Gobby v Jones - [2013] WADC 50

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: GOBBY -v- JONES [2013] WADC 50

CORAM: STAUDE DCJ

HEARD: 24-28 SEPTEMBER 2012 & 4 APRIL 2013

DELIVERED : 18 APRIL 2013

FILE NO/S: CIV 3729 of 2010

BETWEEN: JAKE RAYMOND GOBBY
Plaintiff
AND
NEIL ANDREW JONES
First defendant
RHONDA DENISE JONES
Second defendant

Catchwords:

Contract - Sale of land by offer and acceptance - Specific performance - Whether contract formed by signing of standard form offer and acceptance - Whether offer and acceptance misrepresented - Whether first defendant bound by signing a blank pro forma - Whether second defendant believed document was contractual in nature - Counterclaim for declaratory relief

Legislation:

Nil

Result:

Claim dismissed
Counterclaim dismissed

Representation:

Counsel:

Plaintiff:     Mr W Vogt
First defendant             :     Mr T Clavey
Second defendant         :     Mr T Clavey

Solicitors:

Plaintiff:     Vogt Graham Lawyers
First defendant             :     Clavey Legal
Second defendant         :     Clavey Legal

Case(s) referred to in judgment(s):

Gange v Sullivan [1966] HCA 55; (1966) 116 CLR 418
Jones v Dunkel (1959) 101 CLR 298
Neate v Parfit [2006] WASC 121
Petelin v Cullen (1975) 132 CLR 355
Sandra Investments Pty Ltd v Booth [1983] HCA 46; (1983) 153 CLR 153
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Widodo v Hamdan [2008] WASCA 113

STAUDE DCJ:

Introduction

This is an action for specific performance of a contract for the sale of land by offer and acceptance made between the parties on 16 October 2010 with respect to the defendants' residential property at 980 Harper Road, Wooroloo (the Property).
The defendants, who each signed the offer and acceptance, but now dispute its contractual effect, refused to settle when they discovered that the transfer of the Property would create a capital gains tax liability which they could not afford. On its face, the offer and acceptance (exhibit 4) constitutes a legally enforceable agreement by the defendants to transfer the Property to the plaintiff for $404,000, subject to the plaintiff obtaining finance approval for a loan of $400,000 by 30 October 2010.
The defence is that the defendants made no contract with the plaintiff. The defendants contend that the offer and acceptance on which the plaintiff's claim is based is vitiated by a mistake on the part of the defendants as to the identity of the plaintiff as the purchaser, a mistake which was brought about by the manner in which the plaintiff's mother, Anne Gobby, who prepared the offer and acceptance, obtained their signatures.
The defendants contend that they never dealt with the plaintiff, that they did not agree to sell the Property to the plaintiff for $404,000, or any sum, and that their signatures on the offer and acceptance were obtained by deceptive conduct on the part of Mrs Gobby as agent for the plaintiff. They contend that the plaintiff's name was not on the document when it was signed by Mrs Jones and that in any event neither of them was shown the first page of it.
The defendants maintain that they signed the offer and acceptance in the belief that it would give effect to an earlier agreement which they made with the plaintiff's parents, Anne and Raymond Gobby, to sell the Property to them. The terms of that agreement were not expressed in the offer and acceptance.
In the alternative, the defendants say that if the contract is valid it cannot be enforced because the finance approval clause was not satisfied. This was the basis upon which the defendants purported to terminate the contract by letter of their solicitors on 9 November 2010.
Otherwise, the defendants say it would be unconscionable for the plaintiff to enforce the contract by reason of his knowledge of the unfairness of the contract in its terms and the special disadvantage the defendants were at when they signed it.
The basis of the defendants' assertion that they were mistaken as to the identity of the plaintiff as the purchaser is an oral agreement entered into between the defendants and Mr and Mrs Gobby on 30 May 2010 (the 30 May agreement), referred to in the defence as the 8 August 2010 agreement, being the date of a memorandum of it. By that agreement, Mr and Mrs Gobby agreed, among other things, to purchase the Property for the amount owing to the mortgagee.
It is not the plaintiff's case that he was privy to that agreement. Rather, his claim is based squarely on the contract by offer and acceptance dated 16 October 2010 pleaded in par 2 of the statement of claim.
The principal issues are:
1.whether there was a contract made between the plaintiff and the defendants;
2.whether, if a valid contract was formed, the defendants were entitled to terminate the contract on the grounds that the finance clause was not satisfied; and
3.if the defendants were not so entitled, whether specific performance should be ordered rather than damages.
No question arises with respect to unconscionability, except with respect to relief in the event that the alleged contract is upheld. Essentially, this case is about whether a contract was made. Evidence and argument about unconscionability have been disproportionately time consuming and have tended to deflect attention from the main issues.
The presentation of the plaintiff's case has also suffered from confusion as to the relationship between the contract sought to be enforced and the 30 May agreement between the plaintiff's parents and the defendants. In opening address (ts 9) and in written closing submissions (29 January 2013, par 17) counsel for the plaintiff argued that a contractual object of the 30 May agreement was that the plaintiff would buy the Property. Not only is that submission wrong as a matter of fact, the 30 May agreement making no reference to the plaintiff, but it is entirely inapposite. The claim, as pleaded, can derive no support at all from that agreement. The apparent reliance of the plaintiff on the contractual objects of an agreement to which he was not privy is misconceived.
As to the events leading up to the purported formation of the contract there was considerable factual controversy. Accordingly, it is necessary to determine the facts of the relationship between the defendants and the Gobbys in which context the disputed contract arose.
I observed at the conclusion of the evidence that I had concerns about the credibility of the testimony of witnesses on both sides. None of the witnesses who have an interest in this action, namely, the plaintiff, his parents and Mr and Mrs Jones, impressed me as being completely truthful or reliable. This is not a case, therefore, in which the factual disputes can be resolved on the basis of a general finding that the evidence of one or more witnesses can be preferred to the evidence of others where there is conflict. Rather, I have had to consider the evidence in relation to each issue of fact to determine who should be believed and to what extent, taking due account of objective evidence of surrounding events to determine the probabilities.

