Hamdan v Widodo - [2007] WASC 26

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: HAMDAN -v- WIDODO [2007] WASC 26

CORAM: JOHNSON J

HEARD: 22 & 23 NOVEMBER 2005

DELIVERED : 9 FEBRUARY 2007

FILE NO/S: CIV 1813 of 2004

BETWEEN: JAMAL HAMDAN
Plaintiff
AND
SRI WAHJUNI WIDODO
Defendant

Catchwords:

Real property - Contract for sale of land by offer and acceptance - Subject to finance condition - Approval of finance - Termination by vendor where purchaser has advised of finance approval within time and is prepared to proceed - Dispute as to whether finance approval has been granted

Legislation:

Nil

Result:

Judgment for the plaintiff

Category: B

Representation:

Counsel:

Plaintiff: Mr R J Nash
Defendant: Mr J L H Formby

Solicitors:

Plaintiff: Williams & Co
Defendant: Formbys

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

Charles Lodge Pty Ltd v Menahem [1966] VR 161
Gange v Sullivan (1966) 116 CLR 418
Globe Holdings Ltd v Floratos [1998] 3 NZLR 331
Koikas v Green Park Construction Pty Ltd [1970] VR 142
Masters v Cameron (1954) 91 CLR 353
Maynard v Goode (1926) 37 CLR 529
Meehan v Jones (1982) 149 CLR 571
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Raysun Pty Ltd v Taylor [1971] Qd R 172
Rossiter v Miller (1878) 3 App Cas 1124
Sampson v Clifford & Ors [2001] WASC 102
Sheridan v Nikolic [1982] Qd R 725
Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284
Zieme v Gregory [1963] VR 214

