Frumar v Guilfoyle Developments Pty Limited

[2014] NSWCA 225

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Frumar v Guilfoyle Developments Pty Limited [2014] NSWCA 225

Hearing dates:

4 February 2014

Decision date:

15 July 2014

Before:

Beazley P at [1];
Emmett JA at [101];
Bergin CJ in Eq at [109]

Decision:

Appeal dismissed with costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

CONTRACTS - Variation of contractual relations - whether variation partly written and partly oral - whether variation written only - whether terms agreed

CONTRACTS - Variation of contractual relations - Agreements contemplating execution of formal document - Masters v Cameron

APPEAL - Interference with judge's findings of fact - where findings based on credibility of witness

Cases Cited:

Brambles v Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153
Eccles v Bryant [1948] Ch 93
Masters v Cameron [1954] HCA 72; 91 CLR 353

Category:

Principal judgment

Parties:

Geoffrey Craig Frumar (Appellant)
Guilfoyle Developments Pty Limited (Respondent)

Representation:

Counsel:
G A Sirtes SC; J P Knackstredt (Appellant)
M B J Lee SC; W V McManus (Respondent)
Solicitors:
Geoffrey C Frumar & Associates (Appellant)
Harris Freidman (Respondent)

File Number(s):

CA 2012/391409

 Decision under appeal 

Jurisdiction:

9111

Citation:

Guilfoyle Developments Pty Ltd v Geoffrey Craig Frumar [2012] NSWSC 859; [2012] NSWSC 1455

Date of Decision:

2012-12-10 00:00:00

Before:

Nicholas J

File Number(s):

2011/377547

HEADNOTE

[This headnote is not to be read as part of the judgment]

On 20 November 2009, the appellant entered into a contract with the respondent for the purchase "off-the-plan" of a strata unit for $3.3 million (the contract). The respondent brought proceedings against the appellant claiming damages for breach of contract for failing to complete the contract pursuant to a notice given by the respondent. Nicholas J found in favour of the respondent, and awarded damages in the sum of $158,833.97 by way of liquidated damages.

The appellant appealed from his Honour's decision. At first instance and on appeal, the appellant pleaded that the parties had agreed to vary the contract in two respects. First, the appellant alleged that the completion date of the contract was extended to 30 April 2012 unconditionally (the first variation). Secondly, the appellant alleged that in consideration of waiving his right to rescind the contract pursuant to cl 40, the respondent had agreed to carry out additional fit-out works to the unit (the second variation).

The Court of Appeal dismissed the appeal.

Held by Beazley P (Emmett JA and Bergin CJ in Eq agreeing):

In respect of the first variation:

(1) The parties had reached an agreement to vary the contract by extending the sunset date and amending clause 30.2: [73], [82]. That variation was contained in correspondence between the parties between 29 June and 1 July 2010.

(2) There was no error in the trial judge's rejection of the variation contended for by the appellant, which was alleged to be partly oral and partly in writing: [82]. To the extent that his Honour's rejection of the variation for which the appellant contended was based on his rejection of the appellant's evidence the appellant has not demonstrated any basis upon which his Honour's credit findings should be disturbed: [81].

Considered: Fox v Percy [2003] HCA 22; 214 CLR 118.

(3) (obiter): The parties had reached finality in the terms of their bargain and intended to be immediately bound to the performance of those terms, but had intended that the terms of their agreement would be restated in a formal document. The variation therefore fell into the first class of case in Masters v Cameron. However, as the Court rejected the variation contended for by the appellant, the appeal does not turn upon this issue: [97].

Considered: Masters v Cameron [1954] HCA 72; 91 CLR 353 at 360; Eccles v Bryant [1948] Ch 93.

In respect of the second variation:

(4) The evidence did not support any agreement between the parties having been reached in respect of the second variation: [86].

Judgment

1. BEAZLEY P: On 20 November 2009, the appellant entered into a contract with the respondent for the purchase "off-the-plan" of a strata unit for $3.3 million (the contract). The appellant contended that the completion date of the contract had been varied to 30 April 2012 so that the respondent's demand for completion prior to that date was not in accordance with the terms of the contract. Nicholas J rejected the appellant's argument and declared that he, in breach of contract, had failed to complete the contract pursuant to a notice given by the respondent. His Honour ordered that the appellant pay to the respondent damages in the sum of $158,833.97 by way of liquidated damages for failure to settle in accordance with the respondent's notice.

1. The appellant appealed from his Honour's declaration and order. The principal issue raised by the appellant's grounds of appeal was whether the parties had agreed to vary the contract so as to be immediately bound by variations the appellant alleged had been agreed to or whether a binding agreement in respect of the variations was not to come into effect until a replacement contract had been executed by the parties. This raised the question whether any agreement between the parties fell into the first or third class of case identified in Masters v Cameron [1954] HCA 72; 91 CLR 353 at 360. The appellant contended that the case fell within the first class of case so that the agreements reached were immediately binding notwithstanding that a replacement contract had not been executed.

Terms of the contract

1. The contract, which was for the sale of land, contained a number of special conditions which are central to the determination of the issues on the appeal. They were as follows:

"30 COMPLETION AND NOTICE TO COMPLETE

30.1 Completion of this agreement (the 'completion date') will take place on the later of the date:-

a. twenty one (21) days from the date of service by the vendor on the purchaser of written notice that the Strata Plan has been registered. Such notice must include a copy of the registered strata plan and any other dealings registered simultaneously with the Strata Plan; or

b. forty two (42) days from the date of this contract.

30.2 The vendor will provide written notice to the purchasers of at least six (6) months that registration of the plan is anticipated and that settlement will be due so as to enable the purchasers to market and sell their house. Where completion would otherwise be due to take place between 1 May and 1 September in any year then the completion date will be automatically extended to 30 November of that year without any penalty being suffered by the purchasers.

30.3 In the event that completion is not effected in accordance with special condition 30.1 then either party shall be entitled to give to the other party a notice to complete requiring completion to take place within fourteen (14) days from the date upon which the notice to complete is served time being of the essence and the parties agree that such notice is reasonable and sufficient notice."

It was anticipated by the parties that settlement would occur in the calendar year 2011, so that the reference in cl 30.1 to November was anticipated to be November 2011.

1. Clause 31 provided that completion of the contract was conditional upon the respondent becoming the registered proprietor of the entire property and the registration of the strata plan of subdivision on or before 24 months from the date of the contract, that is, by 19 November 2011. This was referred to by the parties as the sunset period. The full terms of cl 31.1 are as follows:

"31. CONDITIONAL CONTRACT

31.1 Completion of this Contract shall be subject to and conditional upon the vendor becoming the registered proprietor of the lands specified on page 1 of this contract and registration of the strata plan of subdivision substantially in the form annexed hereto and marked 'A' (the 'Strata Plan') on or before twenty four (24) months from the date of this contract ('Plan Registration Date'). In the even that registration of the Strata Plan has not been effected or occurred before the Plan Registration Date then the purchaser may rescind this Contract upon seven (7) days written notice whereupon the provisions of Clause 19 shall apply PROVIDED HOWEVER that no such right of rescission shall be exercisable by the Purchaser after twenty eight (28) days from expiry of the said twenty four (24) month period."

1. Clause 32 provided for the construction of the property in a "proper and workmanlike manner and substantially in accordance" with the plans, and for the items specified in the Schedule of Finishes to be installed.

