Hemat Shir and Sayed Developments Pty Ltd v Haseeb
[2014] WASC 485
•19 DECEMBER 2014
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: HEMAT SHIR & SAYED DEVELOPMENTS PTY LTD -v- HASEEB [2014] WASC 485
CORAM: BEECH J
HEARD: 1, 2 & 4 DECEMBER 2014
DELIVERED : 19 DECEMBER 2014
FILE NO/S: CIV 1613 of 2012
BETWEEN: HEMAT SHIR & SAYED DEVELOPMENTS PTY LTD
Plaintiff
AND
SAID AKBAR HASEEB
Defendant
Catchwords:
Contract - Sale of land - Whether parties made written or oral agreement for sale of land - Whether oral agreement conditional upon execution of a written contract - Turns on own facts
Legislation:
Nil
Result:
Plaintiff's claim for possession dismissed
Defendant's counterclaim for specific performance of 2009 agreement upheld
Category: B
Representation:
Counsel:
Plaintiff: Mr P G McGowan
Defendant: Mr C S Williams
Solicitors:
Plaintiff: Lewis Blyth & Hooper
Defendant: Solomon Brothers
Case(s) referred to in judgment(s):
Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582
Briginshaw v Briginshaw (1938) 60 CLR 336
County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193
Fazio v Fazio [2012] WASCA 72
BEECH J:
Introduction
The plaintiff (HSSD) owns land at 39 Totara Avenue, Canning Vale (the Property). The defendant, Mr Saied Haseeb, has paid for a house to be built on the Property, and lives there with his family. HSSD seeks an order for possession of the Property. Mr Haseeb claims that he is entitled to enforce, as purchaser, a contract made in 2004, alternatively a contract made in 2009. Mr Haseeb has some further alternative claims for compensation for his expenditure in having the house built.
For the reasons that follow, I do not accept that any agreement was made in 2004 and I find that in 2009 the parties made an agreement for HSSD to sell the Property to Mr Haseeb for $270,000.
The remainder of these reasons deal with the following topics:
(2)Background facts.
(3)The issues.
(4)2004 agreement?
(5)Events in 2009 and thereafter.
(6)The 2009 agreement and its terms.
(7)Mr Haseeb's other claims.
(8)Conclusion.
Uncontroversial background facts
The following facts are not controversial.
HSSD was incorporated in August 2003. From its inception, it had three shareholders: Mr Ghulam Hemat, Mr Hemat's nephew, Mr Shir, and Mr Anwar Sayed.
Mr Haseeb is Mr Sayed's younger brother.
By 2003, HSSD had identified three properties for acquisition and development. Two of these were in Western Australia, in Canning Vale and Wattle Grove. The third was in Queensland.
Mr Hemat was and is resident in Sydney.
Mr Hemat provided HSSD with funds to purchase the properties and was to provide funds to enable each development project to occur. Mr Sayed's role was to do the work necessary for the subdivisions of each property.
The Canning Vale property comprises land located on and around Totara Avenue, Canning Vale.
The issues
Mr Haseeb claims that on or about 30 January 2004, he agreed to purchase, and HSSD agreed to sell, two lots of land to be created from the subdivision by HSSD of land located in Flynn Street, Canning Vale.[1] The contract is said to be partly in writing, partly oral, and partly to be inferred. Insofar as it is in writing, it is constituted by a deed dated 30 January 2004. Insofar as it is oral, it is constituted by conversations between Mr Sayed on behalf of HSSD, and Mr Haseeb, that occurred in January 2004. The inferred part of the contract is said to arise from subsequent conduct.
[1] Defence and counterclaim [6].
In particular, on 5 March 2004, Mr Sayed, on behalf of Mr Haseeb, paid HSSD $172,000 which, he says, was in performance of Mr Haseeb's obligation to pay for the land the subject of the 2004 contract.
HSSD denies that any contract was formed in 2004. Further, HSSD says that the $172,000 paid was a repayment of a loan to Mr Sayed by Mr Hemat.
