Hayward v Planet Projects Pty Limited
Case
•
[2000] NSWSC 1105
•1 December 2000
No judgment structure available for this case.
CITATION: Hayward & Anor v Planet Projects Pty Limited & Anor [2000] NSWSC 1105 CURRENT JURISDICTION: Equity FILE NUMBER(S): SC 1978/2000 HEARING DATE(S): 16-20/10/00; 8/11/00 JUDGMENT DATE: 1 December 2000 PARTIES :
Max Hayward and Helen Hayward v Planet Projects Pty Limited and Hugh AitkenJUDGMENT OF: Simos J at 1
COUNSEL : M. Tyson (Plaintiff)
P. Menadue (Defendant)SOLICITORS: Stidwell Solicitors (Plaintiff)
Anne Gillin (Defendant)CATCHWORDS: Vendor and purchaser - Exchange of non-identical counterpart contracts - Claim for rectification - HELD: Rectification granted LEGISLATION CITED: Contracts Review Act CASES CITED: Sindel v Georgiou (1984) 154 CLR 661
Longpocket Investments Pty Limited v Hoadley (1985) NSW Conv R 55-244
Domb v Isoz (1980) Ch 548
L'Estrange v Graucob (1934) 2 KB 394DECISION: Rectification granted
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISIONSIMOS J
Friday 1 December 2000
1978/2000 - MAX HAYWARD and HELEN HAYWARD v PLANET PROJECTS PTY LIMITED and HUGH AITKEN
JUDGMENT
HIS HONOUR :
THE PROCEEDINGS
STATEMENT OF CLAIM
1 By their further amended statement of claim filed in Court on 16 October 2000, the plaintiffs allege that on or about 12 March 1998 the defendants purported to enter into a contract with the plaintiffs, whereby the defendants agreed to sell to the plaintiffs, and the plaintiffs agreed to purchase from the defendants “the business located on the land known as ‘Burrapine Lodge’ located at Sheet-O-Bark Road, Taylor’s Arm, New South Wales, and also the said land” for the sum of $780,000. The plaintiffs further allege that in fact no contract was concluded between the plaintiffs and the defendants.
2 The plaintiffs particularized this latter allegation as follows:-
(c) At all material times the Plaintiffs believed they would own the livestock and plant and equipment on exchange of Contracts.
“ PARTICULARS
(a) The Vendor Counterpart Contract provides that out of the $166,000.00 payable shortly after exchange:
(i) $50,000 is apportioned to the purchase of cattle;(b) The Purchase Counterpart apportions:-
(ii) $50,000 is apportioned to the purchase of plant and equipment; and
(iii) The remainder is apportioned to the freehold land, structural improvements, milk quota and chattels.
(i) $27,900 towards the purchase of cattle;
(ii) does not identify an amount apportioned to the purchase of plant and equipment; and
(iii) apportions the remainder to the freehold land, structural improvements, milk quota and chattels as well as machinery and equipment.
(d) At all times the Plaintiffs were under the belief that the Licence payments were coming off the purchase price;
(e) At all material times the Defendant was under the belief that the Licence payments were not coming off the purchase price.”
3 The plaintiffs further allege that in performance of the purported contract, the plaintiffs paid the defendant the sum of $78,000 on 5 February 1998, the sum of $88,000 on 4 March 1998 and the sum of $30,000 on 10 March 1999.
4 The plaintiffs further allege in the alternative, that if there was a concluded contract (which was denied) the contract was unjust in the circumstances relating to the contract at the time it was made, having regard to various matters which were particularized.
5 The plaintiffs claim a declaration that there was no binding contract between the plaintiffs and the defendant, judgment in the sum of $196,000 and further in the alternative, relief under sections 7 and 8 of the Contracts Review Act and certain other relief.
DEFENCE
6 By his amended defence to the further amended statement of claim the defendant alleges that the parties did enter into a binding contract for the sale and purchase of Burrapine Lodge and that a contract was in fact concluded between the plaintiffs and the defendant.
7 The defendant further alleges that there was such a concluded and binding contract between the parties because any differences between the counterparts were not material or substantial.
8 The defendant further alleges in the alternative that at the time of exchange of counterparts it was the intention of the plaintiffs and the defendant that there be a concluded and binding agreement in the same terms as the Vendor’s Counterpart, and further in the alternative, that at the time of exchange of counterparts, it was the intention of the defendant known to the plaintiffs that their agreement would be in the same terms as the Vendor’s Counterpart.
9 Further, or in the alternative, the defendant alleges that by signing a counterpart of the contract the plaintiffs represented that there was a binding contract between the parties, that immediately upon exchange of contracts on 12 March 1998 the plaintiffs took possession of the property and still have possession of it, that on or about 23 April 1999 the parties entered into an agreement to extend the time for completion of the said contract by a year, and that accordingly, in the premises the plaintiffs had represented that there was a binding contract between the parties, in terms of the Vendor’s Counterpart, and that they would pay the balance of the purchase price upon settlement.
10 The defendant also alleges that in reliance upon this representation and induced thereby the defendant assumed that there was a binding contract between the parties, gave possession of Burrapine Lodge to the plaintiffs on the terms set out in the Licence Agreement, spent the deposit released under the contract and incurred the loss and damage referred to in the amended cross claim.
11 The defendant further alleges that in the premises the plaintiffs are estopped from denying that there was a concluded and binding agreement between the parties in the same terms as the Vendor’s Counterpart and further that the plaintiffs had waived their entitlement to rely upon the position that there was no binding and concluded contract between the parties.
12 The defendant further alleges that if there was no contract (which was denied) between the parties, that any payments which the plaintiffs made to the defendant should not be returned to the plaintiffs because the defendant provided consideration for those payments, the defendant has not been incontrovertibly benefited or unjustly enriched, and it would be unjust in the circumstances to order the return of the money.
13 The defendants also deny that the contract was unjust in the circumstances in which it was made within the meaning of the Contracts Review Act.
CROSS CLAIM
14 By his amended cross claim the defendant alleges that on or about 12 March 1998 the defendant (cross-claimant) and the plaintiffs (cross- defendants) entered into a contract for sale of Burrapine Lodge and a Licence Agreement with respect to Burrapine Lodge for the sum of $780,000, the contract providing, inter alia, that the subject of the contract was not only the land but also the current milk quota and all structural improvements, furnishings, chattels, machinery, equipment and livestock listed in the schedule to the contract. The defendant (cross-claimant) alleges that the contract provided that the plaintiffs (cross-defendants) would pay a deposit of $166,000, leaving a balance of $614,000 payable on completion. The defendant (cross-claimant) also pleads that the plaintiffs (cross-defendants) were required to pay certain amounts pursuant to the Licence Agreement.
15 The amended cross claim also alleges that on or about 23 April 1999 the defendant (cross-claimant) and the plaintiffs (cross-defendants) agreed to extend the time for completion of the contract to 22 April 2000 and to reduce the licence fee to $3,600 per annum, inter alia, on condition that the plaintiffs (cross-defendants) paid to the defendant (cross-claimant) the sum of $30,000.
16 The defendant (cross-claimant) further alleges that although the plaintiffs (cross-defendants) paid to the defendant (cross- claimant) the further sum of $30,000, they the plaintiffs (cross- defendants) were in breach of the Licence Agreement in failing to pay certain licence fees and other amounts, and further that the plaintiffs (cross-defendants) did not complete the contract on 22 April 2000 as agreed, by reason whereof, on 1 May 2000 the defendant (cross-claimant) served upon the plaintiffs (cross-defendants) a notice to complete on or before 3 pm on 16 May 2000.
17 It is further alleged in the cross claim that in breach of the contract the plaintiffs (cross-defendants) failed to complete the contract in accordance with the terms of the notice to complete, whereupon on 17 May 2000 the defendant (cross- claimant) served upon the plaintiffs (cross-defendants) a notice of termination of the Licence Agreement, a notice of termination of the contract and a notice to vacate the land within seven days. It is further alleged that the sale contract and licence agreement were thereby validly terminated but that the plaintiffs (cross-defendants) continued to retain possession of the land.
18 By his cross claim the defendant (cross-claimant) also claims a declaration that the contract was (originally) a binding contract between the parties, and further that it was the common intention of the defendant (cross-claimant) and the plaintiffs (cross-defendants) to enter into a contract in the same terms as the “vendor’s counterpart” or alternatively that it was the intention of the defendant (cross-claimant) known to the plaintiffs (cross-defendants) to enter into a contract in the same terms as the “vendor’s counterpart” and that further or in the alternative, an order that the contract be rectified to give effect to such intention.
19 The defendant (cross-claimant) also claims a declaration that the contract and the licence agreement had been validly terminated by the defendant (cross-claimant) as a result of the default by the plaintiffs (cross-defendants) and that in the circumstances the defendant (cross-claimant) was entitled to retain all monies which the plaintiffs (cross-defendants) had paid to the defendant (cross-claimant). The defendant (cross- claimant) also seeks judgment for possession of the land, damages and other relief.