1. Clause 37 provided:

"37 THE AGREEMENT

37.1 the Purchaser acknowledges the terms and conditions stipulated in this contract form the whole of the agreement between the Vendor and the Purchaser and that no reliance is to be placed on any letter document or correspondence whether oral or in writing as amending or adding to the terms and conditions stipulated in this contract."

1. Clause 40 was of particular relevance to the appellant, as his wife died on 8 April 2010. That triggered the appellant's right to rescind the contract pursuant to cl 40. Clause 40 provided:

"40 RESCISSION

Notwithstanding any rule of law or equity to the contrary, should the purchasers, or either of them, prior to completion die or become mentally ill, then the surviving purchaser, or the legal personal representative/s of the deceased or mentally ill purchaser's estate, may by notice in writing served on the vendor rescind this agreement, whereupon the provisions of clause 19 will apply."

1. Reference should also be made to cl 19, which also dealt with rescission. It provided, relevantly:

"19 Rescission of contract

19.1 If this contract expressly gives a party a right to rescind, the party can exercise the right -

19.1.1 only by serving a notice before completion; and

19.1.2 in spite of any making of a claim or requisition, any attempt to satisfy a claim or requisition, any arbitration, litigation, mediation or negotiation or any giving or taking of possession ..."

1. Clause 42 provided for the payment of liquidated damages if completion of the contract did not occur by the completion date due to the default of one party only.

1. Clause 57 related to certain agreed additions and variations to the unit. Clause 58 provided for the purchasers to have input in design and architectural matters.

Background

1. The proceedings had been commenced by the respondent seeking specific performance of the contract, together with liquidated damages pursuant to cl 42 of the contract, for failure to complete by the completion date. Unless cl 30.2 was enlivened, the completion date was dependent upon notice being given in accordance with cl 30.1. Subject to the question whether the contract had been varied as alleged by the appellant, that date was agreed by the parties to be 11 November 2011. As the contract was completed subsequent to the commencement of the proceedings, relief by way of specific performance became moot. However, the respondent maintained its claim for liquidated damages. The appellant, in his defence and cross-claim, contended that the contract had been varied on two separate occasions and that the respondent had breached the contract as varied.

1. The variations the appellant alleged had been agreed to were twofold. The first variation, to the extent it was in issue, was in respect of the completion date of the contract. The appellant alleged the parties had agreed that the completion date of the contract be extended to 30 April 2012 unconditionally. The first variation was alleged to be partly oral and partly in writing and was pleaded to have been entered into between 29 June 2010 and 1 July 2010 whereby, in consideration of the appellant agreeing to an extension of the sunset date, the respondent agreed to reduce the purchase price in the sum of $7,475 and to extend the completion date of the contract to 30 April 2012. The sunset date was defined in cl 31 of the contract, relevantly, by reference to the date of registration of the strata plan. The appellant pleaded that other minor variations had been agreed at this time.

1. There was no dispute at trial or on the appeal that the parties had agreed to the variation of the sunset date. The respondent, however, submitted that the first variation was in terms different from those alleged by the appellant. The respondent accepted that there had been discussions and correspondence relating to an extension of the completion date between the dates alleged by the appellant but contended that the only agreement reached was that recorded in writing. That agreement was that the date of 30 April 2012 would be substituted for the date 30 November 2011 in cl 30.2. The respondent contended that there was no oral agreement whereby the completion date was extended unconditionally to 30 April 2012 and further denied that there had been any discussion to that effect. The respondent contended that, in any event, the matter fell within the third class of case identified in Masters v Cameron as found by the primary judge.

1. The second variation alleged by the appellant was that in consideration of waiving his right to rescind the contract pursuant to cl 40, the respondent would carry out additional fit-out works to the unit (the second variation). The second variation was also alleged to be partly oral and partly in writing and was pleaded to have occurred between 22 July 2010 and about 4 August 2010, whereby, in consideration of the appellant agreeing not to exercise his right to rescind pursuant to cl 40 of the contract, the respondent agreed to provide, at its cost, additional services and fit-out items in the property, including installation of various appliances and the reconfiguration of the kitchen and the main bedroom ensuite.

1. The oral part of the variation was alleged to have occurred in conversations on 12 July and 27 July 2010 between the appellant and Mr Machkevitch on behalf of the respondent. Mr Machkevitch was the sole director of the respondent. To the extent that the variation was in writing, it was alleged to have been comprised in a series of letters and emails between 20 July and 4 August 2010.

1. The respondent denied that there was any agreement to the second variation as alleged. In particular, it denied that the appellant had irrevocably waived his right to rescind the contract pursuant to cl 40.

1. This is a convenient place to record that the primary judge gave a direction that evidence of the content of any conversations was to be given viva voce. However, as the affidavits were in evidence, both the affidavit and oral evidence will need to be considered. The appellant's affidavit evidence was based upon diary notes that he said he made contemporaneously with any conversations he had relating to the contract. His oral evidence was, overall, consistent with his diary notes. There is also a question on the appeal as to whether the appellant was challenged as to the accuracy of his diary notes and the impact that ought to have on the acceptance of the appellant's evidence.

The relevant communications

1. Following the death of the appellant's wife, there were oral and written communications between the parties relating to the contract, including whether the appellant would rescind the contract as he was entitled to do pursuant to cl 40. The appellant made diary notes of the telephone conversations and meetings he had in this period with Mr Machkevitch, the respondents, and with the respondent's solicitor, Mr Watson.

1. As the content of the communications between the parties in this period is critical to the questions in issue on the appeal, it is necessary to consider them in some detail.

1. In May 2010, following the death of the appellant's wife, the appellant informed the respondent that he would advise by 30 June 2010 whether he intended to rescind the contract. However, in an email dated 20 May 2010, the appellant advised the respondent that he wished for another month to consider his position. There were other communications in relation to whether the appellant would rescind, the details of which are not relevant to the issue on the appeal. The first relevant communication was on 29 June 2010.

The first variation

1. On 29 June 2010, Mr Watson telephoned the appellant seeking, by way of variation to the contract, an extension of the sunset period (see cl 31.1), in order to satisfy demands being made by the respondent's financiers. He stated that he needed an answer in the next few hours. The appellant responded that he was not in a position to give an immediate answer, because he had still not made up his mind as to whether he would rescind the contract.

1. Mr Watson then emailed the appellant as follows:

"The vendor's financier has yesterday requested as a condition of financing this construction phase that all pre sale contracts have a sunset clause that expires at least 6 months after expected construction completion.

As such I am instructed to seek your agreement to vary the terms of your contract by amending clause 31.1 by deleting 24 months and inserting 19 March 2012. The balance of the contract would remain the same.

If you agree to this amendment by return email before noon today, I am instructed that the vendor will agree to reduce the purchase price by $5000.00 to compensate for your urgent consideration of this request."

1. The appellant said, in his affidavit dated 27 January 2012, that he telephoned Mr Watson later that morning, stating that he had quickly reviewed the contract but that given his personal circumstances, he did not think he would be ready emotionally to complete the contract by October or November 2011. He further said to Mr Watson:

"I remember that [Mr Machkevitch] alerted me recently to expect completion of the building works by that date. Accordingly, for the purpose of consenting to the extended sunset period, I would require an extension of the settlement date for at least 6 months until about 30 April 2012. I also require certain other amendments or variations to the contract."

