Clarendon Homes (Aust) Pty Ltd v Homeworld Iii Pty Ltd
[1996] FCA 463
•31 MAY 1996
CATCHWORDS
CONTRACT - formation - whether any of several documents passing between parties constituted an offer - whether offer accepted within its terms.
Trade Practices Act 1974 (Cth)
Masters v Cameron (1954) 91 CLR 353
CLARENDON HOMES (AUST) PTY LIMITED v HOMEWORLD III PTY LIMITED and NEW SOUTH WALES LAND & HOUSING CORPORATION (t/as LANDCOM)
No. NG 356 of 1996
CORAM: FOSTER J
DATE: 31 MAY 1996
PLACE: SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 356 of 1996
)
GENERAL DIVISION )
BETWEEN:CLARENDON HOMES (AUST) PTY LIMITED
Applicant
AND:HOMEWORLD III PTY LIMITED
First Respondent
NEW SOUTH WALES LAND & HOUSING CORPORATION (t/as LANDCOM)
Second Respondent
JUDGE MAKING ORDERS: FOSTER J
DATE: 31 MAY 1996
PLACE: SYDNEY
MINUTE OF ORDERS
THE COURT ORDERS THAT:
Paragraphs 1, 2, 3, 6, and 7 of the amended application be dismissed.
The issues pleaded in paragraphs 17 to 32 of the amended statement of claim be tried separately.
The applicant pay the first respondent's costs of the separate trial.
Leave be granted to the applicant to discontinue the application in paragraphs 4(a) and 5(a) of the amended application.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 356 of 1996
)
GENERAL DIVISION )
BETWEEN:CLARENDON HOMES (AUST) PTY LIMITED
Applicant
AND:HOMEWORLD III PTY LIMITED
First Respondent
NEW SOUTH WALES LAND & HOUSING CORPORATION (t/as LANDCOM)
Second Respondent
CORAM: FOSTER J
DATE: 31 MAY 1996
PLACE: SYDNEY
REASONS FOR JUDGMENT
(Extempore)
FOSTER J: The applicant in these proceedings, Clarendon Homes (Aust) Pty Limited, is a project home builder. The first respondent is a company engaged in the construction of a display village known as "Homeworld III" ("the display village"). The second respondent, commonly referred to as Landcom, has entered a submitting appearance in these
proceedings; it is the owner of the land upon which it is contemplated that the display village will be constructed.
Annexed to an affidavit of Peter David Campbell sworn in these proceedings, he being a Director of the applicant, are documents indicating the nature of the agreements into which project home builders were required to enter if they were to participate in the display village. In so participating they acquired title to land upon which their respective project homes were to be built. There is no need for me to set those documents out in these short reasons, or indeed to make any particular reference to the very elaborate provisions that they contain.
Stated broadly, the structure of the commercial operation between the parties was that builders wishing to participate in the display village project were required to purchase shares in the first respondent. The purchase of those shares entitled them to acquire title to selected building sites provided by the second respondent in the display village area, upon which they were to erect their display homes.
In addition to the bare acquisition of shares, the builders were required to enter into a number of obligations set out in a document titled "Exhibition Village Management and Promotion Agreement". This was a very lengthy document
containing a large number of terms to be observed by the parties.
The conduct of the project by the first respondent involved a promotion under which a large number of lots of land made available by the second respondent were allocated to applicant builders by way of ballot. It appears that, when that aspect of the promotion had been completed, there remained some 20 lots which were not allocated and which were still available for allocation. The first respondent then set about the allocation of those remaining lots, by what can be described as the second limb of the main promotion.
It is quite clear that the applicant had been aware of the promotion from the start. Indeed, it took exception to a particular clause of the agreement that the applicant builders were required to sign, and regarded that clause as being a restraint of trade and in breach of the Trade Practices Act 1974 (Cth). Furthermore, that clause, if applicable, would apparently have had a detrimental effect upon a similar promotion that the applicant itself wished to make, in respect of a large area of land, near the area where Homeworld III was being promoted.
Those matters appear to be the subject of aspects of the litigation which has been brought by the applicant against the respondents. It is only a part of that litigation which the Court is being asked to decide today. The applicant seeks specific performance of an agreement it alleges it made with the first respondent for the purchase of three blocks of land in what I have described as the second limb of the overall promotion. They are described as blocks 63, 64 and 65.
The issue between the parties can be stated quite simply. The applicant, for its part, alleges that it had entered into a firm and binding contract for the acquisition of those three blocks. This is denied by the first respondent, who asserts that the matter never went beyond the stage of its making a firm offer subject to a time limit. That offer is alleged to have lapsed before the purported acceptance of it by the applicant.