20 By their defence to the amended cross claim the plaintiffs deny, inter alia, that there was any concluded contract for the sale of the land between the parties, deny that there was any breach of such contract if such contract, if such contract did come into existence and deny that there was any valid termination by the defendant of the contract. The plaintiffs also deny that the differences between the counterparts were not material or substantial, and deny that it was the intention of the parties that there be a concluded and binding agreement in the same terms as the Vendor’s Counterpart, or that at the time of exchange it was the intention of the defendant, and known to the plaintiffs, that the agreement would be on the same terms as the Vendor’s Counterpart. The plaintiffs also deny that they represented that there was a binding contract between the parties in the terms of the Vendor’s Counterpart, deny that the defendant relied upon any representations made to him by the plaintiffs, and deny any estoppel or waiver as pleaded.
THE ISSUES
21 In general terms it may be said that proceedings were conducted by the parties on the basis that the plaintiffs claimed that there was no binding contract between the parties; the defendant claimed that a binding contract between the parties had come into existence, or alternatively that the plaintiffs were estopped from denying that such a binding contract had come into existence; that the plaintiffs committed breaches of that contract, inter alia, by failing to complete, which breaches entitled the defendant to rescind and to claim damages; the plaintiffs denied that they were estopped from denying the existence of a contract between the parties, but that if a contract was held to exist, then it was unjust in the circumstances in which it was made, within the meaning of the Contracts Review Act, and that they were entitled to relief under that Act; both the plaintiffs and the defendant acknowledged that if no binding contract had ever come into existence, then the Court should make some appropriate order with a view to restoring the parties to their original positions.
THE FACTS
22 By letter dated 21 January 1998 Anne Gillin, the solicitor for the defendant (vendor) forwarded to Mr Lindsay Moore of Messrs G.P. Evans & Englert, solicitors of West Wyalong, the solicitor for the plaintiffs (purchasers) what she described as “Purchaser’s Counterpart Contract”. The letter continued as follows:-
“Neither the submission of this contract nor this correspondence is meant to be an agreement or offer to sell. No contractual agreement or obligation shall arise as a result of this letter, or submission of the contract. No contractual obligation shall be created until a formal exchange of contract has occurred.23 By letter dated 25 February 1998 Ms Gillin wrote to Mr Moore in the following terms:-
Please note that on exchange of the Contracts I shall require all annexures to be initialled or signed by the Purchaser indicating that these were attached to the Contract at the time of signing as evidence of the Vendor’s compliance with statutory obligations.”
“In respect of the above matter, I am instructed that the parties have agreed to the following arrangements:24 By letter dated 26 February 1998, from Mr Moore to Ms Gillin, it was stated, inter alia, as follows:-
(1) Deposit to be reduced to $187,000.00. I note your clients have already paid $78,000.00 direct to my client.
(2) The parties will be in a position to exchange contracts within seven days.
(3) Your clients will lease the property for 12 months between exchange and settlement. In that regard I shall forward lease documents for your approval as soon as possible.
(4) You may wish to have a further breakdown of the purchase price in respect of plant and equipment, stock and goodwill.”
“Our clients will require a breakdown of the purchase price. However, we understand that our clients have retained your clients’ accountant as theirs. We are instructed that he is able to settle this issue without disadvantage to Vendor and Purchaser.25 On 2 March 1998 Ms Gillin rang Rhonda from the office of Mr Moore and said to her, words to the following effect:-
We will await the submission of new documents.”
“The parties are to enter into a Licence Agreement. They will pay a licence fee and will be able to take over the farm from the date of exchange. The licence agreement will continue for 12 months until settlement. Otherwise the only change in the contract at this stage is that I understand that your clients want the deposit to be reduced to $166,000.00.”26 On 2 March 1998 Ms Gillin wrote a letter dated 2 March 1998 to Mr Moore enclosing “copy of Licence Agreement” and stating, “Please advise if you require the original Licence Agreement to be forwarded directly to your clients”.
Rhonda replied that that was correct, to which Ms Gillin responded that she would be sending a copy of the licence agreement that day for her client’s approval.
27 On 4 March 1998 Ms Gillin sent to Mr Moore by facsimile an amended Licence Agreement.
28 A final draft of the licence agreement was faxed to Mr Moore on 5 March 1998.
29 On 5 March 1998 Mr Moore wrote a letter dated 5 March, 2000 to Ms Gillin, which letter included the following passages:-
“… our clients have instructed us that they have agreed with your clients to revert to the earlier proposal as follows:
Our clients to pay to your clients $166,000 immediately made up as follows:-
Deposit on purchase of land $66,000.00
Purchase of plant and equipment $50,000.00
Purchase of livestock $50,000.00
Total: $166,000.00
As indicated we have fully presented our clients in writing with the issues confronting them and the attendant risks. They are confident that they will be able to complete the purchase within 12 months. As we see it this will require our clients to raise $614,000.00 to complete the purchase. This is calculated as follows:-
Purchase of property $482,000.00
Purchase of milk quota $111,000.00
Purchase of ‘goodwill’ $87,000.00
Total $680,000.00
Less deposit paid as above $166,000.00
$614,000.00
Subject to your clients’ instructions to you we are willing to amend the draft document to accord with these changes and submit them to you. Our clients have now moved to Taylor’s Arm, and if approved we will have no objection to them attending your office to exchange contracts.”
30 By letter dated 6 March 1998 Ms Gillin wrote to Mr Moore as follows:-
“I refer to your facsimile of 5 March, 1998. My client does not agree with your proposal that your clients purchase the plant and equipment separately from the rest of the property. My client wishes the matter to proceed in accordance with the contract submitted to you originally incorporating the amended Special Conditions provided to you yesterday AND amending the deposit to read $166,000.00 and the balance to read $614,000.00.31 It appears from the letter dated 5 March 1998 from Mr Moore to Ms Gillin that the plaintiffs did wish to apportion the sum of $50,000 to the plant and equipment and a further sum of $50,000 to the livestock and they also had intended that the property in each of those items would pass to them upon payment of the deposit. At least it appears that that is how the letter was regarded by Ms Gillin who replied on 6 March 1998 by saying that “my client does not agree with your proposal that your clients purchase the plant and equipment separate from the rest of the property ”. In other words, it appears that at this time, the plaintiffs wanted the property in the plant and equipment and in the livestock to be transferred to them immediately upon payment of the deposit as to $50,000 for the livestock and a further $50,000 for the plant and equipment, but, although the defendant was agreeable to the apportionment of those two sums of $50,000, he was not agreeable to the transfer of the property in those items passing upon payment of the deposit. As will appear hereafter, however, the defendant later made it clear to the plaintiffs - that he was not agreeable to the property in the livestock and the plant and equipment passing to the plaintiffs prior to completion.
My client believes that your clients are agreeable with this proposal.
Please confirm that the matter can exchange as outlined above.
My client is happy for your clients to attend my office to exchange contracts.” (underlining supplied).
32 The letter dated 5 March 1998 from Mr Moore to Ms Gillin does however, support the conclusion that at the time of exchange the plaintiffs had agreed as to the apportionment of the purchase price as indicated in that letter. It is also the case that the counterpart contract that the plaintiffs did sign made it expressly clear that the property in the livestock would not pass until completion (see Special Condition 6(b)).
33 I note also that Ms Gillin’s letter dated 6 March 1998 to Mr Moore states, inter alia, that “ my client wishes the matter to proceed in accordance with the contract submitted to you originally incorporating the amended Special Conditions provided to you yesterday …”.
34 It is not clear whether Ms Gillin intended to convey that what she provided to Mr Moore the previous day (5 March 1998), was a complete copy of “the contract submitted to you originally incorporating the amended Special Conditions” or merely “the amended Special Conditions”. Either way there is no evidence that Mr Moore received either a complete copy of “the contract submitted to you originally incorporating the amended Special Conditions” or only “the amended Special Conditions”, and there is nothing in Mr Moore’s file to suggest that he received either. Moreover, there is nothing is Ms Gillin’s file, other than the letter of 6 March 1998, to suggest that either was actually sent by Ms Gillin to Mr Moore and Ms Gillin was unable to say whether either had been sent.
35 Be that as it may, what is clear is that the counterpart contract which Mr Moore returned to Ms Gillin, which was given by Ms Gillin’s clerk, Ms Legend to the plaintiffs to sign on 12 March 1998, was the original unamended contract forwarded by Ms Gillin to Mr Moore on 21 January 1998, and not that original contract incorporating the amended special conditions referred to in Ms Gillin’s letter of 6 March 1998 to Mr Moore in which she stated that that copy with the amended special conditions or the amended special conditions alone had been sent to Mr Moore the previous day, namely 5 March 1998.
