Duskwood Pty Ltd v Bellara Willows Pty Ltd
[2002] WASCA 353
•17 DECEMBER 2002
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE FULL COURT (WA)
CITATION: DUSKWOOD PTY LTD -v- BELLARA WILLOWS PTY LTD [2002] WASCA 353
CORAM: WALLWORK J
MURRAY J
ANDERSON J
HEARD: 20 SEPTEMBER 2002
DELIVERED : 17 DECEMBER 2002
FILE NO/S: FUL 25 of 2001
BETWEEN: DUSKWOOD PTY LTD
Appellant
AND
BELLARA WILLOWS PTY LTD
Respondent
Catchwords:
Contract - Alleged sale of land and repudiation by buyer - Whether agreement ever made - Whether only expression of intention - Held buyer not a signatory to relevant agreement - Not bound by it - On appeal held trial Judge correct
Legislation:
Nil
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
Appellant: Mr A J Myers QC & Mr M L Segler
Respondent: Mr B R S Kendall QC & Mr B E S Lauri
Solicitors:
Appellant: Shane Michael Brennan
Respondent: Leonard Cohen & Co
Case(s) referred to in judgment(s):
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101
Black v Smallwood (1966) 117 CLR 52
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
Dillon v Nash [1950] VLR 293
Formby Brothers v Formby (1910) 102 LT 116
Fred Drughorn Ltd v Rederiakt Trans‑Atlantic [1919] AC 203
Humble v Hunter [1848] 12 QB 310
Masters v Cameron (1954) 91 CLR 353
Public Trustee v Taylor [1978] VR 289
Warren v Coombes (1979) 142 CLR 531
Zuvela v Cosmarnan Concrete Pty Ltd (1996) 71 ALJR 29
Case(s) also cited:
Abalos v Australian Postal Commission (1990) 171 CLR 167
Bahr v Nicolay (2) (1988) 164 CLR 604
Bank of New Zealand v Simpson [1900] AC 182
Danziger v Thompson [1944] KB 654
Devries v Australian National Railways Commission (1993) 177 CLR 472
Epps v Rothnie [1945] KB 562
Macdonald v Longbottom (1859) 1 E1 & E1 977; 120 ER 1177
Paterson v Paterson (1953) 89 CLR 212
Rhodes Pty Ltd v Galati [1961] WAR 180
Gordon-Cumming v Houldsworth [1910] AC 537
Wilson v Hart (1817) 7 Taunt 295
WALLWORK J: The issue in this appeal is whether the appellant and the respondent made an enforceable agreement for the sale of land on 16 January 1998. The appellant claimed that there was such an agreement and that the respondent had breached it by refusing to complete it.
The appellant company ("Duskwood") was at all material times the owner of land in the Frankland River region of Western Australia. Adjoining the Duskwood land was land owned by two related companies, Red Valley Pty Ltd ("Red Valley") and Spring Valley Pty Ltd ("Spring Valley"). Each of Duskwood, Red Valley and Spring Valley had common directors and shareholders, one of those being Mr Warren Anderson.
In the relevant action the appellant claimed that it was an express material term of a written agreement made on 16 January 1998 that the appellant would sell and the respondent would purchase the Duskwood land in the event that a prior sale of the Duskwood land did not proceed. The appellant claimed that when the respondent was subsequently notified that the prior sale of the Duskwood land had not proceeded, the respondent had refused to take any step towards the completion of the contract and instead denied that any agreement for the purchase of the land existed.
The learned trial Judge held that the action involved three questions: firstly, whether there was an intention to contract. Secondly, whether if there was an intention to contract it was effectively carried through in the written agreement so that the contract proposed thereby was not so incomplete or uncertain as to be void, and thirdly whether, if the written agreement did amount to a valid contract, the appellant was a party to it.
The Judge found that there was an intention to contract and that the contract contended for was not so incomplete or uncertain as to be void. However, he held that there was no enforceable written agreement as Duskwood had not signed the document and was not a party to it. He dismissed Duskwood's action.
There were a number of people present when the document which was said to comprise the written agreement was completed. They were Mr Warren Anderson, Mr Colin King, Mr Goh Chee Khen, Mr Colin Madden and Mr Surinder Gurdial.
Because the terms of the document are fairly short I now set out that document in full:
"16th January 1998
1)Agreed purchase price of $14,000,000.00 for
(a)Red Valley
(b)Spring Valley
2)Purchaser is Bellara Willows Pty Ltd ACN 081 255 110.
3)Purchase price payable as follows:
(a)Deposit of $2,000,000.00 is payable in 14 days from signing of contracts
(b)Settlement dated 1st March 1998
(c)At settlement purchaser takes a transfer of land of both properties
And:
1)pays the Vendor $3,000,000.00 (total of $5,000,000.00)
2)transfer to Vendor two properties at York (value $3,900,000.00)
3)grants to vendor 2nd mortgage for the balance owing secured over Red Valley and Spring Valley. Interest on the second mortgage will be 9% per annum payable on final settlement.
(d)A 1st mortgage of $6,500,000.00, maximum, will be granted by Purchaser over Red Valley and Spring Valley.
(e)Purchaser needs 14 days to obtain finance approval (note finance is approved but drawn‑down is conditional upon acceptance of sworn valuation. Purchase financier needs 14 days to obtain written sworn valuation for the two properties for the mortgage).
(f)Separate contracts for each of the individual titles for Red Valley and Spring Valley.
(g)In the event that Duskwood sale to Ton Lauwers does not proceed Purchaser will enter into a separate contract to purchase this property. Purchase price of $11,000,000.00, with $2,000,000.00 payable on thirty days after signing and balance payable in November 15th, 1998, with vacant possession on settlement.
(h)Any sales prior to final settlement shall be apportioned 55% to 1st Mortgagee and 45% to Second Mortgagee.
(i)In the event of subject property being revalued upwards prior to settlement, that enables the 1st mortgagee to maintain a 55% lending ratio shall entitle the 2nd mortgagee to receive the full proceeds of any sales up to the ratio of 55% lending.
…………………………….. ……………………………….
COLIN MADDEN WARREN ANDERSON
MACHERSON & KELLEY AUTHORISED
SOLICITOR OF THE REPRESENTATIVE FOR
PURCHASER AND ON BEHALF OF
SPRING VALLEY PTY LTDRED VALLEY PTY LTD"
It can be seen that the document is dated 16 January 1998. In the first paragraph there is an agreed purchase price for Red Valley and Spring Valley at $14,000,000. The purchaser in the document is the respondent. In par 3(g) appear the following words:
"In the event that Duskwood sale to Ton Lauwers does not proceed Purchaser will enter into a separate contract to purchase this property. Purchase price of $11,000,000.00, with $2,000,000.00 payable on thirty days after signing and balance payable in November 15th, 1998, with vacant possession on settlement."
There is no further reference to Duskwood in the document. On the face of the document no‑one representing Duskwood has signed it. The document is signed by Mr Madden as "Solicitor of the Purchaser". It was also signed by Mr Anderson as "Authorised Representative for and on behalf of Spring Valley Pty Ltd Red Valley Pty Ltd". Those two companies, Spring Valley and Red Valley, are referred to in the agreement.
Although the learned Judge came to the conclusion that he was unable to accept that this was a case in which resort to extrinsic evidence was justified, his Honour did examine some of that evidence. He considered arguments based on facts and events both before and after the signing of the contract.
His Honour referred to the evidence of Mr Anderson who said that he had arrived at Mr King's home at The Vines in Perth at about noon on 16 January 1998. Mr Anderson said that he had explained to Messrs Goh and Madden that he wished to sell the Rocky Gully land for a total of $25,000,000 but that he had already signed a contract with Mr Lauwers to sell him the Duskwood land for $10,000,000 conditional upon the Spring Valley and Red Valley land being sold for a total of $15,000,000. Mr Anderson said that Mr Madden had said words to the effect that the respondent was interested in all three locations but was prepared to offer $14,000,000 in total for the Spring Valley and Red Valley land.