JOHNSON J: This action is brought by the plaintiff, Jamal Hamdan, against the defendant, Sri Wahjuni Widodo, for specific performance of a contract for sale of land. In the alternative, the plaintiff seeks an order for damages for breach of contract. There is but a single issue for determination and that is whether the plaintiff received finance approval within the terms of the contract.
The defendant was at all material times the registered proprietor of 20 John Street, Bentley, more particularly described as Lot 2 on Strata Plan 38346 being the whole of the land in Certificate of Title Volume 2199 Folio 430 ("the property"). On or about 3 August 2003, the plaintiff made an offer to purchase the property by signing the standard form, Real Estate Institute of Western Australia ("REIWA") approved, Contract for Sale of Land or Strata Title by Offer and Acceptance ("the Offer"). On or about 6 August 2003, the defendant accepted the plaintiff's offer thereby bringing into existence the contract which the plaintiff seeks to enforce by this action. Under the contract the plaintiff agreed to purchase and the defendant agreed to sell the property for $225,000. The contract provided for a deposit of $1000 which was received into Mega Endeavour Realty's Trust account on 9 August 2003 and identified as "Deposit on Sale".
The contract was subject to a number of conditions, only one of which, the finance condition, is relevant to this action. The finance condition, which appears as cl 1 of the contract is in the following terms:
"1. Finance
1.1This contract is conditional upon Finance Approval being obtained before the Latest Time.
1.2The Buyer shall:
(a)make an application for Finance Approval to at least one Lender using, if required by the Lender, the property as security;
(b)use best endeavours to obtain Finance Approval and if required in writing by the Seller or the Seller's Agent provide evidence in writing of the making of an application in good faith for Finance Approval, any loan offer made, and the reasons for the Buyer not accepting any loan offer made;
(c)on receipt of the Finance Approval immediately notify in writing the Seller or the Seller's Agent whereupon the condition in paragraph 2.2 will then be satisfied.
1.3 If on or before the latest time:
(a)the Buyer is notified by the Lender that the application for Finance Approval is rejected; or
(b)no Finance Approval is obtained
THEN the Buyer shall immediately in writing notify the Seller or the Seller's Agent of such rejection or no receipt as the case may be, and provide evidence in writing of the rejection.
1.4UNLESS the Buyer has waived this condition and communicated such waiver in writing to the Seller or the Seller's Agent prior to the Latest Time, then if:
(a)the condition in paragraph 1.1 is not satisfied; and
(b)the Buyer has complied with paragraphs 1.2(a), 1.2(b) and 1.3
THEN this contract shall be deemed to have come to an end without the necessity of either party giving to the other notice to that effect. The Deposit and all other monies (if any) paid pursuant to this Contract shall then be refunded to the Buyer (less all bank and government charges) and there shall be no further claim under this Contract by either party in law or in equity against the other.
1.5If the Buyer fails to notify the Seller or Seller's Agent in accordance with paragraphs 1.2 (c) or 1.3 the Buyer shall be in default and the Seller may without prejudice to any other remedies and rights available immediately terminate the Contract by notice in writing to the Buyer.
1.6The clause shall operate for the benefit of both the Seller and the Buyer except that the Buyer by waiving the Buyer's rights pursuant to this clause at any time before the Latest Times shall be deemed to have received Finance Approval."
The definitions applicable to the contract are contained in cl 1.7. The terms "Finance Approval" and "Lender" have the following meanings:
"'Finance Approval' means 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 that the Amount of Loan shown below. An approval that is subject to the Lender's usual terms and conditions shall be deemed to be Finance Approval.
'Lender' means either the Lender nominated below (if any) or any other Lender acceptable to the Buyer."
The balance of cl 1 consists of a series of headings. Next to each heading is a line where the relevant information is to be entered. The following is the information contained in that part of the contract including the words in italics which are handwritten:
"Lender:                 Any Australian Bank
Latest Time:           4.00pm on the date 10(ten) working days from date of acceptance
Amount of Loan:     90(ninety) per centum of Purchase Price"
There was no issue between the parties that the Latest Time for the purpose of the contract was 20 August 2003, being 10 business days after 6 August 2003 which is the date of the contract. As to the description of the lender, the plaintiff's evidence was that, at the time he completed the finance clause of the offer to purchase he did not know which bank he would use so he specified any Australian Bank. He knew that he would be borrowing 90 per cent of the value of the property so that is what he specified as the loan amount.
The operation of some aspects of the finance condition of the contract can immediately be resolved. The first is that the effect of cl 1.1 and cl 1.2 is that where the buyer, having received Finance Approval, immediately notifies the seller in writing, the contract becomes unconditional and the buyer is bound to complete. The second is that it is only where finance approval has not been obtained, the buyer has made an application for finance, used his best endeavours to obtain it, and notified the seller of the failure to obtain finance, that the contract comes to an end without more; unless of course there has been a waiver of the condition by the buyer. It is apparent then that the termination referred to in the letter of 21 August 2003 to the plaintiff from the defendant's agent was clearly not a reference to a termination of the contract under cl 1.4 in the sense that the contract has come to an end by operation of a clause of the contract. The only specific and express right of the seller to terminate the contract appears in cl 1.5 which is predicated on a failure by the buyer to notify the seller under cl 1.2(c) that Finance Approval has been obtained or under cl 1.3 that Finance Approval has not been obtained. The only other clause of the contract relevant to termination of the contract by the seller is cl 1.6 which states that the clause shall operate for the benefit of both the seller and the buyer. However, that clause has no operation where the buyer has waived the finance condition before the Latest Time which has the effect of making the contract unconditional.
Prior to being advised that the offer had been accepted by the defendant, the plaintiff made contact with Ahmad Norly Hassan, a finance broker from Your Finance Group Pty Ltd. Mr Hassan had previously assisted the plaintiff to purchase a property. The plaintiff told Mr Hassan about the property and the price and asked him what the repayments would be. In reply, Mr Hassan forwarded to the plaintiff a facsimile dated 30 July 2003 in which he provided an indicative finance costing for the purchase of the property. The loan costs included an amount for mortgage insurance. In the text of the facsimile Mr Hassan advised that, as the loan amount exceeded a certain percentage of the purchase price (which cannot be read on the copy tendered into evidence), the loan would be subject to Lender Mortgage Insurance. It is apparent from this correspondence, and the fact that the plaintiff pursued the loan application, that a condition requiring the payment of Lender Mortgage Insurance was known to the plaintiff and accepted by him.
On being made aware that his offer to purchase the property had been accepted, the plaintiff faxed a copy of the contract to Mr Hassan and provided information in response to Mr Hassan's questions about the plaintiff's financial position. The plaintiff also recalled filling out an application form which he believed Mr Hassan must have brought to the plaintiff's office and assisted him to complete. According to the plaintiff, Mr Hassan recommended that he finance the property with ING Bank. Mr Hassan recalls attending the plaintiff's office on about 7 August 2003, shortly after his offer to purchase the property had been accepted. He made no reference in his evidence to bringing an application form with him and assisting the plaintiff to complete it.
A Finance Application for the plaintiff, prepared and submitted by Mr Hassan of Your Finance Group and dated 8 August 2003, was tendered into evidence. The evidence does not clarify whether that is the document which the plaintiff said was brought to his office and he filled out. I note that there is no part of the Finance Application which needs to be filled out although there is the possibility that the plaintiff was referring to a draft form of the application. Alternatively, the plaintiff may be referring to the application referred to in the evidence of Suzanne Elizabeth Seddon, the Credit Assessor from ING Bank who dealt with the plaintiff's application. On being shown the Finance Application, Ms Seddon agreed that the document was not an ING generated form. She observed that the document appeared to be that of the broker. Ms Seddon stated that ING Bank have a 10 page application form, which includes a privacy declaration and other matters, which has to be signed before it can be entered into the system. She said that, in the absence of any memory of it, she would not have entered anything into the system without the standard ING Bank application form signed by the applicant. The first reference to such a document came in the evidence of Ms Seddon. Consequently, neither the plaintiff nor Mr Hassan, both of whom had already given evidence, was questioned on the issue. However, when the evidence of Ms Seddon and the plaintiff is considered together, there is sufficient evidence to conclude that all documentation considered by ING Bank to be necessary for a loan application to be received and approved was in fact provided by or on behalf of the applicant. The affidavit evidence of Alan Richard Lee, the Manager, Mortgage Acquisitions of ING Bank, explains that if applications for finance approval do not proceed within six months, the Bank has a policy of periodically destroying those documents associated with the finance approval process. Mr Lee stated that he had no reason to suspect that the policy was not followed in relation to applications made in Western Australia in 2003 which did not proceed to a loan. Therefore, the absence of an ING Bank application form signed by the plaintiff does not establish that no such application ever existed.
The Finance Application contained personal and employment details and salary information and also identified the purpose of the loan of $202,500 as being for the purchase of a single dwelling for investment purposes. The loan product is described in the Application as "Home Saver Residential Investment HL @ 5.95%". The security offered is a registered first mortgage over the property. The balance of the information in the application is not directly relevant to the issue requiring determination. Mr Hassan stated that he prepared the Finance Application on the plaintiff's instructions. The information contained in it would have been given to him either over the telephone or during his meeting with the plaintiff. In cross‑examination, Mr Hassan agreed that the Finance Application was not an ING Bank document but was a standard form submissions summary used by Your Finance Group Pty Ltd, which could be submitted to any financial institution. In re‑examination Mr Hassan stated that the Finance Application was only submitted to ING Bank because, following his discussions with the plaintiff, the plaintiff had selected ING Bank as his finance provider.
On 8 August 2003, ING Bank responded to Mr Hassan by facsimile asking him to check the particulars with respect to the loan as set out in the facsimile and advising that he would be hearing from them shortly in regards to the application. In effect, this correspondence was a standard form notification of receipt of the application
On 12 August 2003, ING Bank provided Mr Hassan with a document headed "Indicative Approval Advice" with respect to the plaintiff's finance application. ING Bank confirmed that it had approved the credit facility in principal, and advised that the letter was only a preliminary advice of its approval in principle and was not intended to create any legal liability for the borrower or the Bank.
It is apparent from the text of the letter that a valuation of the property was ordered on 8 August 2003. The valuation is also included under the heading "Other" which is an item under a general heading of outstanding conditions. The letter also reveals that Mortgage Insurance Approval is a condition of the approval which is outstanding. The plaintiff said in his evidence that he was happy to pay for mortgage insurance.
In the Indicative Approval Advice of 12 August 2003 ING Bank advised that it would issue a formal letter of finance to the borrower immediately after satisfactory valuation has been received for the proposed security (a valuation of the property of not less than $225,000) and the further condition of mortgage insurance approval is met to its satisfaction. Other details were requested, some of which are directed to confirmation of the plaintiff's financial position including a loan statement to confirm the redraw funds available on the plaintiff's owner occupied home loan which in the finance application was stated to stand at $117,000 against a current value of $450,000.
The Indicative Approval Advice was sent by Ms Seddon, the Credit Assessor. It was Ms Seddon's responsibility to handle all loan approval processes in respect of loan applications made in Western Australia during 2003, up to an amount of $250,000. Although she did not specifically recall the plaintiff's loan application, she was the only person in Western Australia dealing with such applications in August 2003. She confirms that the Indicative Approval Advice was sent by her. With respect to the statement in the Indicative Approval Advice that a valuation was ordered on 8 August 2003, she said that there is a requirement that there be a satisfactory valuation of not less than $225,000 in respect of the property the subject of the finance application.
The plaintiff stated that the Indicative Approval Advice was faxed to him at work, following which he spoke to Mr Hassan on the phone about the matters referred to under the heading "Other" and provided the information sought where it was within his capacity to do so. Mr Hassan then said to the plaintiff that he would fax him a copy (presumably with his notes of the information provided by the plaintiff) for him to take a look and confirm what the plaintiff had told him regarding those items. The plaintiff confirmed that he received by fax a copy of the Indicative Approval Advice with Mr Hassan's hand written notes on it.
The reference under that heading to the approval being subject to a satisfactory valuation report of not less than $225,000 was not of concern to the plaintiff. He said in his evidence that the other loans he had organised were always subject to a satisfactory valuation but the properties always came up to the valuation required. The plaintiff said that he had never heard of a property not coming up to the valuation required and was confident this property would come up to the required valuation.
According to Mr Hassan, on receiving the Indicative Approval Advice he discussed with the plaintiff the matters on which the Bank sought additional information. The handwritten annotations on the document are notes made by Mr Hassan after discussing the items with the plaintiff. This was in accordance with his usual practice. He also confirmed that he faxed to the plaintiff a copy of the Indicative Approval Advice with the handwritten annotations.
On the same day, 12 August 2003, Mr Hassan faxed to ING Bank a memorandum setting out the details sought by ING Bank in its letter of 12 August 2003. This document was not shown to the plaintiff before it was sent but the plaintiff said that Mr Hassan had covered all the issues that were raised by the Bank. On that basis, the only outstanding conditions were for mortgage insurance approval, for the bank's solicitor to confirm the purchase price, and for a satisfactory valuation of the property of not less than $225,000.
A letter from ING dated 14 August 2003, which Mr Hassan confirms was faxed to him on that date, is addressed to him at Australian Finance Group and is headed "Approval Advice". It states:
"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 a formal letter of finance to the borrower."
The following information is also contained in the Approval Advice:
"Date of Decision:   14 August 2003
Account Name       JO HAMDAN
Loan Type             HOME LOAN SAVER
Repayment Type     PRINCIPAL AND INTEREST
Loan Purpose         PURCHASE INVESTMENT PROPERTY
Loan Amount         $202,500.00"
This letter does not contain the exclusion set out in the Indicative Approval Advice that the letter was only a preliminary advice of its approval in principle and was not intended to create any legal liability for the borrower or the Bank. Indeed, the evidence of Ms Seddon was that the Approval Advice signifies that finance has been approved. She said that once Approval Advice is given then the approval process is finished and the file goes to Sydney. Ms Seddon stated that she would not have issued an approval advice in those terms without a satisfactory valuation having already been obtained. Indeed, Ms Seddon said that approval advice of the kind set out in the facsimile of 14 August 2003 cannot be given without a valuation. She confirmed that the valuation had been done by that stage and had been accepted by the Bank. Ms Seddon also stated that approval from the mortgage insurers had been obtained at the time the Approval Advice was sent. In her evidence, Ms Seddon agreed with the proposition that, in the Bank's view, it makes a commitment when it issues an Approval Advice. She said the commitment was to prepare letters of offer and documentation necessary to register the mortgage.