1. The appellant said that Mr Watson asked him to send an email with the proposed amendments to the contract and he would get instructions. The appellant forwarded the following email to Mr Watson at 11.18 am, advising that he had:

"... reserved to myself and retained the right to exercise my entitlement to rescind the Contract for Sale dated 20 November 2009 pursuant to Clause 40 until 31 July."

1. The email continued:

"I am agreeable to amendment of Clause 31.1 by deleting the reference to 24 months and by substituting 19 March 2012 (which is a Saturday) as the Plan Registration date in its stead subject to your client's favourable consideration that, in view of the unexpected delay in commencement of the building works and the additional requirement of your client's Financier, the following consequential variations should be made to the contract:

(i) Clause 30.2 should be amended by deleting the date 30 November and by substituting 30 April 2012;

(ii) Clause 31.2.10 should be amended by deleting the 2 references to 6 months and by substituting 12 months; and

(iii) Clause 31.2.12.1 should be amended by deleting the reference to 6 months and by substituting 12 months on the basis that, should I not rescind the Contract, due to the proposed extension of the Plan Registration Date into a further 6 month period and consistent with the previous arrangement between the parties for which purpose I refer you to my letter of 30 November last, your client shall pay an additional sum of $2,475 towards the funding costs of the Bank Guarantee in its possession."

1. The appellant, in his affidavit evidence, said that following that email, Mr Watson telephoned him and advised that the respondent was agreeable to the extension of the settlement date to 30 April 2012. The appellant was cross-examined to the effect that the notes did not accurately record the content of the conversations on 29 June 2010, in that he did not ask for and Mr Watson did not agree to an extension of the settlement date to 30 April 2012. The appellant responded, "I reject that absolutely". Mr Watson denied, in cross-examination, that the appellant had said that he required an extension for at least six months until about 30 April 2012 and further denied that, in a telephone call he made shortly afterwards to the appellant, he said that his client was agreeable to the extension of the settlement until 30 April 2012.

1. Later on 29 June 2010, Mr Watson forwarded, by facsimile transmission, the following letter to the appellant:

"I refer to our exchange of emails this morning and thank you for your prompt attention to the vendor's request. I acknowledge and confirm that the agreement to amend the contract as set out below will not affect any other contractual rights you now have under the contract. I now seek confirmation that you agree to the following amendments to the contract:

1. Clause 31.1 is amended by deleting the words 'twenty four (24) months' and replacing them with '19 March 2012';

2. Clause 30.2 is amended by deleting the words '30 November' and replacing them with '30 April 2012';

3. Clause 31.2.10 is amended by deleting the number '6' where [it] appears twice and replacing with the number '12';

4. 31.2.12.1 is amended by deleting the number '6' and replacing with the number '12' and that the vendor agrees to pay an additional sum of $2,475.00 towards the cost of funding the Bank Guarantee Deposit Bond should that be required."

1. The appellant replied by email dated 30 June 2010, noting that except for the wording in relation to cl 31.2.12.1, agreement seemed to have been reached as to amendment of cl 31.1. The email continued:

"As to Clause 31.2.12.1, for the purpose of extending the term of the Bank Guarantee which I had negotiated with St George Bank Limited in favour of [the respondent] and in order to accommodate [the respondent's] Financier's requirement for the amendment of Clause 31.1, it will be necessary to pay the additional acquisition cost of $2,475 in the event of the waiver of my entitlement to rescind the Contract. Accordingly, following the meeting with [the respondent] on 12 July and should I not withdraw from the Contract, payment by [the respondent] of the said sum of $2,475 should be made to the Bank on or about 31 July. Perhaps, as a suitable precaution for both parties, should I elect not to rely upon Clause 40, I should issue to you a letter on or prior to 31 July confirming the waiver of my entitlement simultaneously with my receipt from [the respondent] of the cheque drawn in favour of St George Bank Limited."

1. The appellant also sent, this time by facsimile transmission, a letter of the same date to Mr Watson, as follows:

"We refer to the recent exchange of emails between our Firms and hereby confirm our clients' agreement to the alteration or variation of Clause 31.1 of the Contract for Sale between our respective clients by the deletion of the words 'twenty four (24) months' and their replacement by the date '19 March 2012'."

(This was a reference to the extension of the sunset date.)

1. Mr Watson wrote to the appellant on 1 July 2010, noting "the agreement to amend clauses 30 and 31 of the contract for sale of land as set out in [the facsimiles of 29 and 30 June 2010]".

1. Although the appellant referred to the amendments that needed to be made to the contract in a letter to Mr Watson on 20 July 2010, which is discussed below, it is sufficient to note at this point that there was nothing in that letter that was different from what was contained in the correspondence between 29 June and 1 July 2010.

The second variation

1. The critical communications, both oral and written, in relation to the second variation occurred on 12 July, 20 July, 27 July, 28 July and 3 August 2010.

1. On 12 July, there was a meeting attended by the appellant, his daughter, Mr Machkevitch on behalf of the respondent, and the respondent's architect. The appellant said that at this meeting he indicated that he was inclined to withdraw from the contract. He expressed concern at having to deal with the outfitting of the unit, without his wife's assistance. He also expressed concern at having to pay stamp duty on the contract. Under the stamp duties legislation, stamp duty was payable on this contract within 12 months of the date of the contract with a grace period of three months. Accordingly, stamp duty was payable on or before 20 February 2011. The appellant's concern was that although he would have become liable for stamp duty by that date, building work had only just commenced and would not be completed by the date that the duty was payable.

1. The appellant said that Mr Machkevitch responded by making a number of offers to assist him, including offering to reduce the purchase price by $30,000 because of the stamp duty issue. In response to these offers, the appellant said he told Mr Machkevitch he would reconsider his position in respect of rescission.

1. On 20 July, the appellant emailed the respondent referring to matters that had been discussed at the meeting on 12 July. In particular, he advised that he would take some further time beyond 31 July in which to make a decision as to whether to rescind but hoped that he would be able to inform the respondent of his decision within 14 days of their reply to his email. The email then listed 30 items relating to fit-out of the unit and the building work. This part of the email was introduced with the phrase, "[i]n the meantime and for the purpose of certainty on my part". The letter concluded:

"I would appreciate the early receipt of your comments to the above items so that your answers can assist me in determining my preferred course of action due to my present unsettled state of mind.

Please note my sincere intention as I indicated at the meeting in your Office that I do not wish to postpone my decision as to whether I should rescind the Contract for Sale for any length of time beyond that which I consider to be practical in my best interests. For that reason and in the hope that I do feel more comfortable and confident with the benefit of your reply to this letter, I remind you of the following in relation to the Contract for Sale:

(a) the Purchaser should now only be me;

(b) arising from the recent exchange of correspondence between your Solicitor, Mr Gregg Watson and me, amendments do seem to be necessary at least to Clauses 30.2, 31.1, 31.2.10, 31.2.12.1, 57.15 and, perhaps, generally to Clauses 57 and 58 with the Purchase Price to be reduced by $5,000 and the payment by you of an additional sum of $2,475 in relation to the Bank Guarantee, all of which issues were confirmed by Mr Watson in his correspondence to me on 30 June; and

(c) in the light of the considerable number of amendments which would need to be made to the Contract for Sale, the parties must consider the best means of implementing the same at the earliest opportunity."