The 30 May agreement

Mr and Mrs Jones purchased the Property from Mrs Jones' uncle and aunt for $275,000 in 2004. Subsequently, they met and became friends with Raymond and Anne Gobby who were part‑owners and occupiers of a residential property at 1555 Doconing Road, Beechina.
In 2007 Mr and Mrs Jones consolidated a mortgage debt relating to the Property and business debts relating to their trucking business in a loan of $406,000 from Bluestone Finance. This debt was secured by a first mortgage on the Property. According to Mrs Jones, at the material time the mortgage payments were interest only.
In March 2010 Mr Jones suffered a heart attack which rendered him unfit for work as a truck driver for some time during which he and Mrs Jones fell behind in their mortgage payments.
By early May 2010 they were three months in arrears. They were unable to pay their water rates and their electricity had been cut off. Towards the end of May they received a notice (described in the evidence as an eviction notice) by which Bluestone Finance indicated that if the arrears were not paid by 5 June 2010 it would take possession. As the notice was not tendered, the court cannot be sure what the legal effect of it was, but it was common cause at the trial that if the Joneses did not pay the arrears they would lose the Property.
On 28 May 2010 Mrs Jones asked Mrs Gobby if she would be able to agist her horses on the Gobby's property in the event that they were dispossessed. Upon hearing of Mr and Mrs Jones' predicament Mrs Gobby spoke to her husband Raymond. They had been trying since early 2010 to sell their property which they co‑owned with another couple. Mr and Mrs Gobby discussed the idea of paying the arrears and ongoing mortgage payments with a view to buying the Property. In the meantime Mr and Mrs Jones would be able to continue to live there.
On 30 May 2010 Mr and Mrs Gobby met with Mr and Mrs Jones who informed them that, according to the eviction notice from Bluestone, they owed $410,000. The amount of the arrears was $10,300 and the monthly mortgage payment was $3,500. An agreement was reached in terms that Mr and Mrs Gobby would:
(a)pay the arrears of $10,300;
(b)pay the monthly payments of $3,500 until such time as the Gobbys were able to buy the Property;
(c)pay the outstanding Shire and water rates;
(d)assist Mr and Mrs Jones to find a rental property and put up the bond for a tenancy;
(e)buy them some furniture; and
(f)for the amount due to Bluestone Finance at the relevant time, purchase the Property.
Mr Jones did not expect that a mortgagee sale would realise any equity in the Property. Hence, by this agreement he and Mrs Jones would be able to walk away debt‑free, generally better off than if Bluestone foreclosed. That was the intended effect of the agreement insofar as they were concerned and is reflected in the terms. It is not clear from Mr Jones' evidence why he thought this would be so, but his state of mind explains why he agreed to sell the Property to the Gobbys on the stated terms rather than risk a mortgagee sale.
The debts on the Property were the mortgage debt to Bluestone, including the arrears, and the shire and water rates. The amount owing to Bluestone at the time of transfer I take to mean the cost of discharging the mortgage. Potential liability for capital gains tax was not comprehended by the agreement. It was not in the contemplation of the parties.
It was not a term of the agreement that the purchase price would be reduced by the mortgage payments made by the Gobbys. Nothing was agreed as to any period of time within which the Property would be transferred. There was no agreement made that Mr and Mrs Jones would pay rent. There was no agreement as to the nomination of another purchaser, or any assignment by the Gobbys of their rights and obligations under the agreement to another. Nor was there any discussion of such matters.
It was Mrs Gobby's evidence, and that of her husband, that the possibility of the plaintiff purchasing the Property was mentioned, but I am unable to find that this was so. The plaintiff's evidence (ts 19) was that he heard discussion to the effect that if his parents could not get a loan, he might be able to do so because he had a good job. This option may have been discussed between the plaintiff and his parents, but was not raised with the defendants. On this issue I prefer the evidence of Mr and Mrs Jones for the following reasons.
When on 10 June 2010 Mrs Gobby prepared an offer and acceptance, she named herself and her husband as the buyers. Furthermore, when the agreement was documented by signed memorandum two months later, it was expressed to be an agreement between Mr and Mrs Gobby and Mr and Mrs Jones. No reference to Jake Gobby was made. At that time, 8 August 2010, the substantive terms of the agreement and the identities of the parties to it were clearly and unambiguously recorded.
Mrs Gobby said she prepared the memorandum in order to have something in writing and to apply for finance (ts 180). Her evidence is consistent with Mrs Jones' evidence, that she was told the memorandum was needed for a finance application. I accept that it also served as a receipt.
Mrs Gobby was asked in examination‑in‑chief why she did not make any reference to the plaintiff in the memorandum. She said that at that time someone was looking at their property, which was for sale. If it sold, she and her husband would be able to purchase the Property. She added, disingenuously in my view, that the expression, 'the Gobbys', made with reference to obtaining finance, included Jake. I do not accept this rationalisation. Whilst I have no difficulty accepting that the Gobbys did contemplate the possibility that the plaintiff might be able to purchase the Property if they could not, and discussed that possibility with him, the express agreement with Mr and Mrs Jones was that they would be the buyers.
I do not accept Mrs Gobby's evidence that on 6 June 2010, when her husband delivered some machinery to Mr Jones, and prior to her preparing an offer and acceptance on 10 June, she told Mrs Jones that a contract in Jake's name could not be written up because he was on probation at work. I find the evidence implausible. It is inconsistent with a formal offer in the names of Mr and Mrs Gobby (exhibit 3) being prepared four days later. On the other hand, I accept as truthful and highly probable Mrs Jones' evidence that there was no mention of any contract with Jake.
By the same token, I do not accept Mrs Gobby's evidence that in July 2010 she told Mrs Jones to tear up the offer and acceptance because they were not going to be able to get finance and that Jake would be able to purchase the property when he came off probation. This, like other parts of Mrs Gobby's evidence, was an unconvincing re‑construction designed to assist her son's claim. It is disproved, in my opinion, by her 8 August memorandum.
Even if, contrary to my express finding, the Gobbys did mention to Mr and Mrs Jones that Jake might purchase the Property if they could not, that fact would not assist him to prove the validity and enforceability of the contract on which his claim relies. It is not his case, as I have noted already, that he was a party to the 30 May agreement.

Memorandum of 8 August 2010

The 30 May agreement was substantially, but not entirely, recorded in a signed memorandum dated 8 August 2010 in the following terms:
This agreement is between Raymond and Anne Gobby and Neil and Rhonda Jones.
Due to circumstances beyond Neil and Rhonda's control, Mr Jones suffered a heart attack. Unfortunately they were unable to pay their mortgage and were being evicted, as [sic] we could not see them and their 3 kids in this situation the following was agreed upon by all parties.
Ray and Anne stepped in and had a meeting with Rhonda and Neil, and all parties agreed that Ray & Anne would pay the outstanding mortgage payments, so they could stay in the house, and continue paying the mortgage of $3,500 each month, until such time as the property the Gobby's [sic] own is sold or when finance can be arranged.
The purchase price that was agreed upon, and a Selling agency agreement was signed, price agreed was $410,000 which is what is owed on the property.
Up until the date of this letter the Gobbys have paid out $17,500, and will continue to pay until such time as the property at 1555 Deconing Road, Beechina is sold or until finance can be arranged. If finance is arranged the property at Deconing Road will be rented, until sold.
Mrs Gobby, who drafted the document, conceded that the reference to a selling agency agreement was in error and that she meant to write 'contract of offer', by which I understood her to mean 'offer and acceptance' (ts 182).
As has been mentioned, she had, in fact, on 10 June 2010, prepared a REIWA standard form contract for sale of land by offer and acceptance (2009 version) in her and her husband's names which described the property as 'Harper Road, Wooroloo' and stipulated the purchase price as 'payout figure on loan at time of settlement' (exhibit 3). There was no finance clause. The settlement date was to 'coincide with settlement of buyers' property'. The special conditions were expressed as follows:
1.The buyer agrees to pay $3,500 on the 5th of every month until settlement or until finance is approved.
2.Seller agrees to pay to buyer $1,600 per month until settlement or until finance is approved.
3.Buyer agrees to give seller a minimum of six weeks to coincide with settlement of buyers' property to vacate premises.
The offer and acceptance was signed by each of Mr and Mrs Gobby as offerors, but not dated. Mrs Jones' evidence was that this document was given to her by Mrs Gobby, but she did not sign it as it did not express correctly the terms upon which the two couples had agreed. I observe that the document omitted from the special conditions the payment of the shire and water rates as agreed, and included a term that had not been agreed, being the payment of $1,600 per month rent.
Plainly, the 8 August memorandum recorded an agreement between the Jones' and the Gobbys for the sale of the Property, the terms thereof, and the extent of the Gobby's payments of mortgage arrears and instalments to that date. The document was said to have been prepared to assist the Gobbys to obtain finance (Mrs Gobby, ts 180). Mr Gobby did not think so (ts 305), but he was not the author. Mrs Gobby by reason of her real estate training and experience, I infer, would have appreciated the legal requirement for such a memorandum.
I reject the plaintiff's submission that nothing can be inferred against him from the absence of his name in the document for the reason that it does not record that the buyers are his parents. Plainly, it does. The submission that the memorandum is non‑specific as to the identity of the buyer flies in the face of common sense.

The involvement of the plaintiff

Pursuant to the 30 May agreement, the Gobbys paid the arrears of $10,300 on 3 June 2010 and monthly payments of $3,500 on 5 July 2010, 30 July 2010, 6 September 2010 and 4 October 2010, $24,300 in total. The plaintiff contributed $4,000.
The plaintiff was told of the 30 May 2010 agreement by his parents. His father told him that he and Mrs Gobby could not obtain a loan to buy the Property. He suggested, however, that the plaintiff could do so. His mother told him that the Jones' owed $410,000 on the Property which she considered to be a fair price taking into account their payments of the mortgage which she expected would be about $20,000. The plaintiff said he agreed to pay his parents $1,000 per month towards the monthly mortgage payments. He said he authorised his mother to be his agent and to prepare the paperwork with respect to his purchase of the Property. (I note, incidentally, that Mrs Jones admitted that she was aware that the plaintiff was contributing to the mortgage payments in this way, but I can infer nothing from that knowledge as to the contract in issue).
The plaintiff gave evidence that Mr and Mrs Jones met with his mother at his parents' home on 8 August 2010. On that occasion he said he told Mr Jones that he would be buying the Property. He gave no evidence of the purpose of that meeting and recalled nothing else of it. He was watching football on television. When cross‑examined as to why, if he was buying the Property, there was no mention of his name in the memorandum of that date (exhibit 2), he acknowledged that he may have been mistaken. He admitted that he had discussed events with his parents and his solicitors on a number of occasions and that he may have become mixed up about some things. Undoubtedly, in my mind, he did. I do not accept that there was any conversation of significance between the plaintiff and Mr Jones on 8 August 2010.