In cross‑examination Ms Seddon confirmed that she had no specific memory of preparing the approval advice but explained that she was the only person that had the authority to do so. It is also the case that her name is included as the name of the person sending the facsimile. Ms Seddon stated that the Approval Advice was something that they amended from the Indicative Approval Advice because there was no form on the system called an Approval Advice. The Bank provides the Approval Advice so that the broker has something in writing to say that the applicant's loan has been approved, rather than mere verbal approval. The next stage is for the formal letter of offer to issue although Ms Seddon conceded that it was not part of her job to prepare the letter of offer. In re‑examination, Ms Seddon was asked why it was felt necessary to give to the brokers the Approval Advice in writing. Ms Seddon's response was as follows:
"Because most of the brokers ring up and with finance approval due they want something in writing to say that the bank has approved it so that they can hand it onto the borrower and to the agents."
The addressee of the Approval Advice was Australian Finance Group. Mr Hassan explained the relationship between Australian Finance Group and Your Finance Group Pty Ltd. In my opinion, nothing turns on this issue. Mr Hassan described the Approval Advice as a standard form of finance approval advice generated by that Bank. That description was based on Mr Hassan's experience in dealing with ING Bank. He also said that, in his experience, the approval advice always refers to the later issue of a formal letter of finance. Mr Hassan further stated that, in the course of his business dealing with several hundred loans a year, 25 per cent or 30 per cent of them with ING Bank, he has never known ING to give an approval advice like the one contained in the facsimile of 14 August 2003 and not proceed with the loan. In Mr Hassan's experience, the Approval Advice of 14 August 2003 was ING Bank's standard form of approval advice. In cross‑examination Mr Hassan agreed that, in his experience, it is always the case that until the formal letter of finance is signed by the borrower, the Bank does not proceed to put the loan in place and no advance is made by the Bank. Mr Hassan responded to the proposition that a loan offer would normally be signed by officers of the Bank by stating that the offer is usually issued with the mortgage document by CBA Legal who act on behalf of ING Bank. In my view, nothing turns on the fact that the formal Loan Offer is signed by CBA Legal.
A copy of the Approval Advice was faxed to the plaintiff by Mr Hassan on 14 August 2003. The plaintiff understood that the loan had been approved but formal loan documents with the usual conditions would be forthcoming for his signature. According to the plaintiff, he considered the advice from ING Bank to mean that he was now committed to purchase the property and he could not back out. The plaintiff asked Mr Hassan to forward a copy of the approval advice to the defendant's agent. In cross‑examination the plaintiff was asked whether he advised Mr Hassan to immediately advise the defendant's agent. The plaintiff said that he advised him to inform them but he did not recall telling him to do so immediately. The plaintiff did not say when he wanted them informed and they did not discuss the timing.
On 19 August 2003 Your Finance Group Pty Ltd sent to the defendant's agent, William Suseno of Mega Endeavour Realty, a memorandum in these terms:
"Dear William
Please find an ING loan approval for the above client.
The final letter of offer from ING will follow as soon as the valuation is completed.
Please do not hesitate to contact me should you require further information on the above matter.
Regards
Ahmad"
The ING Bank Approval Advice referred to in the memorandum is the letter sent by facsimile and dated 14 August 2003 referred to above.
In his evidence, Mr Hassan stated that the reference to the final letter of offer being forwarded when the valuation was completed was a formality. He said that he was aware that ING Bank had already received advice from Hegney Property valuations on 14 August 2003 that the security valuation was satisfactory. The source of that information was the ING web site and the loan tracking documents printed out from the web site. However, it would appear that these documents were not printed until 21 August 2003. It would appear that Mr Hassan was speaking with the benefit of hind sight. In cross‑examination, Mr Hassan was asked whether at the time he sent the facsimile to Mr Suseno he knew the valuation had been completed. His response was that he believed it was completed. He then said that he did not know at the time. Mr Hassan also agreed that, in his experience, no loan would be made by ING Bank until the formal Loan Offer was sent out and signed by the borrower. On that basis, it was put to Mr Hassan that the reason he did not send the facsimile to Mr Suseno until 19 August 2003 was because he was waiting for the formal Loan Offer to issue. Mr Hassan disputed that he was waiting for a formal letter of offer. Mr Hassan conceded that until the formal Loan Offer issues, the borrower does not know the exact terms of the loan he is being offered. With respect to the ING Bank web site and the documents printed from that site, Mr Hassan agreed that neither he nor the company which employed him was involved in putting the information on to the system or in maintaining the system and he did not know who did so or the source of the information. With respect to the valuation, Mr Hassan agreed that he had not seen the valuation. With respect to the mortgage insurance, Mr Hassan stated that he did not have access to or receive anything from the insurance company providing the mortgage insurance. Mr Hassan said that his evidence about the policy of ING Bank was based solely on his experience as a broker. For myself, I would have thought that was a sound basis on which to give that evidence. In the circumstances, I do not consider that the lack of involvement in creating or maintaining the website reduces the weight of the evidence to the point that it cannot be accepted. Mr Hassan confirmed in cross‑examination that the date on the documents, 21 August 2003, was the date on which he accessed that information and that when he sent the facsimile to the defendant's agent on 19 August 2003 he had not yet accessed the service.
Mr Hassan explained that as an accredited broker he was given a broker code as well as a password for him to access the client's web site and, in particular, the client's tracking systems so that he could track the status of loan applications at any point in time. A series of documents from the ING web site were tendered into evidence. The first one was described as an ING loan tracking document printed from the ING web site. The document is headed by an account number and an account name of Jamal Osman Hamden. The document has four columns headed Loan Status, Date/Time, User and Further Info. In effect, the document identifies the various stages after the loan application details are processed and provides a date and time that the actions were carried out or the information obtained. It appears from the loan tracking document that the plaintiff's application was processed on 8 August 2003, the Indicative Approval sent on 12 August 2003, the valuation received on 14 August 2003, the mortgage insurance approved on 14 August and the credit assessment approved on 14 August 2003.
According to Mr Hassan, where the word "Yes" appears in the column headed "Further Info", the web site user may click on that entry for further information. Mr Hassan did this with respect to the valuation and printed out a document of the information on the screen which was headed "Security Property Valuation". It is apparent from that second document that the valuation was provided by Hegney Property Valuations on 12 August 2003 in an amount of $225,000. The same process was carried out with respect to mortgage insurance. The document printed from the screen is headed "Mortgage Insurance" and contains the details of the plaintiff's loan application. It indicates that mortgage insurance was approved on 14 August 2003 at 12:41:23 pm for a cover value of $205,000.
By letter dated 21 August 2003 addressed to the plaintiff, the defendant by its agent, Mr Suseno, purported to terminate the Contract on the ground that "the unconditional Finance Approval has not been received until the due date, which is 20^th August 2003, being 10 (ten) working days from the date of acceptance (06/08/2003)."
I note in passing that the contract does not provide for unconditional Finance Approval. Clause 1.1 states that "This Contract is conditional upon Finance Approval being obtained before the Latest Time". Finance approval is defined in cl 1.7 to include an offer to lend made on reasonable terms and conditions or an approval of a finance application where such approval is subject to the Lender's usual terms and conditions. If "Finance Approval" as defined is provided, and all other conditions of the contract are complied with or waived, then the contract becomes unconditional. However, it would appear that this letter refers to the defendant's view that the approval was conditional on receipt of the letter of offer and hence did not amount to finance approval.