1. Mr Machkevitch responded by email dated 22 July. Relevantly, in response to the matters referred to in the appellant's email, he stated that Mr Watson would prepare and submit a revised contract for the appellant's consideration.

1. There was a further meeting between the parties on 27 July. The appellant said that at this meeting he thanked Mr Machkevitch for the extension of the settlement date to 30 April 2012 and said that "[w]ithout that extension, I would have definitely withdrawn from the contract". There ensued, on the appellant's account, a discussion in relation to variations to the fit-out of the unit. The question of stamp duty was then discussed. The appellant said he suggested to Mr Machkevitch that in order to overcome the stamp duty issues, the existing contract be cancelled and that, simultaneously, "the parties enter into a new replacement contract which incorporates all the variations that we have discussed and agreed upon".

1. In his affidavit evidence, the appellant said there was discussion as to the effect of a newly imposed state government levy on property transfers. On the appellant's account, Mr Machkevitch said he would discuss that with his solicitor, but that if the appellant became liable to pay the levy, the respondent would pay the levy if that would assist the appellant in deciding not to withdraw from the purchase. The appellant said that Mr Machkevitch then asked him his intentions in relation to the contract, to which the appellant responded:

"I do now feel more comfortable and assure you that, provided that you satisfy the variations that we have agreed upon, I will not exercise my right under the contract to withdraw from the transaction. Please now proceed to instruct your solicitor to prepare the replacement contract for sale incorporating the agreed variations to assist me with postponement of the payment of stamp duty." (emphasis added)

1. The appellant said that Mr Machkevitch replied, as follows:

"Thank you for letting me know your decision. By you remaining in the transaction, I do not need to notify my bank or risk the building finance. I will instruct my solicitor immediately to proceed with the preparation of the replacement contract for sale."

1. In his oral evidence, the appellant said that he stated, early in this meeting, that having regard to the consideration that had been extended to him by the respondent, he was leaning towards not exercising his right to rescind. He said there was further conversation in relation to variations to the fit-out, as well as in respect of the proposed new state levy on the transfers of property. The appellant said that at the end of the meeting, he said, "now that we have reached agreement on the variations I will not exercise the right to rescind". He said Mr Machkevitch responded that he would not therefore "need to inform his bank or the financier or put his building finance at risk" and he responded that they should proceed "without delay". The reference to the risk to building finance was a reference to a requirement by the respondent's financier for a certain number of pre-sales of the units. At that time, if the appellant rescinded, the respondent would have sold less than the number required by the financier.

1. Mr Machkevitch, in his oral evidence in chief, denied that there was any discussion at the meeting of 27 July as to whether or not the appellant would rescind the contract consequent upon his wife's death. He said, however, there was discussion about rescission of the existing contract for the purposes of entering a new contract. His evidence on this was as follows:

"A. Well, [the appellant] said to me that because there are so many changes in the contract that we must sign a new amended contract and then he said that because it is, he is going to be the sole purchaser of that contract, the old contract would be rescinded and there were - he wouldn't have to pay stamp duty for some lengthy period of time under the new contract. It was in his interests to do that.

Q. That was the discussion, the question of rescission of the existing contract, and a new contract being entered into?

A. Yes."

1. Mr Machkevitch said that at the end of the meeting, the appellant told him he would need time to think about what the respondent was prepared to offer and also to consider the revised contract, and that he would "return back to us with his answer". Mr Machkevitch was challenged as to this answer in cross-examination, but reiterated that the appellant, in response to Mr Machkevitch's question, "[w]hich way are we going?" had said that he would talk to his family and advise the respondent of his position. Mr Machkevitch said that at the meeting of 12 July the appellant had said "exactly the same thing" as at the meeting on 27 July. Mr Machkevitch denied that he was confused as to what was said at the two meetings. In cross-examination, Mr Machkevitch denied that the appellant said towards the end of the meeting, "I will not exercise my right to withdraw".

1. On 28 July, Mr Machkevitch emailed the appellant, setting out a summary of the discussion held the previous day and stating that if he had missed something, to "please add it on". The email then listed 12 items, all of which related to the fit-out. A further item related to the new government levy introduced on 1 July, in respect of which Mr Machkevitch advised that the respondent would reimburse the appellant if he became liable to pay it. Importantly on the respondent's case, Mr Machkevitch's email made no reference to the appellant having stated that he would proceed with the contract. The email concluded, "[p]lease do not hesitate to contact me if you need further clarifications".

1. The appellant responded on 3 August, as follows:

"Thank you for your email of 28 July following the further meeting in your Office on 27 July."

The letter responded to five fit-out items raised in Mr Machkevitch's email of 28 July. The letter continued:

"Subject to your acceptance of these further points of clarification, please inform [your solicitor] of the issues which have been discussed between us at the meetings in your Office on 12 and 27 July and the content of the emails which have passed between us. Furthermore, he should be reminded of the issues raised in correspondence and discussions which took place between him and me during the period from 29 June to 1 July so that he can proceed to prepare the revised documentation for my consideration and final resolution of my position pursuant to Clause 40 of the existing Contract for Sale.

Please note that, following my receipt of the documentation from [your solicitor] and my approval of the same, I will proceed without delay."

1. The appellant was cross-examined as to the contents of this letter and, in particular, the reference to receiving the revised documentation for "the final resolution of [his] position pursuant to clause 40 of the existing contract". The appellant also said in cross-examination that he had made his decision not to rescind by the end of the meeting of 27 July. He agreed, however, that this is not how it was expressed in the letter of 3 August and accepted that it was "completely inconsistent" with what was said in the letter. The appellant agreed that the letter conveyed to the respondent that he had not made a final decision but again said that he had told Mr Machkevitch at the end of the meeting that he had decided not to rescind the contract.

1. On 4 August, Mr Machkevitch advised his solicitor, by email, that he was happy to incorporate into the contract the changes requested by the appellant and requested Mr Watson to liaise directly with the appellant "to work out an acceptable form of the agreement".

Subsequent communications and notification of settlement date

1. There was correspondence between Mr Watson and the appellant on 11 and 17 August 2010, in relation to the amendments to the contract. In his letter of 17 August, the appellant relevantly made the following observation:

"(a) although we have no objection to the retention of both Special Conditions Nos. 30.1 and 30.2 we remind you that your client has agreed with our client to 30 April 2012 as the Completion date;

...

(g) in Special Condition No. 40, we submit that the words 'or either of them' at the end of the first and at the commencement of the second lines should be deleted." (emphasis added)

1. The respondent, in an email on 14 September 2010 to Mr Watson, advised that it was "happy to proceed with all items as per [the appellant's] email of 17 August 2010".

1. Mr Watson, by letter dated 15 September 2010, responded to the appellant's letter of 17 August, stating that he was instructed that para (a) was agreed to. He attached an amended special condition which provided for completion to take place on 30 April 2012. The previous cl 30.2 was struck through in its entirety.

1. Mr Machkevitch gave evidence that any agreement to para (a) in the appellant's email of 17 August was in error. He said that when he reviewed the appellant's email of 17 August, he had not appreciated that the appellant was suggesting that there had been an agreement to extend the completion date unconditionally to 30 April 2012. In cross-examination, Mr Machkevitch stated that there had been no reference in the correspondence between 29 June and 1 July to such an extension. He said that he had made a mistake when viewing the appellant's email of 17 August because he had not understood that the appellant was proposing "to insert an absolute date of 30 April". He said that he had understood that it was agreed that 30 April was a completion date "in certain circumstances" and that there was no further agreement, oral or otherwise, after the exchange of letters between 29 June and 1 July. He said that was why he "overlooked" that the reference to 30 April in the appellant's email was to an unconditional completion date.

