive, Mermaid Waters as follows:1.Purchase price to be $650,000 being the mid-point between the guesstimate range of 600K and 700K for the value. This is favourable to you as there will be no agent commission.2.Option exercise for purchase is dependent on funds from the Chinese deal as discussed, or indeed other funds if possible. I cannot guarantee a timing. In the meantime you agree to keep me on as the tenant.3.Once option is exercised, I will be able to proceed to settlement quickly, at least within 30 days.4.Once the option is exercised, you will be responsible for issue of contract from registered proprietors as vendors to Peter Brooke or nominee as purchaser.5.Once option has been exercised, rent on the property will cease forthwith in view of the quick settlement. I will then be in occupation of the property under license and adjustments for rates etc will be calculated from the date that the license commences.6.If settlement is delayed beyond 30 days because of any default on my part, rent will again commence and back rent to the date of the option will be paid.7.You grant me the right to lodge a caveat on the title of the property should I feel the need to protect my interests under this arrangement.I’ll keep you updated on the Chinese deal.”

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The passage from the learned trial judge’s reasons referred to was not set out by the respondent in argument. It is at paragraph [46] of the judgment as follows:“Consideration for the agreement [46]The learned trial judge rejected the first of Hebron Park’s arguments. His Honour said:“Consideration was provided by the parties’ mutual conferral of rights and assumption of obligations. The plaintiff’s ‘call’ option was consideration for the defendant’s ‘put’ option. The consideration for the right conferred on the plaintiff to buy the land was the right conferred on the defendant to sell it.There is an alternative approach. The consideration for the grant of an option need be not more than a peppercorn. One commonly sees options of this type granted in consideration of the payment of one dollar. When the parties agreed, as in my opinion these parties did, that they should execute a put and call option agreement their presumed intention must have been that the agreement was to be binding, which would require valuable consideration. It would be an appropriate case in which the law would imply a term that each party would give sufficient consideration, eg one dollar to the other to make the contract binding. The implication of such a term is necessary to give business efficacy to the agreement, and is so obvious as to go without saying. As well, such a term is reasonable, capable of clear expression, and does not contradict any express term of the contract. The five conditions for the implication of terms as described in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1981 – 1982) 149 CLR 337 at 347, are satisfied.” Thus the plaintiff relies on these observations to meet the argument of unenforceability due to lack of consideration. Thus the real question on this point in the present case is whether there was, as in Moffat, a mutual conferral of rights and assumption of obligations such as to amount to consideration and thus enforceability. There are, however, differences from the present case. In Moffat the arrangement was much more formal; the letter was directed to the owner’s agent and was described as an unconditional offer and expressly said “Contract will be unconditional in the form of a Put & Call[11]”. It provided for the purchase price and, on acceptance, a substantial non-refundable deposit. It was accepted in writing by the offeree the next day. [11]Generally understood as an agreement between a vendor of a property (grantor) and the other party (grantee) under which the grantor gives the grantee a call option to buy the property and the grantee gives the grantor a put option to sell the property to the grantee; this terminology is suggestive of a mutuality of obligations In the present case, the email from the plaintiff firstly recorded an agreement which was completely open-ended as to time. This in itself creates problems. It can be implied that it was exercisable within a reasonable time; see for example Gold Coast Oil Co Pty Ltd v Lee Properties Pty Ltd.[12] Acknowledging that this may be so, it is difficult to conclude that a date almost two years later, and eighteen months after the only formal lease had expired, was a “reasonable time” for the purposes of such an implied term. It is certainly difficult to uphold an implication of a term that the option would remain exercisable indefinitely, and in this case two years later. The more logical conclusion is that any option which did exist had either lapsed or been repudiated by the passage of time, or was in the first place so vague as to not be intended to be binding in a contractual sense.[12][1985] 1 Qd. R. 416 at 421