36 This letter of 6 March 1998 is also of particular importance in relation to at least two matters, namely, firstly, that it plainly states that Ms Gillin’s client, the vendor, did not agree with the proposal that the purchasers should purchase the plant and equipment separately from the rest of the property, and secondly, that the vendor wished to proceed “in accordance with the contract submitted to you originally” but “incorporating the amended Special Conditions provided to you yesterday”.
37 In relation to the first of these matters, it is plain, in my opinion, that the defendant (vendor) did not prior to exchange of counterparts, or at any relevant time, depart from his disagreement with the proposal that the purchasers should purchase the plant and equipment separately from the rest of the property. Moreover, I find as a fact in this connection, that, prior to exchange of counterparts, the defendant discussed this matter with the plaintiffs and informed the plaintiffs that he was of this view and the plaintiffs did not disagree or express any objection (see later).
38 I note in passing that no reference was made in the letter of 6 March 1998 from Ms Gillin to Mr Moore to the proposal contained in the letter dated 5 March 1998 from Mr Moore to Ms Gillin to the effect that the livestock also should be purchased separately from the rest of the property but I find that this matter was also discussed by the defendant with the plaintiffs (see later).
39 It is plain, in my opinion, as a result of these discussions, that, as at the time of exchange of the contracts on 12 March 1998, both the plaintiffs were aware of the position of the defendant as expressed to them in relation to these matters and that they had not disagreed.
40 Nor in my opinion did anything pass between the solicitor for the defendant and the solicitor for the plaintiffs prior to exchange which would produce any different result, for example, there was no suggestion in any correspondence between the solicitors that the solicitor for the defendant had agreed (short of a binding contract) on behalf of his client that there would be a separate purchase of the livestock and plant and equipment on exchange of counterparts.
41 I would only add that because the letter dated 6 March 1998 from Ms Gillin to Mr Moore expressly stated that her client did “not agree with your proposal that your clients purchase the plant and equipment separately from the rest of the property”, in my opinion for present purposes, notice to that effect to the plaintiffs’ solicitor must be deemed to be equivalent to notice to the plaintiffs direct. (see later).
42 Although Ms Gillin was only able to say that the counterpart contract signed by the defendant was signed by the defendant prior to 12 March 1998, Ms Gillin, whose evidence I accept, gave evidence that she believed that it was on or about 3 March 1998 that the defendant attended her office to review the contract and licence agreement, and that she believed that he may have signed the contract on that day or a later day. Ms Gillin also stated that on whatever day that was, she was instructed by the defendant to change the value of the livestock to $50,000 and also to put $50,000 in as the value for the plant and equipment. Ms Gillin gave evidence that following those instructions she amended her copy of the contract (signed by the defendant) as forwarded by her to Mr Moore on 21 January 1998, as follows:-
(1) By deleting special condition 7 because it was redundant.43 On 12 March 1998 the plaintiffs went to the office of Ms Gillin and signed both the counterpart contract to be signed by them as well as the licence agreement pursuant to which they were to be entitled to possession of the property after exchange for a period of twelve months, on the terms and conditions of the licence agreement.
(2) By substituting $50,000 for $27,900 and adding the words “and a further sum of $50,000 is for plant and equipment” to special condition 9.
(3) By deleting and changing the dollar amounts in the annexure (schedule) so they reflected the figures in the previous paragraph.
(4) By adding the words “enter into a Licence Agreement, a copy of which is annexed hereto and marked ‘B’ to special condition 12(a)”.
EXCHANGE OF CONTRACTS
44 Prior to the plaintiffs signing the documents Ms Gillin’s clerk, Ms Jennifer Legend, whose evidence I accept, asked them whether they wished to telephone their solicitor before signing, to which Mr Hayward replied that he would, following which Mrs Hayward spoke to Mr Moore and asked him whether it was in order for them to sign the contract to which Mr Moore replied to the effect that it should be okay. After the telephone call had concluded the plaintiffs signed the documents.
45 According to Mrs Hayward in her affidavit of 25 July 2000 the contract she signed was no more than 13 to 15 pages long “at most”. Having since been shown a copy of the contract signed by the defendant held by her solicitor, she says that she was surprised to see how thick it was (68 pages) and did not recall the contract she signed having so many pages, and, in particular, did not recall seeing any of the diagrams and copies of title deeds attached. Mrs Hayward said in her affidavit that when she signed the contract she believed “we were getting the stock and equipment outright and leaving the remainder as the actual deposit for the land”. She also said “I quickly flicked through the other pages without reading them. The wording was confusing and I had faith that Anne Gillin had made the changes I had asked for. I had no reason to believe otherwise. Max and I then signed the contract and handed it back to the female at the reception”.
46 When the purchasers signed the counterpart contract in Mr Gillin’s office the counterpart contract which they signed contained a copy of the licence agreement but a separate licence agreement document was signed by them.
47 It appears that the defendant was present for at least part of the time when the plaintiffs were in the office of Ms Gillin because Mrs Hayward says that on this occasion the defendant asked her whether she had received legal advice in relation to the licence to which she replied in the affirmative, after which the defendant asked her to write on the last page of the licence agreement that she had been legally advised by her solicitor. Mrs Hayward then wrote the following words on the last page of the licence agreement:-
“We, Edward and Helen Hayward have been legally advised by our solicitor Mr Lindsay Moore in respect to this Licence Agreement.”
48 Ms Legend gave evidence which I accept as probable to the effect that she produced a “complete Contract, consisting of approximately 68 pages, to Mr and Mrs Hayward.”
49 Ms Legend further stated in her affidavit that “the Purchasers’ Contract which the Haywards signed (was) the same document which was sent to Lindsay Moore for his perusal (in January) and was then returned (in March) to this office by Lindsay Moore so that the Haywards could sign it.” If this is correct as it appears to be, it seems that the copy sent back by Mr Moore to Ms Gillin contained the original special conditions and did not contain the amended special conditions said by Ms Gillin in her letter of 6 March 1998 to have been provided to Mr Lindsay Moore “yesterday” and this is, of course, confirmed by the fact that the counterpart contract actually signed by the plaintiffs contained the original special conditions but not the amended special conditions. This is also further evidence to suggest that Mr Moore did not receive the amended Special Conditions.
50 Mrs Legend also said in her affidavit that the defendant had signed the counterpart copy signed by him prior to 12 March 1998 and that when she “carried out the exchange of Contracts, I added no extra documents to the Purchasers’ Contract nor were there any alterations made to the Purchasers’ Contract after Mr and Mrs Hayward signed it. Upon exchange I dated both Contracts.” She was unable to explain the differences between the two contracts.
51 It does appear, however, that originally both Ms Gillin and Mr Moore had identical counterpart contracts in the form, a copy of which was sent by Ms Gillin to Mr Moore on 21 January 1998. Thereafter on or about 3 March 1998, or perhaps later, but in any event prior to 12 March 1998, as a result of a conference between the defendant and Ms Gillin, Ms Gillin altered the special conditions contained in the copy of the counterpart contract signed by the defendant, but apparently failed to send a copy of those amended special conditions to Mr Moore, although she intended to do so. The result was that the copy of the contract which Mr Moore returned to Ms Gillin in March 1998 for the purpose of it being signed by the plaintiffs in Ms Gillin’s office, was the original counterpart contract sent by Ms Gillin to Mr Moore containing the original and unamended special conditions, and it was this counterpart contract which the plaintiffs signed in Ms Gillin’s office. The contract which was signed by the defendant, and which Ms Gillin sent to Mr Moore by way of exchange under cover of her letter dated 12 March 1998 contained the amended special conditions, not the original special conditions.
52 By letter dated 12 March 1998 from Ms Gillin to Mr Moore, Ms Gillin forwarded to Mr Moore the copy of the contract signed by the defendant. The letter was in the following terms, inter alia:-
“In respect of the above matter please find herewith the Vendor’s counterpart of the Contract, duly signed, to complete the exchange. Both Contracts have been dated 12 March, 1998. I also enclose a copy annexing the Licence Agreement for your records.”53 The counterpart contract signed by the plaintiffs on 12 March 1998 in Ms Gillin’s office did not reflect in its terms the knowledge of the plaintiffs as referred to above in that the counterpart contract signed by the plaintiffs did not provide for the livestock and the plant and equipment to become the property of the plaintiffs on exchange, but merely apportioned $27,900 of the sale price to “the livestock referred to in the schedule”. The relevant special condition also provided that the balance was apportioned to the freehold lands and the structural improvements thereon and the milk quota for 185,916 litres per annum, the furnishings and chattels referred to in the schedule and machinery and equipment also as set out in the schedule.