On 2 September 2010 the plaintiff applied to Resi Mortgage Corporation Pty Ltd (Resi) for a loan to purchase the Property. By that time he had completed a probationary period of employment as a fitter with Byrnecut Mining. A letter of that date by his employer confirmed that he was working full-time on a gross salary of $116,480. His application was for a loan of $384,000. The purchase price was stated to be $400,000 and the estimated value of the Property $490,000.
The plaintiff, I find, was quite inexperienced at the time. He was aged 20 and had only just commenced work as a qualified fitter on a fly‑in, fly‑out basis. He had an incomplete knowledge of his parents' agreement with the defendants and of the transaction proposed by his parents to which he would be a party. His understanding of what occurred from time to time, such as it is, has been gained in the aftermath of the relevant events. I do not consider that the evidence shows any real desire on his part to transact with Mr and Mrs Jones. Rather, he was, by virtue of his earning capacity, merely the means by which his parents could secure what they obviously thought was an advantageous acquisition of the Property. As Mrs Gobby admitted in cross‑examination, Jake was going to buy the Property 'for the family' (ts 165). That statement is consistent with the evidence of the plaintiff (ts 19).

The plaintiff's finance application

The plaintiff said he was introduced to David Hayes of Resi by his mother and met him on the day that his loan application was made (2 September 2010). He said he read and checked the application before he signed it. He confirmed that the application was for $384,000 which was the most he could obtain and that he intended to pay the balance of the purchase price in cash.
On page 5 of the application, after 'Purchase price (if buying): $400,000' there is an entry 'Estimated value (if owned): $490,000'. That entry appears to be otiose, but was necessary in this case because the loan applied for was 96% of the stated purchase price. Notably, the amount sought ($384,000) is 78.4% of $490,000, roughly 80%, which was the proposed lender's standard loan to value ratio.
Mr Ian Raines of Resi gave evidence that the estimated value, being much higher than the purchase price, prompted Resi to treat the transaction as a favourable purchase and to require as a condition of finance approval that the vendors sign a gift of equity declaration. An acceptable valuation would also be required. The lender, in this case, ING, would lend against the valuation, rather than the nominated value.
If, therefore, the value of the land was $430,000, as the Garmony Property Consultants' valuation (exhibit 6) found it to be as at November/December 2010, rather than $490,000, then a loan of $384,000 would represent a ratio of 89%. According to Mr Raine, whether a loan higher than 80% of value would be made on the basis, say, that mortgage insurance was required, as suggested by the plaintiff's counsel, would be considered in the context of the entire valuation report.
As I understand Mr Raine's evidence, he could not say whether ING, for whom Resi acted, would have approved, or would yet approve, a loan of 89% of value, based on the Garmony valuation of $430,000 as at November/December 2010, or 91%, based on the valuation of $420,000 as at June 2011. No evidence of current value was given. The evidence does not satisfy me to the required standard that a loan of $384,000 would have been approved on a valuation of $430,000.
A letter from Resi dated 8 October 2010 (exhibit 1, page 67) informed the plaintiff of its 'in principle' approval of a loan of $383,800 on the following conditions:
•Acceptable valuation (payment $352 required before ordering valuation).
•Latest payslip (less than 30 days old) at the time of formal approval.
•Statutory declaration required from the vendor confirming non‑repayable gift of equity (difference between purchase price and market value) to the applicant.
The letter stated that the approval was subject to the abovementioned conditions and 'final approval by Resi', and that it was 'an advice of approval in principle only and … not intended to create any legal liability for the borrower or the lender'.
Mr Raine said that the valuation was critical. If the valuation were satisfactory (by which I infer that it was in the order of $490,000), a gift of equity declaration obtained and proof of earnings provided, the loan would be approved subject to the lender's normal terms and conditions of mortgage. His evidence with respect to the lender's required loan to value ratio contradicts the plaintiff's contention that final approval of finance would been obtained. There was no evidence that the proposed lender would lend $384,000 against a valuation of $430,000 and no other evidence was adduced to show how else the plaintiff would be able to finance the purchase of the Property.
When cross‑examined, the plaintiff could not say where the estimated value of $490,000 had come from, but in re‑examination he said that he may have nominated it. When asked about what he understood to be the gift of equity by the vendors, the plaintiff said he thought it was $20,000 representing the payments made on the Jones' mortgage pursuant to the 30 May agreement, yet when he was asked about the circumstances in which his mother got Mr Jones to sign the statutory declaration he said that she told Mr Jones that it was the difference between the market value and the purchase price. His evidence in this respect was inconsistent and unsatisfactory. It was clear that he had collaborated with his mother in the preparation of his evidence. The plaintiff was not speaking his own mind.
Mrs Gobby gave evidence about the finance application. She said the figure of $490,000 did not come from her. I find without difficulty in this case that it did. It did not come from the plaintiff. He had no knowledge of such things. It was not suggested that it came from Mr Hayes.
I do not accept the evidence of Mrs Gobby that she, at that time, estimated a value of $420,000 to $430,000. She would have known that her son could not borrow $400,000 (as stipulated in the finance clause), or even $384,000, against a property worth $430,000. Mrs Gobby had local real estate experience. For her son to get the required loan the property had to be valued at the higher amount ($490,000). Mrs Gobby's estimate of a value of $420,000 to $430,000 was based, she said, on her assessment of the value of the land at $400,000 and the house at $40,000, discounted because of its condition. When cross‑examined, about land value in the locality of the Property Mrs Gobby said 5 acres would cost $350,000 ‑ 360,000. The area of the Property was 14 acres.
Hearing her give this evidence, I was not convinced of its truthfulness and came to the view that it was tailored to accord with the valuation of $430,000 placed on the Property by the plaintiff's valuer Garmony Property Consultants, and, rather conveniently, with the total of the purchase price in the offer and acceptance ($404,000) and the mortgage payments made by the Gobbys ($24,300).
Mrs Gobby, in my view, was not prepared to admit that she nominated a value of $490,000 for the purpose of the finance application because it would tend to indicate that the defendants were taken advantage of in the 30 May agreement.

