Cobbold v Barrett
[2006] WASC 252
COBBOLD -v- BARRETT & ANOR [2006] WASC 252
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2006] WASC 252 | |
| Case No: | CIV:1935/2006 | 20 OCTOBER 2006 | |
| Coram: | JENKINS J | 7/11/06 | |
| 19 | Judgment Part: | 1 of 1 | |
| Result: | Caveat extended on conditions | ||
| B | |||
| PDF Version |
| Parties: | STANLEY GEORGE COBBOLD ELIZABETH MICHELLE BARRETT THE REGISTRAR OF TITLES |
Catchwords: | Conveyancing Caveats Extension of caveat Purchasers interest under an uncompleted contract for sale of land Construction of finance clause Estoppel Relief against forfeiture |
Legislation: | Transfer of Land Act 1893 (WA), s 138B, s 138C |
Case References: | Adderley v Dixon (1824) 1 Sim & St 607 Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129 Dougan v Ley (1946) 71 CLR 142 Halse v Embling, unreported; SCt of WA; Library No 970734, 22 December 1997 Hewett v Court (1983) 149 CLR 639 J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 Kern Corporation Ltd v Walter Reid Trading Pty Ltd (1987) 163 CLR 164 Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419 Legione v Hateley [1982] 152 CLR 406 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 Shakibaee v Chan (2001) 24 WAR 97 Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 Westminster Properties Pty Ltd v Comco Constructions Pty Ltd (1991) 5 WAR 191 Brown v Heffer (1967) 116 CLR 344 Bull v Gaul [1950] VLR 377 Ciavarella v Balmer (1983) 153 CLR 438 Commonwealth v Verwayen (1990) 170 CLR 394 Gange v Sullivan (1966) 116 CLR 418 Hartley v Hymans [1920] 3 KB 475 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Peter Turnbull and Company Pty Ltd v Mundus Trading Company (Australasia) Pty Ltd (1954) 90 CLR 235 Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221 Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367 Stern v McArthur (1988) 165 CLR 489 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ELIZABETH MICHELLE BARRETT
First Defendant
THE REGISTRAR OF TITLES
Second Defendant
Catchwords:
Conveyancing - Caveats - Extension of caveat - Purchasers interest under an uncompleted contract for sale of land - Construction of finance clause - Estoppel - Relief against forfeiture
Legislation:
Transfer of Land Act 1893 (WA), s 138B, s 138C
(Page 2)
Result:
Caveat extended on conditions
Category: B
Representation:
Counsel:
Plaintiff : Mr A J Camp
First Defendant : Mr C W Lockhart
Second Defendant : No appearance
Solicitors:
Plaintiff : Butcher Paull & Calder
First Defendant : Muries Lawyers
Second Defendant : No appearance
Case(s) referred to in judgment(s):
Adderley v Dixon (1824) 1 Sim & St 607
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129
Dougan v Ley (1946) 71 CLR 142
Halse v Embling, unreported; SCt of WA; Library No 970734, 22 December 1997
Hewett v Court (1983) 149 CLR 639
J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546
Kern Corporation Ltd v Walter Reid Trading Pty Ltd (1987) 163 CLR 164
Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419
Legione v Hateley (1982) 152 CLR 406
Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181
Shakibaee v Chan (2001) 24 WAR 97
Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444
Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315
Westminster Properties Pty Ltd v Comco Constructions Pty Ltd (1991) 5 WAR 191
(Page 3)
Case(s) also cited:
Brown v Heffer (1967) 116 CLR 344
Bull v Gaul [1950] VLR 377
Ciavarella v Balmer (1983) 153 CLR 438
Commonwealth v Verwayen (1990) 170 CLR 394
Gange v Sullivan (1966) 116 CLR 418
Hartley v Hymans [1920] 3 KB 475
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Peter Turnbull and Company Pty Ltd v Mundus Trading Company (Australasia) Pty Ltd (1954) 90 CLR 235
Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221
Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367
Stern v McArthur (1988) 165 CLR 489
(Page 4)
1 JENKINS J: Pursuant to s 138C of the Transfer of Land Act 1893 (WA) ("the Act"), the plaintiff applies, by originating summons dated 5 September 2006, for extension of a caveat.