Alternatively, Mr Haseeb claims that between July and November 2009 HSSD agreed to sell the Property to the defendant for a purchase price of $270,000.[2] Mr Haseeb says that contract was partly in writing, partly oral and partly to be inferred. Insofar as it is in writing, it is constituted by a transfer of land instrument executed by the parties. Insofar as it is oral, it is said to be constituted by conversations between Mr Hemat, on behalf of HSSD, and Mr Sayed, on behalf of Mr Haseeb. Insofar as it is inferred, it is inferred from the following facts:
(a)in May 2009, Mr Haseeb took possession of the Property;
(b)on 12 June 2009, Mr Haseeb entered an agreement with BGC Residential Pty Ltd for BGC to construct a residence;
(c)HSSD was aware, from about July or August 2009, that Mr Haseeb was causing a residence to be constructed;
(d)in the period July to October 2009, HSSD as transferor and Mr Haseeb as transferee executed a transfer of land form for the conveyance of title of the Property from HSSD to Mr Haseeb;
(e)in or about July to November 2009, Cobra Conveyancing acting as settlement agent for both parties prepared the transfer, lodged it with the Office of State Revenue, notified Mr Haseeb of an assessment and prepared another ancillary document.
[2] Defence and counterclaim [15], [16].
HSSD admits that an oral agreement was reached in about mid‑2009 between HSSD and Mr Sayed on behalf of Mr Haseeb to sell the Property for the sum of $270,000.[3] HSSD says it was a term of that agreement that the transfer was to be held in escrow pending preparation of a formal written agreement and payment of the full purchase price.[4]
[3] Reply [5].
[4] Reply [6].
Thus whether the parties made an oral agreement in mid‑2009 for HSSD to sell the Property to Mr Haseeb for $270,000 is not in issue on the pleadings. Rather, what is in issue is the terms of that agreement.
Mr Haseeb alleges, and HSSD denies, that HSSD knew and consented to the taking of possession of the Property by Mr Haseeb.
In the alternative to his contract claims, Mr Haseeb claims that HSSD is estopped from denying that it was contractually obliged to convey title to the Property to him.
In the further alternative, Mr Haseeb pleads that HSSD has been unjustly enriched by receiving the benefit of the construction of a residence on the Property at his expense. HSSD admits that Mr Haseeb has incurred costs in constructing the residence and is entitled to just and reasonable compensation in relation to that.[5]
[5] Reply [10].
The principal issues may be summarised as follows:
(1)Whether the parties entered into a contract on or about 30 January 2004 for the sale of two lots in the Canning Vale development.
(2)The terms upon which the parties agreed, in or about mid‑2009, that HSSD would sell the Property to Mr Haseeb for $270,000.
(3)If no agreement was reached in 2004 and if any agreement in 2009 was conditional on preparation of a contract, has HSSD granted Mr Haseeb a tenancy at will or a licence to occupy the Property pending conveyance?
(4)Is HSSD estopped from denying that it is contractually obliged to convey title to the Property to Mr Haseeb?
(5)What costs did Mr Haseeb incur in constructing the residence on the Property, and what is the amount of reasonable compensation that HSSD should pay to Mr Haseeb?
There are major factual conflicts and credibility issues between the parties, especially in relation to the question of whether an agreement was made in 2004. I turn to that question.
2004 agreement?
It is convenient to outline the two competing cases. The evidence of the two sets of witnesses paints very different pictures of the events.
4.1 The evidence relied on by Mr Haseeb
Mr Haseeb relies on the evidence of two witnesses: himself and Mr Sayed.
In 2003, Mr Haseeb owned property at Wharf Street, Queens Park. He decided to sell the property as soon as a separate title for his strata lot in the property was issued. That occurred in around November 2003.
In November 2003, he received a settlement sum of $191,690.50 from the sale of that property.[6]
[6] Exhibit A3; exhibit A4.