THE COUNTERPARTS AS EXCHANGED
54 The relevant special condition was Special Condition 9 which was in the following terms:-
“9. The Vendor is selling the land and improvements, furnishing and chattels, machinery and equipment together with certain livestock as set out in the schedule and the current milk quota attaching to the property on a walk-in walk-out basis. It is expressly agreed that of the sale price, the $27,900.00 is for the livestock referred to in the schedule; and the balance is apportioned to the freehold lands and the structural improvements thereon, the milk quota for 185,916 litres per annum, the furnishings and chattels referred to in the schedule and machinery and equipment as also set out in the schedule.”
55 The schedule did list, inter alia, items under the headings of “STRUCTURAL IMPROVEMENTS”, “FURNISHINGS AND CHATTELS”, “MACHINERY AND EQUIPMENT” and “LIVESTOCK”. At the end of the schedule was typed “Total value $50,000.00”.
56 It should be noted that in relation to these matters the copy of the contract signed by the defendant, which the defendant claims accorded in this respect with the common intention and/or agreement of the parties at the time of exchange, provided that out of the $166,000.00 “deposit”, $50,000.00 was apportioned to the purchase of cattle, $50,000.00 was apportioned to the purchase of plant and equipment and the balance was apportioned to the freehold land, structural improvements, milk quota and chattels.
57 Although this counterpart (signed by the defendant) provided for apportionment of the “deposit” in the manner just mentioned, that counterpart did not make any provision for the passing of any of the property the subject of the purchase and including the cattle and the plant and equipment on payment of the “deposit”.
58 I note that Special Condition 6 of the counterpart signed by the plaintiffs also included the following provision:
“6. With respect to the livestock included in the sale …59 Special condition 6(b) was the same in the counterpart signed by the defendant as in the counterpart signed by the plaintiffs.
(b) Delivery of the livestock and title thereto shall be given and taken on completion following a mustering of the land (unless the parties otherwise agree) and the sale price shall not be adjusted as a result of any increase or decrease for natural reasons in the number of the livestock and the Purchaser shall not be entitled to raise any objection should the number of livestock be different on delivery from those indicated in the said schedule as a consequence of such natural reason.” (underlining supplied).
60 Special condition 7 as contained in the counterpart signed by the plaintiffs was omitted from the counterpart contract signed by the defendant but this does not appear to have been regarded as significant by either party. As a result of this, however, special condition 8 in the counterpart contract signed by the purchasers is numbered 7 in the counterpart contract signed by the defendant and so on with the final special condition in the counterpart contract signed by the vendors being numbered 12 and the final special condition in the counterpart contract signed by the defendant being numbered 11.
61 Special condition 8 in the counterpart contract signed by the defendant was different from its counterpart being special condition 9 in the counterpart contract signed by the purchasers and was in the following terms:-
“8. The Vendor is selling the land and improvements, furnishing and chattels, machinery and equipment together with certain livestock as set out in the schedule and the current milk quota attaching to the property on a walk-in walk-out basis. It is expressly agreed that of the sale price the sum of $50,000.00 is for the livestock referred to in the schedule and a further sum of $50,000.00 is for plant and equipment; and the balance is apportioned to the freehold lands, and the structural improvements thereon, the milk quota for 185,916 litres per annum, the furnishings and chattels referred to in the schedule and machinery and equipment also as set out in the schedule.”
62 The schedule in the counterpart contract signed by the defendant appears to have been in the same terms as the schedule in the counterpart contract signed by the plaintiffs, in that in the schedule to each of the contracts it is expressed that the total value of the machinery and equipment is $50,000.00 and the total value of the livestock is also $50,000.00.
63 Both counterparts provided, as stated above, that “Delivery of the livestock and title thereto shall be given and taken on completion” and although nothing specifically was provided for in the contracts as to when title to the plant and equipment would pass, there can be no doubt, in my opinion, that on the true construction of the contract title to the plant and equipment would also pass on completion, and not before.
64 The nett result of the differences between special condition 9 in the counterpart contract signed by the plaintiffs and special condition 8 of the counterpart contract signed by the defendant is that special condition 9 of the counterpart contract signed by the plaintiffs provided that $27,900.00 was apportioned to the livestock and the balance to the other items included in the sale including the land, whereas in special condition 8 of the counterpart contract signed by the defendant the sum of $50,000.00 is apportioned to the livestock and a further sum of $50,000.00 is apportioned to the plant and equipment with the balance being apportioned to the other items, the subject of the sale, including the land.
CONSTRUCTION OF THE CONTRACT
65 So far as the counterpart contract signed by the plaintiffs is concerned, it is submitted on behalf of the defendant that, inter alia, special condition 9 in the counterpart contract signed by the plaintiffs should be construed as apportioning $50,000.00 to the livestock and $50,000.00 to the plant and equipment (as was done expressly in clause 8 of the counterpart contract signed by the defendant) by reason of the fact that in the schedule to the contract it is stated, in effect, that the total value of the machinery and equipment is $50,000.00 and that the total value of the livestock is also $50,000.00.
66 In my opinion there is no warrant for construing special condition 9 in the counterpart contract signed by the plaintiffs in this way. In my opinion special condition 9 in the counterpart contract signed by the plaintiffs must prevail principally because, in my opinion, the schedule must be construed simply as a convenient place to record details of the livestock and other items referred to in special condition 9 notwithstanding the references to “total value of $50,000.00”.
67 In other words, in my opinion, special condition 9 should be construed on the basis that its contractual words should be given effect to and prevail over what is a mere reference to the two sums of $50,000.00 contained in a schedule whose primary purpose, in my opinion, is to identify items referred to in the special condition 9, thereby shortening and simplifying that special condition. Such a construction on one view could also involve the notion that although the true value of the livestock is $50,000.00 the purchasers are fortunate in getting them for $27,900.00. Be that as it may, I am of the opinion, as stated above, that special condition 9 of the counterpart contract signed by the purchasers cannot be construed as if it provided that $50,000.00 of the purchase price was to be apportioned to livestock and $50,000.00 apportioned to plant and equipment. It follows that, in my opinion, the counterpart contract signed by the plaintiffs, is different from the counterpart contract signed by the defendant, at least in this respect.
THE DIFFERENCES BETWEEN THE COUNTERPARTS ARE SUBSTANTIAL
68 It was then submitted on behalf of the defendant that the difference between special condition 9 in the counterpart contract signed by the purchasers and special condition 8 in the contract signed by the defendant is not substantial within the meaning of the English Court of Appeal case of Domb v Isoz (1980) Ch 548, with the result that on the authority of that case the counterpart contract signed by the plaintiffs on the one hand, and the defendant on the other hand, may be regarded as relevantly identical, with the result that a binding contract came into existence between the parties on exchange notwithstanding that the counterparts were not in fact identical.
69 In my opinion, as observed in the High Court in the case of Sindel v Georgiou , ibid , the case of Domb v Isoz was a case in which the remedy of rectification would have been available so that the true ratio of that case is not that exchange of counterparts with differences which are not substantial will bring into existence a binding contract, but rather that where the differences between the counterparts are not substantial and are such that rectification may be granted, then a binding contract will have come into existence on exchange.
70 In any event, in my opinion, the differences between special condition 9 in the counterpart contract signed by the plaintiffs, and special condition 8 in the counterpart contract signed by the defendant are not relevantly insubstantial.
71 In the first place, both special conditions, when dealing with the question of apportionment use the words “it is expressly agreed” and this, in my opinion, lends some support to the view that the parties considered the question of apportionment of the purchase price was significant. Moreover, in my opinion, it would have been known to both parties, or certainly their solicitors, that the apportionment of purchase price can have consequences for the purposes of the Commonwealth Income Tax Act and may result in liability of one or other or both of the parties for income tax. The fact that the question of the apportionment of the purchase price is relevant in relation to financial matters of this kind is further evidence, in my view, to support the view that a clause relating to apportionment of a purchase price cannot be regarded as unimportant or insignificant.
72 Relevant also, in my opinion, is the fact that the defendant stated in his affidavit of 16 September 2000 that at some time shortly before the exchange of contracts on 12 March 1998 he spoke to his solicitor Ms Gillin and told her that it would be necessary to change the apportionment in the contract for plant and equipment and stock up from $27,000 to $50,000 each which would make it look more realistic for tax purposes. Moreover, Ms Gillin stated under cross-examination that there was always “toing and froing” between purchasers and vendors in conveyances about the apportionment clause. She also expressed the view that vendors had more power than purchasers in such transactions and usually got their way in relation to the apportionment clause.
73 The letter dated 25 February 1998 from Ms Gillin to Mr Moore stated, inter alia, that “you may wish to have a further breakdown of the purchase price in respect of plant and equipment; stock and goodwill”. This, in my opinion, is another indication of the importance to the parties of the relevant provision relating to apportionment of the purchase price.
74 A further indication that the parties did not regard the apportionment clause as insubstantial or insignificant is the very fact that it was included among the special conditions in the contracts additional the standard conditions contained in the normal printed form of contract.