2 The plaintiff lodged the caveat, No J858485C over the first defendant's land which is described as Lot 155 on Deposited Plan 143820 and being the whole of the land in Certificate of Title Volume 1771 Folio 855 ("the subject land"). The caveatable interest claimed by the plaintiff is as purchaser under an Agreement for the Sale of Land by virtue of an agreement in writing between the plaintiff as buyer and the first defendant as seller made on 22 April 2006. This date is an error as the agreement is dated 24 April 2006.
3 The first defendant denies that the plaintiff has such an interest and therefore objects to the extension of the caveat. The first defendant required the second defendant to serve a notice on the plaintiff pursuant to the Act, s 138B. The plaintiff then commenced these proceedings. The second defendant abides the decision of the court.
Factual Background
4 There are various matters of fact in dispute between the parties. It is not appropriate for me to resolve factual disputes in an application for an extension of a caveat because it is determined solely on the basis of affidavit evidence. Factual disputes must be resolved at trial. Consequently, I will determine this application on the version of the facts most favourable to the plaintiff on the basis that they are the facts which the plaintiff would seek to prove at the trial of an application by him for specific performance of the contract.
5 The first defendant contracted to sell the subject land to the plaintiff pursuant to a contract of sale constituted by an offer and acceptance form dated 24 April 2006 ("the first agreement") which incorporated into it the 2002 Joint Form of General Conditions for the Sale of Land ("the General Conditions"). The purchase price was described as $1,550,000 plus GST with provision for payment of a deposit of $10,000 on the signing of the first agreement and $40,000 to be paid within 90 days of acceptance. There was a special condition permitting the plaintiff to perform due diligence during the 90 day period following the acceptance of the offer. Settlement was to be 30 days after the completion of the due diligence period.
(Page 5)
6 The first agreement contained standard conditions relating to the approval of finance ("the finance clause"). The finance clause stated:
"1.1 This Contract is conditional upon Finance Approval being obtained before the Latest Time.
1.2 The Buyer shall:
(a) make an application for Finance Approval to at least one Lender using, if required by the Lender, the Property as security;
(b) use best endeavours to obtain Finance Approval and if required in writing by the Seller or the Seller's Agent provide evidence in writing of the making of an application in good faith for Finance Approval, any loan offer made, and the reasons for the Buyer not accepting any loan offer made;
(c) on receipt of the Finance Approval immediately notify in writing the Seller or the Seller's Agent whereupon the condition in paragraph 1.1 will then be satisfied.
1.3 If on or before the Latest Time:
(a) the Buyer is notified by the Lender that the application for Finance Approval is rejected; or
(b) no Finance Approval is obtained then the Buyer shall immediately in writing notify the Seller or the Seller's Agent of such rejection or non receipt as the case may be, and provide evidence in writing of the rejection.
1.4 UNLESS the Buyer has waived this condition and communicated such waiver in writing to the Seller or the Seller's Agent prior to the Latest Time, then if:
(a) the condition in paragraph 1.1 is not satisfied; and
(b) the Buyer has complied with paragraphs 1.2(a), 1.2(b) and 1.3
- THEN this Contract shall be deemed to have come to an end without the necessity of either party giving to the other notice to that effect. The Deposit and all other monies (if any) paid pursuant to this Contract shall then be refunded to the Buyer (less all bank and government charges) and there shall be no further claim under this Contract by either party in law or in equity against the other.
- 1.5 If the Buyer fails to notify the Seller or Seller's Agent in accordance with paragraphs 1.2(c) or 1.3 the Buyer shall be in default and the Seller may without prejudice to any other remedies and rights available immediately terminate the Contract by notice in writing to the buyer.
1.6 This clause shall operate for the benefit of both the Seller and the Buyer except that the Buyer by waiving the Buyer's rights pursuant to this clause at any time before the Latest Time shall be deemed to have received Finance Approval."
7 Westpac was named as the proposed lender. The amount of the loan was stated as $1,000,000 and the "Latest Time" for approval of the finance was given as "4.00 pm on the date 90 DAYS FROM ACCEPTANCE". It is common ground that time expired at 4 pm on 24 July 2006.
8 The sale was negotiated through the first defendant's real estate agent, WA Prestige Properties, and a registered sales representative, Mr Brent Morfesse. In the first agreement the first defendant nominated Peacock Settlements as her settlement agent and consented to "Notices" being served to its facsimile number. The plaintiff did not nominate a settlement agent.