The matter for the most part falls for determination upon a consideration of certain documents that passed between the parties, together with a consideration of certain conversations deposed to in affidavit evidence and in oral testimony as to certain events which occurred after the date upon which the first respondent alleged the offer lapsed. I turn then to the documents that form the basis of the contentions between the parties.
On 16 February 1996, the applicant, having apparently decided that it wished to acquire three of the remaining blocks, sent by facsimile a communication to the first respondent. It did so under the name of Bellevale Homes Pty Limited, which company is apparently an associate or a subsidiary of the applicant company. No issue is taken in these proceedings as to the difference between these two companies, and I shall continue to refer to the applicant company simply as the applicant, whether or not the correspondence in question emanates from it or from Bellevale Homes Pty Limited.
That facsimile communication was sent to the secretary of the first respondent. It stated that the applicant was aware that 20 additional blocks of land were available in the Homeworld III project, and wanted to take three of those blocks. The letter concludes with this request:-
"Would you please fax to us today ... location plan, prices and terms for the available blocks to enable us to make our selection and commitment."
On 21 February a further facsimile communication was sent by the applicant to the first respondent. It referred to the first communication, and confirmed that the applicant had:-
"read Special Condition Clause 12(5)(b) of the HWIII Builder's Agreement and accept that we must sign this agreement in its entirety if we are to participate in HWIII."
It concluded with a request that the site plan, prices, terms and a full copy of the builder's agreement be sent to the applicant, again, "so we might make our selection and commitment".
Although there is no direct evidence on the point, it is quite clear that some conversation must have occurred between the dates of these two communications, in which the question of the special condition clause had been raised and insistence expressed on the part of the first respondent that the agreement containing it must be signed, presumably without any deletion of that clause.
On 22 March the solicitors for the first respondent forwarded to the applicant a letter which enclosed, for the information of the applicant:
"A Notice to Prospective Homeworld III Builders, Price List and Plan to assist you in selecting your lot or lots."
There was also enclosed a document described as a "builders/investors particulars form", which was for completion and return "to enable the appropriate documentation to be prepared".
On 2 April 1996 the applicant wrote to the respondents' solicitors, apparently in response to the last communication, enclosing the completed builder's particulars form and requesting that appropriate documentation for the purchase of lots 63, 64 and 65 be prepared. On 4 April 1996, in a letter, which, in my opinion, is of major importance in this litigation, the respondents' solicitors replied to the last letter.
In their letter in reply they referred to the receipt of the builders/investors particulars form. That form, I should interpolate, is one of the annexures to Mr Campbell's affidavit. It is clearly a pro forma that all builders or investors were required to fill in if they wished to participate in this project. It is a form which provides extensive information as to the nature and substance of the builder and investor, providing in effect detailed information that the first respondent might well wish to consider when contemplating whether or not to enter into a significant commercial transaction with any such builder or investor.
The letter enclosed a number of documents for execution by the builder under common seal, with an admonition that all the pages were to be initialled at the bottom. Those documents were, first, detailed in the letter as being the "Exhibition Village Management and Promotion Agreement" to which I have already made a reference. Clearly enough it is the same agreement used in the first part of the promotion, being used again in the second part. The second document was an application for allotment of shares. The third document was an authority to complete blanks in the documents, and the fourth, a particular notice. Elaborate instructions were provided as to how the documents were to be signed, with particular reference to the affixing of company seals and the use of powers of attorney. The letter then required that there be returned to the office of the respondents' solicitors
those documents duly completed, and in addition a series of cheques to be made payable to the promoter and the solicitor.
There was an indication that as soon as practicable the promoter would allocate shares in accordance with the application for allotment of shares and forward the appropriate share certificate. The letter went on to indicate that, as the overall scheme clearly enough required, when those matters were attended to the matter of the entering into of appropriate contracts with Landcom for the purchase of the lots was to be dealt with. That latter contractual relationship has, in my view, no bearing upon the question of whether or not there was a concluded contract between the applicant and the first respondent.
It is the applicant's contention that, in effect, this letter of 4 April 1996 should properly be regarded as an acceptance by the first respondent of an offer previously made by the applicant. Reliance in this regard is placed on the well‑known case of Masters v Cameron (1954) 91 CLR 353. It was submitted that a contract contemplated by what is generally described as the second limb of the statement of principles set out in that case (at 361) had come into existence.
It is the submission of the respondent, however, that no such contract came into existence at that point of time. Instead, it is submitted, the letter of 4 April should be characterised as simply a firm offer made by the first respondent to the applicant which provided within its terms for the means by which it should be accepted.
In my view, that submission correctly characterises this document. What I have to determine is whether an acceptance of it took place or not. This requires that consideration be given to a further letter dated 24 April 1996, forwarded by the first respondent to the applicant. It is not difficult to infer that some concern was being experienced as to the delay which was occurring in relation to the return of the executed documents together with the cheques which had been required in the letter of 4 April. The letter of 24 April reads as follows:
"The Homeworld III Pty Limited board of directors have advised me that the offer which has been extended to Bellevale Homes to take up Lots 63, 64 and 65 in Homeworld III will expire at 5 pm on Friday 26 April 1996.