On 22 August 2003, Mr Hassan received a copy of ING's Home Loan Saver Loan Offer dated 15 August 2003. On 23 August 2003, the plaintiff received two copies of it sent directly to him. He believed the Loan Offer came with a covering letter which he said he probably did not keep. In the Home Loan Saver Loan Offer, ING offered a loan to the plaintiff on the terms and conditions set out in the loan offer, the Terms and Conditions Booklet (July 2003 version) and the fee schedule. The loan amount is stated to be $202,500 at the variable interest rate, where the current ING Bank Home Loan Saver rate on the date of the loan offer was 5.95 per cent per annum. The schedule of fees and charges payable by the plaintiff includes a lender's mortgage insurance premium. The loan offer provides for ING Bank to hold a first registered mortgage over the property. The loan offer also sets out the Bank's requirements which must be satisfied before the plaintiff borrows the money. The Bank has to be satisfied that the mortgaged property is adequately insured with a reputable insurer and that ING Bank is noted on the policy as mortgagee. The Bank also has to have obtained a valuation which confirms that all construction and repair work on the property has been satisfactorily completed and that the value of the property is at an amount considered by the Bank to represent adequate security. The requirements set out in the Terms and Conditions Booklet must also be satisfied. In my opinion, the terms of the loan offer are unremarkable for a loan of this type.
That part of the loan offer which sets out the Special Conditions which must be met prior to settlement date include a statement that approval has been obtained from ING Bank's mortgage insurers. Insofar as that requirement was to be a special condition of the offer, it was met prior to the Loan Offer being made and, on the evidence of Ms Seddon, it was met prior to sending the Approval Advice. In any event, the plaintiff stated in his evidence that he was happy to pay for that insurance. The loan offer also contained a requirement that the Bank's panel lawyers be satisfied from a review of the contract that the purchase price was not less than $225,000 and that there are no special conditions adversely affecting the value of the bank's security. Ms Seddon said that this was in fact a standard condition. The final special condition included in the Loan Offer was that the plaintiff's credit card limits be reduced to a total maximum of $8,000, prior to or simultaneously with the settlement of the loan. Ms Seddon stated that it was not uncommon for the Bank to ask people to reduce their credit card limits or to close their credit card accounts.
The loan offer also sets out the circumstances in which ING Bank can withdraw from the transaction, one of which is inadequate security and another is an inadequate capacity to repay the loan. These matters were all described by Ms Seddon as standard. Further, the capacity of the borrower to repay the loan was assessed as part of the initial phase of approval.
Ms Seddon described the Loan Offer as a standard letter of offer from the Bank. It is also the case that the requirement for a valuation of the property is a standard condition of a loan of this type. According to Ms Seddon, the reference to obtaining a valuation which is adequate for the Bank's purposes is standard wording and does not mean the Bank has not already obtained that valuation. Indeed, according to Ms Seddon, there must have been a satisfactory valuation of the property for her to issue the Approval Advice on 14 August 2003 in the terms that she did. It does not follow from the reference in the Loan Offer to obtaining a valuation that another valuation is to be obtained.
In his evidence, the plaintiff stated that he signed the acceptance of the original and posted it back to ING Bank and retained the copy that came with it. The copy he retained had the signature of CBA Legal above the title "Authorised Officer".
The plaintiff stated that he was shocked when he received the letter from Mr Suseno at Mega Endeavour Realty purporting to terminate the contract. He did not accept that the contract was terminated and, on 22 August 2003, the plaintiff sent a facsimile to Mr Suseno expressing his surprise that "the vendor is trying to back out of the contract". Attached to the facsimile was information regarding the loan approval, mortgage insurance and the valuation. The plaintiff said in evidence that he believed he sent all the documents regarding the loan that he had, except the bank offer which he felt was his personal document. In cross‑examination, the plaintiff said that he sent everything he had and prepared the letter even before seeking legal advice. He attached to the facsimile a letter from him accepting the mortgage insurance requirement, which was a condition for the bank to give him a loan. He also said in cross‑examination that he believed he attached a copy of the valuation which was completed. In response to the proposition that he was not now sure whether he sent a copy of the valuation, the plaintiff conceded that it was two years ago but said that he sent everything he had.
The facsimile also contained a request for the vendor to honour his legal obligation and follow through with the signed contract. The possibility of legal action was also mentioned. After he was notified that the seller did not want to proceed with the sale of the property, the plaintiff still satisfied all the conditions that related to the land, including obtaining an engineer's report. The only things that he did not do were things which required access to the property because the defendant would not give him access. Consequently, the plaintiff instructed his settlement agent to write to the defendant's settlement agent advising of these matters.
By letter dated 10 October 2003, Victoria Moroney, the Conveyancer from Tenant Settlements, wrote to Elizabeth Reiss & Associates, the defendant's settlement agent, advising that the plaintiff was ready, willing and able to effect settlement but was unable to complete certain conditions of the Offer and Acceptance due to the seller requesting the keys from his real estate agent, thereby denying access to the property.
The plaintiff stated in evidence that the $1000 deposit paid by him has never been refunded to him. However, it is not clear whether that is because the plaintiff has indicated, both in correspondence and by commencing this action, that he considers the contract to be on foot.
The plaintiff contends that the ING Bank Approval Advice faxed to Mr Hassan on 14 August 2003 was a notification from the Bank stating that the Bank had approved the loan for the sum of $202,500 (being 90 per cent of the purchase price). Significantly, it is said that the notification did not, by its terms, purport to be conditional. In particular, the reference in the Approval Advice to the issue of a formal letter of finance does not make the approval conditional. On the plaintiff's case, from the date the Approval Advice was issued by the ING Bank the contract ceased to be subject to condition 1 of the contract, namely the finance condition. Therefore, the terms of the subsequent loan offer do not, and could not, alter the fact that the contract had become unconditional as at 14 August 2003. However, the plaintiff's summation of the effect on the contract overlooks the requirement in cl 1.2(c) for the seller to immediately be given notice of the Finance Approval. The proposition on which the plaintiff relies more accurately requires receipt of the Approval Advice and notification of the seller of receipt of the Approval Advice. However, in this case, both those events occurred prior to the Latest Time so it remains the plaintiff's proposition that the contract became unconditional as at 14 August 2003.
Counsel for the plaintiff stated that, even if the terms of the subsequent Loan Offer could be implied into the Approval Advice as at 14 August 2003, none of the conditions can be said to be unreasonable. However, it must be noted that if the communication of 14 August is properly described as approval of a finance application, the terms need only be the usual terms and conditions in order to meet the definition of "Finance Approval". On Ms Seddon's evidence, the terms and conditions set out in the Loan Offer were the usual terms and conditions of an ING Bank Home Loan Saver. The only term that might not be usual was the requirement for mortgage insurance. However, the plaintiff was aware of that condition and had agreed to it. On the other hand, if the communication of 14 August is taken to be an offer to lend, then the terms must be reasonable for the definition to be met. In my view, the subsequent terms, insofar as they reflect the terms of the Approval in the facsimile of 14 August, were both usual and reasonable and well within the contemplation of any borrower. Indeed, the defendant did not suggest that the terms did not meet either of those descriptions and did not identify any clause which was said to be unreasonable or other than the usual terms and conditions.
It is contended by the defendant in its defence to the claim that the Approval Advice from the ING Bank of 14 August 2003 was not a Finance Approval within the meaning of cl 1.7 of the contract. One particular of that plea states that the notice of 14 August 2003 was notification that ING Bank had approved a credit facility for the plaintiff and was not an approval of the plaintiff's finance application by ING Bank. Another particular of the plea states that the notice of 14 August 2003 was subject to the condition precedent that the mortgaged property be valued at an amount which for mortgage lending purposes represents adequate security and this condition had not been fulfilled. The requirement that there be mortgage insurance approval is not relied upon by the defendant in its Defence.
The defendant also pleads as a defence to the claim that the terms of the Approval Advice did not constitute an approval of a finance application but was instead a notice of the Bank's intention to make an offer to the plaintiff of the credit facility referred to in the Approval Advice. As that offer, set out in the written Loan Offer document, was not communicated to the plaintiff until 23 August 2003, it was made outside the Latest Time. In effect, the defendant's position is that the offer set out in the Approval Advice was conditional on the issue of the formal letter of finance to the borrower, the receipt of which was outside the Latest Time and, in any event, was not communicated to the seller before the Latest Time.