9 The plaintiff deposes that subsequent enquiries revealed that it would take longer than he had anticipated to develop the subject property and so he decided to on sell it. He believed that he would be able to do so privately or, if not, to bring funds from overseas to complete the purchase. On an unnamed date after the end of May but prior to 10 July, the plaintiff alleges that he told Mr Morfesse that if he did not on sell the property he would bring funds in from overseas, he did not require finance from Westpac and he would not be making an application for finance from that Bank. He says he asked Mr Morfesse for a copy of the first agreement to
(Page 7)
- send overseas. Mr Morfesse denies this version of events and recollects that the plaintiff told him that if he did not on sell the property he "would likely bring some money in from overseas".
10 On 10 July 2006 the plaintiff contracted to sell the subject land to a third party, Gradewest Pty Ltd, pursuant to a contract of sale constituted by an offer and acceptance form ("the second agreement"). The purchase price was described as $2,020,000 with provision for payment of a deposit of $50,000 on the acceptance of the second agreement. Settlement was to be on 21 August 2006 but the second agreement was subject the settlement of the first agreement which settlement was said to be due on the same date. A previous agreement between the plaintiff and Gradewest had been subject to due diligence. The second agreement was not subject to due diligence because Gradewest had advised the plaintiff that due diligence had been completed.
11 On or around that date Mr Brendan Cark, a director of Gradewest went to inspect the subject property and told the first defendant that it was purchasing the property from the plaintiff for over $2,000,000 cash. He says that the first defendant asked him whether she could get out of the first agreement and he told her to get legal advice.
12 The first defendant denies that this conversation occurred. She deposes that she met Mr Clark at her property on 26 June and that he told her that he had agreed to purchase the subject land subject to due diligence. She says that she told him about various matters relating to the development of the land and Mr Clark told her that he would not be going through with the purchase.
13 The first defendant says that she then spoke to Mr Morfesse who later told her that the plaintiff had assured him that the on sale was not occurring and that the plaintiff would settle on the first agreement and then decide whether to sell or subdivide. Mr Morfesse confirms this and says that the plaintiff told him that he had not on sold the subject property and he had not yet decided what he was going to do.
14 On 11 July 2006 the plaintiff had a breakfast meeting with Mr Morfesse and says that he told Mr Morfesse that he had sold the subject property and that it was a "cash unconditional agreement". He says that he asked Mr Morfesse whether there was anything else he had to do and Mr Morfesse replied that he did not think so and to bring him the balance of the deposit. Later in the same affidavit the plaintiff deposes that he told his solicitor that he had also told Mr Morfesse that he would
(Page 8)
- no longer require finance approval or approval of a bank loan to settle the first agreement.
15 Mr Morfesse says that at this meeting the plaintiff told him that he had received an offer for the subject property but had not accepted it. Mr Morfesse says that on 12 July 2006 when he spoke to the plaintiff about the possibility of one of Mr Morfesse's contacts buying the subject property from him the plaintiff said words the effect of "don't worry about on selling". He also deposes that whenever the issue of on selling was mentioned the plaintiff told him he was going to first attempt to settle on the subject property and then decide whether he would sell or subdivide it.
16 On 12 July 2006 the plaintiff instructed his solicitor to advise him generally in respect to the "procedure and way forward to the settlement" of the first and second agreements.
17 On 19 July the plaintiff paid the $40,000 balance of the deposit. At that time he says that he told Mr Morfesse that the purchaser under the second agreement did not require completion of due diligence. Mr Morfesse denies having been told this. On the same date the plaintiff obtained advice from his accountant about GST and later told his solicitor that GST should be deleted.
18 On 20 July the plaintiff, Mr Morfesse and his principal, Mr Damon Smith had a meeting. The plaintiff requested the removal of the reference to GST. He was given a form of variation to remove the reference to GST and a form to waive due diligence. The plaintiff signed the first document and returned it to Mr Morfesse. He took the second document with him in order to obtain legal advice in respect to it. He obtained the advice, signed the second form and returned it. The first defendant also had to sign both forms for them to be effective. This did not occur because the first defendant did not agree to the changes to the first agreement.
19 Mr Smith deposes that on this date the plaintiff told him that he had not on sold of the subject property. He says that the plaintiff also said that he was trying to bring money in from overseas but that he needed as much time as possible to arrange this.