His Honour referred to the evidence of Messrs Goh, Madden and Gurdial, which was different in some respects to that of Mr Anderson. Each of Messrs Goh, Madden and Gurdial had said that all negotiations leading up to the preparation of the typewritten document which was ultimately signed by Mr Madden and Mr Anderson, had taken place between them and Mr King. They said that Mr King had disappeared from time to time into his office where he had apparently made telephone calls to one or both of Mr Anderson and Mr Gianotti, a solicitor, who was also a director of Duskwood. The three of them said that they were told by Mr King that Duskwood had been sold to Mr Lauwers for a sum of $11,000,000 and that the sale was very likely to proceed although it was conditional upon Mr Lauwers being able to obtain finance. Each of them said that Mr Anderson had only arrived at Mr King's home, or made his presence known there, at about 4pm, by which time the typewritten draft agreement had taken its final form. An agreement in principal had been reached by those who had the conduct and the negotiations. They said that they were told by Mr King that the typewritten draft "or 'summary' as they chose to call it", had been faxed to Messrs Anderson and Gianotti and that there had been extensive discussions between Mr King, Mr Anderson and Mr Gianotti in respect of what had there been set out. They said that when Mr Anderson had appeared, he had a private discussion with Mr King and then expressed a desire, conveyed to them by Mr King, that he wished to vary the summary. When they refused to do that Mr Anderson had agreed to sign the document. It was subsequently executed.
Importantly, his Honour said at par 47:
"I prefer the evidence of Messrs Goh, Madden and Gurdial as regards the time of Mr Anderson's arrival or perhaps that at which he made his presence known to the three men, and as regards the limited role which he played in discussions on 16 January 1998, to that of Messrs Anderson and King. Each of Messrs Goh, Madden and Gurdial was quite certain of his recollection in this respect. Importantly, their recollection is supported by the fact that Mr Anderson in his evidence spoke only of seeing the document which was ultimately signed by him and Mr Madden."
His Honour found that there was no doubt that the document which was signed had been preceded by a handwritten draft which had been spoken of by Messrs Goh, Madden and Gurdial and which had been produced in evidence. Mr King had acknowledged having seen that document in the course of the negotiations. His Honour accepted also that that document was thereafter typed up in the form of a second draft before the document was ultimately amended to give it its present form. The document which his Honour referred to as the second draft and which was the first typed document, bore a date of 16 January 1998 and contained a provision for signing by each of the parties. The provision for signing by the vendor read "Warren Anderson" and underneath that "Vendor". Changes were made to that document involving a change in the purchase price, the rate of interest and the amount of the first mortgage. Paragraph 3(g) which referred to the Duskwood sale to Mr Lauwers was also altered. Importantly, the signature clause for Mr Anderson was amended from "Warren Anderson Vendor" to "Warren Anderson Authorised Representative for and on behalf of Spring Valley Pty Ltd Red Valley Pty Ltd".
Facts which throw doubt on Appellant's Contentions
After the alleged contract dated 16 January 1998 was signed, and on about 3 February 1998 the appellant made an offer to the respondent to sell the Duskwood land in a formal document being a form of offer and acceptance which differed from and was more detailed than par 3(g) of the document dated 16 January. Significant points of difference between the two documents were that the settlement date was advanced from 15 November 1998 to 29 March 1998; also the second proposed contract was subject to the property not being sold to a "third party" by the 1 March 1998. Paragraph 3(g) of the relevant 16 January document referred to a sale to Mr Ton Lauwers not proceeding and no time frame was prescribed.
When the abovementioned form of offer and acceptance was sent to the respondent's solicitors the contract for Mr Lauwers' company to purchase Duskwood was still on foot.
Subsequently, on 8 February 1998, Mr Colin King advised Mr Anderson:
"Burt has asked me to forward this fax requesting you fax him re the Duskwood contract, as he needs to inform Colin Madden by 6am our time tomorrow morning. I have told him that as at last night you felt that you would proceed with the GOH deal as Ton Lauwers' finance approval has not been given to date…"
The next day Mr King sent a further fax to Mr Anderson in which was included:
"GOH is still saying that Ton may go ahead if given more time and they will proceed with the first two contracts… Your best option is still the GOH deal on the whole lot but somehow we must get it over the line tomorrow or I feel we will lose it…"
On 12 February 1998 Mr King faxed Mr Burt "Gianitti", Mr Anderson's solicitor. In the course of that fax it is said:
"Warren is saying that he needs a commitment on Duskwood, as Mr Lauwers' finance at this point not available and secondly, he wants the clause to read 6.5% and exclude the word "interest and costs" as discussed with you earlier today. He has said to inform you that in the event of you being able to satisfy both these points, he is happy for you to accept the contracts on behalf of the companies. In addition, he also said that he has no problems with the Lauwers' deal being pulled back into line prior to the settlement and then that could proceed but needs their commitment in accord with the "Head of Agreement" letter dated 16 January 1998. He will assist wherever possible for the Lauwers' deal to proceed given that we have their commitment of the above now."
On 17 February 1998 Mr King wrote to Mr Gianotti, Mr Anderson's solicitor, in the course of which he said:
"I would like to confirm that the contract between Hillsfield Pty Ltd … (Purchaser) and Duskwood Pty Ltd (Vendor) for the purchase of Rocky Gully property has expired. The latest date for approval of finance was 31 January 1998. This purchaser has been negotiating for the purchase of the property since October 1997. Warren insists that Bellara Willows' contract must now be entered into. Subject to this contract being signed, he has indicated that he will give an extension for a further ten working days for Hillsfield Pty Ltd to obtain finance. … Please advise me as soon as you have a new contract in place."
On 1 April 1998 Mallesons Stephen Jaques wrote to the directors of various companies including Duskwood Pty Ltd (attention Mr Warren Anderson and Mr Burt Gianotti) and amongst other things stated:
"We understand from Mr Gianotti that:
1.…
2.…
3.No contract for the sale of Duskwood has been entered into; and …
4.…
The proposed sales are said to be proceeding in two parts, but the second part, the sale of Duskwood, has not yet been effected … The position is only marginally improved if the proposed sale of Duskwood proceeds on the terms you have advised us, …"
None of the appellant or Mr Anderson or Mr Gianotti attempted at the time to correct the relevant statements in that letter.
When considering the case for the appellant it is significant that the learned Judge saw the witnesses before him and made findings of fact. In their joint judgment in Zuvela v Cosmarnan Concrete Pty Ltd (1996) 71 ALJR 29 at 31 Brennan CJ, Toohey, McHugh, Gummow and Kirby JJ said:
"When a Court of Appeal is reviewing by way of rehearing the findings of fact made by a trial judge who has had the advantage of hearing and observing the witnesses, the Court of Appeal should not treat the appeal as a hearing de novo. As Barwick CJ said in Whitely Muir & Zwanenberg Ltd v Kerr, followed in Warren v Coombes:
'The trial judge, although not depending in any respect on the credibility of any witness, may have preferred one possible view of the primary facts to another as being in his opinion the more probable. Such a finding may, in my opinion, be disturbed by an appellate court but this should only be done if other probabilities so outweigh that chosen by the primary judge that it can be said that his conclusion was wrong. Again, the trial judge, having found the primary facts, may decide that a particular inference should be drawn from them. Here no doubt the appellate court has more room for setting aside that conclusion. But, even in that case, the fact of the trial Judge's decision must be displaced. It is not enough that the appellate court would itself, if trying the matter initially, have drawn a different inference. It must be shown that the trial judge was wrong. This may be achieved by showing that material facts have been overlooked, or given undue or too little weight in deciding the inference to be drawn; or the available inference in the opposite sense to that chosen by the trial judge is so preponderant in the opinion of the appellate court that the trial judge's decision is wrong.'
Of course, if the relevant fact is an inference to be drawn from the established facts, the Court of Appeal may be in as good a position as the judge at trial."