75 Accordingly, in all the circumstances, I am of the opinion that the differences between the apportionment clauses contained in each of the counterpart contracts cannot be regarded as insubstantial or insignificant.76 After the plaintiffs had been in possession for approximately 12 months they ascertained that finance to enable them to complete the purchase was not available.
SUBSEQUENT EVENTS
77 By letter dated 3 March 1999 the plaintiffs wrote to the defendant, inter alia, as follows:-
“When we contacted Mr Bill Garland (Coast to Coast Finance) through whom we dealt concerning the loan to purchase Burrapine with you. Just before the 12 months were up we, and our local accountant, contacted him and were told there wasn’t a loan in place. This has devastated us as we truly believed that it was held until after we finished the 12 months in which to prove ourselves, and as we were always told while all the business was being arranged that everything would be alright.78 By letter dated 23 April 1999 Ms Gillin wrote to Mr Lindsay Moore as follows:-
Our local accountant is currently attempting to arrange finance urgently.”
“Our client consents to extending the term of settlement to 22 April 2000 and reducing the Licence fee to three thousand five hundred dollars ($3,500.00) a month on the following basis:-79 By letter dated 23 April 2000 to Ms Gillin from Mr Moore this offer was accepted.
1. That your clients pay our client the sum of thirty thousand dollars ($30,000.00) cash by way of reduction of the purchase (price) by 5.00 pm 23 April, 1999;
2. You liaise with us by 7 March 2000 as to your clients’ position in respect of them obtaining finance and their ability to settle the matter by 22 April, 2000.
3. That if your clients default for more than three weeks in paying the agreed Licence fee, our client will have the right to serve a Notice to Complete on your clients.”
80 By letter dated 1 May 2000 Ms Gillin wrote to the solicitors for the plaintiff enclosing a Notice to Complete dated 1 May 2000 and by letter dated 17 May 2000 from Ms Gillin to the solicitors for the plaintiff, Ms Gillin enclosed by way of service a Notice of Termination of Licence Agreement, a Notice of Termination of Contract, and a Notice to Vacate, all dated 17 May 2000. The Notice to Terminate the Licence Agreement alleged that the plaintiffs were in arrears in payment of the relevant Licence fee, the Notice of Termination of the Contract alleged default under the contract and the Notice to Complete dated 1 May 2000 and the Notice to Vacate was stated to be pursuant to the Notice of Termination of Contract and the Notice of Termination of the Licence Agreement both being dated 17 May 2000.
81 By letter dated 12 June 2000 Mr Moore wrote to Ms Gillin as follows:-
“We refer to your FAX of 10 June. Our clients have experienced problems in raising funds, and indeed we have had difficulty in stamping the Head Contract and the matter is presently before the Commissioner for Stamp Duties. Our initial fears that our clients were under capitalized and were depending upon funds from other sources have materialized. We are awaiting settlement of the sale of one property before funds are available for stamping. Our clients were made aware of their obligations for the payment of stamp duty and costs. All we can do is keep you posted.”82 The relevant approach which the Court must take in cases such as the present is as set out in the following passages from the joint judgment of Mason, Murphy, Wilson, Brennan and Dawson JJ in the High Court in the case of Sindel v Georgiou (1984) 154 CLR 661 at 667-668:-
THE RELEVANT APPROACH
“An unqualified acceptance of the proposition that delivery of two parts in identical terms is crucial to an effective exchange would exclude the parties’ intention as the governing or, even as a relevant, factor. The question whether the delivery of the parts in identical terms is essential must ultimately depend on the parties’ intention. The answer to this question determines the manner in which the contract becomes binding. And as Lord Greene M.R. emphasized in Eccles v Bryant , the manner in which the contract is to be created so as to become binding is to be gathered from their intention, express or implied. In ascertaining their intention, we must take account of those factors which favour an insistence on documents in such a form as will evidence with certainty a contract and the terms of that contract, factors expressed and underlined by Lord Greene in Eccles v Bryant and by Lord Denning M.R. in Harrison v Battye . We must also take account of the real intention of the parties, giving due weight to their objective - the making of a binding contract by means of the exchange of parts. And if the parties, through negotiations between their solicitors, have agreed on the terms of their bargain and settle on an exchange of parts in order to seal that bargain, it would usually accord with their intention to treat the exchange as creating a binding contract, notwithstanding the lack of correspondence in the parts, so long as that lack of correspondence is capable of being remedied by rectification. It will be otherwise when it appears that the parties intend to be bound only by an exchange of parts in identical terms or when the prior negotiations do not completely settle the terms of the bargain and the parties look to the parts as exchanged to fix these terms.83 These passages deal, inter alia, with the situation where it is found as a fact that the parties intended to make a binding contract by means of the exchange of identical parts prior to which exchange no contract has come into existence. The passages also deal with the principles to be applied when the real intention of the parties being to make a binding contract by means of the exchange of identical parts, it transpires that the parts exchanged pursuant to that intention are not identical. In such a situation the principles as enunciated by the High Court require that the Court should ascertain whether, through negotiations between the parties and/or their solicitors, the parties had agreed on the terms of the bargain prior to the exchange of the “intended to be identical” parts, and if so, whether it accorded with the intentions of the parties that a binding contract could come into existence upon the exchange of non-identical parts “so long as that lack of correspondence was capable of being remedied by rectification”.
This approach places less emphasis on the advantage of bringing into existence a document which establishes with certainty the terms of the contract and more emphasis on the intention of the parties in creating a contract by the ceremony of exchange, the terms of the bargain having already been determined. In such a case the importance of exchange lies not so much in the circumstance that it fixes the terms of the contract as in its function in fixing the existence of a binding contract, thereby terminating the period in which each party is free to withdraw from the negotiations. This concept of exchange enables the Court to do greater justice between the parties by precluding one party from acting on the footing that there is no binding contract when, as a result of an undetected error one part of the contract does not correspond with the other. On this view of exchange the availability of rectification is not a problem.”
84 The passages from the judgment of the High Court also refer to other cases (“otherwise”) where the parties intend that any contract between them should become binding on the exchange of the parts and where the exchange of non-identical parts produces no contract because either:-
(1) the evidence establishes that the intention of the parties was that no contract between them should become binding until the exchange of identical parts, whatever the other circumstances may be, or85 I note in passing that the principles laid down by the High Court appear to allow for the factual position in which, although the parties may have agreed on all the terms of their bargain prior to exchange, it may be that, in what might be thought to be an unusual case, and certainly not the present case, the parties nevertheless intended that no binding contract should come into existence prior to exchange of identical counterparts, even if the lack of correspondence between the counterparts, could, in other circumstances, have been remedied by rectification.
(2) the prior negotiations had not completely settled the terms of the bargain, and the parties looked to the parts as exchanged to fix those terms, in which case, of course, there would be no entitlement to rectification by either party.
86 It was submitted on behalf of the plaintiffs as follows:-
“The test that the Court should apply, and the framework for analysis in this case, is, ‘Did the parties intend that there would be no contract until there was an exchange of identical contract counterparts, or did the parties instead intend that the exchange of contracts was merely to be a seal on a pre-existing bargain?”
87 In my opinion this is not the appropriate test to be applied in the present case.
88 In the present case there can be no doubt that the parties intended that no binding contract would come into existence until there was an exchange of counterparts. There is also no doubt that the counterparts which were exchanged were not identical. In those circumstances, the appropriate question in the present case should be framed as follows:-
“It being plain that the parties did not intend that there should be a contract until the exchange of counterparts, and it also being plain that the counterparts actually exchanged were not identical, is the remedy of rectification available to the plaintiffs, because if it is, a binding contract will have come into existence upon exchange, notwithstanding that the counterparts exchanged were not identical.”
89 Put another way the critical question in the present case is not whether the parties intended that a binding contract would come into existence only upon the exchange of counterparts, because there is no doubt that that was the case. The critical question is whether having regard to that intention, and when it appears that the counterparts exchanged were not-identical, can the non-identical parts so exchanged be relevantly rectified, in which event a binding contract will be held to have come into existence at the time of exchange as recorded in the terms of the counterparts as rectified so as to be identical.
90 In the present case, the answer to this question is that the defendant will be entitled to have the counterpart contract signed by the plaintiffs relevantly rectified so as to be identical with the counterpart contract signed by the defendant if he can establish that the parties had agreed (but without intending that that agreement would be binding until exchange) on all the terms of their bargain prior to exchange, notwithstanding the fact that the counterparts exchanged were not identical.