Both Mr Haseeb and Mr Sayed say that around that time they spoke about the fact that HSSD was doing a development in Canning Vale. In the course of that conversation, Mr Sayed said that with the proceeds of sale of the Wharf Street property Mr Haseeb could purchase a smaller lot upon which he could build a house to live and a larger lot for later subdivision. A price of $172,000 for both lots was agreed.[7]
[7] Exhibit 2 [7] ‑ [9]; exhibit 1 [11] ‑ [14].
Mr Haseeb says that his brother told him that he should deposit the proceeds of sale of the Wharf Street property into his brother's bank account and his brother would pay the sum of $172,000 to HSSD from that.[8] According to Mr Haseeb, the balance of the money would be for Mr Haseeb to use whenever he wanted.[9]
[8] Exhibit 1 [15].
[9] Exhibit 1 [15].
On 14 November 2003, Mr Haseeb deposited $191,690.50 into Mr Sayed's bank account.[10]
[10] Exhibit A2.
Mr Sayed says that within a few weeks of his conversation with his brother, he had a telephone conversation with Mr Hemat, with Mr Haseeb present. The conversation was conducted on speaker phone. Mr Sayed says that he explained the proposed sale and Mr Hemat said that he agreed with it.[11] Mr Haseeb does not give evidence of this. Mr Hemat denies this conversation.[12]
[11] Exhibit 2 [10].
[12] Exhibit B2 [18].
Mr Sayed says that in the following months he prepared a document to record the agreement between HSSD and Mr Haseeb.[13] The document is entitled deed of agreement, and is dated 30 January 2004, signed by the two brothers, with their sister, Ms Masuma Lateef, as the witness. Ms Lateef is not a witness in the case.
[13] Exhibit A5.
Whether this document was created and signed in 2004, or much later, after 2009, after the parties were in dispute, was a central factual issue at trial.
Both brothers say that around this time Mr Haseeb asked Mr Sayed to pay $172,000 to HSSD from the deposit of $191,690.50 already made.[14]
[14] Exhibit 2 [15]; exhibit 1 [20].
On 5 March 2004, the sum of $172,000 was debited from Mr Sayed's account and credited to HSSD's account.[15]
[15] Exhibit A6, exhibit A7.
Mr Haseeb says that he was prepared to pay the sum of $172,000 in advance of receiving title because of his brother's involvement with HSSD.[16]
[16] Exhibit 1 [23].
Mr Haseeb and Mr Sayed say that they had a discussion in which Mr Sayed asked Mr Haseeb to select the smaller of his lots; Mr Haseeb selected lot 18.[17] Mr Haseeb says this was around the time of signing the agreement; Mr Sayed says it was during 2005.
[17] Exhibit 2 [19]; exhibit 1 [25].
Mr Sayed says that shortly after this he spoke to Mr Hemat and told him that lot 18 had been picked, and Mr Hemat said that that was okay.[18] He consequently instructed that the brochure for the development should show lot 18 as sold.[19] Mr Hemat denies these conversations and says that lot 18 was marked as sold in the brochure because Mr Sayed said that having it marked in that way would make the development look more attractive.[20]
[18] Exhibit 2 [20].
[19] Exhibit 2 [21] ‑ [22].
[20] Exhibit B2 [18], [23].
Mr Sayed and Mr Haseeb say that at a later time Mr Hemat required Mr Haseeb to change his choice of smaller lot, leading to the choice of lot 25.[21] Mr Hemat denies these conversations.[22]
4.2 HSSD's case
[21] Exhibit 2 [25] ‑ [27]; exhibit 1 [26].
[22] Exhibit B2 [18] ‑ [20].
HSSD says that no agreement was entered into in 2003 or 2004. Further, HSSD says that the payment of $172,000 was a repayment of a loan earlier made.
Mr Hemat's evidence is as follows:[23]
(a)in September 2001, he received a telephone call from Mr Sayed. Mr Hemat was in Germany and Mr Sayed in Australia;
(b)Mr Sayed said that he urgently needed AUD $200,000 to be lent to him so he could undertake a development;
(c)Mr Hemat agreed to lend him that money by a transfer of funds on 21 September 2001;
(d)Mr Sayed said he needed AUD $200,000 for two years;
(e)the conversation was in Dari;
(f)a transfer was made of an amount of approximately USD $100,000;
(g)Mr Hemat says that he wrote a letter of 21 September 2001 in Dari.[24] His witness statement translates the letter.