The Appeal
The appellant contends that whilst the learned trial Judge found as a matter of fact that the contract expressly and unambiguously records that Mr Anderson signed it only in the capacity as authorised representative of and for Red Valley and Spring Valley, there is no support to be found in any of the evidence for such a finding. It submitted that there was no evidence that the authority or representative capacities of Mr Madden or Mr Anderson were the subject of any discussion, negotiation or instruction; that the proper inference from the expressed capacity in which Mr Anderson signed the written agreement is that he signed it in any capacity which was necessary and appropriate to facilitate what had been agreed.
In the course of his reasons the learned trial Judge said that there was obviously a decision to change the signature clauses. His Honour said:
"I am prepared, in this respect, to find that this was one of a number of changes suggested either by Mr King who must, I think, have signed the prior typewritten draft … It seems to me to be very probable on the whole of the evidence (and there was no real suggestion to the contrary), that the changes between the first typewritten draft of that document and the final version thereof were made at the request of either Mr King or Mr Anderson. The change to the signature clauses was, as I have also said, one of these."
Later in his reasons, the learned trial Judge said [114]:
"It is important that I should add that it does not assist Duskwood to describe the signature clause, as counsel for Duskwood did, as an oversight or mistake on Mr Anderson's part. I have already found that the change to this clause was suggested either by Mr King, as I consider to be most probable, or by Mr Anderson."
Importantly, there was also uncontested evidence at the trial that Mr Anderson was experienced in the signing of legal documents.
The learned trial Judge found that cl 3(g) of the relevant document was no more than a statement of intention on the part of the respondent [99], [104]. His Honour said:
"My conclusion as regards the existence of an intention on the part of Bellara Willows to contract for the purchase of the Red Valley and Spring Valley land is supported by the fact that cl 3(g) provides that if 'the sale to Ton Lauwers' does not proceed then Bellara Willows 'will enter into a separate contract to purchase' the Duskwood land [my italics]. I take the italicised words to refer to a contract separate to that constituted by the 16 January document, and like the reference, in cl 3(f), to 'Separate contracts for each of the individual titles for Red Valley and Spring Valley' which seems to contemplate that, when the time comes to give effect, in a more formal way, to the 16 January contract, then each of the individual titles of the land referred to is to be made the subject of a separate formal contract. There is nothing in the prior, or subsequent, conduct of the parties which makes me doubt the conclusion at which I have arrived." [100] [101]
The appellant accepted that the learned Judge had correctly identified the issues in the case but it took issue with a statement of his Honour that the third question, that of whether Duskwood was a party to the contract, was one of construction. The appellant contended that the question whether Duskwood was a party to the contract was not merely a question of construction although there were issues of construction involved.
Counsel for the appellant put it that where there was an undisclosed principal who was a party to a contract, no amount of construction could possibly assist in determining whether the undisclosed principal was a party to the contract. That was a matter which would have to be determined wholly by reference to extrinsic evidence. It was submitted that the extrinsic evidence ought to have been looked at more broadly by his Honour in determining the issue of whether Duskwood was a party to the contract.
Even if the appellant's submissions in that regard are accepted, in my view the extrinsic evidence was against Duskwood being a party to the contract. I have already referred to some of the subsequent conduct of Duskwood's representatives which would support that view.
With respect to the learned Judge's comment that "I should say in any event that I have reached the conclusion… that Duskwood was not a party to the contract and that cl 3(g) thereof was nothing more than a statement of intention on the part of Bellara Willows", counsel for the appellant submitted that there was nothing in the document apart from the signature clause which would lead someone to treat cl 3(g) differently from any other part of the document. It was submitted that to suggest that cl 3(g) was a statement of intention on the face of the document was a surprising result. It was part and parcel of a single deal and it was expressed in imperative terms in the document that the purchaser "will enter into a separate contract to purchase this property..." It was submitted that the elements of the contract were identified and that the document in its terms made no distinction between the way in which the parties had regarded the clause dealing with Duskwood and the other clauses; that in effect there was no difference between the provision that there would be separate contracts for each of the individual titles for Red Valley and Spring Valley and the provision that in the event of the sale to Ton Lauwers not proceeding "the purchaser will enter into a separate contract to purchase this property...", those last words referring to the Duskwood property; that in each case there was an intention that a separate contract would be entered into afterwards.
It was further submitted that there were four versions of the relevant document. The first one was some rough notes prepared by Mr Madden; the second was a more elaborate handwritten note, again prepared by Mr Madden; then there was the first typewritten version prepared by Mr Madden; then there was the final document dated 16 January 1998.
With respect to his Honour's comment that there was nothing in the prior or subsequent conduct of the parties which made him doubt the conclusion at which he had arrived, it was submitted that there was a great deal in the prior and subsequent conduct of the parties to displace his Honour's conclusions.
His Honour referred to the document dated 3 February 1998, which was later submitted to the respondent in relation to the sale of Duskwood land and which differed in significant respects from the terms proposed in cl 3(g) of the document of 16 January 1998. Significant differences in that document to the 16 January document included that the 16 January document made no provision as regards the giving of a mortgage. There was also a difference concerning the date of possession.
It was submitted for the appellant that there was nothing remarkable about that document being submitted whilst containing different terms. That did not reflect upon the question of whether there was already a contract in existence.
His Honour also referred to later negotiations concerning the acquisition of the Duskwood land including the terms of an offer submitted by Duskwood to Bellara Willows on 23 March 1998; also the further one submitted by Bellara Willows to Duskwood on 11 May 1998.
It was further submitted for the appellant that if on a wide and full examination of the extrinsic evidence one came to the conclusion on the balance of probabilities that there was an intention to contract in the terms of cl 3(g), then the signature clause would have to yield.
It was pointed out that his Honour had to some extent relied on Humble v Hunter [1848] 12 QB 310 and Formby Brothers v Formby (1910) 102 LT 116. It was submitted that those two cases were not good law.
It should be noted that in par 110 of his reasons, his Honour said:
"However, even if Humble and Hunter and Formby Bros and Formby are no longer to be regarded as good law I am unable to accept that this is a case in which to resort to extrinsic evidence is justified. I have mentioned that the contract expressly and unambiguously records that Mr Anderson signed it only in the capacity of authorised representative of and 'for and on behalf of', Red Valley and Spring Valley. Evidence that he signed it also in some other capacity, or for and on behalf of some other person, in my opinion necessarily contradicts the document. The parties have contracted that Mr Anderson has signed only in the stated capacities. In Drughorn, Fred (Ltd) v Rederiaktiebolaget Trans‑Atlantic [1919] AC 203 at 206 Viscount Haldane accepted the proposition that evidence of authority of an outside principal is not admissible if to give such evidence would be to contradict some term of the contract itself. Similarly Lord Sumner in that case said at 209 that, 'Unless this contract (the Charter Party) is read as stipulating that … [the signatory] charters for himself only, the appellants fail." [my italics].
In any event the extrinsic evidence which was relied upon by Duskwood is to the effect that it was made known to each of the persons present at the time of the negotiations on 16 January that Mr Anderson would not agree to the sale of any of the Rocky Gully land unless all of it was sold for a total consideration of not less than $25,000,000. I very much doubt that this evidence is evidence of objective background of a kind which is admissible in the construction of an ambiguous contract. Rather, it seems to me to be evidence of Mr Anderson's actual intentions and expectations which were superseded by and merged in the contract itself. That being so, even if the contract was to be regarded as ambiguous, I would not be prepared to make use of this evidence in its construction."
With respect to the submission that his Honour had fallen into error when he said "I am unable to accept that this is a case in which resort to extrinsic evidence is justified", counsel relied upon the reasons in Fred Drughorn Ltd v Rederiakt Trans‑Atlantic [1919] AC 203, including the words of Lord Sumner at 209:
"Unless this contract is read as stipulating that Lundgern charters for himself only, the appellants fail. I think it cannot be so read. It states that Lundgern charters, and so he does; but it does not say that he is not chartering for others and if that is what he has done in fact the law allows them to prove it."