The offer and acceptance

On 14 September 2010 Mrs Gobby met with Mrs Jones. Mrs Gobby had a form of offer and acceptance. Her evidence was that she had telephoned Mrs Jones to tell her that she had given a reference for her to a real estate agency regarding a rental property. She said she also told Mrs Jones that she had prepared an offer and acceptance in Jake's name and asked her to come around to sign it. Mrs Gobby said she had written out the offer that day, inserting a purchase price of $404,000, Mr Hayes of Resi having asked her to get 'something in writing' for the purposes of the finance application. She identified exhibit 4, a two‑page (stapled) document. The form had printed at the foot of the first page 'NOTE: IF THIS DOCUMENT IS ON SEPARATE PAGES OR IS TO BE FAXED THEN ALL PARTIES SHOULD SIGN ALL PAGES'.
When Mrs Jones arrived, Mrs Gobby said she 'explained' the purchase price to her. She said she did not know the payout figure, but thought it would be less than the $410,000 discussed in May because of the payments they had made. She said it was 'a bit of a guess'. Her evidence in this respect did not otherwise explain where the figure of $404,000 came from. Elsewhere in her evidence she accepted the mortgage payments made pursuant to the 30 May agreement would not have reduced the mortgage debt very much (ts 223). She acknowledged that the agreement was to pay whatever the mortgage debt was at the time of transfer (ts 222). If Mrs Gobby by preparing the offer and acceptance was attempting to reflect the terms of the 30 May agreement, she had no reason to insert a purchase price different from what had been agreed at that time.
The submission made by the plaintiff that Mrs Gobby's calculation was 'accurate and sensible' is contrary to the evidence. There is no evidence as to the payout figure of the loan at the date of the preparation of the offer and acceptance. I am unable to infer that the payment of the arrears of $10,300 reduced the mortgage debt to $399,700. On this point I do not accept the plaintiff's submission in closing that a Jones v Dunkel ((1959) 101 CLR 298) inference should be drawn against the defendants because they did not produce the notice to quit or any bank statements. No point was made at trial of the apparent failure of the defendants to comply with an order for specific discovery of these documents. On the evidence, the purchase price entered by Mrs Gobby bore no relationship to either $410,000 or $399,700.
Mrs Gobby said Mrs Jones signed the document in three places where she had marked a cross. There was a discussion about a settlement agent. Mrs Gobby suggested that Woodbridge Settlements could act for both parties, so Mrs Jones entered that name in the relevant box and signed again. Mrs Jones did not sign the first page. Nor did she initial any handwritten entries. She was not given a copy of the offer and acceptance or the General Conditions for Sale of Land, although she signed an acknowledgement that she had. (The document referred to the 2002 General Conditions.)
Mrs Jones gave a different account. She said that Mrs Gobby asked her to sign a document appointing Woodbridge Settlements as the settlement agent for both parties for reasons of economy. Mrs Jones said she was shown a single page folded in half. She was asked to fill in the name of the settlement agent and to sign in the places marked with crosses by Mrs Gobby, which she did. (Mrs Jones also gave evidence about being asked by Mrs Gobby to hide the document when another person arrived, but I do not make any finding as to whether that occurred and would draw no inference from it if it did.)
The plaintiff signed the offer and acceptance on 22 September 2010. On the plaintiff's evidence, which contradicted his mother's, it had not been filled out. The plaintiff said that his mother presented him with the document which he described as having his name at the top. It had been signed by Mrs Jones on 14 September 2010. In cross‑examination (ts 47 ‑ 51) the plaintiff said that he sat down with his mother on this occasion and discussed the terms of the offer and acceptance with her. He was very clear on this. His mother entered the property details, the settlement date and the finance clause details. He did not know how the purchase figure of $404,000 was arrived at. He said, 'I didn't ask any questions, Mum sorted it out'. He was aware that the latest date for finance approval was 30 October 2010.
In response to questions by the court the plaintiff acknowledged an apparent inconsistency between his evidence that his mother prepared the offer and acceptance in his presence prior to him signing it and his evidence that Mrs Jones had already signed the document at that time. He said that there may have been two occasions on which he dealt with the document. In further cross‑examination on this point he said he was unclear on this point (ts 80 ‑ 81).
Mrs Gobby's evidence was that the plaintiff was away when she filled out the offer and acceptance. On her evidence he had no input into the terms. There is in fact no evidence that the plaintiff authorised her as his agent to put any offer to Mrs Jones. Mrs Gobby said she prepared the offer prior to it being signed by Mrs Jones because Mr Hayes of Resi wanted something in writing. There is clearly a conflict between the evidence of the plaintiff and his mother with respect to the circumstances in which the offer was prepared. The plaintiff's account that his mother inserted the terms before he signed the document is consistent with the evidence of Mrs Jones that she signed only one page, being the second, that she did not initial any entries on the form, and that there was no discussion of the purchase price of $404,000. Mrs Gobby accepted that she should have asked Mrs Jones to sign the first page of the document.
I am satisfied that if Mrs Jones had seen or been told that the purchase price was $404,000, she would have objected to, or at least queried, that amount, as the only agreement made as to price by that stage was $410,000, or the amount owing on the loan at settlement. She would also have been concerned to ensure that the offer reflected all the terms of the 30 May agreement, bearing in mind that the 10 June offer had not. Her conduct is consistent with her treating the document as a mere formality to be completed in furtherance of the 30 May agreement.
On the same date, 14 September 2010, Mrs Jones sent a text message to Mrs Gobby: 'The water is $2940.25 & $11.35 interest. Bluestone are sending an email but can only give a figure as of today'. There was no evidence of any payout figure obtained from Bluestone. As the Gobbys had agreed to pay the water rates, that text is consistent with Mrs Jones believing that the document she signed related to the 30 May agreement.
On 8 October 2010 Mrs Gobby sent a text message to Mrs Jones informing her that the plaintiff had received finance approval subject to valuation. Mrs Jones responded, stating '…good news about Jake getting the loan' (exhibit 1, page 66). On that date Resi had issued the 'in principle' approval of the plaintiff's loan application. Mrs Jones' evidence that she did not understand her reference to the loan (ts 483) is unacceptable. I have no doubt that she knew that Mrs Gobby was referring to a loan to finance the purchase of the Property. I reject her evidence that she and her husband did not know of the 'in principle' approval until November 2010.
Texts from Mrs Jones to Mrs Gobby on 20 and 21 October 2010 (exhibit 1, pages 79 and 80) indicate that Mr and Mrs Jones were cleaning up the Property. They were aware that a formal valuation was required for purposes of the finance application.
On 16 October 2010 the plaintiff went with his parents and his girlfriend, Jessica Roberts, by car to the Property to obtain Mr Jones' signature on the offer and acceptance. The plaintiff said that he met Mr Jones on that occasion at his front door. He showed him the offer and acceptance, the Resi letter of 'in principle' approval (which he also later sent to him by letter of 8 November 2010) and a document called a gift policy statutory declaration which was a condition of the loan approval.
It was the plaintiff's evidence that he was present when Mr Jones asked his mother where to sign the contract and that he heard his mother explain what the gift policy declaration was for. The plaintiff said that he understood the gift of equity was the difference between the valuation of $430,000 and the purchase price which he thought represented the money which had been paid for the arrears and the monthly mortgage payments. In fact, no valuation had been done at that time. The plaintiff was confused in that respect.
The plaintiff's evidence of the 16 October meeting was supported by that of his fiancée and his parents. Mr Jones' evidence was to contrary effect. According to the plaintiff, Mr Jones was given a two‑page offer and acceptance to sign. In cross‑examination, the plaintiff conceded that what he observed to be the second page may, in fact, have been the equity gift declaration. He could not say, therefore, whether Mr Jones was given the first page of the offer and acceptance. He did not look at the documents that Mr Jones signed.
Mrs Gobby said that on that occasion she told Mr Jones that she wanted him to sign the offer and acceptance. She said she told him the purchase price was $404,000 and that Mrs Jones had nominated Woodbridge Settlements. She said he read and signed the offer and acceptance. She witnessed his signature. The document consisted of two pages, unstapled, yet Mr Jones did not sign or initial the first page. Mrs Gobby was asked about the note at the foot of the first page which indicated that if the document was on separate pages all parties should sign all pages. It was a significant point because Mr Jones, like Mrs Jones, gave evidence that he was shown only one page.
Mrs Gobby's response was that she 'missed that part'. She said it was a different form from that with which she had been used to dealing when she was in real estate, yet the form is, in fact, an old version, as the reference to the 2002 General Conditions demonstrates. The two forms are the same in that respect. Her answer made no sense.
Mr Jones' evidence was that on 16 October he completed a nightshift and had been sleeping when he was awakened by one of his sons. He saw the Gobbys walking through one of the sheds. He went out and met Mrs Gobby at her car. The others, Mr Gobby, the plaintiff and Jessica Roberts were still walking around the property. Mrs Gobby said she needed him to sign an appointment of settlement agent. He was shown a page which had his wife's signatures and the name Woodbridge Settlements on it and signed it in three places where indicated. There was no discussion about the document. He was also shown a document, a statutory declaration, which he was told had something to do with equity. He could not recall being given an explanation of it as he was fatigued at the time. He filled it out and signed it. He said 'it was something about a gift equity to Jake or something'. He could not remember. He did not know why it was required. Mrs Gobby said it was something to do with getting finance. He just wanted to get back to bed.
As occurred with respect to Mrs Jones, Mr Jones signed the acknowledgement that he had received a copy of the offer and acceptance and the General Conditions even though Mrs Gobby did not provide them. She said she forgot. Mrs Gobby sent a scanned version of the offer and acceptance to Mr Jones by email on 25 October 2010. His evidence was that that was the first time he had seen it. I do not accept that Mr Jones was given or shown the Resi 'in principle' approval letter. The plaintiff's evidence in this respect is unreliable and I do not accept Mrs Gobby's evidence on point. Certainly, the letter was not given to Mr Jones: he took no documents away from that meeting. If it had been there would have been no reason for it to be delivered together with the contract on 8 November. I note also that the letter of Vogt Graham to Talbot Olivier of 9 November 2010 (exhibit 1, page 100) states that an approval notice was delivered on 8 November.
Mrs Gobby had been trained to write up real estate contracts. She accepted that it was normal practice for the parties to sign both pages where the document consisted of two separate pages. Mrs Gobby admitted that it was also normal practice for terms that were inserted, such as the purchase price and any special conditions, to be initialled. Exhibit 4 reveals no signatures or initials by either of the defendants on page 1. That fact is wholly consistent with neither of them ever seeing page 1, whether completed or not.