1. Mr Watson gave evidence that he was wrong in this correspondence, although he thought it was in accordance with his instructions.

1. On 1 October 2010, the appellant wrote a lengthy letter to Mr Watson responding to the letter of 15 September. Some matters were noted, other matters were queried and new matters were raised. Significant drafting amendments to the contract were put forward as being necessary. The requirement for some clauses to be reinstated was stated. There was also a complaint that the draft special conditions prepared by Mr Watson failed to address issues that had been discussed between the architect and the appellant in a meeting on 18 August. The letter concluded:

"Please oblige in acknowledging your receipt of this letter and in furnishing to us your client's comments and instructions at his earliest convenience ... We suggest that, subject to resolution and finalisation of the above issues, you prepare the appropriate form of Contract for Sale with all appropriate annexures and forward the same to our Office for the Writer's approval ... and for execution in readiness for exchange which should be able to take place during the last week of this month."

1. The appellant was overseas from 4-21 October 2010. He telephoned Mr Watson on 10 November 2010. Their versions of the conversation differ. The appellant contended that Mr Watson told him that Mr Machkevitch:

"... maintains that he never agreed to extend the settlement date from the specified date in the contract. He considers that I have ignored or misunderstood his instructions ..."

Mr Watson denied the words attributed to him by the appellant in the appellant's affidavit evidence. On his evidence, in the conversation on about 10 November 2010, he said words to the effect:

"... I have been speaking with [Mr Machkevitch]. I have misunderstood my instructions. [Mr Machkevitch] will not agree to extend the settlement date."

1. The appellant again wrote to Mr Watson on 22 November 2010, pointing out, inter alia, that in his letter of 15 September, Mr Watson had confirmed his instructions to agree to the extension of the completion date to 30 April 2012. Mr Watson responded the following day, 23 November 2010, advising the appellant that the respondent relied upon the existing contract and that the settlement date provided for in that contract would not be extended. The letter continued:

"The vendor will continue to build the property and the unit sold to you in accordance with the contract and the finishes and fittings as agreed with you and documented in the contract and subsequent exchange of correspondence between our firms."

1. On 2 December 2010, the respondent emailed the appellant, stating that it would not incur any more costs in respect of the fit-out of the unit:

"... until such time that you affirm that you are proceeding with the original contract ... [W]e cannot afford to continue to incur expenses with the current uncertainty on your side."

1. Although the appellant did not respond to this email, it appears that he continued to be involved with the fit-out. On 15 February 2011, he received an email from the respondent, noting that the appellant had selected a particular veneer for the kitchen cupboard doors and drawers and stating that the builder would be asked to provide a quotation for this work. The email further noted that the respondent had incurred three hours of the architect's time for the visit that day and that, having already paid $20,000 to the architect for the design work and modifications to the appellant's unit, the respondent had exhausted "our allowance". The letter concluded that all future work, including that relating to the selection of the finish to the kitchen cupboards, would have to be paid by the appellant directly to the architect.

1. By letter dated 5 October 2011, Mr Watson served notice of the registration of the strata plan. Pursuant to cl 30.1(a) of the contract, completion was required within 21 days of the date of service. On 26 October 2011, the appellant was served with the occupation certificate and informed that settlement was required on 2 November 2011.

1. The appellant, by letter dated 28 October 2011, denied that the respondent was entitled to completion under the contract. In addition, he alleged numerous breaches of the contract and referred to itemised work that was either defective or yet to be performed. In his letter dated 31 October 2011, Mr Watson denied that there was any agreement to vary the contract other than that contained in the correspondence of 29 June 2010. He stated that completion was required on or before 11 November 2011. The appellant was subsequently advised of the time and place for settlement on that day, but did not attend.

1. The respondent commenced its specific performance proceedings on 25 November 2011.

Trial judge's reasons

1. The trial judge, at [6], framed the issue between the parties as being whether there was a binding agreement to extend the date of completion to 30 April 2012 and for the respondent to carry out additional work required by the appellant. His Honour observed that it was common ground that a replacement contract for sale would be prepared to incorporate the variations that had been agreed between the parties. However, his Honour noted that it was the appellant's position that a binding agreement was not conditional upon the execution of a replacement contract. His Honour thus identified the crucial question in the case to be whether the negotiations between the parties had resulted in a binding agreement within the first or second class of case identified in Masters v Cameron at 360, or whether it was the intention of the parties that a concluded bargain was conditional upon the execution of a formal contract, as contended by the respondent.

1. The trial judge, after an examination of the communications between the parties and references to the various meetings that were held, including the meetings on 12 July and 27 July 2010, considered, at [56], that it was unnecessary for him to determine which evidence he preferred as to what occurred at the meetings, because following each meeting the parties had engaged in correspondence that "comprehensively identified all issues of importance". As his Honour put it, "if it was not in a letter, it was not on the table". His Honour considered that the appellant's oral evidence confirmed this view.

1. Critically, at [58], his Honour referred to the appellant's cross-examination in relation to the meeting of 27 July 2010 and the letter of 3 August 2010, in which the appellant accepted that the letter gave no indication of a decision not to rescind and that his request for revised documentation for consideration and final resolution of his position under cl 20 was inconsistent with his evidence as to what he had told Mr Machkevitch at the meeting on 27 July. In his Honour's opinion, the correspondence demonstrated that the appellant's evidence that he had given up his right to rescind was implausible. His Honour rejected, at [59], that the appellant had done so.

1. His Honour's conclusions were expressed at [62]-[64] as follows:

"62 The transaction was for the sale and purchase of a unit 'off the plan', the construction of which included a vast number of detailed fittings and fixtures to a high standard. The contents of the correspondence convince me that the requirement for a contract document to replace the existing contract was a condition underlying the negotiations without which there was to be no binding and enforceable agreement. In other words, I find that the parties did not intend to be bound unless and until they had signed and exchanged a formal contract which included all matters about which negotiations had resulted in agreement. In short, this case is squarely within the third class of cases described in Masters.

63 Furthermore, in my opinion, there is nothing in the correspondence which suggests that a separate and binding agreement(s) about particular matters arose irrespective of the outcome of negotiations about other matters. For example, the correspondence provides no support for the proposition that a binding agreement had been reached by 1 July 2010, or at all to extend the date for completion although many other terms and conditions were under consideration.

64 For these reasons, [the appellant's] claims that the contract had been varied to extend the date for settlement to 30 April 2012, and that by 4 August 2010 a binding agreement had been reached for additional works on the unit must be rejected."

1. The appellant had also claimed at first instance that the respondent had induced the expectation that he would not have to settle under the contract until 30 April 2012 and further, in the correspondence between 22 July and 4 August 2010, the respondent had induced an expectation that it would perform the building variations. His Honour dealt with the estoppel claim at [65] ff. The estoppel claim was based upon an expectation, alleged to have been induced by the respondent during the course of telephone conversations with Mr Watson on 29 June 2010, that the appellant would not have to settle until 30 April 2012. His Honour observed, at [66], that he had already rejected the appellant's claim that he had given up his right of rescission. His Honour also observed, at [68], that the appellant had agreed in cross-examination that the correspondence disclosed no absolute entitlement to an extension of the settlement date to 30 April 2012 and that that date would not apply unless completion was otherwise to take place between 1 May and 1 September in any year. As his Honour noted, in the correspondence between 29 June and 1 July 2010, there had been no suggested amendment of cl 30.1, which specified the completion date. Rather, as his Honour, at [68], saw it:

"Amendments of these conditions became part of the negotiations which continued following [the appellant's] email of 20 July 2010."