The learned trial Judge in this case was aware of what was said in Drughorn. It was an entirely different case to the present one.
In my view, the words of the signature clause "authorised representative for and on behalf of Spring Valley Pty Ltd Red Valley Pty Ltd" are very particular. Mr Anderson is a knowledgeable and very experienced businessman who is used to signing legal documents. He would have known that he was not contracting for Duskwood when he signed himself as contracting for and on behalf of Spring Valley and Red Valley. In my view, in all the circumstances, the signature clause speaks for itself.
Counsel for the appellant amongst other things referred to three pieces of evidence which he submitted were very important. The first was that on 18 January Mr Goh on behalf of the respondent had an authority to sell the Duskwood land once the offer became unconditional. It was submitted that that was powerful evidence in support of the proposition that Mr Goh intended cl 3(g) to be contractually binding.
It was also submitted that the respondent had commissioned a valuation of the Duskwood land immediately after the alleged sale on 16 January; that that was only consistent with the respondent considering that it was in a position to sell the land.
It was submitted that the respondent had engaged in negotiations through the agency of Mr King for the sale of the Duskwood land to Mr Casella; also that Mr Madden had encouraged Mr King to sell individual allotments of the Duskwood land. Reference was made to telephone conversations between Mr Madden and Mr Gianotti (the solicitor for Mr Anderson) in the course of which Mr Madden appeared to assume that the respondent would proceed to buy the Duskwood land.
With respect to his Honour's comment that none of this evidence of subsequent conduct on the part of the parties was admissible in construing the contract it was submitted that while that may be a correct statement about a mere matter of construction, it is not a correct statement about whether there is a contractual intention and is not a correct statement about whether a person entered into a contract in a particular capacity.
His Honour said that the evidence was admissible for the purpose of determining whether the parties to the 16 January document had intended to create legal relations. His Honour said:
"I have already found that they did but that Duskwood was not a party to the contract comprised by that document (and I have also said that the only contract relied upon by Duskwood is one comprised by that document)."
It was submitted that the learned Judge was really allowing the tail to wag the dog with that statement; that the Judge was acknowledging that that evidence could be admitted on the question of contractual intention but had then in effect ignored it on the question of whether a contract came into existence.
Counsel for the appellant relied on a loan proposal document which had been prepared before 16 January 1998, which refers to the deal for Red Valley, Spring Valley and Duskwood being packaged as a whole "but to be split into two blocks of properties". In the body of that document there is a reference to the purchase price of Red Valley and Spring Valley and under "conditions", it is said amongst other things, "the option to Ton Lauwers' is valid for one month until 16 February 1998. Should Ton be unable to take up, then Dato Jerry is to take it up and sign a new agreement for Duskwood."
Mr Goh was the author of the document and had typed it up and submitted it to persons who were to lend money. When he was questioned in cross‑examination he said he wanted to buy Duskwood. Mr Goh said:
"He came back to me to say that Warren would want three properties to be transacted and I told him you can discuss that with Ton, because he has been in and out of these properties, and at this juncture I can only transact two and the only way … that he wanted three transactions to be done, somebody else would have to come in."
When Mr Goh was then pressed he said he was unable "to go into Duskwood". He was asked whether he wanted to buy it. He said "Yes, I do have intentions. Yes." When further pressed he said "The mere fact that I was only interested in the two, that I asked them to go back to Ton, was a suggestion that I can't do all and I'm not interested in all. I am only interested in the two." He said it had been put to him by Mr King that should Ton be unable to take it up, then Dato Jerry is to take up and sign a new agreement for Duskwood. Mr Goh said that after making an assessment, although he had been told by Mr King that Duskwood had fallen over, he felt that after his assessment he felt "he could only do two". "That was why the suggestion that 'look you know I can only do two. You go back. If Ton can carry on with one of it, then we will do it.'".
Reliance was also placed upon a letter to Mr Anderson from Mr King dated 12 January 1998 in which Mr King said he had an agreement in principal for the purchase of the whole property including Duskwood. There were said to be two purchasers arriving on Wednesday, 14 January, being Mr Goh and Mr Gurdial. Reference was also made to Mr Goh's statement which referred to a list of prices at which he considered individual lots in Red Valley, Spring Valley and Duskwood properties could be on‑sold. Before going to that document I note that in the next paragraph of Mr Goh's statement he says:
"I spoke to King by telephone and told him that Bellara Willows was only interested in purchasing Red Valley and Spring Valley…"
He then says:
"I then told King that $14,000,000 would be the maximum I would be prepared to pay for Spring Valley and Red Valley."
Mr Goh says in his statement that he had told Mr King that if the vendor needed $25,000,000 then "King should approach Lauwers to see if he was willing to purchase Duskwood for $11,000,000." Further on he says:
"King told me that Anderson had asked him what would happen if Lauwers was not able to proceed with the purchase of Duskwood. I told King that I was only prepared to purchase Red Valley and Spring Valley. I said that provided a substantial amount of Red Valley and Spring Valley had already been 'on sold' I might consider purchasing Duskwood at a later time should Lauwers be unable to proceed. King told me that the Duskwood deal with Lauwers was likely to go ahead. King told me that he was assisting Lauwers to obtain finance and that the bank had indicated that finance would not be a problem."
With respect to the learned Judge's findings concerning the factual events after the signing of the 16 January documents, the appellant accepted his Honour's findings of fact in those paragraphs. However, it was said that almost immediately after the 16 January Mr King was given an authority to sell property by Mr Goh, including the Duskwood property.
Counsel also relied on the fact that Mr Goh had made calculations with respect to the prices for which individual allotments could be sold. These had included Duskwood property. He also referred to Mr Madden's evidence that Mr Anderson required that all three properties be sold and that if Mr Lauwers did not proceed Mr Anderson required another buyer for Duskwood.
Counsel also referred to Mr Gurdial's statement that during the negotiations Mr Goh had said that the respondent would be interested in purchasing Duskwood after there were sufficient sales of the individual lots in Spring Valley and Red Valley. It was submitted that those matters supported the contention that there was a contractual intention in relation to cl 3(g) and that his Honour had not really taken into account the extrinsic evidence.
It was submitted that the learned Judge had misstated the effect of the loan proposal document when he said: [45]
"Finally there is evidence of prior conduct in the form of preparation of the loan proposal document which shows that finance was sought only in respect of Red Valley and Spring Valley."
In my opinion, his Honour did not misstate the effect of the loan proposal document in that statement.
Counsel said that, in that document Dato Jerry had said he would have to enter into an obligation to buy Duskwood if Ton does not do so. It was said that his Honour had made no mention of that fact and had treated the loan proposal document as evidence for in fact the oppose of what it was evidence for.
It was further submitted that before 16 January Mr Anderson had evinced a clear intention to sell all three properties. Mr Goh had understood that and so had Mr Madden and Mr Gurdial.
Counsel referred to the first of the four documents which had been prepared on 16 January. That was the one in handwriting which Mr Madden had prepared. In the course of that document there is the reference "(7) Purchase of whole if Ton does not exercise his right to purchase."
The next document which Mr Madden prepared reads under (g):
"In the event the Duskwood sale to Ton Lauwers does not proceed will enter into a separate contract to purchase this property. Purchase price $11,000,000 with 10% payable on signing and balance on December 15th 1998. Vacant possession with settlement."
The next document was the document which was typed which has under (g):
"In the event the Duskwood sale to Ton Lauwers does not proceed purchaser will enter into a separate contract to purchase this property. Purchase price of $11,000,000, with 10% payable on signing and balance payable on November 15th 1998. Vacant possession with settlement."
The vendor there was said to be "Warren Anderson Vendor".
Then there was the fourth document which Mr Anderson signed as "authorised representative for and on behalf of Spring Valley Pty Ltd Red Valley Pty Ltd".
It was submitted that Mr Goh had said that during the negotiations Mr Madden had said to Mr King that if Lauwers did not buy Duskwood then Bellara Willows would be able to buy Duskwood for $11,000,000 provided it had first sold a substantial number of the individual lots of the Red Valley and Spring Valley land. Mr Madden had said that if that occurred, funds would then be available from RMBWL to provide for the deposit on the Duskwood property.