It was further pleaded that notification on behalf of the plaintiff to the defendant that the condition as to Finance Approval had been satisfied, did not waive the Finance Condition in the terms of cl 1.4. A plea that cl 1 of the contract included implied terms was not pursued at trial. With respect to the action taken by the defendant to terminate the contract, reliance is placed on cl 1.6 of the contract which states that the finance condition is for the benefit of both the buyer and the seller.
Counsel for the defendant submitted that, for these reasons, the defendant was entitled to terminate the contract under cl 1.5. However, as I have indicated above, the right to terminate under cl 1.5 arises only in one of two circumstances. The first is where the buyer has failed to notify the seller in accordance with cl 1.2(c) which places on the buyer the obligation, on receipt of Finance Approval, to immediately notify in writing the seller. The second is where the buyer has failed to notify the seller in accordance with cl 1.3 which places on the buyer the obligation to immediately advise the seller of rejection of an application for Finance Approval or of the failure to obtain Finance Approval. In my opinion, the right to terminate under cl 1.5 is predicated on a failure to comply with the obligation to notify the seller of the outcome of the attempts to obtain Finance Approval. There has been no such failure on the part of the plaintiff in this case. I am not persuaded that this provision comes into play whenever it can be established that the terms of any "approval" which was communicated to the seller do not meet the definition of "Finance Approval" in cl 1.7. Any contrary conclusion would lead to uncertainty up to the date of settlement as to whether the purchase would be finalised, something the notification provisions were designed to avoid. A contrary conclusion could also operate against a bona fide seller of the property if the power to terminate on establishing that the approval did not meet the definition of "Finance Approval" was found to reside in both parties to the contract. For these reasons, the right to terminate the contract, in the circumstances that arose in this case, must be found elsewhere.
The primary issue for resolution is whether the Approval Advice provided by ING Bank is Finance Approval for the purposes of cl 1 of the contract because, if the Approval Advice meets the definition of that term, then there can be no basis upon which the defendant was entitled to terminate the contract.
On behalf of the defendant it was submitted that the Approval Advice was not "an offer to lend made by the Lender on reasonable terms and conditions", which is the first limb of the definition of Finance Approval in cl 1.7. The basis of that submission is that the Approval Advice was not an offer to lend; the offer to lend was the Home Loan Saver Loan Offer dated 15 August 2003 which was received outside the Latest Time and of which the defendant was not given notice as required by cl 1.2(c). It was further submitted on behalf of the defendant that the Approval Advice was not "an approval of a finance application", the second part of the definition under cl 1.7.
A number of factors were identified by the defendant as supporting the conclusion that the Approval Advice was not an approval of a finance application. They are:
(i)The evidence of Ms Seddon which was said to be to the effect that the Approval Advice is a document generated in Western Australia which is not part of the system of putting loans in place;
(ii)If a document such as the Approval Advice constituted Finance Approval a buyer would be bound to complete the purchase without knowing the terms on which he was going to borrow the money and, therefore, would be bound to meet the conditions set by the lender even where he is unable to perform them;
(iii)The Approval Advice does not state that it is an approval of the application made by the plaintiff. The document simply states that the Bank has approved a credit facility;
(iv)The reference in the Approval Advice to the issue of a formal letter of finance to the borrower. The defendant submits that the approval was conditional on the issue of the letter of finance and no agreement existed until that event occurred;
(v)That more than the Approval Advice would be required before steps would be taken to advance monies under the loan.
As to the first factor, the statement on which the defendant relies is not, in fact, the terminology used by Ms Seddon. Her evidence was that "there is no form on the system called an Approval Advice" which is not precisely the same proposition. It does not follow that an Approval Advice is not an authorised step in the process. It would not be in every case that a borrower or his agent would require confirmation of an approval. It was never suggested to Ms Seddon that issuing an Approval Advice was not part of her duties as the ING Bank representative responsible for approving loans in Western Australia.
It was also submitted by counsel that Approval Notices were generated as a consequence of the request by brokers for confirmation that an offer of finance is going to be made by the Bank. Counsel for the defendant made it clear that he was using his own words in describing the circumstances behind sending an Approval Notice. However, the very way in which those circumstances are phrased colours the nature of the Approval Notice as indicating something which would happen in the future. What Ms Seddon actually said was that the Bank provided the Approval Advice so that the broker had something in writing to say that the applicant's loan has been approved. She also stated that the Approval Advice signifies that finance has been approved and that once the Approval Advice issues the approval process is finished. On Ms Seddon's evidence it is clear that the Approval Advice does not merely indicate that a formal letter of finance will issue; it represents an actual and present approval of the applicant's loan. Ms Seddon agreed with the proposition that, in the Bank's view, it makes a commitment when it issues an Approval Advice. She said the commitment was to prepare letters of offer and documentation necessary to register the mortgage; in other words, to prepare and execute all the documentation reflecting the agreement.
The next factor on which the defendant relies is that, if the Approval Advice were to constitute Finance Approval, the buyer would be bound to complete the purchase without knowing the terms of the loan or whether he was able to perform them. The defendant submits that the documentation, whether a loan offer or the combination of an application and an approval, must set out the terms and conditions, bind the parties and create an obligation to make an advance.
I do not accept the proposition that the purpose of the finance condition is to protect the buyer from completing the purchase. It is not a general escape clause. The effect of the finance condition is to protect the buyer from completing the purchase if he is unable to obtain finance approval: Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 541 per Gibbs CJ; Meehan v Jones (1982) 149 CLR 571 at 580-581 per Gibbs CJ, at 588 per Mason J. By making the offer, the buyer commits himself to proceed with the purchase should that offer be accepted and finance approved. If the buyer were to make an application for a loan which might be approved without the buyer first making himself aware of the precise terms of the loan, then providing the loan which is approved is on the usual terms and conditions, the buyer can hardly complain if he is obliged to complete the purchase. Another matter relevant to this factor is that any incapacity to meet the requirements of the loan is addressed by the lender prior to the approval being granted or the loan offer being made.
In determining whether the Approval Advice constitutes finance approval under the contract, it should not be assumed that a buyer in receipt of an Approval Advice wouldn't know the terms of the loan. The possibility that the buyer may not know the terms and conditions of a loan for which he has received approval, or which he has been offered, is specifically dealt with in the contract by the inclusion in the definition of a requirement that an offer to lend be on reasonable terms and conditions and that an approval of a finance application be subject to the Lender's usual terms and conditions. The uncontroverted evidence of Ms Seddon was that the terms and conditions of the loan approved were the usual terms as required by cl 1.7.
It is, therefore, the case that the contract itself envisages a situation where the obligation to proceed to settlement may arise before the buyer knows the precise terms of the offer to lend or the approval of the finance application. In the case of an approval of a finance application, where the buyer has selected the agency to which it makes the finance application, that buyer cannot complain of being bound to proceed with a loan contract subject to that agency's usual terms and conditions. For that reason I see no substance in the difficulty which the defendant identifies. If a buyer commits himself to a contract to purchase a house which will require finance, it can hardly be unfair to require him to complete the purchase by taking out a loan on reasonable terms or on the usual terms of an agency which he has selected to finance the purchase.
In this case, even if the plaintiff was unaware of every term of the loan, he was aware that the relevant terms were those of a Home Saver loan of which he had sufficient knowledge to make that the type of loan for which he would apply.
This brings me to the third factor identified by the defence; whether the approval granted and referred to in the Approval Advice was an approval of the plaintiff's application for a loan. The defendant's submission involves interpreting the Approval Advice as using the term "approve" in a very loose sense and meaning that a credit facility has been approved and that an offer will be made to enable the borrower to access that credit facility". In other words, the defendant submits that the Approval Advice is simply a notice that the bank is prepared to provide credit accommodation to the borrower. In those circumstances, it is only the formal loan offer which sets out the terms that the bank is offering, although counsel conceded that where that part of the definition relating to an approval is relied upon and the approval relates specifically to the application, the content of the application and the approval will usually identify the terms.