1. In this context, his Honour referred to Mr Watson's letter of 15 September 2010, which included a reference to the amendment of cl 30.1 provide for 30 April 2012 as the completion date.

1. His Honour further observed, at [69]:

"It was put that [the appellant] relied on the agreement to extend the completion date to his detriment. In my opinion the submission must be rejected. The question of amendment to clause 30.1 became one of the numerous matters of negotiation and agreement intended to become binding upon the making of the contemplated replacement contract. In the circumstances, it cannot be said that a binding agreement for the extension of the completion date upon which [the appellant] could reasonably rely had come into existence on or about 1 July 2010. It follows, in my opinion, there was no reasonable basis for [the appellant] to regard the proposed amendment as immediately binding."

Submissions

1. The appellant relied upon the parties having reached agreement, partly orally and partly in writing, as to an extension of the completion date to 30 April 2012. He submitted that it was explicable that the correspondence between 29 June and 1 July 2010 did not fully set out what had been agreed between the parties, given the haste in which the matters the subject of the correspondence had arisen. He submitted that the likelihood that an agreement had been reached to extend the completion date to 30 April 2012, notwithstanding that it was not reflected in the correspondence, was reinforced by the context in which the communications took place, namely, an indulgence being sought by the respondent in return for which the appellant himself sought an indulgence. The appellant further submitted that Mr Machkevitch's explanation that he had made a mistake in not fully understanding the letter of 17 August was self-serving. It was the only possible thing that he could say if he wanted to extricate himself from the bargain which the appellant contended had been made, namely, the unconditional extension of the completion date to 30 April 2012.

1. The appellant further contended that, as at 27 July, the parties had reached a concluded agreement whereby he had abandoned his right to rescind the contract, there was an extended completion date of 30 April 2012 and there were agreed variations to the fit-out. He submitted that the communications and the conduct of the parties thereafter, was post-contractual conduct which evidenced the variation of the agreement for which he contended. In particular, the appellant pointed out that after early August, there was no further reference in the communications between the parties to his right to rescind pursuant to cl 40 which demonstrated that both parties were proceeding with the contract. He singled out the respondent's email of 15 February 2011 (see above at [*56]) as being consistent with there having been a concluded agreement as to variations as he contended, otherwise the respondent would not have expended monies such as were referred to in the email.

1. The respondent submitted that it would be expected that matters would be recorded in writing between the parties, both because the contract was a complex contract in respect of land and because the parties took care to confirm to the other party, in writing, their various discussions and telephone calls: see Eccles v Bryant [1948] Ch 93. The respondent submitted, therefore, that it was improbable that there was an additional term agreed to orally on 29 June that was not recorded in the correspondence. The respondent further submitted that his Honour's approach to the determination of the question whether the appellant had unconditionally waived his right to rescind the contract was consistent with this notion, namely, that the parties would be expected to record their agreement in writing.

1. The respondent submitted that it was plain that as at 3 August 2010, the appellant had still reserved his position as to whether he would rescind the contract. It submitted that, as the correspondence also made plain, even in December 2010 it had not been finally informed whether the appellant proposed to rescind or unequivocally proceed with the contract. The respondent contended that this was apparent from the email in late November and, in particular, from the email of 2 December, in which it requested the appellant to affirm that he was proceeding with the existing contract.

1. The respondent submitted that having regard to the correspondence, his Honour's rejection of the appellant's oral evidence involved a credit finding which, on the facts and circumstances of this case, was not open to appellate challenge.

Consideration

1. Given that the respondent disputed the appellant's case based on the variations alleged, it will be necessary to determine in the first instance, in respect of the first variation, what agreement was reached, and in the case of the second variation, whether any agreement was reached. The appropriate starting point, however, for a consideration of the issues on appeal is the pleadings. Two variations of the contract were pleaded, the first relating to the extension of the completion date as having been agreed to between 29 June and 1 July and the second as having been agreed to between 2 July and 4 August 2010. At first instance, the primary judge's focus was on whether the parties intended their agreement to be immediately binding.

1. In respect of the first variation, if regard is had only to the written communications between the parties, then, as the respondent contended, what was agreed to by the parties in the correspondence between 29 June and 1 July 2010 was as follows. First, cl 31.1 was to be amended, substituting the date 19 March 2012 for the period of 24 months, thus extending the sunset clause by four months. As I have indicated, there was no dispute between the parties that this variation had been agreed to. Secondly, cl 30.2 was to be varied by substituting the date 30 April 2012 for 30 November.

1. No other variation was proposed to cl 30 in this correspondence. In particular, no variation was proposed to cl 30.1 and no variation was proposed to cl 30.2 other than the change of date from 30 November 2011 to 30 April 2012. Thus, the completion date in cl 30.1, which was specified by reference to the date of registration of the strata plan, remained unchanged. The date for completion otherwise conferred by cl 30.2, although agreed to be varied so as to insert 30 April 2012 for 30 November, remained dependent upon the operation of the earlier part of the clause, namely, the extended date for completion, beyond that specified in cl 30.1, only arose "where completion would otherwise be due to take place between 1 May and 1 September in any year". As notice of the registration of the strata plan was served on 5 October 2011, the completion date under cl 30.1 did not fall within this period.

1. The appellant, however, contended that the agreement as to the first variation was partly oral and partly in writing. If the appellant's oral evidence ought to have been accepted, and in particular the appellant's evidence of oral communications with Mr Watson on 29 June 2010, his Honour should have found that the parties had agreed to an extension of the completion date to 30 April 2012, subject to the question whether any agreement was dependent upon the entry into a formal contract. Mr Watson denied that the conversation the appellant alleged occurred between them on 29 June had in fact occurred.

1. Given the conflict in the evidence, it was necessary for the primary judge to determine whether the appellant's evidence or Mr Watson's evidence was to be accepted. His Honour concluded, at [56], that the parties took care to ensure that any oral communication was "comprehensively captured in correspondence confirming what had been discussed". The written communications did not reflect an agreement in the unconditional terms for which the appellant contended.

1. His Honour also made express credit findings. His Honour, at [52], considered that Mr Machkevitch gave his evidence carefully and to the best of his recollection, and that overall, his evidence was reliable and consistent with the correspondence. His Honour found Mr Watson's evidence overall to be reliable. His Honour's assessment of the appellant's evidence was more guarded, as is apparent from his comments, at [53]:

"Mr Frumar, also, is a practising solicitor with extensive experience as a conveyancer. His affidavit, oral, and documentary evidence demonstrated that he is a shrewd and meticulous person, and was ever alert to advance and protect his interests in this transaction. I have no doubt that in these negotiations he was disposed to leave nothing to chance, and recorded in his communications every material matter which he required as a condition of the contemplated replacement contract. Although Mr Frumar made frequent reference to his unsettled state of mind attributable to the death of his wife, the content of his correspondence shows that he remained capable of formulating with precision the numerous variations and amendments he demanded. His understandable grief did not blunt his acuity."