In my view, that evidence does not support the case for the appellant. Rather, it is consistent with his Honour's findings.
Although there was no direct evidence as to why the signature clause was signed in the way that it was, it was submitted for the appellant that it had probably been a mistake. However, Mr Gurdial had typed the document under Mr Madden's direction. Mr Gurdial was Mr Goh's solicitor from Malaysia. Mr Madden was a solicitor from Melbourne whose firm was arranging for the lending of the finance. Mr Gurdial had worked as an associate solicitor in Mr Madden's firm. All these persons knew what they were doing and why.
The learned Judge found that the change to the signature clause was suggested by Mr King "as I consider to be most probable, or by Mr Anderson." Mr King was the selling agent for Duskwood. However, it was pointed out that it had not been suggested that Mr King was acting on instructions. It was submitted that there was no evidence that Mr Anderson had suggested the change. His Honour had simply been ruling out a mistake. That it was deliberate for whatever reason.
It was submitted that it was a fair inference that someone had said Mr Anderson was not the vendor and that Mr Gurdial had then typed in the two companies and not the third. It was said that to erect a case that at the very last minute Mr Anderson had moved from an insistence that all three properties be dealt with in a legally binding way to a requirement that one of them not be dealt with in a legally binding way "beggared belief".
In my view, the evidence for the respondent was clear to the effect that it could not afford the three purchases, at least until it had sold some of the land it was purchasing.
The Court was told that it had not been put to Mr Anderson that he had instructed anyone to take out the word "Vendor" and insert only the name of the two companies. However, it was put to Mr Anderson that he was thoroughly experienced in reading documents of this kind and in understanding the capacity in which he executed such documents. He said "That's correct." It was put to Mr Anderson that the word "Duskwood Pty Ltd" did not appear below his signature. Mr Anderson said "It's a legal technicality, nothing to do with a contract." Mr Anderson insisted he was signing on behalf of Spring Valley, Red Valley and Duskwood because the three properties were named in the agreement. Mr Gianotti said nothing about the change in the signature clause. He was not there. Mr King did not recall why the document had been signed in that way.
It was submitted that the evidence was that Mr Madden had wanted to catch a plane. Mr King had been pushed to one side. Mr Madden and Mr Gurdial had prepared the document. Mr King said he had had absolutely no conversation with Mr Anderson concerning the signing of the contract. He said he had been disappointed that he was not given the opportunity to write the contract. He said "I did not see or understand or get involved in any discussion between Mr Madden or Mr Anderson, on whose signatories and where the signatories were to be, and on what contracts."
Mr Goh said he did not remember Mr Anderson being there when the changes were made in the documents. Mr Gurdial said in his statement "King requested me to amend the summary by changing the description of the capacity in which Anderson signed from vendor to "authorised representative for and on behalf of Spring Valley Pty Ltd and Red Valley Pty Ltd. King told me that Anderson's solicitor had requested him to make this change."
Mr Goh's statement was a very clear statement. However, counsel for the appellant said there were a couple of problems with it. Firstly, Mr Gianotti had given evidence that he had not been involved in the process at all. His evidence had been accepted by the trial Judge. Mr King's evidence had been that he had not had anything to do with the document because he had wanted a different form of contract.
Mr Gurdial said that Mr Madden had told him to make the changes with respect to the matters in (a) to (f). He was then asked "Then you say Mr King requested you to amend the summary - this is at the bottom of par 15, by changing the description of the capacity in which Mr Anderson signed from vendor to authorised representative. You remember that do you." Mr Gurdial said "Yes, I do." Mr Gurdial said that while he had been making these amendments Mr Anderson had appeared for the first time. That was the first time he had met him.
Mr Madden had said in his statement that after Mr Anderson had indicated final acceptance there was a further delay as Mr Anderson and Mr King had then discussed the points further with Gianotti. He said "Three further changes were requested being the insertion of clauses 3(1) and 3(h) and the deletion of 'Warren Anderson Vendor' and the substitution of 'Warren Anderson authorised representative for and on behalf of Spring Valley Pty Ltd and Red Valley Pty Ltd'. These final changes were negotiated by King and by Anderson. The changes were accepted by Goh on behalf of Bellara Willows. The change in the description of the vendors, on whose behalf Anderson agreed to sign, was made at King's request after King said he had spoken with Gianotti."
In my view, that is very significant evidence. Mr Gianotti was in the background and he was advising Mr Anderson who in any event, knew who he was signing for.
His Honour began his recitation of the events after the signing of 16 January document in par 57 of his reasons. I will not recite his findings here except to say that in par 70 of his Honour's reasons he refers to the fact that Mr King had said in evidence that during 1988 (sic 1998) (but after 16 January) he had about six telephone conversations with Mr Madden on behalf of Bellara Willows in the course of which Mr Madden had encouraged him to sell allotments of the Duskwood land. His Honour said that Mr King said "and I accept" that he asked Mr Madden "Who's going to accept any offers?" and that Mr Madden said in response "Get them first and then we will see who is going to accept the offers." His Honour referred to the fact that on 11 May 1998 the respondent had submitted an offer to Duskwood to purchase the Duskwood land for a price of $11,000,000 on terms.
Reference was made to the document where Mr Goh authorised Mr King to sell properties "once the offer becomes unconditional". Those properties included parts of the Duskwood land. The authority is dated 18 January 1998. Another document with a similar notation appears in the appeal papers but in that document the Duskwood land is not listed.
As opposed to those pieces of evidence there is the fact that on or about 3 February 1998 the appellant made the offer abovementioned to sell the Duskwood land to the respondent on substantially different conditions to those in the 16 January document. The respondent contended that the advancement of the settlement date from November to March was worth about $500,000 in real terms. Counsel for the appellant said "Yes. That simply wasn't agreed"; that it was never suggested when that draft contract was submitted there was not a binding contract already. It does seem to me however, that the relevant offer is consistent with his Honour's findings and the respondent's contention that there never was a binding contract on 16 January.
As stated above, reliance was placed by counsel for the appellant on the fact that the respondent had had Duskwood valued after 16 January. He also made much of the fact that Mr Gianotti had referred to a great many conversations he had had with Mr Madden in which Mr Madden had acknowledged, expressly or implicitly, that there was a contract involving Duskwood.
Mr Gianotti, whose evidence the learned Judge accepted, said that Mr Madden "advised me that in so far as Duskwood was concerned he considered that the letter of 16 January 1998 bound his client to the purchase of Duskwood if the Ton Lauwers' contract did not proceed and that there was no need for any further document to be signed in that regard." That was on 6 February 1998. There was a telephone note made by Mr Gianotti of a conversation with Mr Madden on 6 February which reads "considers letter from client re Duskwood contract as binding and firm. Won't give any other deed etc."
It was conceded for the appellant that there were some differences in the two documents later submitted concerning the Duskwood land, one on 23 March and one on 11 May. Those two documents were submitted by Mr Gianotti. There had been an earlier one on 3 February submitted by Mr King. It was conceded for the appellant that that document also contained departures from the 16 January document and that it was not executed. However, it was said that at that stage Mr King had been acting for both parties. It was conceded that there was an anomaly in the change of terms "but it's an anomaly that one really puts at the feet of Mr King whom the purchasers had engaged to sell land." It was said that Mr Anderson was away in London when that contract was submitted.
The learned Judge made a finding that it was unlikely that Mr Anderson was not aware of the first typewritten draft. What his Honour said was: "If, as he said, Mr Anderson was involved in lengthy negotiations, then it seems very probable that he would have seen at least the second draft." [48]. Mr Anderson said he had attended at Mr King's house at about 12 noon.
It is significant that the learned Judge heard the evidence over a period of some 8 days. Added to that is the fact that the signature clause over which Mr Anderson signed is very particular and states that he is the authorised representative for and on behalf of two of the companies. That was also a deliberate change from the signature clause being "Warren Anderson Vendor".