Mrs Gobby said that the need for the statutory declaration (exhibit 5) was explained to Mr Jones. She told him it was needed by the bank because the valuation was more than the purchase price. She then corrected her answer by saying 'if the valuation was more'. At this juncture no valuation had been done, but as has been noted, the finance application stipulated an estimated value of $490,000. Mrs Gobby said (ts 123):
Cos the bank knew that we were – or that Jake was paying what was owed on the loan, which we still didn't know at that stage what the figure was. I explained to Neil that it's probably, by my experience of the area, that it was going to be about 20-odd thousand dollars equity difference. And I explained it to him that up to October we'd paid out 20 – 23 and a half thousand dollars – 23 – $24,000. So – and with what Ray was paying and the water rates, that was the difference. He – well, what I gathered, he – yeah. Didn't ask any questions, agreed with that and had the pen in his hand and signed it.
This evidence is patently unsatisfactory. Mrs Gobby knew and understood that the gift of equity, insofar as the proposed lender was concerned, related to the difference between the purchase price of $400,000 (the purchase price specified in the application) and the market price as determined by valuation. The equity gift declaration was necessitated by the insertion in the application of an estimated value of $490,000. There had been no valuation of the property at $430,000. That figure had never been discussed. Moreover, the amount which the Gobbys had paid by way of mortgage payments did not represent equity, but interest. It had no significance to the lender. Also, the obligation to pay water rates was unrelated to the purchase price as Mrs Gobby well knew.
Mrs Gobby said that the amount of gifted equity was left blank in the statutory declaration because the property had not been valued at that time. She expected that it would be filled in at a later stage. She also admitted that she intended to have the statutory declaration signed by a person who did not witness Mr Jones' signature. To obtain Mr Jones' unwitnessed signature on a form of statutory declaration that was materially incomplete is not consistent with honest conduct on the part of Mrs Gobby.
These matters reflect adversely on Mrs Gobby's credit as a witness. Her admitted willingness to procure the signature of a qualified person on a statutory declaration who had not in fact witnessed the declaration reveals a lack of probity. Moreover, on her evidence she misled Mr Jones in her explanation of the gift of equity. I do not accept her evidence that she understood the gift of equity to be, in effect, the amount of the mortgage payments made by her and her husband.
I find, nevertheless, that Mr Jones was not so naïve, or so tired from having worked that day, that he mistook completely the nature of the documents he signed. I find that he did sign the second page of the form of offer and acceptance knowing, in a general sense, what it was, but believing it gave effect to the 30 May agreement.
Likewise, I am satisfied that he knew that he was signing a statutory declaration of a gift of equity, although he was misled as to what the gift represented. The document was meaningless in its form as it did not state the value of the gift and was not witnessed. Mr Jones' admission that the statutory declaration acknowledged a gift of equity to Jake (ts 504) shows that he knew the plaintiff was involved in the transaction, but it does not follow from the fact that he was going to be the borrower that a contract different from the 30 May agreement was being proposed in the form of the offer and acceptance. It was not a contractual document. He gave it no significance.
Mrs Jones said in cross‑examination that the offer and acceptance which Mrs Gobby sent her by email on 25 October 2010 was not the contract she thought she had made. It did not contain the terms previously agreed and the purchase price was not that which had been agreed. It was suggested to her that these matters could have been clarified by contacting the plaintiff. The effect of Mrs Jones' evidence was that she saw no reason to communicate with the plaintiff about the contract as she did not consider that he was a party to it.
Whilst the identity of the buyer as such did not affect Mr and Mrs Jones, the fact of a new contract different in terms from the 30 May agreement did. They had no reason to sell the Property on different and less favourable terms from what they had agreed with Mr and Mrs Gobby.

The valuation

It is not in dispute that Resi arranged for a valuer, Mr Hemsley, to do a valuation. He attended at the Property for an impromptu inspection on the morning of 14 October 2010 as he happened to be in the area. No notice was given to Mrs Jones who was not in a position to receive him, being in bed after returning from working nightshift. Mrs Gobby then arranged for the inspection to be done on 21 October and notified Mrs Jones.
On 20 October Mrs Gobby sent a text to Mrs Jones enquiring how the cleaning of the house was progressing and reminding her of the inspection the following day. Mrs Jones responded, saying that she was cleaning floors. On 21 October Mrs Jones called Mrs Gobby to say that the valuer should be postponed because a water pipe had burst and the floors could not be cleaned. Later, she sent a further text saying that as there was no water, the valuer would not have access to all areas (exhibit 1, page 80). As the valuation inspection could not be postponed, according to Mrs Gobby, she attended with Mr Hemsley at the Property that day. Mrs Jones did not allow the valuer in, so the inspection was deferred. The evidence of Mr Jones was that there was a water pipe rupture between the mains and the house which cut off water supply at that time. Mr Hemsley agreed to come back on 28 October.
Mr Hemsley did not give evidence. I find, in the event that it may prove relevant, that Mr and Mrs Jones did not obstruct the valuation as the plaintiff contends. After Mr Hemsley's visit on 14 October Mrs Jones sent a text (exhibit 1, page 72): 'Yes it will be cleaner next thursday i think the visit this morning may have been what neil needed to get him to help me' [sic]. It was Mrs Gobby who insisted that the residence on the Property be cleaned. There is no evidence of why it needed to be cleaned for the purposes of a valuation. It is apparent from the evidence of the text messages that Mrs Jones felt under some pressure from Mrs Gobby to get the house cleaned. When that could not be done it was not unreasonable for Mrs Jones to request that the inspection be postponed, on the first occasion because she had been taken by surprise by Mr Hemsley's visit, and on the second because she and her husband were dealing with the water problem. I do not accept the plaintiff's submission that Mr and Mrs Jones deliberately tried to thwart the valuation by refusing the valuer access to their residence in order to bring about a breach of the finance approval clause. Mr and Mrs Jones were not aware of that clause until they received a copy of the offer and acceptance by email to them on 25 October 2010.

The capital gains tax liability

On 22 October 2010 Mrs Jones had obtained advice from an accountant that the sale may create a liability to pay capital gains tax (CGT). On 25 October she texted Mrs Gobby (exhibit 1, page 82):
Neil and I are consulting with our own accountant etc to get the information relevant to us and out situation, as you can appreciate we can not continue down this path if it means we're going to be left with a huge tax bill.
On 26 October 2010 Mrs Gobby sent a text to Mr Jones (exhibit 10):
Hi Neil it's Anne I haven't cancelled the valuer for tomorrow either way u are up for capital gains get the valuation over and done with. This is killing Ray and it's killing my family we don't know what to do we don't want top loose [sic – to lose] this money we have put in.
Mr Jones responded:
Anne please stop harassing us. You'll not lose money as all we are asking is some time to sort this out, as capital gains isn't as simple as paying it. The house isn't subject to the tax as well as 2.2 ha which we allocate. There is also costs we can wright [sic] off against it so if this is not handled properly then we could lose a lot more than you. Why r u so scare [sic] of us getting our own advice and help on doing this properly as you are placing too much stress on us by trying to rush it.
Mrs Gobby replied:
We are not scared of you getting advice obviously you are in more trouble than we know we are scared of forking out more money as there is a payment due in a week so do we just keep forking. We have spent $27,500. You have had six months and no pressure.
In a subsequent message Mrs Gobby indicated that she had cancelled the loan. In evidence Mrs Gobby said that in fact she cancelled the valuation, but did not cancel the loan. She, her husband and the plaintiff then decided to obtain legal advice.
It is clear from Mr Jones' evidence that by that time he had resumed full‑time work and was able to meet ongoing mortgage payments.