91 Contrary to the submissions on behalf of the plaintiffs, such an enquiry, in the case of an ordinary contract for the sale of land, is unlikely to pose any undue difficulties, in my opinion, because in the case of an ordinary contract for the sale of land the solicitors for the parties will, prior to exchange, have agreed (short of a binding contract), on behalf of their clients, upon all the terms of the proposed contract which will be embodied in both counterparts, even though that agreement will not mature into a binding contract until exchange. If in such a case it should transpire that the parts exchanged were not identical, evidence may be adduced for the purpose of determining whether or not the parties had indeed agreed (short of a binding contract) on all the terms of the agreement between them (which would mature into a binding contract upon exchange), and if so, the remedy of rectification would be available to bring into existence a contract upon the terms of the identical and rectified counterparts as to which there could be no doubt.
92 It follows that I reject the unqualified submission on behalf of the plaintiffs to the effect that “the Court should find that it was the parties’ intention that contractual relations would only be created upon, and not before, the exchange of identical contract counterparts” because this unqualified submission makes no allowance for the possibility that the remedy of rectification may be available to the defendant, as I hold that it is. (see later).
93 In my opinion, the evidence establishes that, in the present case, the parties had, prior to the exchange of the counterparts, agreed on all the terms of their agreement (bargain) and that, accordingly, the defendant is entitled to rectification.
94 In other words, I am of the opinion that, in the present case, the parties had “through negotiations between (themselves and/or) their solicitors … agreed (short of bringing a binding contract into existence) on the terms of their bargain” prior to exchange, but had agreed, nevertheless, that the agreement on those terms would not mature into a binding contract until the exchange of counterparts, with the result that, in accordance with the principles laid down by the High Court, a binding contract did come into existence on the exchange of counterparts, notwithstanding that the counterparts exchanged were not identical, in circumstances in which “that lack of correspondence (between the counterparts) (is) capable of being remedied by rectification.” (see later).
RECTIFICATION
95 The relevant principles relating to the remedy rectification were restated by certain members of the High Court of Australia in Pukallus v Cameron (1982) 180 CLR 447 as follows:-
“The case raises no issue as to the principles which govern the rectification of a contract. Those principles are not in dispute. There need not be a concluded antecedent contract, but there must be an intention, to both parties at the time of contract, to include in their bargain a term which by mutual mistake is omitted therefrom. So long as there is a continuing common intention of the parties, it may not be necessary to show that the accord found outward expression, notwithstanding the views expressed to the contrary in Joscelyne and Maralinga . The opposing view is argued by Mr Bromley QC in an article in the Law Quarterly Review. It is unnecessary to pursue the distinction in the present case because the representation of the respondent and its acceptance by the appellants plainly establish such an accord.
The second principle governing the rectification of a contract which is material to this case is that which requires the plaintiff to advance, ‘convincing proof’ that the written document does not embody the final intention of the parties. The omitted ingredient must be capable of such proof in care and precise terms. The Court must not assume for itself the task of making the contract for the party” per Wilson J at 452.
“Although the remedy of rectification is no longer held to depend upon proof of an antecedent concluded contract, it is necessary to show a concurrent intention of the parties, existing at the time when the written contract is executed, as to a term which would have been embodied in the contract if the parties had not made a mistake in expressing their intention. Proof of such an intention is necessary to ‘displace the hypothesis arising from the execution of the written instrument, namely, that it is the true agreement of the parties’.”
96 The High Court also dealt with the relevant principles in Maralinga Pty Limited v Major Enterprise Pty Ltd (1973) 128 CLR 336:
“What is of importance is that the purpose of the remedy is to make the instrument conform to the true agreement of the parties where the writing by a common mistake fails to express that agreement accurately. And there has been a firm insistence on the requirement that the mistake as to the writing must be common to the parties and not merely unilateral, except in cases of a special trust? to which I shall later refer.97 It is, of course, not suggested on behalf of the defendant that the defendant is not bound by the terms of the counterpart contract signed by him.
It is now settled that the existence of an antecedent agreement is not essential to the grant of relief by way of rectification. It may be granted in cases in which the instrument sought to be rectified constitutes the only agreement between the parties, but does not reflect their common intention …. But this circumstance does not affect what I have already said”: per Mason J at 350.
98 In this connection, I note that in his affidavit of 17 October 2000, the defendant gave evidence as follows:-
“I have read the special conditions and the annexure to the Sale Contract which I signed. Those special conditions and the annexure accord with my instructions to Anne Gillin. Certainly, they are the basis upon which I believed that I was contracting with the Haywards.”99 The principal issues between the parties relating to the defendant’s entitlement to rectification as alleged in the statement of claim are two in number.
RECTIFICATION ISSUES
100 The first such issue is whether, as at the time of exchange, the plaintiffs had agreed (short of a binding contract) that the purchase price would be apportioned as to $50,000 for livestock and as to $50,000 for plant and equipment and further, that the property in each of these items would not pass until completion of the contract by payment of the balance of the purchase money.
101 The second such issue is whether the plaintiffs, at the time of exchange, had, in effect, agreed or otherwise knew that the payments to be made by them under the licence agreement were not to be deducted from the purchase price.
THE LIVESTOCK AND THE PLANT AND EQUIPMENT
102 There is abundant evidence that the plaintiffs were agreeable to the apportionment of the purchase price as to $50,000 to the livestock and as to a further $50,000 to the plant and equipment.
103 It is also clear in my opinion from the evidence that, at the time of exchange the plaintiffs had, in effect, agreed and were aware that the property in the livestock and in the plant and equipment would not pass to them until completion of the contract. In this connection, as stated earlier, I have found that the defendant discussed this matter with the plaintiffs and they did not disagree or offer any objection. It is true that the plaintiffs have denied the relevant conversations but I have no doubt that they occurred generally, in accordance with the evidence of the defendant. The parties were in relatively regular contact concerning the contract and its terms and had ample opportunity to speak to each other as they were both living on the land, and it is, in my opinion, highly probable that a matter of this importance would have been discussed between them.
104 On the other hand, it is the case that the possibility that the property in the livestock and in the plant and equipment might pass to the plaintiffs upon payment of the deposit was certainly discussed by them with their solicitor, and mentioned in correspondence from their solicitor to the solicitor for the defendant. In that context, I believe that the plaintiffs have persuaded themselves that there had been no change to that position. It is difficult, of course, to remember conversations which took place a long time ago, and I do not suggest for one minute that the evidence of the plaintiffs was deliberately untrue. Rather, I am of the opinion that they have persuaded themselves under the pressure of the litigation and the position in which they find themselves and the confusion to which those matters have given rise, that those conversations did not occur. As stated above, however, I have no hesitation in regarding the evidence of the defendant as more reliable in relation to these matters.
105 The relevant evidence of the defendant included evidence to the effect that he had a conversation with the plaintiffs to the effect that in lieu of an apportionment of $27,900 for the livestock, there would be an apportionment of $50,000 for the livestock and $50,000 for the plant and equipment.
106 This conversation was some time after a conversation to the same effect which the defendant had with his solicitor Ms Gillin in which various reasons for the change were discussed as appears from the following passages in the cross examination of the defendant:-
“Q. Originally it was agreed what?107 In this connection I am also of the opinion that at some time prior to exchange of counterparts and either at about the same time as the conversation just referred to, or at some other time, the defendant informed the plaintiffs that he had been advised, in effect, that the contract should provide for all property including the livestock and the plant and equipment to be transferred to the plaintiffs on completion, as appears from the following questions and answers in the cross examination of the defendant:-
A. The apportionment would be $27,000 for the stock, and then discussing it with Ms Gillin we agreed that that was too low a figure so we made it a more realistic figure to make it …
Q. $50,000?
A. $50,000.
Q. Why do you say it was too low a figure?
A. Well, we’re talking about 132 head of cattle and the going price for good milking cows was over $1,000 so it just wasn’t realistic.
Q. So you said in your affidavit there were tax reasons behind that. Can you explain what you mean by tax reasons?
A. Yes. There is a big difference in the duty on cows and livestock to land purchase, your Honour.
Q. You mean stamp duty?
A. Yes, your Honour. So if you have land high and stock low you pay those fees …
Q. What words did you use when you told them that? What did you say?
A. I said ‘I have changed the contract to make it more realistic for tax purposes from $27,000 to $50,000’.”
“Q. What did you say and what did they say on that subject?
A. It was after I had spoken to Ms Gillin, I then saw them both and they were normally in and around the holiday house as it was very close and we just popped over if we had anything to talk about. I just explained that I had been talking to the solicitor and we agreed that the best option was - safest option for me was just buy the place outright and so everything would transfer to them after they had paid the final settlement …
Q. Did they say no?
A. No, no they didn’t. I just explained that that was the way it was going to be and I don’t know whether they were, they didn’t say no, don’t want that or anything like that, no. Because it was on the solicitor’s advice it was the most common sense thing to do and I explained it like that.