In my opinion, Mr Anderson with his extensive property and business knowledge, would have known that if he had signed for himself personally he could have been held responsible. It defies commonsense to suggest that he would not have known he was signing only on behalf of the two companies concerned. It would also be to gravely under‑estimate his abilities to think otherwise.
I agree with the contentions for the respondent that the learned trial Judge was very careful in his consideration of all the evidence and in referring to the different aspects of it in his reasons for judgment.
In my view, it is important that Mr Gurdial said he remembered Mr King requesting him to make the relevant change to the signature clause and that Mr Anderson was there when he was making some amendments to the final draft. The learned trial Judge made findings in accord with the apparent effect of the document having heard extensive evidence concerning the matter. In my view, his Honour's findings accord with what was in the document.
Counsel for the respondent observed that it was important to note that in none of the decided cases cited by the appellant was a person who had expressly signed as agent for a nominated second party held also to have signed as agent for a third party not mentioned in the signature clause. I would add that there is no ambiguity about the signature clause. I accept the submission made for the respondent that when one looks at all the extrinsic evidence, some of which admittedly points in different directions, in the end result, the Court could not have sufficient reason to come to a conclusion different from that of the learned trial Judge.
I accept the respondent's contentions that on Monday, 23 March there was a document produced by the appellant which does not reflect the contents of cl 3(g) of the document of 16 January. The advancing of the settlement date by more than seven months had the effect that the purchase price payable by the respondent for Duskwood was effectively increased by almost $500,000. It is also relevant that it was common ground that as at 16 January the respondent only had sufficient financial resources to purchase Red Valley and Spring Valley.
With reference to the written authority to sell the land, Mr Goh said that Mr King had given him the document authorising Mr King to sell the property and had asked him to sign it because Mr King did not have an authority to sell. He said that Mr King dictated the wording for him to sign. Mr Goh said it was his mistake for not crossing out Duskwood on the relevant document. He said he was not giving Mr King authority to sell Duskwood but in any event the words were dictated by Colin King. Secondly, he had only endorsed amounts in the right hand column of that document in handwriting which were referable to Red Valley and Spring Valley. A second document concerned Red Valley and Spring Valley only. In my view, a possible explanation is that Mr King might have been anticipating that the Duskwood transaction would go ahead and was ensuring that Mr Goh signed up in advance.
It is significant that RMBL would not lend the respondent more than $6,500,000. Mr Goh said that in evidence in [22] of his statement. That was confirmed by Mr Madden [16(8)] who said that any further advance by RMBL to the defendant (respondent) was dependent upon the initial advance being reduced by the application of the sale proceeds from individual allotments of Red Valley and Spring Valley. As at 16 January there was no way in which Mr Goh could commit his company to buy the Duskwood land without being assured that he could sell the individual lots from Red Valley and Spring Valley.
It is also significant that the inspections carried out before 16 January had concentrated on the Red Valley and Spring Valley had and that no detailed inspection at that time was made of the Duskwood property. Mr Goh had to satisfy Mr Madden concerning the value of the Red Valley and Spring Valley land in order to obtain the finance to buy them. RMBL Investments was not interested in the Duskwood property. That was consistent with the loan application which was made to McPherson & Kellie which contemplated only the two properties.
Then there is the letter from Mallesons Stephen Jaques [AB955-957] "Attention Mr Warren Anderson and Mr Bert Gianotti" dated 1 April 1998 which amongst other things says: "We understand from Mr Gianotti that … (3) no contract for the sale of Duskwood has been entered into." If that statement was not correct it would be expected that at least Mr Gianotti would have denied it. There is a sentence on the next page of the same letter "The proposed sales are said to be proceeding in two parts, but the second part, the sale of Duskwood, has not yet been effected." Neither Mr Anderson, nor Mr Gianotti, responded to those assertions although the letter referred to correspondence and telephone conversations between Mr Anderson and Mr Hoad of the Wyllie Group and Regal Investments which was the company which had security over the land being sold by the Anderson company at that stage. Apparently, Mr Anderson did not think the contract had been finalised and neither did Mr Gianotti, his solicitor.
Counsel for the appellant conceded that after 16 January Mr Lauwers had signed an agreement to purchase the Duskwood land at $11,000,000. It is significant that Mr Anderson said that if Mr Goh signed for Spring Valley and Red Valley for $14,000,000 Mr Lauwers would sign for Duskwood at $11,000,000. On 19 January Mr Lauwers signed such a contract with a purchase price of $11,000,000.
Having considered all the very thorough submissions which were made for the appellant, including some which are not referred to in these reasons, it is my opinion that no error of fact or law on the part of the
learned trial Judge has been demonstrated. Additionally, and with respect, in my view his Honour's judgment was correct.
I would dismiss the appeal.
MURRAY J: The appellant ("Duskwood") sued the respondent ("Bellara Willows") for damages for breach of contract upon the alleged repudiation of a contract by Bellara Willows. Duskwood relied upon a written contract dated 16 January 1998 made between a Mr Anderson for Duskwood and a Mr Madden for Bellara Willows. The contract was alleged to be one for the sale by Duskwood to Bellara Willows of certain parcels of land which were described collectively as the Duskwood land. It was pleaded that the contract was conditional upon a prior sale to a Mr Lauwers not proceeding. In that event it was alleged that Bellara Willows agreed to buy the land for $11M. It was pleaded that Mr Lauwers did not proceed with the purchase of the land. And yet, so it was alleged, Bellara Willows breached the agreement by refusing to take any steps towards the completion of the sale of the land until, finally, it repudiated the agreement. The damages claimed represented the loss occasioned by Duskwood's incapacity to sell the whole of the land.
In its defence, so far as presently material, Bellara Willows pleaded that the document dated 16 January 1998 was not a contract but "merely a framework for the negotiation of contracts". On the other hand, if it was a contract, Bellara Willows pleaded that Mr Anderson executed it on behalf of two other companies, Spring Valley Pty Ltd ("Spring Valley") and Red Valley Pty Ltd ("Red Valley"), and it was not a contract between Duskwood and Bellara Willows at all.
After an eight‑day trial Duskwood's claim was dismissed. Apart from ground 5, which I think is intended to be a complaint about the decision of the trial Judge to exclude extrinsic evidence in determining whether Duskwood was a party to the contract, the other grounds of appeal allege what seem to me to be errors of fact on the part of the trial Judge in finding that the contract of 16 January 1998 was not made by Duskwood with Bellara Willows for the sale of the Duskwood land. It is argued that, although the contract was made by Duskwood's authorised representative, Mr Anderson, expressly on behalf of Red Valley and Spring Valley, his Honour should have found that the intention of the parties was to enter into a contract for the sale of the Duskwood land and that the omission of Duskwood from the signature clause of the agreement, as it was drawn by Mr Madden on behalf of Bellara Willows, was a mere oversight on the part of Mr Anderson.
It will be evident from the way in which I have summarised the grounds of appeal that the trial Judge concluded, contrary to the contention of Bellara Willows, that the document signed on 16 January 1998 by Mr Anderson and Mr Madden was a contract at law, but one made by Red Valley and Spring Valley for the sale of land owned by those companies and not one made by Duskwood for the sale of its land. It was the alternative defence relied upon by Bellara Willows which succeeded.
It is convenient to say at the outset that the complaints made about this conclusion of the trial Judge are, to my mind, not only complaints of errors of fact, but they are complaints which do not depend upon a consideration of his Honour's decisions about the credibility of the various witnesses who gave evidence before him. They are complaints which contend that, upon the evidence and, more particularly, upon his Honour's findings of fact, his Honour ought to have inferred that Duskwood was a party to the contract. This Court's approach to those grounds will be that described by the High Court in Warren v Coombes (1979) 142 CLR 531. The identity of the parties to a contract is certainly a fact to be inferred from the evidence accepted by the court.