The defendants' purported termination

On 4 November 2010 the plaintiff attended at Woodbridge Settlements to pay the $500 deposit as provided in the offer and acceptance. Woodbridge Settlements declined to act and subsequently the plaintiff, on his mother's advice, instructed Anne Lynch Settlements. On 5 November 2010 the plaintiff paid stamp duty on the offer and acceptance. On 8 November 2010 the plaintiff wrote to Mr and Mrs Jones as follows:
Please find enclosed a copy of the finance approval letter by Resi Mortgage Corporation Pty Ltd dated 8 October 2010.
Please be advised that I have now appointed Anne Lynch Conveyancing of 23 McVicker Road, Mount Helena as my settlement agent, and having paid the $500 deposit of which is now held by Anne Lynch Conveyancing trust account. I confirm settlement is contracted to occur on 1 December 2010.
Upon receipt of that letter Mr and Mrs Jones took legal advice. On 9 November 2010 Talbot Olivier on behalf of Mr and Mrs Jones wrote to Anne Lynch Conveyancing purporting to terminate the contract pursuant to condition 1.5 on the grounds that the finance approval notice sent with the plaintiff's letter of 8 November 2010 did not satisfy the definition of finance approval as set out in condition 1.9 of the contract.
By condition 1.9 of the offer and acceptance 'finance approval' means:
(a)a written approval by the lender of the finance application or a written offer to lend or a written notification of an intention to offer to lend made by the lender; and
(b)for the amount of the loan; and
(c)which is unconditional or subject to terms and conditions:
(1)which are the lender's usual terms and conditions for finance of a nature similar to that applied for by the buyer; or
(2)which the buyer has accepted by written communication to the lender, but a condition which is in the sole control of the buyer to satisfy or be treated as having been accepted for the purposes of this definition; or
(3)which, if the condition is other than as referred to in paragraphs (1) and (2) above, includes:
(i)an acceptable valuation of the property;
(ii)attaining a particular loan to value ratio;
(iii)the sale of another property; or
(iv)the obtaining of mortgage insurance;
and has in fact been satisfied.
The letter from Talbot Olivier expressly referred to a contract between the plaintiff and the Jones'. It did not dispute the validity of the contract or take issue with the identity of the plaintiff as the buyer. It is submitted that the letter constitutes an admission by the defendants. To the extent that the letter from Talbot Olivier acknowledges the existence of a contract between the parties it contradicts the evidence of the defendants. However, whether a contract subsisted at the time is a question of law. Because they feared a CGT liability and were by then able to meet their mortgage payments the defendants had reason to seek to avoid any contractual obligation to sell the Property, irrespective of who the buyer was. It was not material to the defendants at that time whether the buyer was the plaintiff or his parents. That most likely explains why the purported termination was based on non‑satisfaction of the finance approval clause. On the face of the offer and acceptance there was a contract. No analysis was required at that time, as it has been for the purpose of this trial, of the threshold issue of formation.
The failure to take the point that there was no contract, does not, in my view, render unacceptable the evidence of Mr and Mrs Jones that they did not contract with Jake Gobby, or preclude a legal conclusion that no contract was made with him. I am satisfied that at the time they obtained legal advice the defendants gave no significance to the fact that the plaintiff, rather than his parents, was named as buyer.
The defendants' motive to avoid any contractual obligation may be relevant to the question of their credibility, but it is not material to the issue of whether, as a matter of fact and law, an enforceable contract was made between them and the plaintiff.

Observations on the issue of formation

At no time was there a novation of the 30 May agreement. It is not pleaded that there was. The plaintiff does not seek to enforce a contract between his parents and Mr and Mrs Jones of which he is the assignee of his parents' rights, but a different, later, separate contract which did not contain the terms of the original agreement.
Having heard the evidence, and having had cause to doubt a good deal of what was said by all interested witnesses, I find that, unaided by professional advice, the Gobbys, the Jones' and the plaintiff made arrangements which they each perceived to be in their interests, but were effectively unworkable. The 30 May agreement, although well‑intentioned, was ill‑considered by both parties. Mr and Mrs Gobby, although they desired the Property, could not finance its purchase at that time, but bound themselves to meet the monthly mortgage payments indefinitely while they looked for the means to pay out the loan. Their attempt to interpose the plaintiff as the buyer was bound to be problematic because he was not a party to the original agreement and therefore not bound by his parents' ancillary promises.
While other payments were also promised, including shire and water rates, the purchase price originally agreed upon was the mortgage debt at the time of transfer, being an otherwise unspecified amount. Mrs Gobby, rather than take steps to ascertain that sum, inserted a figure of her own, lower than the amount known to have been owing at the time of the 30 May agreement. Mrs Gobby, I find, had reason to conceal from Mrs Jones the fact that she was signing a blank offer and acceptance, and from Mr Jones the identity of the plaintiff as purchaser, the purchase price of $404,000, and the fact that the terms of the 30 May agreement were not included. Mr and Mrs Jones were expecting to transfer the Property to Mr and Mrs Gobby in furtherance of the 30 May agreement. At no time was it ever discussed that that agreement would be annulled so as to permit another agreement for the sale of the Property to be made.

Was there a contract made between the plaintiff and Mr and Mrs Jones?

Mrs Jones appeared to be at pains to prove that she did not know that what she signed was an offer and acceptance. I find that with her experience of dealing with the previous offer prepared by Mrs Gobby and similar documents signed by her in relation to prior property transactions, and in the context of the agreement to sell the Property to Mr and Mrs Gobby, it would have been clear that the document was not merely an appointment of a settlement agent. To that extent I do not accept her evidence. But as to whether her signing the document had any contractual effect, I come to a different view.
Her subsequent conduct, and that of her husband, is clearly indicative of an understanding that the anticipated sale of the Property was proceeding towards settlement. She had reason to expect that some documentation would be required to effect the transfer of the Property, having earlier been asked to sign the 10 June offer and acceptance. She believed, I infer, that the document she signed was in furtherance of the 30 May agreement, not a new and different contract. One of its purposes was to appoint a settlement agent.
I am satisfied that Mrs Jones at that time believed that, as agreed, the Property would be sold to Mr and Mrs Gobby for the amount owing to Bluestone. The consideration for the transfer also included the other promises made by the Gobbys in the 30 May agreement. That agreement was still on foot. Prior to the signing of the offer and acceptance by Mrs Jones on 16 October 2010 no agreement had been made between the plaintiff and Mr and Mrs Jones in relation to the Property.
I accept the plaintiff's evidence that he signed the offer after his mother in his presence had entered the necessary details. It follows that the document Mrs Jones signed on 16 September 2010 was not filled out. I find that Mrs Gobby presented Mrs Jones with the second page of a blank offer and acceptance form. Whether folded or not, it had not been signed by the plaintiff. The terms had not been entered. That occurred later, prior to the plaintiff signing it on 22 September.
I find that Mrs Gobby did not 'explain' the purchase price of $404,000. There was no discussion of the purchase price at all. I conclude from the evidence of Mrs Gobby, Mrs Jones and the plaintiff that the plaintiff's name was not on the document. Nor was the purchase price entered. It was not a contractual document.
Moreover, and in any event, I find that Mrs Jones was not shown and did not see the first page of the form, so if I am wrong in fact in finding that the form was blank as to the buyer and the price, I would find, absent a signature by the plaintiff on the second page, about which there is no dispute, that there was nothing on that page to indicate to Mrs Jones that the buyer was other than Mr and Mrs Gobby. Mrs Gobby did not tell Mrs Jones that the form was proffered on behalf of her son. Importantly, this event occurred prior to Mrs Gobby informing Mrs Jones of the plaintiff's finance approval on 8 October 2010.
I have rejected the evidence of the plaintiff and Mrs Gobby that Mr and Mrs Jones had previously been told that the plaintiff would be buying the Property. Even if they had, the evidence does not show that Mr and Mrs Jones ever made an agreement with the plaintiff to sell the Property to him. Nor does it show (and it is not pleaded to be the case) that Mrs Gobby reached such an agreement orally with Mr and Mrs Jones as agent for and behalf of the plaintiff.
I have looked for objective evidence that would show that the form of offer and acceptance signed by Mrs Jones should be regarded, not as an offer as such, which I have found it was not, in either form or substance, but as a memorandum in writing of an earlier agreement made between the plaintiff and Mr and Mrs Jones. None exists. There was no agreement at that stage between the defendants and the plaintiff to which the document might be seen to record or give effect.
In the absence of an existing agreement between the plaintiff and the defendants the document did not constitute a memorandum in writing capable of creating a binding contract for the sale of land. Therefore, Mrs Jones did not enter into a contract with the plaintiff by signing an incomplete offer and acceptance form unsigned by an offeror.
Mr Jones, I have found, knew that the gift of equity declaration he partly completed was in favour of the plaintiff and that the other document he signed was an offer and acceptance. I am satisfied that he understood that the buyer, in the sense of transferee, was the plaintiff. Yet, as far as Mr Jones was concerned, the transfer of the Property was to be effected pursuant to the 30 May agreement with Mr and Mrs Gobby. He had no reason to believe that the documents were prepared for any purpose other than the performance of that agreement.