20 At 3.30 pm on 24 July 2006 Mr Morfesse discussed finance approval with an officer from Peacock Settlements, the first defendant's settlement agent. Mr Morfesse says that he was out of the office at this time. He returned to his office at approximately 4.35 pm. At approximately 4.40 pm, Peacock Settlements faxed a letter to WA Prestige Properties. It was on blank paper and addressed to WA Prestige Properties at its
(Page 9)
- facsimile number. It stated, "[d]ue to the failure of the purchaser to obtain finance in accordance with the Offer & Acceptance dated 24 April 2006, I hereby terminate the contract". The letter was signed by the first defendant. At about 6.20 pm the same letter was sent by facsimile to the plaintiff's solicitors.
21 Mr Morfesse received this facsimile and at approximately 5.15 pm, he telephoned the plaintiff and told him that the first defendant had terminated. The plaintiff advised his solicitor and they sent a letter by facsimile to Peacock Settlements at about 6.50 pm, which, in effect, advised that the plaintiff had waived the finance clause, refused to recognise the purported termination of the first agreement and stated that the first agreement was now unconditional and that settlement would be on 21 August 2006. On 25 July 2006 Peacock Settlements sent a facsimile to the plaintiff's solicitors, which enclosed a copy of the first defendant's termination letter of the previous day. The plaintiff's solicitors replied and drew attention to cl 21.2 of the General Conditions, which they said required notice of termination to be personally delivered to the plaintiff or mailed to him and that it would then take effect three days thereafter. It further stated that the plaintiff's oral advice to WA Prestige Properties prevented the first defendant from terminating the first agreement. The plaintiff has thereafter maintained that the first agreement remains on foot.
22 On 2 August the plaintiff lodged this caveat over the subject land. On 17 August the first defendant's solicitors wrote to the plaintiff's solicitors by facsimile advising, "to the extent that it is necessary", that the first defendant terminates the first agreement. On 18 August the plaintiff's solicitors replied to the effect that the previous day's letter was a wrongful repudiation fundamental breach of the first agreement. It stated that if the first defendant did not advise the plaintiff's solicitor as to the apportionment of out goings by 18 August 2006 it would be accepted that the first defendant did not require the plaintiff to perform the contract.
23 Apparently no such advice was received and the settlement has not occurred. As of 9 October 2006, the date Mr Clark swore his affidavit, Gradewest was ready and able to settle on the second agreement.
Principles Governing the Extension of Caveats
24 Section 137 of the Act enables a person claiming any estate or interest in land to lodge a caveat forbidding the registration of any dealing affecting the claimed estate or interest. The purpose of a caveat is to act as a statutory injunction to the Registrar General to prevent registration of
(Page 10)
- dealings with the land until notice has been given to the caveator. This enables the caveator to pursue such remedies as he or she may have against any person lodging a dealing for registration: J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 at 552 per Barwick CJ.
25 In 1996 the Act was amended to provide that the proprietor of land in respect of which a caveat has been lodged may apply for the caveator to be served with a notice to the effect that unless the caveator applies to extend the operation of the caveat it will lapse within 21 days. Section 138C of the Act provides that on the hearing of such an application this Court, if satisfied that the caveator's claim has or may have substance, may, amongst other things, make an order extending the operation of the caveat.
26 It is clear from the statutory scheme that in an application under s 138C of the Act the onus is upon the caveator to satisfy the court that the caveator's claim has or may have substance. This has been interpreted as an onus to satisfy the court that there is a serious question to be tried as to whether a caveatable interest exists; that is that the plaintiff has an arguable case that he has a proprietary interest in the land. The caveator must also satisfy the court that the balance of convenience favours the retention of the caveat in that it would be better to maintain the status quo until the trial of the action by preventing the caveatee from disposing of the land to a third party. If there is a serious question to be tried it will be unusual for the balance of convenience to lie in the refusing of an application to extend a caveat: Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42.
27 If there is a serious question to be tried but the validity of it can only be determined by findings of fact then the caveat should remain and the caveator should be left to proceed by way of action to establish the interest or estate: Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129 at 141 per Brinsden J; Halse v Embling, unreported; SCt of WA; Library No 970734, 22 December 1997 at [11] per Parker J.