The trial Judge approached that question primarily as one of construction of the written agreement itself. In taking that approach, in my respectful opinion, his Honour was undoubtedly right. If one wishes to see who were the parties to a written contract, one commences the enquiry by looking at the document which is said to embody the terms of the contract, examining its provisions and observing who executed it. However, the trial Judge did not exclude extrinsic evidence bearing upon this question. His Honour merely noted that such evidence could not be relied upon if it had the effect of contradicting the plain language and meaning of the contract: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 352.
His Honour appropriately noted as examples of the admissibility of such evidence five cases upon which Duskwood relied at trial and upon which it now relies. They are cases concerned with the question of the capacity in which a contract was executed. His Honour further noted the admissibility of parol evidence in relation to "the so‑called doctrine of the undisclosed principal". But those cases also make it clear that such evidence may not be relied upon where to do so would contradict the plain terms of the contract itself, as they are found to be: eg, Public Trustee v Taylor [1978] VR 289, 292 ‑ 293 and Black v Smallwood (1966) 117 CLR 52, 55 ‑ 56 and 60 ‑ 61. In the latter case, at 55, the majority of the High Court said that, "it is a cardinal rule that no oral evidence shall be admitted to show an intention different from that which appears on the face of the writing."
In the end, the trial Judge concluded that on the face of the contract itself Duskwood was not a party to it and that a reference to the Duskwood land in the contract was no more than a statement of intention on the part of Bellara Willows to deal with Duskwood if the circumstance referred to in the contract should arise. His Honour considered the evidence of the prior and subsequent conduct of the parties and said there was nothing in that evidence which made him doubt the conclusion to which he had arrived, having regard to the terms of the contract. Although at [110] of his judgment his Honour said that he was "unable to accept that this is a case in which resort to extrinsic evidence is justified", it is clear, I think, that his Honour was saying merely that he was unable to rely upon the parol evidence because of his clear view of the effect of the terms of the document and his incapacity, therefore, to draw a conclusion which he would regard as being in contradiction to that emerging from the document itself.
I turn, therefore, to the contract, which has been set out in full by Wallwork J. It commences with a specific agreement by Bellara Willows to purchase the land of Red Valley and Spring Valley for $14M. Clause 3 is worded so as to make it clear that it is concerned with how the purchase price is to be paid. Paragraphs (a) ‑ (e), (h) and (i) of cl 3 are all concerned with aspects of that process. Clause 3(f), which provides for separate contracts "for each of the individual titles for Red Valley and Spring Valley", seems to me, as I think it appeared to the trial Judge, to be that fourth class of case, additional to the three recognised by the High Court in Masters v Cameron (1954) 91 CLR 353, 360, where the parties have entered into a valid contract, but nonetheless provide that at a later date a further contract is to be entered into which may contain terms additional to those agreed, but will be directed to giving effect to the essential agreement reached by the parties: Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101, 110.
Clause 3(g), on the other hand, seems to be in a different category. It contains the document's only reference to Duskwood. Its terms are as follows:
"In the event that Duskwood's sale to Ton Lauwers does not proceed Purchaser will enter into a separate contract to purchase this property. Purchase price of $11,000,000.00, with $2,000,000.00 payable on 30 days after signing and balance payable in November 15th, 1998, with vacant possession on settlement."
In my opinion, it was open to the trial Judge to conclude, as his Honour did, that this did not represent a concluded agreement between Duskwood and Bellara Willows subject to the condition precedent that a sale of the land to Mr Lauwers did not proceed, but, rather, expressed an intention to enter into a contract in the event that that sale did not proceed. That is the way in which the paragraph is expressed. His Honour regarded the terms of the paragraph as being clear and unambiguous and, with respect, I agree. Consistent with that view of the provision was the fact that the document was signed by both Mr Madden, as the solicitor for and representative of Bellara Willows, and Mr Anderson, as the authorised representative for and on behalf of Spring Valley and Red Valley.
His Honour noted that in the original typed draft of the agreement cl 3(g) had been the last in the document. Paragraphs (h) and (i) dealing with the apportionment of moneys resulting from sales between the first and second mortgagees did not appear in the first typed draft. That rather reinforces the impression that all that was being done was, after setting out the essential terms of the sale of land by Red Valley and Spring Valley to Bellara Willows for the price of $13.5M, as was then provided, a reference was made to an agreement which it was proposed would be made in future in relation to the Duskwood land if the sale of that land to Mr Lauwers did not proceed. In the first typewritten draft of the contract Mr Anderson was simply shown as "vendor". He was not, of course. He was the authorised representative of the vendors and when that change was made, the vendors, Red Valley and Spring Valley, were expressly identified in the signature clause.
On that basis alone, as it seems to me, his Honour's decision is entirely supportable by the clear terms of the document. The error for which the grounds of appeal contend cannot, in my opinion, be made out. In my view, the appeal must be dismissed, but it is convenient to make some reference to the surrounding facts and events, as they were found to have occurred before 16 January 1998, on that date and thereafter, because, in my view, his Honour's conclusion that those facts did not dictate a different conclusion was well open to him.
His Honour found that Mr Anderson, in his capacity as a director and shareholder of each of Red Valley, Spring Valley and Duskwood, was under pressure to sell the land owned by all those companies to repay debts secured by the land. He needed to achieve a total purchase price of $25M. The sale of the land was put in the hands of a real estate agent, a Mr King. Mr King approached Mr Lauwers, a client, who was a director of a company known as Hillsfield Pty Ltd ("Hillsfield"). Hillsfield offered to purchase all the land, subject to finance, but it was unable to raise the necessary funds.
Mr King sought an offer from Mr Goh, also a client of his, who would act on behalf of Bellara Willows. However, at about the same time King went back to Lauwers and suggested that Hillsfield might wish to make an offer to buy the Duskwood land for $10M on the basis that Bellara Willows may be interested in purchasing Red Valley and Spring Valley for $7.5M each, so resulting in the total consideration of $25M required by Mr Anderson.
On 14 January 1998 Hillsfield and Duskwood entered into a contract for the sale of the Duskwood land by offer and acceptance for the price of $10M subject to finance being obtained and on condition that Duskwood would purchase land owned by Hillsfield at Toodyay for $5.5M. There was to be settlement of that contract simultaneously with what was described as "the Spring Valley and Red Valley contract for 15M", although, of course, no such contract had yet been made. At that stage Mr Goh had done no more than express interest particularly in the Spring Valley and Red Valley land and he had said that he would travel to WA to inspect it.
There is evidence that Mr Goh sought finance to purchase Red Valley and Spring Valley for a total price of $14M on the basis that Mr Lauwers, through Hillsfield, would pay $11M for the Duskwood land so as to continue to meet Mr Anderson's requirement for $25M. Goh, Madden, as the solicitor for Bellara Willows and as a director of the proposed financier of the deal so far as it might involve Bellara Willows, and a Mr Gurdial, another solicitor associated with the proposed financier, inspected the land, showing particular interest in Red Valley and Spring Valley, on 15 January 1998.
On the following day, 16 January 1998, there followed the extensive negotiations at Mr King's home at The Vines which culminated in the contract set out in full by Wallwork J to which I have already referred. The document was prepared by Madden and Gurdial and, as I have mentioned, there was an earlier typewritten draft before it took the final form to which I have previously referred. I have referred to the matters which appear to me, as they did to his Honour the trial Judge, to be significant.
The events after 16 January 1998, as found by the trial Judge, appear to me to be inconclusive. On 17 February 1998 Bellara Willows, Red Valley and Spring Valley executed a formal offer and acceptance in respect of the sale of the Red Valley and Spring Valley land to Bellara Willows for $14M. It is apparent that Mr Lauwers, on behalf of Hillsfield, was still attempting to finance its acquisition of the Duskwood land, but he failed to do so and on 23 March 1998 he told Mr King that Hillsfield could not proceed with the purchase. It is apparent that thereafter those acting for Duskwood pursued further attempts to sell the land to Bellara Willows.