[23] Exhibit B1 [111] ‑ [113], [115] ‑ [120].
[24] Exhibit A142.
There was no challenge to Mr Hemat's evidence that he made the loan in 2001. Mr Sayed agreed that the loan had been made.[25]
[25] ts 253.
Mr Hemat says that in September 2003 he asked for repayment of the loan. Mr Hemat's account of the conversation about repayment is as follows:
(a)Mr Sayed said that he would be ready to repay the loan a few months later;
(b)Mr Sayed asked where Mr Hemat wanted the money to be repaid; and
(c)Mr Hemat said that the money should be paid into HSSD's account.[26]
[26] Exhibit B1 [121] ‑ [126].
Mr Sayed's witness statement does not deal with this question. In cross‑examination he denied this conversation.[27]
[27] ts 254 ‑ 255.
Mr Michele Mucciarone is the accountant for HSSD. Mr Sayed introduced him to HSSD, and his contact with HSSD has been through Mr Sayed, at least until April 2008.[28] A loan account was created in HSSD's name for Mr Hemat. That arose because Mr Sayed told Mr Mucciarone that Mr Hemat would finance the operations of the company.[29]
[28] Exhibit E [10].
[29] Exhibit E [21] ‑ [22].
On 17 February 2005, Mr Mucciarone spoke to Mr Sayed about a deposit of $172,000 to the company's HSBC account on 5 March 2004. Mr Mucciarone refers to his file note.[30] The file note records that he queried the deposit of $172,000 and that he was told to allocate it to Mr Hemat's loan account with the company. Based on the telephone call, he prepared the accounts for 30 June 2004 and thereafter so as to allocate the $172,000 to Mr Hemat's loan account. That is reflected in the ledger entries report.[31]
[30] Exhibit A7A.
[31] Exhibit A137, 287.
HSSD also relies on evidence of a discussion in July/August 2007 concerning the deposit in 2001 of $203,000 and the payment in March 2004 of $172,000.[32] In the course of this discussion the deposit was referred to as a loan by Mr Hemat to Mr Sayed, and the payment of $172,000 was referred to as a repayment of that loan.
[32] Exhibit D [28] ‑ [33], [36] ‑ [37]; exhibit B1 [132] ‑ [136].
At trial, HSSD adduced evidence of discussions in 2010 about the loan. Mr Haseeb objected on grounds that the discussions were the subject of without prejudice privilege. Ultimately HSSD conceded that that was so, and withdrew its reliance on that evidence.[33]
4.3 Was the 2004 agreement made?
[33] ts 300 (thus excluding exhibit B1 [141] ‑ [154], [156], exhibit B2 [13] ‑ [15], [30], [31], exhibit C1, exhibit C2, and, consequently, exhibit 2 [51] ‑ [58].
The onus proving the 2004 agreement lies on Mr Haseeb.
Mr Haseeb's claim that the 2004 agreement was made relies heavily on the deed of agreement[34] said by Mr Haseeb and Mr Sayed to have been made on 30 January 2004 and signed by Mr Sayed on behalf of HSSD and by Mr Haseeb as buyer. I am satisfied that that document was not signed in 2004, or at any time prior to December 2009. It was created after that, when the dispute with Mr Hemat was on foot. Further, I am satisfied that the evidence of Mr Haseeb and Mr Sayed about this deed is, to their knowledge, false. I am aware of the serious nature of such findings, and do not make them lightly.[35] In my view, the following eight circumstances sustain this conclusion. Those same circumstances also lead me to conclude that the alleged 2004 agreement was not made.
[34] Exhibit A5.
[35] See Briginshaw v Briginshaw (1938) 60 CLR 336, 362 ‑ 363 (Dixon J).