The board believes you have had ample time to return the documentation to us following your telephone advice of same to me last Wednesday 17 April.
Please ensure that your completed Registration of Interest Form is received by me no later than 5 pm on Friday, otherwise the land will be made available to other interested builders."
The document is signed by Mr Price, who, I believe, is the secretary of the first respondent.
It has but faintly been argued that the use of the term "Registration of Interest Form" in the last sentence which I have quoted, in some way has an invalidating effect on this letter as a letter imposing a condition upon the acceptance of the offer which had previously been made. In my view, it does no such thing. There is, as part of the overall documentation involved in the Homeworld project, a document described as a "registration of interest form". The simple position is that at no stage was this form one of the documents relevant to what these parties were doing in respect of the second round of allocation of lots in the project village. It was plainly a slip, and would plainly have been viewed as a slip by anyone receiving the letter.
The significant words in the letter, in this regard, are the words "return the documentation to us". They can only have been a reference to the documentation forwarded in the letter of 4 April, the execution and return of which was the form of acceptance stipulated for the offer made in that letter.
In my view, the letter of 24 April legitimately limited the time for acceptance of the offer embodied in the letter of 4 April to 5 pm on Friday 26 April 1996. The result was that the offer previously made was held open until that time, after which, unless it were further extended, it would lapse and could no longer be accepted.
It has been conceded that, had the offer been accepted by the forwarding of the documents and the cheques by 5 pm on that day, a concluded agreement for the allocation of shares would have come into existence. However, the fact of the matter is that the relevant completed agreements, applications for shares and cheques were not provided to the first respondent until 29 April. The view was then taken and expressed that that form of acceptance had come too late, the offer having already lapsed.
I should add that a letter obviously came into existence in the offices of the applicant on 26 April. That letter is an annexure to the affidavit of Mr Campbell. It in fact is addressed, relevantly, to the respondent's solicitors, and purports to enclose those very executed documents and cheques to which I have made reference, and it asks that a signed copy of the agreement be provided in due course.
In my view, it was clearly contemplated that the letter would be delivered on 26 April, together with the documents, in order to conform with the time of expiry of the offer. It may be noted that on the same day a letter was sent by the applicant's solicitors to the first respondent's solicitors referring to the outstanding dispute as to the validity of the clause of the agreement to which I have already made reference. That letter says "our client will exchange today."
The use of the word "exchange" in that letter clearly conveys that the solicitors for the first respondent accepted that a contract would come into existence upon the provision to the applicant of the documents and cheques stipulated for in the letter of 4 April, and which in fact were intended to be forwarded on 26 April under cover of the letter to which I have previously made reference. In my view, although the argument has been forcefully put, when one looks at the situation as it pertained at the time, it was not the view of those advising the applicant that they already had a second limb Masters v Cameron type contract and were merely in effect performing that contract by the execution of these documents. It was clearly understood that there would be no contract unless the offer was accepted within the time limit, and all efforts were being bent towards that being done. The fact that it did not occur appears to have resulted from the relevant documents and covering letter being placed in the hands of an overnight courier rather than an on-the-spot courier, with the result that they were delivered after the offer had in fact lapsed.
Some evidence was given which was directed to the establishment that there had either been a waiver of the imposed time limit or an extension of it. That evidence was given by affidavit. Two conflicting points of view were advanced, one through an employee of the applicant, and one through an employee of the respondent's solicitors. Both these ladies have given evidence before me. I am more than satisfied to accept the version of Ms Buckton, the employee of
the respondent's solicitors, particularly as her recollection was supported by a contemporaneous note that she made.
I am satisfied that there was an intention at all times on all sides that the method of acceptance stipulated for would in fact be carried out and consummated before the expiry of the time limit, and that in the circumstances there was a failure to do this. The offer had lapsed, it could not be accepted and no contract came into existence.
I therefore dismiss that part of the current proceedings which seeks specific performance of that contract simply on the basis that there was no such contract.
I certify that this and the preceding twelve (12) pages are a true copy of the reasons for judgment herein of the Honourable Justice M. L. Foster.
Associate:
Date: 31 MAY 1996
A P P E A R A N C E S
COUNSEL FOR THE APPLICANT: N. A. COTMAN
INSTRUCTED BY: MALCOLM McDONALD & CO
COUNSEL FOR THE RESPONDENT: N. C. HUTLEY
INSTRUCTED BY: VAUGHAN BARNES
DATE OF HEARING: 31 MAY 1996
DATE OF JUDGMENT: 31 MAY 1996
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