The plaintiff submits that the defendant's contention that the Approval Advice is not a Finance Approval for the purposes of cl 1 is without merit since the terms of the Approval Advice are unequivocal and expressly stipulate that finance for the amount required has been approved by the Bank. Therefore, the requirements of the definition in cl 1.7 are met.
In considering this aspect of the defendant's argument, it is important to consider the wording of the Approval Advice. One important aspect of that document is that it doesn't simply state that a credit facility has been approved, it states that the Bank has approved "the credit facility referred to above". Counsel for the defendant suggests that the credit facility above is a home loan rather than the home loan for which the applicant has applied. It is also said that the absence of the statement "we approve your application" or word to that effect, supports the argument that the approval is for a type of credit facility, in this case a home loan, rather than of the application made by the plaintiff. For myself, I do not see the distinction. It is also not correct to say that there is no reference to the application. The letter commences by stating "We refer to the recent application for finance and confirm that we've approved the credit facility referred to above". Not only, in my view, is it apparent from any reading of the document that the approval relates to the application, categorisation of the document should not depend solely on the form of words chosen by the lending officer in constructing a document for which there is no set format, unless it is clear on the evidence that the form of words used was intended to convey a meaning other than what would normally be understood from a document of this type.
As I have noted, the terminology used in the Approval Advice was approval of "the credit facility referred to above". It is the case that the preceding information does not include the term "credit facility". However, the plaintiff's account name is given, a loan type of Home Loan Saver, a repayment type of principal and interest, a loan purpose description of purchase investment property and a loan amount of $202,500. This information correlates with the loan product and purpose description in the finance application submitted on behalf of the plaintiff. The finance application specified an ING Bank Home Saver Residential Investment HL at 5.95 per cent, being for the purchase of a single dwelling for investment purposes and where the security offered was a registered first mortgage over the property. The subsequently provided ING Bank Home Loan Saver Loan Offer is further evidence that the loan approved was in fact the type of loan applied for and the evidence of Ms Seddon was that it contained the usual terms and conditions. While the interest rate isn't identified in the application, it is obviously the interest rate which applies to the type of loan which the borrower seeks. In any event, it appears on the evidence that the interest rate of which the plaintiff was aware was the interest rate in fact offered by the Bank. Even if that were not the case, where the borrower applies for a particular type of loan the only reasonable expectation will be that the approval received for that type of loan will include the interest rate applicable to that type of loan. A purchaser should not be able to avoid the contract if he decides that the interest rate is higher, however marginally, than that which he would prefer to pay.
In my view, it is apparent that the type of loan sought was the type of loan which was approved and, therefore, the loan facility for which the plaintiff applied is the "credit facility" to which the Approval Advice relates.
The fourth and fifth factors can conveniently be considered together. The defendant's submission is that the Approval Advice was subject to a formal offer issuing subsequently and was, therefore, conditional. Being conditional, further steps had to be undertaken before monies would be advanced under the loan. On that basis, it is said, the Approval Advice was not an approval for the purposes of the finance condition and the purchaser was entitled to terminate the contract because the finance condition has not been satisfied. Counsel for the plaintiff's response was that there was nothing about the terms of the Approval Advice to suggest that it did not bind the ING Bank.
It is clearly the case that both the Bank and the financial adviser considered the Approval Advice to be binding on the bank and, although further action was required to give effect to that approval, the obligation under cl 1.2(c) of the contract to immediately advise the seller had come into effect. As noted above, the Indicative Approval Advice expressly provided that it was not intended to create any legal liability for the Bank. However, notwithstanding that the Indicative Approval Advice was used as a framework from which to draft the Approval Advice, that qualification has been deliberately removed. The construction of the Approval Advice pressed by the defendant would confer on the document no greater purpose than the Indicative Approval Advice.
Ms Seddon's evidence was that the Approval Advice signifies that finance has been approved. She added that, once Approval Advice is given then the approval process is finished and the file goes to Sydney. Further, Ms Seddon stated that, in issuing the Approval Advice, the Bank makes a commitment to prepare the letters of offer and documentation necessary to register the mortgage. If the Approval Advice did not constitute an approval until the letter of finance issued, as the defendant submits, then it could hardly provide the evidence required by the brokers to say that the applicant's loan had been approved, which Ms Seddon stated was the purpose of the Approval Advice.
In considering the effect of the Approval Advice, it is apparent that, consistent with the content of the Approval Advice, the ING Bank file and instructions were indeed forwarded to the Sydney office within time for the formal letter of finance to the borrower to issue the next day. It is open to conclude that the formal letter of finance was prepared at the earliest possible opportunity and without the provision of further information by or concerning the plaintiff. I consider that the prompt provision of the formal letter of finance is consistent with the conclusion that the approval contained in the facsimile of 14 August 2003 is the type of approval contemplated by the finance clauses of the contract rather than being a mere indication of a course which it may adopt in the future, depending on circumstances or on a consideration of further matters. Looked at in this way, the Loan Offer is evidence of compliance with the finance condition rather than evidence that something more was required for the finance approval condition to have been met by the Latest Time. I consider the reference in the Approval Advice to the issue of a formal letter of finance as no more than a statement of fact as opposed to a reference to a condition.
It is also apparent from Mr Hassan's letter of 19 August 2003 to the defendant's real estate agent that he considered that Finance Approval had been obtained. However, in cross‑examination Mr Hassan agreed that, in his experience, it is always the case that, until the formal letter of finance is signed by the borrower, the Bank does not proceed to put the loan in place and no advance is made by the Bank. Of course, that would necessarily be the case because there would be no security in place at that point to protect the Bank's interests.
In my view, the mere fact that there remains a further step in the process of actually providing funds to the plaintiff, such as creating a record of the agreement, does not necessarily mean that the Approval Advice is not "an approval of a finance application" for the purposes of cl 1.7. It is only where, as the defendant submits, the approval required is of a type that actually binds the lender to "hand the borrower a cheque" that it becomes necessary to consider whether a further step, such as the letter of offer, is required for that to occur. Such a construction would present certain difficulties. For example, the period between acceptance of the offer to purchase and the Latest time would have to be more substantial to accommodate the process of obtaining the loan.
Reference to a requirement that, in the context of a contract for the sale of property, finance approval be of a type that binds the lender to "hand the borrower a cheque" can be found in the judgment of Wheeler J in Sampson v Clifford & Ors [2001] WASC 102. In that case the defendant purchasers were having difficulties in obtaining finance through the standard lending institutions. Prior to entering into the contract the defendant primarily involved in the negotiations had participated in discussions with a finance broker, but had expressed concern about the potential for there to be an interest rate payable under such loans of up to 9.35 per cent. Insofar as it could be said that the finance broker provided the defendants with finance approval, such approval was not unconditional, being subject to the furnishing of further financial information dealing with the defendants' ability to service a loan and subject to the finance broker obtaining a valuation. There were also differences on the evidence about the precise terms of the loan. It was common ground that the defendant involved in the conversations with the finance broker had expressed dissatisfaction with at least some of them and had advised that he was still negotiating with Challenge Bank, and hence was not entirely satisfied by the terms offered by the finance broker. Her Honour found (at 9 ‑ 10) that this was the point to which the discussion about a loan from the finance broker had progressed at the point that the defendants entered into the contract to purchase the property.