Q. They didn’t raise any objection?
A. No, your Honour …
Q. The earlier evidence you gave … was limited to the $50,000 for the cattle?
A. Livestock, stock and plant …
Q. So you are only talking about the cattle?
A. No, cattle, we talked about the machinery too …
Q. She (Ms Gillin) advised you to put $50,000 for plant and equipment, did she, after a discussion?
A. After a general discussion, your Honour, yes.
Q. And then you say you told the Haywards?
A. The Haywards, yes.”108 It is also probable in my opinion that Mr Moore made the effect of Ms Gillin’s letter dated 6 March 1998 relating to the passing of the property in the plant and equipment known to his clients, notwithstanding that they may not recall that being done. But in any event, I am of the opinion that in relation to what was conveyed expressly and by implication by the letter of 6 March 1998 from Ms Gillin to Mr Moore, the knowledge of Mr Moore is, for present purposes, to be imputed to his clients, the plaintiffs, since the knowledge was received by him in the course of his acting for the plaintiffs under circumstances in which it was his duty to communicate that knowledge to the principal in accordance with the following principle as stated by Mason J in the High Court in Sargent v A.S.L. Developments Limited 1974 131 CLR 634 at 658-699:-
108 That being so, the plaintiffs cannot, in my opinion, in the circumstances of the present case, be heard to say that when they signed the counterpart contract they were not agreeable to it containing special conditions giving effect to the position in this respect taken by the defendant, more especially having regard to the fact that, inter alia, after receipt by Mr Moore of Ms Gillin’s letter of 6 March 1998 and prior to the exchange of contracts, and indeed thereafter, Mr Moore expressed no disagreement and made no complaint on behalf of his clients. Nor, I would add, did the plaintiffs make any complaint after receiving copies of the amended special conditions forwarded to them after the exchange.
“Whether the knowledge of a solicitor is to be attributed to his client arises in the Turnbull’s case. As against a third party the law imputes to a principal knowledge gained by his agent in the course of, and which is material to, a transaction in which the agent is employed on behalf of the principal, under such circumstances that it is the duty of the agent to communicate it to the principal. In the words of James L.J. in Vane v Vane , ‘the actual knowledge of the agent through whom an estate is acquired is … equivalent to the actual personal knowledge of the principal’. In my view this principle applies to information acquired by a solicitor in the course of acting for his client in a conveyancing matter ( Dixon v Winch ). The solicitor is to be regarded as the alter-ego of the client and the rights of the other party to the contract cannot be made to depend upon the diligence or lack of diligence exhibited by the solicitor in his dealings with his client.”
109 In this connection the following appears in the cross examination of Mr Hayward:-
“(Exhibit 7 handed to witness)110 The cross examination of Mrs Hayward included the following passages:-
Q. Have a look - who signed that front page?
HIS HONOUR: I think you will find they are the same.
A. Mr Aitken signed the front page.
Q. The question is, did you receive that document signed by Mr Aitken from Mr Moore or Mr Garland, or don’t you know?
A. From Mr Garland. This one was sent to us from Mr Garland but I do believe in my own heart there is another one that was sent …
Q. That (the first one) was sent by Mr Garland?
A. That was sent by Mr Garland.
Q. To you?
A. To us.
Q. How do you know that?
A. ‘From William Garland to Helen Hayward dated 14/8/98 3.01 pm pages 1 to 10” your Honour …
Q. I think we were discussing yesterday how, after you attended Ann Gillin’s office on 12 March 1998 you received two facsimiles, one from Evans & Englert (Mr Moore) and one from Bill Garland?
A. Yes.
Q. (Exhibit 7 and 8 given to witness)
A. Yes your Honour.
MENADUE: Q. When you received those documents you read them through I take it?
A. Yes.
Q. I assumed they were a matter of considerable interest to you, that’s correct, isn’t it?
A. Yes.
Q. And it is quite apparent from those documents, isn’t it, that you did not purchase livestock or plant and equipment immediately upon exchange of the contracts?
A. In here hasn’t claimed that, yes.
“Q. So, is my understanding of the evidence this, within a month or so after attending Ann Gillin’s office to exchange contracts you received a facsimile from Lindsay Moore, which is similar to the facsimile which you also received on 14 August 1998 from Mr Garland. Is that correct?111 I also note that in the cross-examination of Helen Hayward the following appears:-
A. Yes.
Q. And you have a copy of the facsimile from Mr Garland in front of you there?
A. Yes.
Q. I put it to you once again that the deposit which is shown on the front of that document (exhibit 7) is $166,000 isn’t it?
A. Yes.
Q. And there is no mention anywhere in that document of you purchasing plant and equipment or livestock outright?
A. As I have said before, I asked for it to be put in. We weren’t taken through the document before we signed it.”
“Q. At paragraph 1 of that affidavit you said, didn’t you ‘on or about 4 March 1998 I requested a number of changes to the draft contract which my solicitor at the time, Lindsay Moore, had discussed with me’?112 I am satisfied on the evidence that at the time of exchange of counterpart contracts the plaintiffs were aware that the licence fees to be paid pursuant to the licence agreement were not to be deducted from the purchase price.
A. I asked him if he would put into the contract the livestock for $50,000.00, the machinery for $50,000.00 and then the balance as a deposit on the land.”
LICENCE FEES NOT TO BE DEDUCTED FROM PURCHASE PRICE
113 The letter dated 4 March 1998 to the plaintiffs from their solicitor Mr Moore made it clear that the payments pursuant to the licence agreement were not to be deducted from the purchase price. The relevant paragraph in this letter is as follows:-
“The Licence Agreement will allow you to take immediate possession of the property at an annual licence fee of $53,370.00 payable in advance by 12 monthly payments of $4447.50. These payments are in effect a rental of the property and they do not come off the purchase price .”
114 During cross examination Mrs Hayward was shown a copy of this letter and was asked the following questions and gave the following answers:-
“Q. (shown copy of letter dated 4 March 1998) On the first page of that letter Mr Moore refers to the licence agreement, doesn’t he, in the last paragraph?
A. Yes.
Q. And he says,
‘The licence agreement will allow you to take immediate possession of the property at an annual licence fee of $53,370.00 payable in advance by 12 monthly payments of $4,447.50’.A. Yes.
He says that, doesn’t he?
Q. And then he says, ‘These payments are in effect, a rental on the property and they do not come off the purchase price’?
A. Yes, that’s clear to me now, but it wasn’t then.”
SPECIAL CONDITION 7115 So far as concerns Special Condition 7 of the counterpart contract signed by the plaintiffs, the position is that there is no equivalent in the counterpart contract signed by the defendant and the evidence of Ms Gillin was that this clause was deleted because it was redundant after provision had been made for the apportionment of $50,000 for each of the stock on the one hand and the plant and equipment on the other hand. It does not appear to have been submitted on the part of the plaintiffs that this difference between the two counterparts disentitled the defendant to relief by way of rectification but in any event I find that the difference was immaterial, and not such as to deprive the defendant of his entitlement to that remedy. There was no evidence that this special condition would have any operative effect in the relevant transaction and there is no evidence that it was material to any of the parties.
CONTRACTS REVIEW ACT
OTHER TERMS
116 It was also submitted on behalf of the plaintiffs, in effect, that the defendant had not established the agreement of the plaintiffs to all the other many terms of the counterpart contract. In my opinion, however, the position is that the plaintiffs, they having signed the counterpart contract in fact signed by them after a telephone call to their solicitor, Mr Moore, must be taken, relevantly, to be bound by all the contents of the document which they signed: cf L’Estrange v Graucob (1934) 2 KB 394.
117 In such circumstances, in my opinion, it is necessary for a plaintiff seeking rectification of the document so signed to prove only that the parties had agreed, (short of entering into a binding contract) or had a continuing common intention with the other party as at the date of exchange, as to the document signed by them including terms to the effect of the rectification sought by the plaintiff rather than to the effect that the corresponding terms actually signed by them. In my opinion, as stated above, and for the reasons stated above, the defendant in the present case has discharged that onus, and is entitled to have the counterpart contract signed by the plaintiff rectified in the manner claimed.
118 In my opinion, the contract between the parties was not unjust in the circumstances in which it was made within the meaning of the Contracts Review Act and the plaintiffs are not entitled to relief under that Act.
119 In my opinion, in this connection, a principal consideration is that there is no evidence to suggest that the purchase price was other than a fair market price for the property being purchased. There is no suggestion in other words that the property was purchased at a price in excess of market value. Nor did the plaintiffs call any valuation evidence to the contrary.
120 Further, in my opinion, there was no material inequality at the time the contract was made between the position of the plaintiffs and the position of the defendant, and, in particular, there was no particular reason why the plaintiffs had to buy the defendant’s property rather than some other property. The plaintiffs looked at about eleven properties in late 1997 before deciding upon the purchase of the subject property. Nor, in my opinion, was the defendant in any position to put pressure on the plaintiffs to buy his property. Further, in my opinion, it is the case that the plaintiffs were represented by a solicitor Mr Moore, and there is no reason why it was not reasonably practicable for the plaintiffs to negotiate for alterations of or to reject any of the provisions of the contract.