A Purchaser's Caveatable Interest under a Contract for Sale of Land
28 A person who does not have a legal estate or interest in land is only entitled to lodge a caveat over a piece of land if equity recognises that they have an interest in the land. Equity recognises what is known as a "purchaser's lien" where a purchaser of land has paid the, or some of the, purchase price and through no fault of his or her own, the vendor refuses
(Page 11)
- to complete. The purchaser is said to have a lien in equity to the extent of the purchase money paid: Hewett v Court (1983) 149 CLR 639 at 645 per Gibbs CJ at 643 - 654 per Wilson and Dawson JJ at 663 - 664 per Deane J. There is no purchaser's lien if the deposit is paid to and kept by a stakeholder, as it was in this case; Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419 at 430 per Malcolm CJ.
29 However, equity recognises that damages are usually not an adequate remedy for failure by a vendor to complete a contract for the sale of land: Adderley v Dixon (1824) 1 Sim & St 607 at 610; 57 ER 239 at 240; Dougan v Ley (1946) 71 CLR 142 at 150 per Dixon J. Consequently, equity will normally decree specific performance in respect to contracts to convey land: Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444 at 478; [1982] 3 ALL ER 1 at 6. In such cases it has been said that equity requires that the vendor hold the land for the benefit of the purchaser, even in respect to an agreement for sale of land that is conditional. This may also give rise to a caveatable interest in land; Kuper v Keywest Constructions Pty Ltd (supra) at 432 per Malcolm CJ. Although I note that in Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at [53] the majority of the High Court endorsed Deane J's comment in Kern Corporation Ltd v Walter Reid Trading Pty Ltd (1987) 163 CLR 164 at 192, 441 where his Honour said that it was no longer appropriate to speak of a seller under an uncompleted contract as a trustee for a purchaser.
30 I have previously expressed some doubt as to the correctness of the view expressed in Kuper v Keywest Constructions Pty Ltd (supra). The nature of the equitable interest that a purchaser, who has not made any part payments under an uncompleted contract of sale, except for a deposit which has been refunded or which is fully refundable upon termination, is not clear: Tanwar Enterprises Pty Ltd v Cauchi (supra) at [43] - [54]. As the majority of the High Court said in Tanwar Enterprises Pty Ltd v Cauchi(supra) at [53], to say that the interest is commensurate with the availability of specific performance "is bedevilled by circularity" where the very question is whether specific performance is available.
31 However, I recognise the authority of the decision in Kuper v KeywestConstructions Pty Ltd (supra) even though it purports only to apply to the facts of that case and the desirability of a uniform approach among the Judges of this Court. Consequently, it seems to me that I should apply the view expressed in Kuper v KeywestConstructions Pty Ltd (supra) that a purchaser under an uncompleted contract for sale of land has a caveatable interest (whatever that be), in the land.
(Page 12)
Serious Issues to be tried
32 The plaintiff submits that there are serious issues to be tried as to whether:
(a) the first defendant had a contractual right to terminate the contract;
(b) if she did, her termination purported termination was effectual at law;
(c) if she did, she was estopped from terminating the contract; or
(d) if she did, equity will relieve against forfeiture of his interest in the subject land?
33 If it is arguable that either of the first or second issues are to be answered in the negative or either of the remaining issues are to be answered in the positive then the plaintiff will have satisfied me that a serious issue arises between the parties as to whether the plaintiff is entitled to specific performance of the contract.
Waiver not communicated in writing to the first defendant
34 The first issue in turn raises the question whether the plaintiff had waived compliance with the finance clause? If he had, then the first defendant did not have a right to terminate the contract.
35 In identifying the above issues I have deliberated omitted to query whether there was non-compliance with the finance clause and deemed termination of the first agreement under par 1.4 of the finance clause. This is because it is patently obvious that the plaintiff had not complied with the finance clause in the sense that he had not applied for or used his best endeavours to obtain Finance Approval. Further neither party asserts that the plaintiff had complied in any way with pars 1.2(a), 1.2(b) and 1.3 of the finance clause so as to give rise to a deemed termination of the contract under par 1.4.