The finance broker provided the defendants with a facsimile confirming that "finance has been approved to assist in the purchase of [the property] providing $1.2 million advance at 9.35% for a term of 12 months". There were further terms contained in the facsimile and a statement that "the details of the formal loan approval will be issued today". This facsimile was provided outside the available time for loan approval, although it was said by the finance broker to reflect a verbal approval provided on the previous date.
Wheeler J concluded (at 13) that it was clear on the evidence that even though the finance broker considered he had given approval "in principle", or conditional approval of some kind, and even though he was confident he could find from amongst the potential lenders on his books, one or more who would be prepared to enter into the transaction he had discussed with the defendants, there would be no binding contract between any lender and the defendants until a particular lender had agreed to the relevant terms. It was only then that he would be able formally to advise the defendants of the terms and conditions of the proposed loan. This was not done before the latest date for approval. Further, Wheeler J also concluded (at 15) that, prior to the letter containing the finance broker's "in principle approval", no firm proposal, setting out the terms and conditions upon which a lender introduced through the finance broker would be prepared to make finance available, was presented to the defendants so as to enable them to ascertain whether that lender would be acceptable. Wheeler J held (at 16) that, on that basis, as there was no lender acceptable to the defendants identified, there cannot have been an approval obtained from such a source. This finding is the basis of the decision. It is apparent that the facts of that case are not the facts of this case.
Her Honour went on to "make the comment" that it appeared to her that there was no "approval" within the meaning of the finance condition obtained before the relevant date in any event. Wheeler J explained that conclusion in these terms (at 16 ‑ 17):
"As it was put in argument by counsel for the plaintiff, in approaching a broker such as Clifton there was what was described as a 'two step process', that is, 'the approval initially given in the case of loans like this by the finance broker and then there is a further kind of approval that is strictly necessary before somebody actually hands the borrower a cheque'. The significance of an approval of finance in the context of a contract such as this is that once the loan is approved, the purchaser will be required to complete the purchase. It is my view that the approval which is contemplated by such a clause can only be an approval of a kind which actually binds a person to 'hand the borrower a cheque'. That is, it must be an enforceable approval.
There may be an argument as to whether a letter such as that written by Clifton on 10 June is capable of constituting an approval and whether such a letter would give rise to a right in the defendants to require Clifton to advance the loan. It is not necessary to determine that issue, since the letter is plainly subsequent to the latest date for approval of finance. Prior to that date, as I have already indicated, it is my view that any 'approval' purportedly given orally by Clifton, was approval of a conditional nature and was conditional upon, at least, Clifton's receipt of a written valuation in the usual form indicating that the value of the property was indeed $1.7 million."
I note that the proposition that an enforceable approval or "an approval of a kind which actually binds a person to hand the borrower a cheque" was a comment made obiter dicta in a case dealing with vastly different factual circumstances. In Sampson v Clifford, the finance broker's "approval" was conditional on finding a lender. The approval provided by the finance broker, therefore, could not possibly bind the lender and wasn't even a necessary part in the process which would result in the lender handing over the cheque. Those facts wouldn't constitute approval under the contract in this case either. There would not be an approval by the lender of an application by the borrower or an offer to lend made by the lender until the finance broker actually found someone who was prepared to lend the money.
The proposition put to the Court in Sampson v Clifford, absent authority, was that the type of approval required in that case was an approval "that is strictly necessary before somebody actually hands the borrower a cheque". Of course, there is a distinction between an approval which is a necessary part of a process culminating in the handing over of a cheque and an approval which, of itself, and without further action, must bind a person to hand the borrower a cheque. In the first reference to the requirement to "hand the borrower the cheque" in the above extract from Sampson v Clifford, the expression is used in the context of emphasising the distinction between an approval from a finance broker who arranges the loan and an approval from the actual lender. As such, it does not follow that the expression should be construed as meaning that an approval must, without more, and in every case be such as to require the lender to hand over the money.
In the second reference to the expression, Wheeler J follows the reference with a restatement of the expression. In my view, the restatement is more consistent with the interpretation that the approval must be enforceable against the lender rather than an interpretation that the approval must, without any further action, constitute an agreement requiring the lender to hand over the money. I have already referred to the evidence of Ms Seddon which indicates that the Approval Advice, as opposed to the Indicative Approval Advice, did indeed constitute a commitment on the part of the Bank which included preparing letters of offer and the documentation necessary to register the mortgage.
The decision in Sampson v Clifford, is distinguishable on its facts which also, in my view, influence the meaning of the obiter statement made that an enforceable agreement must be established. I am not persuaded that in every case there must be in existence an enforceable loan agreement requiring the lenders to hand over the money before a finance condition in a contract for the sale of land is satisfied. Such a narrow interpretation would be cumbersome and could be expected to affect the time taken to complete transactions for the sale of land and have an adverse impact on the industry.
Notwithstanding the proposition in Sampson v Clifford, relied on by the defendant as a statement of general principal, the nature of the requirement for finance approval will inevitably depend on the provisions of the particular contract. In Sampson v Clifford, the finance condition was expressed to require the Lender to give "Approval of the granting to the purchaser of the Loan before the Latest Time": cl 1.1. The term "Approval" was defined in the contract as meaning "approval by the Lender by the Latest Time of a loan of not less than the amount shown below". The contract entered into by the parties in this action differs in that the term "Finance Approval" includes, not only an approval of a finance application by the Lender to the Buyer subject to the usual terms and condition but also an offer to lend made by the Lender on reasonable terms and conditions. An offer to lend is hardly an act which binds a lender to hand over the loan monies and yet it is clearly within the definition of finance approval and would oblige the buyer to advise the seller under cl 1.2(c). Therefore, the inclusion in the definition in cl 1.7 of an offer to lend supports the argument that something less than an act which binds a lender to hand over the money is required to satisfy the finance condition in this particular contract. The construction of the definition of finance approval on which the defendant relies would have the effect of rendering the first limb of the definition, an offer to lend, of no effect.
In determining the appropriate construction of the finance clause of the contract and, in particular, the nature of the approval required to satisfy a finance condition, it is useful to consider the purpose and effect behind such provisions. The non‑fulfilment of a finance condition does not prevent a binding contract from coming into existence but it does have the effect that the buyer is under no obligation to complete the sale unless the condition is fulfilled or waived: Perri v Coolangatta Investments Pty Ltd at 541 per Gibbs CJ. In Meehan v Jones at 580-581, Gibbs CJ observed that the intention of a finance clause is to leave it to the purchaser himself to decide whether the terms and conditions on which finance is available are satisfactory. The condition prevents a purchaser from being obliged to go through with a sale when he does not believe he can raise the necessary funds: see also Mason J at 588. However, there is an implied, if not express, requirement that the purchaser shall take all reasonable steps to obtain the loan: Zieme v Gregory [1963] VR 214 at 223. In Perri v Coolangatta Investments Pty Ltd, Brennan J stated (at 565‑6) that the purpose of the particular condition in that case (that the purchasers must have sold their house) was to ensure that the purchasers should have the proceeds of the sale of their property before their obligation to pay the balance of the purchase price for the property, the subject of the contract, became absolute.
However, there is no suggestion that the lending process must be completed before a finance condition has been met. In fact, even where the purchaser erroneously believes that finance is available and so informs the seller, he would be estopped from avoiding the contract on the basis that there was no finance approval: Meehan v Jones per Murphy J at 596‑7. It is difficult to envisage a contract where the approval of finance was found not to meet the definition in the contract, where a buyer would be bound to complete the contract but the seller would not be so bound in the same circumstances. Even though the purpose of the finance condition is to avoid the situation where the buyer is obliged to complete the contract but has not been able to obtain the loan necessary to do so, that protection isn't achieved by requiring that the lending process is completed before notice of finance approval may be given and the contract becomes unconditional. Such a requirement would render the Approval Advice provided in this case a nullity.
Of course, a narrow construction would be necessary if the approval required to meet the definition was, as was observed obiter dicta by Wheeler J in Sampson v Clifford at p 16, "an approval of a kind which actually binds a person to "hand the borrower a cheque". In my opinion, the requirement that there be a binding agreement between the parties is a term easily stated but one which does not appear in any part of the contract. Further, it would also follow that the offer to lend must be similarly construed or there would be a greater requirement with respect to one limb of the definition than the other: an anomaly for which there would be no rational explanation.
To my mind, all that is required is an approval which sufficiently identifies the loan type and amount and purpose such that a purchaser may be satisfied that the money is available for the purchaser to safely proceed with the purchase. The purchaser should not be able to avoid an obligation willingly entered into simply because the terms of such a loan, although manageable, are less than what he would prefer.
Relying on the proposition that an approval must actually bind a person to hand the borrower a cheque before it constitutes finance approval, the defendant's submission is that the Approval Advice was not finance approval because it fell within that category of agreements identified in Masters v Cameron (1954) 91 CLR 353 which are subject to the preparation of a formal contract and where the terms of the agreement are not binding until that occurs.
In Masters v Cameron, the High Court identified three categories of cases in which the parties reach an agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract: (at 360). The first category of case is one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. The second category covers cases in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. The third category of case is one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
The Court held that in the first two cases there is a binding contract: at 360. However, with respect to the third category, it was held that the terms of the agreement are not intended to have, and therefore do not have, any binding effect of their own: at 361. Part of the rationale for that conclusion was that, if the contract involved the possibility of new terms or the modification of those already discussed, the matter is still within the train of negotiation and the parties are not bound by the agreement: at 361; see also Rossiter v Miller (1878) 3 App Cas 1124 at 1149 per Lord O'Hagen. The resolution of the question as to the applicable category depends upon the intention disclosed by the language the parties have employed: at 362; see also Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284 at 289 per Parker J.
Insofar as the Approval Advice provided in response to the plaintiff's application for finance created a binding agreement, I am not persuaded by the argument for the defendant that the Approval Advice fell within the third category of case. In my view, the evidence is more consistent with the first category of case where an agreement is reached in relation to a particular type of loan facility which is identified in both the application for loan and the Approval Advice, and where the variable terms have been identified and agreed upon, but the agreement is to be subsequently set out in full in the document reflecting the agreement.
Having considered the matters above, I have concluded that the Approval Advice was not conditional and fell squarely within the second limb of the definition of finance approval within cl 1.7 of the contract. For this reason it is unnecessary for me to determine whether the Approval Advice is also an offer to lend on reasonable terms and conditions under cl 1.7.
Neither is it necessary for me to determine whether the contract was unconditional as a result of notice being given under cl 1.2(c), although provisionally, I favour the view. It is also unnecessary for me to consider whether the defendant was entitled to terminate the contract because of his belief that the finance approval obtained by the plaintiff was not in fact finance approval under the contract. However, having considered the matter, I propose to make some comments in relation to the latter issue.
I believe that identification of the party which benefits from the finance clause is a factor relevant to the resolution of this issue. It is because a finance condition is of benefit to a buyer that it is open to the buyer to waive the benefit of such a condition, irrespective of whether such a right is specifically conferred by the terms of the contract: Meehan v Jones. The determination of who has the benefit of a clause is said to be a matter of construction of the clause in the context of the contract: Sheridan v Nikolic [1982] Qd R 725.
Identification of the purpose behind the incorporation of a finance condition into a contract can assist in determining the nature and effect of the condition and for whose benefit it is said to operate. In Perri v Coolangatta Investments Pty Ltd, Brennan J said (at 565-6) that the purpose of the condition was to ensure that the purchasers should have the proceeds of the sale of their property before their obligation to pay the balance of the purchase price for the property, the subject of the contract, became absolute. According to Brennan J, the condition is for the benefit of the purchaser who may waive it if he or she chooses. However, Brennan J also concluded that the limit of the time within which the stipulation is to be fulfilled inures for the benefit of the vendor as well as for the benefit of the purchasers. He said (at 565):
"When vendor and purchaser are each under a contingent obligation to complete a contract of sale, the fulfilment of the contingency or the entitlement to avoid the obligation is of equal interest to both parties."
See also Gange v Sullivan (1966) 116 CLR 418 at 443 per Windeyer J.
Therefore, even where the purpose of the condition appears to be obviously for the benefit of one party, as with a finance condition and a buyer of property, a benefit may be of equal or lesser benefit to the other party: Charles Lodge Pty Ltd v Menahem [1966] VR 161; Raysun Pty Ltd v Taylor [1971] Qd R 172; see also Globe Holdings Ltd v Floratos [1998] 3 NZLR 331 where the court held that it was necessary to look at the factual matrix to see whether the condition was for the benefit of both parties.
Although "subject to finance" clauses in contracts have been held to be for the benefit of, and may be waived by, the purchaser (Meehan v Jones at 596-7 per Murphy J), because the vendor is in a state of uncertainty, as to when and if at all the contract is to be settled, he should be given the right to resolve the uncertainty by being afforded the power to terminate the contract at his option and hence the contract is also for his benefit.
Of course, even if the conclusion reached is that the condition is to the benefit of both parties, it may be the case that the condition is primarily to the benefit of one party. The issue then is the consequence of a conclusion that the other party has an interest, albeit a limited and lesser one, in the operation of the condition. In the confines of this case, the question then becomes whether that interest is sufficient to justify termination of the contract where the other party is prepared to proceed.
In Koikas v Green Park Construction Pty Ltd [1970] VR 142, the Court considered the content and operation of a special condition in a contract for the sale of land that the sale was subject to the buyer receiving permission from the relevant statutory authority to build a particular type of dwelling. The contract was silent as to the consequence of permission not being obtained. The balance of the purchase money was payable within 30 days from the date of the contract. The point in contest was whether the condition conferred on the vendor any right to terminate the contract should permission to build a dwelling house not be obtained. Little J observed (at 147) that "this question must depend upon the proper construction of the condition, regard being had for this purpose to all the terms of the contract." Little J described the effect of the special condition as conferring on the purchasers the right to terminate if permission to build were not obtained. Further, Little J said (at 147):
"Accordingly, if when the time for completion arrived the purchasers did not then choose to rely on non-fulfilment of the condition and put an end to the contract they were bound to perform it. There was, accordingly, no interval of time between the expiration of the period within which approval was to be obtained and the date fixed for completion, during which the vendor could be left in any state of uncertainty as to whether or not the contract was to go on, or to be finally binding upon the purchasers….If being bound to perform it they failed to do so, then the vendor was at liberty to enforce his contractual rights, just in the same way as if the contract had not contained special conditions."