First, in December 2009 Mr Haseeb made a statutory declaration in support of the caveat he lodged against lot 11 and lot 25. The statutory declaration in support of the caveats stated:
In or about mid to late November 2003 by verbal agreement between myself, [Sayed] and [Hemat], I agreed to acquire from the registered proprietor two lots in what would become the subdivision … The terms of this agreement were as follows:
(a)one lot was to be 1,500 square metres to 2,000;
(b)one lot was to be 300 square metres to 450 square metres in size;
(c)the purchase price would be $200,000, $180,000 to be paid in cash and $20,000 to be paid by a deduction of this amount from [Sayed's] profit entitlement in [HSSD];
(d)title to the smaller lot would transfer to myself promptly following the issue of its certificate of title; and
(e)title to the larger lot would transfer to myself promptly following the deduction of the $20,000 from [Sayed's] profit entitlement.[36]
[36] Exhibit A133, 250.
The statutory declaration made no reference to the deed, and asserted that a 'verbal agreement' had been made. The statutory declaration was prepared in consultation with his solicitors. Mr Haseeb knew that the statutory declaration was an important legal document. He knew it had to be true. He read it before he signed it, to ensure it was true and correct.[37]
[37] ts 178.
Mr Haseeb did not suggest, in his evidence, that by 2009 he had forgotten about the existence of the deed. He said he considered the deed an important document, being the basis for saying he had a contract to acquire lots in the Canning Vale subdivision.[38] When invited, Mr Haseeb gave no explanation for the fact that his statutory declaration did not refer to the deed.[39] In my view, it is very unlikely that, had the deed existed, Mr Haseeb would have overlooked it entirely, and not mentioned it to his lawyers or in his statutory declaration.
[38] ts 176.
[39] ts 183.
Moreover, on his own evidence Mr Sayed was very involved in the preparation of the statutory declaration. That is apparent, for example, from Mr Sayed's repeated statements that in preparing the statutory declaration 'we were guessing'[40] or 'I was guessing'.[41] Mr Sayed's only explanation for the fact that there is no reference in the statutory declaration to the 2004 deed was that the caveat and declaration had to be prepared urgently, and he did not have the documents in his possession.[42] That is not a satisfactory explanation for the fact that the statutory declaration refers only to a 'verbal agreement' and makes no mention of the 2004 deed.
[40] ts 229.
[41] ts 229 ‑ 230.
[42] ts 228 ‑ 230.
Thus both parties to the alleged 2004 deed were involved in the preparation of the statutory declaration, and did not refer, at all, to the 2004 deed. To my mind, that is a powerful indicator that it did not exist when the statutory declaration was prepared.
Secondly, the terms of the statutory declaration are inconsistent, in a number of significant respects, with what is asserted in the deed and with the evidence of Mr Haseeb and Mr Sayed about the 2004 agreement. The deed asserts a 'verbal agreement'. It asserts that that agreement was made between all three men, not only between Mr Haseeb and Mr Sayed. Further, there are material differences in what is said to be the agreed price, the manner of payment, and the size of the lots to be conveyed to Mr Haseeb.[43]
[43] ts 180 ‑ 182.
Thirdly, the deed was not given to Cobra Conveyancing for stamping or otherwise, or mentioned to them at all.
Fourthly, the transfer document stated that the consideration was 'by verbal agreement'. Mr Haseeb gave no satisfactory explanation for this, saying that 'it was both the verbal and also a deed. The same thing.'[44]
[44] ts 201.
Fifthly, in August 2007 Mr Sayed gave written instructions to a real estate agent by signing a selling agency agreement to sell the lots in the Canning Vale development, with a stipulated asking price for each lot.[45] The exception was lot 23, which was noted as having been sold. Prices were stipulated for lots 18 and 25. That is inconsistent with Mr Haseeb's evidence that by 2005 lot 18 had been identified as the lot to be sold to Mr Haseeb under the alleged 2004 agreement.
[45] Exhibit A13.