36 The plaintiff filed written submissions to the effect that there was an oral variation of the finance clause to provide that the plaintiff did not have to seek finance. In my opinion it is unnecessary to construe the finance clause in this way. In my opinion, in par 1.6, the finance clause already provides for the situation in which a purchaser decides not to apply for finance in accordance with the other paragraphs of the clause by providing for a deemed Finance Approval if the plaintiff waives their rights pursuant to the finance clause. Thus, where, as in this case, it is
(Page 13)
- agreed that the purchaser did not attempt to obtain finance the relevant issue is whether it is arguable that the plaintiff was deemed to have obtained Finance Approval because he had waived compliance with the finance clause in the manner allowed for in par 1.6, even thought he did not communicate such waiver to the first defendant in writing prior to the Latest Time?
37 Waiver is referred to in two paragraphs of the finance clause. The first reference is in par 1.4 which provides that the contract will be deemed to have come to an end if the purchaser has complied with the requirements of the clause but Finance Approval has not been obtained by the Latest Time, unless the purchaser "has waived this condition and communicated such waiver in writing to the Seller's Agent prior to the Latest Time".
38 The paragraph is noteworthy for three reasons. First, it does not expressly give the purchaser a right to waive the contract. It merely says what occurs if the purchaser has not waived the contract. Secondly, contrary to the latter reference to waiver in par 1.6, it distinguishes between waiver and communication of waiver. Thirdly it does not provide, as one may expect for the sake of uniformity that communication of waiver shall be by "Notice". Clause 21 of the standard conditions details the precise requirements where a "Notice" is required to be given under a contract.
39 The second reference to waiver is in par 1.6 which states that the purchaser by waiving their rights pursuant to the clause at any time prior to the Latest Time shall be deemed to have received Finance Approval.
40 The plaintiff submits that he had waived his rights under the clause and it is arguable that this second reference to waiver is not governed by the conditions placed on waiver in par 1.4. That is, that there is no requirement in par 1.6 that waiver be communicated in writing to the seller. The first defendant says that as time was of the essence (cl 22 of the General Conditions), any waiver of the finance condition by the plaintiff had to occur and be communicated to her in writing before the Latest Time.
41 The issue requires the first agreement to be construed. In Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at [11] Gleeson CJ, Gummow and Hayne JJ, in their majority decision, adopted the comment of Lord Hoffman that the construction of a contract involved "the ascertainment of the meaning which the document would convey to a
(Page 14)
- reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract".
42 I am largely persuaded to the first defendant's view that a reasonable person would assume that waiver in cl 1.4 and 1.6 would be the same. This is especially so as for the sake of certainty I would have thought that the purchaser would be required to communicate his waiver to the purchaser in writing. However, I concede that there are a number of matters that put this construction of the finance clause in doubt. They are:
1. the omission of the words "in writing" from cl 1.6;
2. the omission of any reference in par 1.6 to communication of waiver. As the drafter in cl 1.4 drew a distinction between waiver and communication of waiver, it may be reasonable to assume that the drafter would make the same distinction elsewhere in the finance clause;
3. the use of the words "pursuant to this clause" par 1.6. The omissions I have mentioned in 1 and 2 may be explainable if the drafter had included the omitted matters by use of the phrase "pursuant to this clause". However, it is not clear whether that phrase qualifies the words "rights" or "the Buyer waiving". If, as it seems more likely from the grammar of the sentence, it is the former then the inclusion of the phrase does not aid the first defendant's position.
43 Consequently, in my view it is arguable that the plaintiff had waived his rights under the finance clause by orally telling Mr Morfesse that he had on sold the subject property and would no longer require finance and was therefore deemed to have received Finance Approval. It is therefore also arguable that the first defendant did not have a contractual right to terminate the contract.
Waiver communicated in writing after the Latest Time
44 In my opinion the second issue also gives rise to an arguable issue. The second issue assumes that the plaintiff has been unsuccessful in respect to the first issue and queries whether it is arguable that the plaintiff was, nevertheless, deemed to have received Finance Approval because he waived his rights under the finance clause and communicated such waiver in writing to the first defendant prior to completion or termination of the first agreement by the first defendant?
(Page 15)
45 Regardless of what had occurred beforehand, it is arguable that the plaintiff gave written notice of waiver of his rights under the finance clause by his solicitor's letter faxed to the first defendant's settlement agent at about 6.50 pm on 24 July 2006. This purported waiver would be of no effect if the first defendant had already terminated the first agreement by her letter faxed to WA Prestige Properties at about 4.40 pm and to the plaintiff's solicitors at about 6.20 pm on 24 July. The plaintiff submits that par 1.6 permitted him to waive the finance clause after the Latest Time as long as the first defendant had not earlier terminated the contract under par 1.5. The plaintiff says that the first defendant's purported termination of the contract on the afternoon of 24 July was not effective because it was not served on him in the manner required by cl 21 of the General Conditions.