In Koikos v v Green Park Construction Pty Ltd, it was contended on behalf of the seller that a condition subsequent in a contract for the sale of land is prima facie for the benefit of both parties, and that, accordingly, something must be found in the contract to exclude one party, in this case the vendor, from the benefit of the condition and so deprive him of the right to terminate the contract if the condition wasn't satisfied. In support of that proposition, reliance was placed on the decision in Charles Lodge Pty Ltd v Menahem, a case concerning the interpretation of a contract containing a condition that the buyer obtain within 60 days approval for the erection of flats, and providing that, if such approval were not obtained, the contract of sale would be void and of no effect. In that case, the court held that it didn't appear to have been intended that the condition operated exclusively for the benefit of the buyer and that, in the absence of such an intention, there was no foundation for an implied agreement that the contract should be voidable at the instance of the purchaser alone. Little J considered that the decision did not enunciate the principle contended for by the seller. He expressed the view that the operation of a condition must depend in each case on the proper construction of the language in its context (at 148-9). As the contract didn't state that if approval wasn't obtained the contract was void or voidable, or use any other language suggestive of a right in each party to terminate, it left the consequences of that event to be ascertained from the terms of the contract. Little J considered (at 149) the condition to be one which was introduced into the contract for the benefit of the purchasers in order to enable them to free themselves of any obligation to perform the contract should it eventuate that, having taken all necessary steps, they were unable to obtain the necessary approval. They were also entitled to waive the condition at any stage up to completion. Little J observed (at 149):
"The vendor would have no interest in opposing that course, or in insisting upon the condition, for if the purchasers could and did waive it the contract would be unconditional and the vendor's concern to have a contract finally binding on the purchasers would have been realized."
Little J concluded (at 149) that the default of the purchasers didn't create in the vendor a right which, on the proper construction of the contract, it did not have to terminate the contract.
In the present case, there is a specific provision of the contract, cl 1.6, which states that the finance clause is for the benefit of both the seller and the buyer. On that basis, the defendant also has an interest which would, in appropriate circumstances, justify him terminating the contract. However, as the authorities reveal, in certain circumstances, particularly where the far greater benefit is to the other party, a party can be deprived of his right to terminate the contract. Turning to the circumstances of this case, in my view, a seller can have no legitimate interest in preventing settlement on a contract voluntarily entered into where the buyer is prepared to complete the contract and hence the seller should not be entitled to terminate the contract. In particular, I don't consider that a mere difference of opinion as to whether the approval granted and communicated to the seller met the definition of finance approval in cl 1.7 of the contract would be sufficient to confer on the seller a right to terminate the contract where the buyer is ready and willing to proceed to settlement.
The courts have also held that a right to put an end to a contract or to refuse to perform a contract without a fixed completion date would not arise thereunder automatically without some warning notice from the vendor fixing a reasonable limit of time for completion: see Maynard v Goode (1926) 37 CLR 529). It seems to me that where a purchaser believes he has finance approval and so advises the vendor, the vender should not be entitled to terminate the contract without notice, simply because the vendor alleges that the approval granted does not meet the definition of finance approval in the contract. A requirement to give notice would give the purchaser the opportunity to exercise his contractual right to waive the condition and make the contract unconditional. I raise this because of my concern about the way in which the defendant has conducted himself in this case. Having been notified and provided with a copy of the Approval Advice, rather than immediately advising the plaintiff, and hence advising him within the Latest Time, that the Approval Advice was not accepted as finance approval for the purposes of the contract, the agent for the defendant waited until time had expired. The defendant thereby deprived the plaintiff of the right under cl 1.6 to exercise his option to waive finance approval and make the contract unconditional, thereby preventing the purported termination from taking effect. My belief that the plaintiff should be entitled to adopt such a course and hence be put in a position to do so is based, in part, on my acceptance of the proposition of Little J in Charles Lodge Pty Ltd v Menahem at 149 that a vendor should have no interest in preventing completion of the contract where the purchaser is prepared to waive the finance condition and proceed to settlement.

Conclusion

The Approval Advice was "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 Loan", and hence was finance approval under cl 1.6. As notice of finance approval was provided to the defendant before the Latest Time, the contract became unconditional on that date and the defendant was required to complete the contract. On that basis, there was no basis upon which the defendant was entitled to terminate the contract.
For these reasons there will be judgment for the plaintiff.
I will hear the parties as to the appropriate orders.