1. The appellant contended this finding was not sustainable, on the basis that he had not been challenged as to the accuracy of his contemporaneous diary notes, which included a note of a conversation on 29 June 2010 corresponding to the appellant's oral evidence. This submission does not sufficiently reflect the cross-examination. The appellant was directly challenged on his diary note in respect of his conversations with Mr Watson. The last question in cross-examination was:

"Q. The conversations you had with Mr Watson on 29 June 2012 did not occur as you have recorded them in that you did not say to him and he did not agree to extend the settlement date to 30 April 2012?"

The appellant responded:

"I reject that absolutely."

1. His Honour was not bound to accept the appellant's refutation of what was put in this question. Importantly, however, in response to the appellant's submission, the question was a direct challenge to his contention that agreement had been reached orally as to an unconditional variation of the completion date.

1. Although relating to the second variation, the appellant was also challenged as to the inconsistency between what he said he told Mr Machkevitch on 27 July and the contents of the letters, not only of 3 August, but also of 17 August, both of which were inconsistent with his evidence as to his discussion with Mr Machkevitch on 27 July. This was a direct challenge to the appellant's oral evidence.

1. The appellant has not demonstrated on the appeal any basis upon which his Honour's credit findings should be disturbed: see Fox v Percy [2003] HCA 22; 214 CLR 118. Indeed, the emails between the appellant and Mr Watson on 29 June, if not incontrovertible evidence, was at least compelling evidence to the contrary of the appellant's oral evidence. There was no error in his Honour accepting it in preference to his oral evidence.

1. The correspondence does not support the first variation propounded by the appellant. The emails between the parties establish that the agreement reached between 29 June and 1 July was the substitution of the date 30 April 2012 for 30 November in cl 30.2 of the contract. There was no agreement that the contract be varied so as to provide for an unconditional completion date of 30 April 2012.

1. In respect of the second variation, the appellant's letter of 3 August 2010 provided compelling evidence to the contrary of his evidence that he advised the respondent on 27 July 2010 that he would proceed with the contract. The appellant's letter of 3 August expressly stated that whether he would rescind pursuant to cl 40 was still a matter for "final resolution". There may also be some evidence to the contrary of the appellant's letter in his letter of 17 August, in which he noted that cl 40 was to be amended by deleting the words "or either of them". That had the effect of deleting any reference to the appellant's deceased wife but otherwise retaining his right to rescind. However, as his personal representative had the right to rescind should the appellant die or become mentally ill, the retention of the clause may have been intended to cover that contingency..

1. Again, there was no error in his Honour's finding that the agreements between the parties were to be found and only found in their written communications. This conclusion thus determines the question whether there was an agreement reached in respect of the second variation.

1. There are a number of other considerations that indicate that the appellant had not irrevocably waived his right to rescind, even if the appellant's evidence of the discussions on 27 July was accepted. First, as the appellant's evidence referred to at [*39] above indicates, his willingness to forego his right to rescind was conditional on the respondent "satisfy[ing] the variations that we have agreed upon". Secondly, the appellant continued, after this time, to seek changes to the fit-out.

1. Accordingly, I am of the opinion that no agreement was reached between the parties at all in respect of the second variation.

1. As I have concluded that the first variation was agreed to in terms different from those contended by the appellant and that there was no agreement as to the second variation, the result is that the appeal should be dismissed. Accordingly, it is unnecessary to determine whether the parties intended to be immediately bound by the first variation. However, for the sake of completeness, I will consider that question briefly.

1. The question whether parties agree to be immediately bound or rather had agreed that there would be no binding agreement until a formal document had been executed is a matter of the parties' contractual intention. In Eccles v Bryant, Lord Greene MR observed, at 99, that when parties propose to enter into a contract, "the manner in which the contract is to be created so as to bind them, must be gathered from the intentions of the parties, express or implied". That intention is to be determined objectively, having regard to all the circumstances: Brambles v Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153. As the analysis below indicates, there are factors that point in each direction and it is necessary to consider both.

1. The likelihood that the respondent intended to be immediately bound was reflected in Mr Watson's letter of 29 June 2010. In particular, the language of the letter seeking confirmation that the appellant agreed to the amendments to the contract and that those amendments would not affect any other contractual rights under the contract, evidenced an intention to be bound immediately provided that the appellant gave the confirmation sought. Mr Watson's letter had responded to the appellant's letter earlier that day in which the appellant first raised the amendment to cl 30.2 of the contract. The language used in the appellant's letter was also redolent of agreement, if reached, being immediately binding. This is particularly indicated by the words "consequential variations should be made to the contract". Mr Watson's confirmation on 1 July of the agreement to amend cls 30 and 31 of the contract as set out in the correspondence of 29 and 30 June reconfirm that the parties intended at that point to be immediately bound by the agreement reached in that correspondence.

1. A further factor that points to the parties agreeing to be immediately bound by the variations set out in the written communications of 29 and 30 June and 1 July is that the respondent needed immediate agreement to an extension of the sunset date. The appellant understood that and agreed to it, but in doing so sought, as consideration, a variation to the date specified in cl 30.2. Whilst the request for that variation did not have the same urgency as the respondent's request, the two were part of the arrangements to which both parties then agreed: see email of 1 July. Both parties acknowledged on the appeal that an extension of the sunset date had been agreed to. As the agreement to a variation of cl 30.2 was an integral part of that arrangement, and indeed was the consideration for it, it can hardly be said that part of the agreement was to become immediately binding and part was not.

1. It is likely that the parties intended that these agreed variations would be embodied in a formal document, not the least because the contract was one for the sale of an expensive piece of real estate and the appellant was a solicitor. Thus, in Eccles v Bryant, Lord Greene MR observed, at 99:

"When you are dealing with contracts for the sale of land, it is of the greatest importance to the vendor that he should have a document signed by the purchaser, and to the purchaser that he should have a document signed by the vendor. It is of the greatest importance that there should be no dispute whether a contract had or had not been made and that there should be no dispute as to the terms of it."

1. But in any event, the terms of the correspondence at this time makes it apparent that the parties intended that the variations agreed to would be formally documented. The appellant's email of 29 June at 11.18 am in particular indicates that this was the parties' intention. The appellant's letter of 20 July provides further support that this was their intention and in particular, para (b) thereof, in which the appellant noted that amendments to the contract appeared to be necessary. However, as is discussed below, that letter possibly contains indications to the contrary.

1. Further, according to Mr Machkevitch, whose evidence the primary judge accepted, it was not until the meeting of 27 July that the question of entering into a new contract (as opposed to merely recording the variations that had been agreed), arose. Mr Machkevitch said that there were a number of reasons why a new contract was suggested at this time. One reason was because of the number of amendments that had been discussed. However, he said that the appellant also wanted a new contract both to record that he was sole purchaser and so that the time in which the obligation to pay stamp duty arose would be extended to 15 months from the date of entry into the new contract.

1. As I have indicated, there are some factors that point in the opposite direction. As at 1 July, when I have found that the parties agreed to a variation to extend the sunset date and to replace the date 30 November with 30 April 2012 in cl 30.2, the appellant had still not decided whether to exercise his right to rescind the contract. It could be thought, therefore, that any intention to be immediately bound was subject to his decision on that matter. However, as the appellant at all times sought to maintain cl 40 in the contract , this factor is at best neutral.