46 The first defendant says that it was effective because par 1.5 only required her terminate by "notice" in writing to the plaintiff and did not require her to give "[a] Notice". She says that cl 21 only governs the giving of "[a] Notice".
47 Thus two further issues arise for consideration. The first is whether the first defendant's letter of termination when it was either sent by facsimile to the vendor's real estate agent or faxed to the plaintiff's solicitor constituted "notice in writing" for the purpose of par 1.5? The second is whether, if it did not, the plaintiff had the right to waive his rights after expiry of the Latest Time because the finance clause was predominantly for his benefit and the contract was still on foot.
48 In my opinion it is arguable, to the plaintiff's benefit, that the first defendant's letter of termination did not constitute a valid termination of the first agreement because either it did not comply with cl 21 of the General Conditions or, even if it did not have to, it was not given to the plaintiff because it was faxed to the first defendant's real estate agent and the plaintiff's solicitor.
49 I am also of the view that it is arguable that the plaintiff could waive his rights after expiry of the Latest Time as long as the contract was still on foot. Although in respect to this issue there are considerable hurdles for the plaintiff to surmount. In Shakibaee v Chan (2001) 24 WAR 97 at [53] Owen J said:
"… The law seems to be that a right to waive a condition continues beyond the expiry of the period within which the condition falls to be fulfilled so long as the contract continues
(Page 16)
- on foot: Sandra Investments Pty Ltd v Booth (1983) 153 CLR 153 at 166; Willing v Baker (1992) 58 SASR 357 at 377. …"
50 In this case the plaintiff's case is weakened by the fact that par 1.6 requires waiver to occur before the Latest Time and because par 1.6 states that the finance clause is for the benefit of both the seller and the buyer. However these matters should ultimately be decided at trial.
Estoppel
51 The third issue also assumes that the plaintiff is unsuccessful with the first two issues and queries whether, in the alternative, it is arguable that a court would find that the first defendant was estopped by her representations from relying upon the plaintiff's breach of the finance clause to terminate the first agreement?
52 The first defendant does not dispute that in some circumstances a vendor under an uncompleted contract of sale may be estopped by their representations as to future conduct from terminating the contract. Rather, she says that in Legione v Hateley (1982) 152 CLR 406 at 435 - 437 Mason and Deane JJ made it clear that there are a number of rules which are applicable to whichever form of estoppel is relevant and that it is not arguable that, in this case, the rules had been met. Two of those rules are:
(a) A representation must be clear before it can found an estoppel; and
(b) a person will not be estopped from departing from an assumption or representation "unless as a result of adopting it as the basis of action or inaction, the other party will have placed himself in a position of material disadvantage if departure from the assumption is permitted".
53 I agree with the first defendant that it is not even arguable that the first rule has been met. The evidence before me does not enable me to find that it is even arguable that the first defendant, either personally or through her agents, made a clear representation as to her future intention not rely upon the rights of termination given to her in par 1.5 of the finance clause.
54 As to the second rule there is some evidence of detriment in that the plaintiff paid the balance of the deposit and therefore lost the use of this money even for a short time. However, I note that the deposit was paid
(Page 17)
- prior to the discussion on 20 July about the forms for waiver of GST and due diligence. Thus, the payment of the deposit could not be said to be an act which relied upon any representations made on that date.
55 Further, there is no evidence that the plaintiff acted to his detriment in reliance upon any representation made by the first defendant. If anything, the implication from the plaintiff's evidence is that he was ignorant of, overlooked or failed to identify the importance of any obligation to provide written notice of waiver. He does not depose that he was aware of the obligation and relied upon the first defendant's representation that the obligation would not be relied upon to terminate the first agreement. Rather, in his affidavit he asserts that the first defendant through her agents failed to tell him of his contractual obligation. This is insufficient to propound an arguable case of estoppel.