Incidentally, it is at this point that the plaintiff's case becomes self‑contradictory, the express submission of the plaintiff being that the documentation was intended to give effect to the contractual objects of the 30 May agreement (29 January 2013, pars 17 and 239).
I am satisfied that Mrs Gobby in obtaining Mr Jones' signatures on the offer and the statutory declaration represented by her conduct that she was acting in her own right and on behalf of her husband to progress the transfer of the Property in accordance with the 30 May agreement, not that she was acting as agent for her son to obtain his agreement to a contract on different terms. I find that this misrepresentation went to the nature and effect of the offer and acceptance and induced Mr Jones to sign it.
As in the case of Mrs Jones, Mr Jones did not sign the first page of the document. There was no disclosure of or discussion of the buyer's details, the price of $404,000, the deposit, or the finance approval clause. In this respect it is argued on behalf of the defendants that the formal requirements of the document itself were not met, such that the signing of one page only could not constitute a valid expression of contractual intent.
The defendants submit that the stated requirement that the parties sign all pages has legal significance. In the absence of authority I am not prepared to find that a failure to observe the directions for signing set out in the pro forma relieves Mr Jones of the ordinary legal consequence of signing it, but the fact that he did not sign the first page is powerful evidence in support of his testimony that he did not see it. With respect to some aspects of his evidence of his understanding and knowledge at the time, Mr Jones was disingenuous I find, however, that the manner of his signing is consistent with Mrs Gobby not showing him, or discussing with him for that matter, the terms of the offer, or doing anything to indicate that she was inviting, as agent for her son, his agreement to a different contract.
This is not a case of non est factum in the conventional sense, i.e. as in Petelin v Cullen (1975) 132 CLR 355. Rather, the issue with respect to formation is whether Mr Jones by signing only the second page of the form in the circumstances as I have found them, can be taken to have given his assent to those terms.
The relevant principle is expressed in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165, [57]. Misrepresentation is a vitiating element. As the High Court held at [54], while a party does not have to read a document before signing it in order to be bound by it, the fact that a document is signed is not conclusive as to its legal effect.
In this case the 30 May agreement was extant at the time of the signing of the offer and acceptance. By that agreement Mr and Mrs Jones had promised to sell the Property to Mr and Mrs Gobby. The agreement was reduced to writing (memorandum of 8 August 2010) and was partly performed by the making of mortgage payments. It was not in dispute at trial that it was capable of being enforced by Mr and Mrs Gobby. Apart from a transfer of land, no further documentation was required. Although the execution of a standard form offer and acceptance, as such, was superfluous, one had been proposed by Mrs Gobby previously, on 10 June.
Against that background, the presentation by Mrs Gobby of another such form would not have signified an offer by the plaintiff to purchase the Property on different terms. I am satisfied, in the circumstances as I have found them, that the nature of the document was misrepresented to Mr Jones such that he was misled as to the true nature and potential effect of the document. His signing it did not have the effect of binding him to a contract with the plaintiff.
It was the plaintiff's submission that, to the extent that the terms of the offer and acceptance differ from the 10 May agreement, Mr and Mrs Jones can seek rectification. Implicit in that submission, it seems to me, is a concession that it was intended to reflect the 10 May agreement. Yet the plaintiff's claim as pleaded is that the alleged contract was on the terms stated, not that it was intended to give effect to the earlier agreement between the defendants and Mr and Mrs Jones. The submission is miscalculated. It supports the conclusion to which I have come that the defendants did not intend to make a different contract from that which they had made. It does not help the plaintiff to say that he is amenable to the substitution of its terms.
For completeness, I note that, as in the case of Mrs Jones, Mr Jones signed, at Mrs Gobby's request, an acknowledgement that he had received a copy of the document and of the 2002 General Conditions when he had, in fact, received neither. Along with the failure to observe the direction to sign all pages, these irregularities tend to support the conclusion that the signature of Mr Jones was obtained in a manner that caused him to be deceived as to the true nature and potential effect of the document.
These findings dispose of the plaintiff's claim. The plaintiff has failed to prove the acceptance of both defendants as he must in order to establish the alleged contract.