1. Another factor that might indicate that the parties did not intend to be immediately bound unless and until the variations were formally documented is that the negotiations at the end of June/early July cannot be viewed in isolation. As the subsequent correspondence indicates, the variations discussed at this time were part only of various negotiations between the parties, including whether the appellant would exercise his right to rescind. The appellant, in his email of 30 June had also excepted from what had been agreed at that time "the wording in relation to cl 31.2.12". This clause was a subject of further reference in the appellant's letter of 20 July, which raised variations to the contract additional to those that had been the subject of the earlier correspondence. As the letter of 20 July 2010 also demonstrated, significant further matters relating to the physical features of the unit had become the subject of negotiation. These matters, if agreed, in turn required amendments to the contract.

1. On 1 October 2010, the appellant wrote a detailed letter to Mr Watson in reply to the amendments proposed to the contract by Mr Watson in his letter of 15 September. The appellant contended that this correspondence did not impact upon the agreement that was reached in early August (that is, the second variation as alleged by the appellant). He contended that a replacement contract, predominantly for stamp duty purposes, did not mean that what had been agreed in relation to giving up his right to rescind in exchange for the variations was not itself binding.

1. Notwithstanding that there were indications that the variations agreed would not be binding until formally documented, I remain of the opinion that, in relation to the first variation, the parties intended to be immediately bound for the reasons I have given and, in particular, the need for an immediate agreement in relation to the extension of the sunset date. Accordingly, had it been necessary to decide the matter, I would have concluded that the parties fell into what is generally described as the first class in Masters v Cameron. The parties had reached finality in arranging all the terms of their bargain and intended to be immediately bound to the performance of those terms but had intended that the terms of their agreement would be restated in a formal document. The parties would thereby have been bound by the first variation, notwithstanding that the contemplated formal document did not come into existence: see Masters v Cameron at 361. It follows that had the appeal turned on this point, I would have been inclined to the view that the primary judge erred in concluding that, in respect of the first variation, the case was "squarely within the third class of case described in [Masters v Cameron]".

1. Had I been of the opinion that an agreement was reached in respect of the second variation, I would have concluded that the intention of the parties was not to be bound in respect of that, and any continuing negotiations, until a formal agreement was executed. The appellant's requirement for a new contract, the correspondence in respect of the terms of the new contract and the number of and continuing nature of the exchanges in respect of changes to the fit-out of the unit, indicate that was the likely intention of the parties. I should add that even had I concluded that the second variation had been agreed but that the parties were not to be bound until all aspects of it had been documented, I would not have concluded that that affected the position in respect of the first variation.

Ground 6: failure to give reasons

1. That leaves only one complaint raised by the appellant in ground 6 of the notice of appeal, namely, that the primary judge did not give adequate reasons for his decision. The appellant submitted that his Honour failed to adequately consider the appellant's oral evidence in which he alleged that the variations were partly oral. This ground of appeal can be disposed of briefly. His Honour, for reasons that have not been successfully challenged on the appeal, did not accept the oral evidence of the appellant. He also found that the evidence of Mr Machkevitch and Mr Watson was, overall, reliable. Their evidence did not support the oral variations the appellant alleged. It follows that ground 6 should be rejected.

1. Accordingly, I propose that the appeal be dismissed with costs.

1. EMMETT JA: This appeal is concerned with a contract entered into on 20 November 2009 between the respondent, Guilfoyle Developments Pty Ltd (Guilfoyle), as vendor, and the appellant, Mr Geoffrey Frumar and his late wife, Mrs Denise Frumar, as purchasers (the Contract). The Contract was for the sale and purchase of a residential unit to be constructed by Guilfoyle in Double Bay. The question in the appeal is whether the Contract was varied in two particular respects. A judge of the Equity Division concluded that it was not. Mr Frumar has appealed from orders made by the primary judge on the basis of that conclusion.

1. Clause 40 of the Contract relevantly provided that, if either of the purchasers should die prior to completion, the surviving purchaser or the legal personal representative of the deceased purchaser's estate may rescind the Contract. In that event, clause 19 of the Contract was to apply. Clause 19 provided, relevantly, that notice of rescission could be given at any time up to completion of the Contract. On 8 April 2010, Mrs Frumar died. One question in the proceedings was whether Mr Frumar had abandoned his right to rescind under clause 40.

1. Clause 30.1 of the Contract relevantly provided that completion of the Contract was to take place on the date 21 days from the date of service by Guilfoyle on the purchasers of written notice that the relevant strata plan had been registered. Under clause 30.2, Guilfoyle was required to provide at least six months' written notice to the purchasers that registration of the strata plan was anticipated and that settlement would be due, so as to enable the purchasers to market and sell their house. Clause 30.2 also provided that, where completion would otherwise be due to take place between 1 May and 1 September in any year, then the completion date was to be extended automatically to 30 November of that year without any penalty being suffered by the purchasers.

1. In addition, clause 31.1 provided that completion was to be subject to and conditional upon Guilfoyle's becoming the registered proprietor of the land in question and registration of the strata plan of subdivision substantially in a form annexed to the Contract, on or before 24 months from the date of the Contract. Clause 31.1 also provided that, in the event that registration of the strata plan had not been effected or occurred before that date, the purchasers would be entitled to rescind the Contract upon seven days' written notice, whereupon the provisions of clause 19 would apply. However, no such right was to be exercisable after 28 days from the expiry of the 24-month period.

1. Mr Frumar alleged that, between 29 June 2010 and 1 July 2010, he and Guilfoyle had entered into a variation of the Contract, pursuant to which, in consideration of Mr Frumar's agreeing to extend the date in clause 31.1, Guilfoyle agreed to reduce the purchase price by $7,475 and to extend the completion date under the Contract to 30 April 2012. Guilfoyle accepted that the Contract had been varied by deleting the date "30 November" from clause 30.2 and substituting "30 April 2012". However, Guilfoyle disputed that any agreement was reached to amend the completion date to 30 April 2012.

1. Secondly, Mr Frumar contended that, between 22 July 2010 and 4 August 2010, he and Guilfoyle entered into a further variation of the Contract under which, in consideration of Mr Frumar's agreeing not to exercise his right to rescind the Contract under clause 40 in consequence of Mrs Frumar's death, Guilfoyle agreed to provide additional services in relation to additional items in the residential unit that was the subject of the Contract. Guilfoyle denied that any such variation was made.

1. The resolution of the two questions concerning variation depends upon a detailed analysis of the communications that occurred at the relevant time between Mr Frumar, on the one hand, and Mr Alexandre Machkevitch, the managing director of Guilfoyle, and Guilfoyle's solicitors, on the other hand. The communications were by oral conversation and meetings and in writing by letter or email. Mr Frumar, for the most part, made written notes of the conversations upon which he relied.

1. I have had the considerable advantage of reading in draft form the proposed reasons of the President for concluding that the appeal should be dismissed with costs. I agree with her Honour that Mr Frumar has not demonstrated any basis upon which the credit findings of the primary judge should be disturbed, and that the written communications of themselves do not support the first variation propounded by Mr Frumar. It follows that Mr Frumar has not made out the first variation for which he contends. I also agree with her Honour that Mr Frumar has not established the second variation for which he contends and that the contention that the primary judge did not give adequate reasons for his decision must be rejected. It follows that the appeal should be dismissed with costs, as proposed by the President.

1. BERGIN CJ in EQ: I agree with Beazley P.

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Decision last updated: 15 July 2014