Relief against Forfeiture
56 Equity will prevent a party from exercising a right to terminate a contract for non-fulfilment of a contingent condition where this would result in the forfeiture of a proprietary interest where it is unconscionable for a party to exercise the right: Westminster Properties Pty Ltd v Comco Constructions Pty Ltd (1991) 5 WAR 191. In Tanwar Enterprises Pty Limited v Cauchi (supra) the High Court considered a number of potentially conflicting judgments of the justices of the Court concerning the availability of relief against forfeiture. At [37] - [39] Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ said:
"[37] In Legione, Mason and Deane JJ instanced 'fraud, mistake, accident, [and] surprise' as elements which may make it inequitable to insist on termination of a contract for failure to observe its strict terms. Subsequently, in Stern, Mason CJ took Legione and Ciavarella as establishing that the court will not readily relieve against loss of a contract for sale validly rescinded by the vendor for breach of an essential condition; and, in particular, equity was not authorised 'to reshape contractual relations into a form the court thinks more reasonable or fair where subsequent events have rendered one side's situation more favourable'. That latter proposition is at odds with the approach by Gaudron J in Stern, to which reference has been made earlier in these reasons at [35], but, nevertheless, it should be accepted as an accurate statement of the law. …
(Page 18)
- [38] … To the extent that what Mason CJ said in Stern represented a development (or, perhaps, a contraction) of what had been put in the earlier cases, then it is to be preferred.
[39] In Stern, Mason CJ also stated that equity intervenes only where the vendor has, by the vendor's conduct, caused or contributed to a circumstance rendering it unconscionable for the vendor to insist upon its legal rights. That helps explain why mere supervening events and changes in the relevant circumstances are insufficient. But it should be noted that cases falling within the heads of mistake or accident will not necessarily be the result of activity by the vendor. In addition, his Honour spoke in Stern of the circumstances being 'exceptional' to attract equitable intervention. That also emphasised the insufficiency of subsequent events which are adverse to the interests of one side. …"
57 The plaintiff submits that the following circumstances would justify the Court granting relief against forfeiture:
(a) The technical nature of his breach of the first agreement;
(b) The fact that the first defendant had received oral notice prior to the Latest Time that he would not require finance;
(c) The "sharp failure" of the first defendant's agent, Mr Morfesse, in not contacting him prior to expiration of the Latest Time to advise him that the first defendant required written notice;
(d) The fact that his failure to give written notice was "of trivial or slight consequence and inadvertent";
(e) The significant loss of the value of the first and second agreements to him;
(f) The breach was not a breach of an essential term of the contract; and
(g) The sale can be readily achieved.
58 The first defendant submits that she did not engage in conduct which rendered it unconscionable for her to exercise her contractual right to terminate the first agreement for lack of written notice of the plaintiff's waiver of his rights under the finance clause.
(Page 19)
59 In particular she says that there was no fraud by her or her agents and neither she nor her agents contributed towards any relevant accident, mistake or surprise.
60 On the bare facts, I tend to agree with the first defendant, especially given the cautious approach of the High Court in Tanwar's case to this remedy. However, I can foresee that, if a Judge found the facts as alleged by the plaintiff, it would follow that he or she may also be prepared to draw a number of adverse inferences against the first defendant and her agents. This is because their evidence is diametrically opposed to what the plaintiff and Mr Clark allege was said at various times prior to the Latest Time. These adverse inferences would strengthen the plaintiff's case as they may tend to show that the first defendant and/or her agent contributed towards the plaintiff's accident, mistake or surprise. I must assume that the plaintiff will be able to make out his allegations of fact. Consequently I am prepared to find that an arguable case has been made out by the plaintiff in respect to relief against forfeiture.
Balance of Convenience
61 The first defendant did not make submissions relating to the balance of convenience. No particular matters having been brought to my attention I am prepared to find that the balance of convenience favours the extension of the caveat.
62 It is apparent that it is in the parties' interests that this dispute be resolved as soon as possible. Thus it is of concern that the plaintiff has not yet instituted proceedings to declare the force and validity of the first agreement and for specific performance of it. When this matter was raised with counsel he inferred that these proceedings may resolve the dispute. That is not necessarily so. I am only prepared to extend the caveat on the condition that the plaintiff institute and prosecute proceedings for the specific performance of the first agreement and related relief within a limited time. There will be liberty to apply so that the first defendant may re-list this matter for further consideration should the plaintiff fail to institute and prosecute those proceedings in accordance with my orders. I will hear the parties as to final orders.
4
26
0