Finance approval

I propose to deal provisionally with the issue of whether the defendants were entitled to terminate on the ground of the plaintiff's alleged failure to satisfy the finance clause. The following reasons assume that a valid contract was made.
The plaintiff's position is that the letter from Resi dated 8 October 2010 (exhibit 1, page 67) was a finance approval as defined in condition 1.9 of the offer and acceptance and that written notice of it was given when it was shown to Mr Jones on 16 October 2010, a copy being delivered to him on 8 November 2010.
The defendants contend that pursuant to condition 1.5 they were entitled to terminate the contract by written notice to the buyer, as they purported to do in the terms of the Talbot Olivier letter of 9 November 2010 to Anne Lynch Conveyancing (exhibit 1, page 99), on the ground that no approval advice was given by the latest time.
I have found that Mr Jones was not given an approval notice on 16 October 2010. The evidence of the plaintiff and Mrs Gobby to the contrary was intended to prove that the notice was given before the latest time, being 30 October 2010, condition 1.5 providing relevantly that if by the latest time the buyer has not given an approval notice, the seller may terminate the contract by written notice. It is not disputed, however, that the purported approval advice was delivered on 8 November, prior to the defendants' purported termination. The issue is not whether approval notice was given, but whether finance approval had been obtained.
On the question of whether the Resi letter of 8 November 2010 was a finance approval, both parties have cited Widodo v Hamdan [2008] WASCA 113 in which the Court of Appeal decided, with respect to a finance clause contained in a standard form REIWA contract for sale of land by offer and acceptance (2002 revision), that 'finance approval' meant an offer or approval capable of being accepted by the buyer which, if accepted, would result in a binding agreement'. The expression 'finance approval' was defined by that contract to mean:
An offer to lend made by the lender on reasonable terms and conditions or an approval of a finance application by the lender to the buyer, by the latest time for a loan of an amount not less than the amount of the loan shown below. An approval that is subject to the lender's usual terms and conditions shall be deemed to be finance approval.
A bank (coincidentally ING) responded to the application for finance with a letter headed 'Indicative Approval Advice' which read in part:
This letter is only a preliminary advice of our approval in principle, and it is not intended to create any legal liability for the borrower or the bank.
We will issue a formal letter of finance to the borrowers immediately after:
1.Satisfactory evaluation has been received for the proposed security.
2.The further conditions (if applicable) are met to our satisfaction.
The letter set out a number of conditions, including mortgage approval. The indicative approval letter was sent to the buyer on 12 August 2003. Subsequently, by 14 August 2003, a valuation was received, mortgage insurance arranged, the loan approved, and a memorandum headed 'Approval Advice' issued to the buyer's finance broker in the following terms:
We refer to the recent application for finance for the above applicants and confirm that ING Bank has approved the credit facility referred to above.
File and instructions will be forwarded to Sydney tonight for the issue of formal letter of finance to the borrower.
This advice was forwarded to the vendor's agent on 19 August. The vendor on 21 August 2003 purported to terminate the contract on the ground that unconditional finance approval had not been received by the due date, being 20 August. The issue, therefore, was whether the approval advice constituted finance approval. It was clear on the facts that it was issued after the conditions set out in the indicative approval advice were satisfied. The Court of Appeal was not required to determine whether the 'indicative approval advice' constituted finance approval.
Martin CJ agreed with McLure JA and EM Heenan AJA. McLure JA noted that the loan offer which followed the approval advice provided that the bank required a valuation that confirmed that construction or repair work was completed and that the value of the property represented sufficient security. The evidence of the ING credit assessor was that as a valuation had been obtained for the purpose of the approval, another did not have to be done. In effect the approval was a counteroffer which, if accepted, would result in a binding agreement. Her Honour held [27]:
An offer on reasonable terms or an approval (counter-offer) on usual terms satisfies the definition of finance approval. The buyer has the option of accepting the offer or counter-offer or deferring acceptance if he or she does not want to lock themselves into the offer on the table. However, that flexibility for the buyer does not prevent the satisfaction of the finance condition. That is consistent with the buyer's obligation to use his best endeavours to obtain finance approval.
EM Heenan AJA also found that the 'approval advice' satisfied the definition of finance approval. By the time of that advice a valuation had been obtained which demonstrated satisfactory security for the loan and arrangements had been made with respect to mortgage insurance. His Honour observed [47]:
The appellant submits that the approvals referred to were no more than informal and provisional without being intended to, or actually, creating any legal obligation to lend the money sought. Certainly, that character can be ascribed to the first communication of 12 August 2003 but not to the second as the learned judge, in my view, quite rightly found.
His Honour noted at [51] that, although principally for the benefit of the buyer, an approval clause was capable of benefitting a vendor, citing Gange v Sullivan [1966] HCA 55; (1966) 116 CLR 418, 443 (Windeyer J) and Sandra Investments Pty Ltd v Booth [1983] HCA 46; (1983) 153 CLR 153, 165 (Wilson J).
The decision in Widodo v Hamdan highlights the distinction between 'in principle' approval, which is an indication by the lender which has no legal effect, on the one hand, and an approval that is capable of resulting in a binding agreement if accepted, whether by law or estoppel, on the other. On the evidence of Mr Raine, ING's usual terms and conditions in this case were the usual terms and conditions of mortgage. The 'in principle' approval conditions requiring an acceptable valuation, proof of earnings and a statutory declaration of a gift of equity by the vendor were, I find, conditions which had to be satisfied before an approval amounting to a counter-offer could be made.
The plaintiff also placed reliance on Neate v Parfit [2006] WASC 121, an earlier decision of Templeman J, in which his Honour held that a finance approval that required an acceptable valuation met the definition. In that case the buyers contracted to buy residential units 'off the plan'. His Honour found in that case that a valuation 'is only to be expected where lenders are being asked to advance moneys to purchase buildings which are still in the course of construction' ([63]). In my view, that decision is confined to its particular facts and does not authorise an approach different from that of the Court of Appeal in Widodo.
Applying Widodo v Hamdan, and having regard to the definition in condition 1.9, I find that the Resi letter of 8 October 2010 did not constitute finance approval for the purposes of the offer and acceptance. Accordingly, the defendants were entitled to terminate, provided they had not, as the plaintiff alleges, breached the contract before purporting to do so in a manner that amounted to a repudiation of it.

Breach and repudiation

It is pleaded on behalf of the plaintiff that the defendants by their conduct breached the contract before the latest time for approval. The plaintiff alleges in par 4 of the statement of claim that the contract contained three implied terms:
(a)The parties would cooperate and do all things necessary to ensure that the terms of the contract were implemented and performed;
(b)The parties would not do anything which would frustrate the performance of the contract or prevent the plaintiff from satisfying the conditions of the contract or conditions of any conditional finance approval;
(c)The defendants' power of termination under condition 1.5 of the contract would only be exercised by the defendants honestly, reasonably and for a proper purpose and would not be exercised capriciously.
The defence by par 6 admits the implied terms. By par 6 of the statement of claim the plaintiff alleges that the defendants breached the contract by:
(a)refusing to allow the valuer on to the property to undertake an inspection for the purpose of a valuation; and
(b)refusing to sign the statutory declaration acknowledging a gift of equity within a reasonable time.
It is not pleaded this way, but as I understand the plaintiff's argument, it is that if the 'in principle' approval were not a finance approval, then the failure of the plaintiff to satisfy the finance clause was due to the defendants' breaches of the implied terms which effectively prevented the plaintiff from obtaining such approval by the latest time, such that the defendants were not entitled to terminate pursuant to condition 1.5 of the contract.
With respect to the inspection by the valuer, I find that the defendants did not breach any implied term. It is conceded that the defendants owed an implied duty to act in good faith, to cooperate, and to not frustrate the performance of the contract. The defendants were bound not to obstruct the valuation process and to make their home available for inspection, but it was not for the defendants to arrange the inspection or to ensure that it was obtained timeously. The evidence of the circumstances in which the inspection of the residence by Mr Hemsley was arranged and postponed does not disclose, as I have found, any unreasonableness on the part of the defendants as would constitute a breach of any implied term. The Jones' have not been shown to have acted dishonestly or in bad faith. The contention that they sought to prevent an inspection in order to frustrate the valuation process has no basis in fact.
As matters transpired, Mrs Gobby informed the defendants by text message on 26 October, four days before the latest time for approval, that she had called off the valuer and cancelled the loan. In those circumstances, the defendants did not act unreasonably or in breach of any implied term by terminating the contract as and when they did. They were entitled to terminate. Therefore their act did not amount to a repudiation. In any event, by that time, Mrs Gobby, on behalf of the plaintiff, had evinced an intention not to proceed. Both sides then took legal advice.
The allegation that the defendants refused to sign the statutory declaration is redundant because no gift of equity could be acknowledged until a valuation was done which enabled the gift to be quantified. In any event, the evidence shows that Mr Jones did sign a declaration, though it was incomplete for that reason, and not witnessed. Mrs Jones was never asked to make a declaration of a gift of equity before the latest time for finance approval. There is no simply no basis for the alleged breach.

Specific performance

It is not appropriate to deal with this issue on a provisional basis having regard to the findings of fact that have been made. Given my findings as to the conduct of the parties and other persons, and bearing in mind the discretionary nature of the equitable remedy and the relevant factual criteria, I do not consider it would be reasonable to hypothesise. Similarly, although the alternative claim for damages is uncomplicated, I do not consider it is appropriate to make a provisional assessment.

Counterclaim

The counterclaim is for damages for loss and damage suffered as a result of the plaintiff lodging a caveat on the certificate of title of the Property to protect his interest as a buyer under the contract. The alleged loss and damage is the loss of opportunity to sell the Property and invest the proceeds. No evidence was led, nor any submissions made with respect to the counterclaim which, in my opinion, is misconceived.
Declarations are also sought. The defendants submit that the court has jurisdiction to give declaratory relief to the effect that there was no contract and to order that the caveat be removed. There is no cause for declaratory relief. As to the caveat, it follows from my findings that the plaintiff has no caveatable interest. The caveat should be removed from the title, but this court has no jurisdiction under the District Court Act 1969 or the Transfer of Land Act 1893 to direct the Registrar of Titles in that respect. The counterclaim is dismissed.

Conclusion

For the reasons set out herein I have found that the defendants did not enter into a contract with the plaintiff. The claim should be dismissed on that basis. I have found provisionally that the contract, if made, was not breached or repudiated by the defendants and that the defendants were entitled to terminate it upon the ground that the finance clause was not satisfied, no finance approval having been obtained.
The counterclaim should be dismissed also.
It follows from this result that there are outstanding issues to be resolved between the defendants and Mr and Mrs Gobby with respect to the 30 May agreement. These are beyond the scope of this litigation. One would hope that they can be resolved without the need for further proceedings.