I will not canvass the evidence in detail, although bearing in mind the way that the grounds of appeal are worded, I have carefully read it all and paid particular attention to the supplementary submissions made by the appellant and the respondent in relation to the extrinsic evidence. I would express my conclusion shortly by saying that, like the trial Judge, I consider that the question whether there was or was not any contract made between Duskwood and Bellara Willows on 16 January 1998 is resolved on the face and within the terms of the document upon which the appellant relies.
However, if the extrinsic evidence is considered, it seems to me to be consistent with the conclusion of fact to which a consideration of the document clearly points. At least, from the point of view of this Court, it seems to me that there is no warrant to hold that on the uncontroverted or objective facts, as they were established by the evidence and found by the trial Judge, the conclusion of fact drawn by his Honour cannot be sustained. To succeed in the appeal Duskwood must persuade this Court not only to set aside the conclusion of the trial Judge, but also, itself, to conclude that there was a binding contract for the sale of the Duskwood land entered into between Duskwood and Bellara Willows.
To put the matter shortly, it seems to me that when the contract made on 16 January 1998 was finally negotiated and settled, it reflected the fact that there was already a contract for the sale of the Duskwood land by Duskwood to Hillsfield, albeit conditional, and it was not then clear that that contract would not proceed. All that was then being done by cl 3(g) of the contract was to record the present intention of Bellara Willows to commit itself to purchase the Duskwood land for $11M in the event that
the sale to Hillsfield did not proceed. It was entirely consistent with the surrounding circumstances that cl 3(g) was interpreted by the trial Judge:
"… as recording Bellara Willows' intention to purchase the Duskwood land, by means of a separate contract, should that land not be sold to the company associated with Mr Lauwers, but not as creating any immediate contractual relationship between Bellara Willows and Duskwood. That construction is entirely consistent with the plain and unambiguous language of the signature clause."
I repeat my view that the appeal should be dismissed.
ANDERSON J: The appellant sued for damages for breach of a written agreement for the sale of land, pleading that under the agreement the respondent was obliged to purchase the land (the "Duskwood land"). The three main issues tried by Steytler J were firstly, whether the document was intended by the parties to be synallagmatical, secondly, whether it was complete as to its terms and thirdly, whether the appellant was a privy to it with the legal right to enforce it.
The first two issues were resolved in the appellant's favour but the third issue was decided against the appellant. Steytler J held that the appellant was not a signatory to the document either itself or by an agent and was not therefore bound by it. In my respectful opinion this conclusion was correct. The document is reproduced in the judgment of Wallwork J and need not be set out again. It manifestly is not signed by or on behalf of the appellant. It is signed on behalf of the respondent purchaser by a solicitor, Mr Madden, and it is signed on behalf of two other entities, Spring Valley Pty Ltd and Red Valley Pty Ltd by their authorised representative, Mr Anderson. There is no other signature on the document.
In order to persuade us that nevertheless the appellant should be treated as a party entitled to enforce the terms of the agreement and thus entitled to a remedy for its non‑performance, counsel for the appellant, Mr Myers QC, submitted firstly, that the Court should have regard to extrinsic evidence and secondly, that it should find on that evidence that the vendor's signatory, Mr Anderson, in fact signed not only on behalf of Spring Valley Pty Ltd and Red Valley Pty Ltd but also on behalf of the appellant. The cases relied on for the proposition that extrinsic evidence was admissible are those cases which lay it down that extrinsic evidence may be led in order to prove that a signatory signed the document in a
particular capacity. The cases are collected in Cross on Evidence (6th Aust ed) at par 39190 and include Fred Drughorn Ltd v Rederiakt Trans‑Atlantic [1919] AC 203 and Dillon v Nash [1950] VLR 293.
Steytler J recognised this rule of evidence but pointed out that it has its limitations. The rule that extrinsic evidence may be admitted on the question of the capacity of the signatory is qualified by the fundamental principle that extrinsic evidence may not be led to contradict the language of the contract when it has a plain meaning: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 per Mason J at 355. This principle applies not only to the terms and content of the bargain but also to the signatory clause: Formby Brothers v Formby (1910) 102 LT 116 per Vaughan Williams LJ at 117. Parole evidence to the effect that Mr Anderson did not sign only as representative of Spring Valley Pty Ltd and Red Valley Pty Ltd but signed also as representing the appellant would contradict the statement of capacity set forth in the signatory clause. A stipulation that a person signs as agent for two named entities can only be understood as a stipulation that he signs as agent for no other entity.
Counsel for the appellant submitted that this conclusion is inconsistent with the existence in the contract of cl 3(g). That is the clause which is in the following terms:
"(g)In the event that Duskwood sale to Ton Lauwers does not proceed Purchaser [the respondent] will enter into a separate contract to purchase this property. Purchase price of $11,000,000.00, with $2,000,000.00 payable on thirty days after signing and balance payable in November 15th, 1998, with vacant possession on settlement."
Counsel for the appellant submitted in effect that this clause has no work to do and its presence in the contract cannot be explained unless the parties who signed the contract intended that the appellant would be a privy to it. There was evidence that Mr Anderson owned and controlled the appellant and it was argued that the proper inference was that the omission of the appellant from the signatory clause must have been an oversight.
In my opinion, this argument starts from a false premise namely that, cl 3(g) has no work to do unless it was intended that the appellant be a privy to the document signed by Mr Madden and Mr Anderson. It is clear on the face of the document that the transaction between the respondent and Spring Valley Pty Ltd and Red Valley Pty Ltd was not the only transaction under discussion. Obviously the three companies (Spring Valley Pty Ltd, Red Valley Pty Ltd and the appellant) were engaged in selling their respective parcels of land and obviously, the respondent was not the only interested purchaser. Once this is appreciated (and there is no need to go beyond the document itself to have an appreciation of it) there might be various reasons for the inclusion in the document of a clause such as cl 3(g). The commercial relationship between the three vendor companies may have been such that the two of them who had struck a bargain with the respondent may have wished to exact a promise from the respondent with respect to the third parcel of land. It is possible to speculate that the three vendors between them (bearing in mind that they were related companies) wanted to obtain an assurance from the respondent concerning the Duskwood land without at that stage binding the appellant to sell it. But this is speculation. The point is that, as counsel for the respondent submitted, there can be no better evidence and no safer evidence as to the intention of the parties than what is in the document itself; and the document plainly and unequivocally stipulates that Mr Anderson signed as authorised representative for only two of the three companies.
It is also to be observed that in par 3(c)(ii) it is provided that part of the purchase price payable by the respondent for the two parcels of land purchased from Spring Valley Pty Ltd and Red Valley Pty Ltd was the transfer of "two properties at York (value $3,900,000.00)". There was evidence that the York properties were not owned by the respondent but were owned by an entity referred to as Sky High Corporation. If the appellant's argument that a reference in the contract to the purchase of the Duskwood land compels the conclusion that it was intended that Mr Anderson should sign the contract as agent for Duskwood then, by parity of reasoning, there should be a finding that Mr Madden signed the contract as agent for both the respondent and Sky High Corporation. It was never suggested that Mr Madden did so.
Counsel for the appellant went so far as to submit that when a contract is signed by a person as agent the proper inference is that he so signed "in any capacity which was necessary or appropriate to facilitate what has been agreed". I do not accept that proposition. As counsel for the respondent pointed out it begs the question "agreed between whom?". The answer to this is to be obtained first and foremost by seeing who signed the document and, if signed by an agent, seeing from the signatory clause on whose behalf it was signed.
This is sufficient to dispose of the appeal but I would add that if it is proper to have regard for extrinsic evidence in order to determine whether Mr Anderson signed on behalf of the appellant I agree with Wallwork J that, at best for the appellant the evidence is equivocal and at worst for the appellant it suggests that there was an intention that Mr Anderson sign only as authorised representative of the two companies who were effecting an immediate sale of their land to the respondent that is, Spring Valley Pty Ltd and Red Valley Pty Ltd. Far from suggesting that the omission of the appellant from the signature clause was an oversight the evidence suggests that the signature clause was formulated as it was quite deliberately.
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