121 I note that in the letter dated 4 March 1998 from Mr Moore to the plaintiffs, Mr Moore gave the plaintiffs full and comprehensive advice about their position prior to their signing the counterpart contract, including a warning that they might be under capitalized.
122 This letter of 4 March 1998 from Mr Moore to the plaintiffs also included the following passages:-
“5. The above arrangements commit you to complete the overall purchase within 12 months notwithstanding that you may not have sold the Lawson and Parkes properties. As indicated this is of serious concern to us as no assurance can be given that either or both of these properties can be sold within 12 months. Therefore your financial planning should make allowance for this event because if you are unable to complete the purchase of the property in 12 months you will be liable to forfeit your deposit of $66,000. In addition you may be sued for damages resulting from any loss to the Vendors.123 In these circumstances, inter alia, the particularization in the further amended statement of claim that the plaintiffs “failed to receive independent expert advice in respect of the contract” must be rejected. Moreover the plaintiffs had their own financial broker, Mr Garland, to advise them about how to finance the purchase of the property.
6. What assurance do you have of finance at the end of the 12 months? You will be required to find a further $614,000.00.7. What are the anticipated proceeds of sale from the Lawson and Parkes properties? Remember no assurance can be given that these proceeds will become available within 12 months.
You should therefore ensure that sufficient finance is available and secured to cover the full balance of purchase money when required, namely $614,000.00.
8. Do you have precise details of the terms and conditions of the borrowing of the amount needed to complete the purchase, at this stage $614,000.00? You will be required to pay in addition … fees and charges of securing this loan. You should be fully aware of the rate of interest that you will be committed, whether it is for a fixed or variable term and whether there are any other special terms and conditions attaching to the loan …
We set these out for you so that you are not taken by surprise at any unplanned liability. For example, we note that the Vendor’s solicitors have charged $806.80 including disbursements, for the preparation of the Licence Agreement and under that Agreement you are liable to pay those charges.
9. Stamp duty on the contract for the sale of the property is $26,084. This must be paid within two (2) months of exchange of contracts, otherwise a fine of twenty five percent is payable over the next month, and thereafter the fine increases to one hundred percent of the stamp duty. Legal costs of the purchase of the assets will be approximately $2,000 and out of pocket expenses will be approximately $250.00. These expenses should also be taken into account together with any adjustment of rates, insurance premiums and of course there are the other normal outgoings relating to the conduct of the dairy business.
10. We have no experience in dealing with milk quotas, and we do not know how they are valued, nor do we have any knowledge as to income details arising out of such quotas. You should therefore confer closely with your accountant to ascertain whether, in his opinion the property is capable of deriving sufficient income for you to meet your commitments, having regard to the immediate outlays you will be asked to carry.”
124 Further, the particularization in the further amended statement of claim that the plaintiffs had “little or no experience of running a dairy farm” cannot sustained in the light of the letter dated 29 January 1998 from Mr Garland on behalf of the plaintiffs to Provident Capital Australia Limited which contained the following passages, inter alia:-
“ APPLICANT SPECIFIC RURAL EXPERIENCE125 Nor in my opinion is it established that the contract imposed conditions on the plaintiffs that were unreasonably difficult to comply with. Nor in my opinion was there any material difference in the relative economic circumstance, educational background and literacy of the plaintiffs and the defendant, and between the plaintiffs and the defendant.
The family will operate the property with the father having some ( 20 ) years dairy experience. Max Hayward (father) was raised on the family 100 acre property “Bybarra” near Wauchope and milked 50 cows per day by hand. Also he assisted on a nearby 450 acre property “Trotteros” with 80 milkers for over (3) years. The family currently operate a 13 acre hobby farm in Parkes NSW which has 11 cows including a calf. Max is about to retire from the Presbyterian Ministry . (sic) During his holiday periods from the church he has continued to manage the dairy and cattle properties for rural parishes (sic) and friends while they take a break. He spends up to (six) weeks every year on the properties. Max will be supported by his (two) sons working the property. …
We have spoken with Max Hayward this morning and he has indicated confidence in his ability and experience to operate and run the dairy profitable (sic). ”
126 To the extent that the plaintiffs may have invested their life savings and invested superannuation moneys in the purchase, that was a matter of their own free choice, as was their failure to consult a financial expert as to the viability of the dairy farm before entering into the contract.
127 Further, in my opinion, the plaintiffs were not pressured by the defendant to enter into the contract upon the defendant’s representation that there were overseas buyers including a buyer from Singapore interested in purchasing the property and to the extent that this was mentioned by the defendant, it was in my opinion, the truth.
128 Nor, in my opinion, was there any unfairness in relation to the signing of the licence agreement and the signing of the contract in both of which cases, of course, the plaintiffs were legally represented. Moreover to the extent that it was or became unreasonably difficult for the plaintiffs to comply with the requirements imposed by the contract for the payment of $780,000 to the defendant by 12 March 1999, that was entirely the responsibility of the plaintiffs undertaken with appropriate legal advice.
129 Accordingly, as stated above, in my opinion the plaintiffs claim for relief under the Contracts Review Act must be dismissed because, in my opinion, the evidence does not establish that the contract was unjust in the circumstances in which it was made.
RESCISSION BY THE DEFENDANT OF THE CONTRACT
130 In my opinion the Notice to Complete served on behalf of the defendant was valid in form and sufficient as to time and in accordance with special condition 3 of the contract. Indeed, it was not submitted to the contrary on behalf of the plaintiffs. I also find that the defendant was entitled to give notice of termination of the licence agreement and to demand possession of the property pursuant to the contract and the licence agreement when he did so. Indeed, once again, it was not submitted on behalf of the plaintiffs to the contrary.
131 It follows in my opinion that the contract having been validly terminated by the defendant that the defendant is entitled to damages for the breach thereof by the plaintiffs.
DAMAGES
132 In circumstances such as the present the defendant is entitled to an award of damages in an amount which will put him in the same position as he would have been if the contract had been performed. The relevant principles have been expressed as follows:-
“The general rule at common law, as stated by Parke B in Robinson v Harman , is ‘that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.’ This statement of principle has been accepted and applied in Australia.133 In accordance with these principles the plaintiff is entitled by way of damages to the difference between the contract price and the value of the subject matter of the contract as at the date of rescission. The contract price was $785,000.00 and Mr Potter has valued the property at $405,000.00 as at the date of termination and this valuation has not been disputed on behalf of the plaintiffs. Accordingly, in my opinion, the defendant is entitled to an award of damages against the plaintiff in the sum of $380,000.00. The defendant is of course, also entitled to possession of the property, the subject of the sale.
The award of damages for breach of contract protects a plaintiff’s expectation of receiving the defendant’s performance. That expectation arises out of or is created by the contract”: per Mason C.J. and Dawson J in The Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 at 80.
“The measure of damages prescribed by Robinson v Harman ensures that the parties to the contract are kept to the benefits and the burdens of the contract they have made: the plaintiff recovers no more than the nett benefit he would have received under the contract; the defendant acquires no right to profit by his breach. The measure of damages for breach of contract is governed by the contract itself. As the contract determines the measure of damages for losses caused by its breach, there is a difference between the measure of damages in contract and the measure of damages in tort, although the purpose of damages in both is the award of compensation. The general principle on which compensatory damages are assessed was stated by Taylor and Owen JJ in Butler v Egg Pulp Marketing Board :
‘That principle is that the injured party should receive compensation in a sum which, so far as money can do so, will put him the same position as he would have been in if the contract had been performed or the tort had not been committed .’ (emphasis added)”: per Brennan J in The Commonwealth v Amman Aviation Pty Limited ibid at 99.”
ORDER OF THE COURT
134 The order of the Court is, accordingly, that the statement of claim of the plaintiffs is dismissed, that the counterpart contract signed by the plaintiffs be rectified so as to be identical with the counterpart contract signed by the defendant, that it be declared that a binding contract did come into existence between the plaintiffs and the defendant, a declaration that the contract was validly rescinded by the defendant, an order that the plaintiffs pay to the defendant damages in the sum of $380,000.00, an order adjudging the defendant entitled to possession of the property with a writ for possession to issue after the expiration of 42 days, and an order that the plaintiffs’ pay the costs of the defendant of the proceedings including the cross claim.
135 I direct the defendant to bring in short minutes of order, after discussion with the plaintiffs, giving effect to the foregoing reasons for judgment.
Last Modified: 12/01/2000
Actions
Download as PDF
Download as Word Document
Most Recent Citation
Sullivan & Sullivan [2011] FamCA 752
Cases Cited
3
Statutory Material Cited
1
Sindel v Georgiou
[1984] HCA 58
Sindel v Georgiou
[1984] HCA 58
Maralinga Pty Ltd v Major Enterprises Pty Ltd
[1973] HCA 23