I do not accept Mr Sayed's attempts during cross‑examination to avoid responsibility for the selling agreement that he had signed and initialled. I reject his evidence[46] that it was prepared by the agent, who erroneously included lot 18, and that Mr Sayed just signed what was put in front of him. The asking price for the properties to be sold by a company in which he had a one‑third share was a matter of vital interest to Mr Sayed. I find that the selling agency agreement and its annexure A reflect the true position: apart from lot 23, all lots were for sale, to be listed at the price shown in annexure A.
[46] ts 238 ‑ 241.
Sixthly, as I will explain in section 7, I find that in 2009 Mr Sayed and Mr Hemat discussed and agreed that HSSD would sell lot 25 to Mr Haseeb for $270,000. Indeed, it is common ground that discussion to that effect took place.[47] In my view, the fact that that discussion occurred tells against there having been the earlier alleged agreement, and against the existence of the alleged 2004 deed. In closing submissions, counsel for Mr Haseeb invited a conclusion that the 2009 agreement may have reflected a compromise of a dispute about the 2004 agreement.[48] Nothing in the evidence provides a sufficient foundation for such a conclusion.
[47] Defendant's notes for closing submissions [29]; ts 162, 277.
[48] ts 277 ‑ 278.
Seventhly, in late 2009 and through to May 2010, Mr Hemat, through his solicitors, asserted that Mr Haseeb had no right to build on the Property and no interest in the Property. At no stage did Mr Haseeb respond, by reference to the alleged deed of agreement, or at all. Had the deed of agreement existed, I think Mr Haseeb would have referred to it. In the circumstances, the fact that neither Mr Haseeb nor Mr Sayed made any reference to the deed of agreement before 2012 tells strongly against the deed having existed in 2004.
Eighthly, Mr Hemat was not a party to the alleged 2004 deed. It was allegedly made between the two brothers. There is no evidence that a copy of the deed was sent to Mr Hemat. In my view, it is unlikely that the deed would have been signed between the brothers without involving Mr Hemat, or at least providing Mr Hemat with a copy. Given the relationships, there would be little or no purpose to be served by signing a deed only between the brothers without at least providing a copy to Mr Hemat.
Further, I find that the sum of $172,000 paid by Mr Sayed to Mr Hemat in March 2004 was paid as a repayment of the loan that Mr Hemat had made to Mr Sayed in 2001. I accept Mr Hemat's evidence in this respect. That evidence is supported by the evidence of Mr Mucciarone which I have outlined in section 5.2, which I accept. Mr Mucciarone's evidence was challenged on the ground that he had acted irregularly in recording a transfer of Mr Sayed's shares without any document signed by Mr Sayed, and without any instructions to do so from Mr Sayed. To my mind, that does not undermine the reliability of Mr Mucciarone's evidence on the treatment of the payment of $172,000. I am satisfied of the accuracy of Mr Mucciarone's contemporaneous file note.
I reject Mr Sayed's evidence, given in cross‑examination, that he told Mr Mucciarone that the $172,000 was a payment for two lots to be sold by HSSD to Mr Haseeb, and that Mr Mucciarone advised that the deposit should go into Mr Hemat's loan account.[49] That was not mentioned in Mr Sayed's witness statement, notwithstanding that he had seen Mr Mucciarone's witness statement before preparing his.[50] Nothing to this effect was put to Mr Mucciarone in cross‑examination. In my view, it is unlikely that Mr Mucciarone would have given such obviously wrong advice. There is no apparent basis for treating monies received by HSSD from Mr Haseeb for the intended purchase of land owned by HSSD as a credit on Mr Hemat's loan account. In closing, counsel for Mr Haseeb invited a conclusion that Mr Mucciarone misunderstood or made an error.[51] In my view there is an inadequate evidentiary foundation for any such conclusion.
[49] ts 255, 260.
[50] See ts 258.
[51] ts 285.
I find that:
(1)Mr Sayed told Mr Mucciarone that the $172,000 deposit was a repayment by Mr Sayed to Mr Hemat of a loan by Mr Hemat to him;
(2)that reflected the true character of the deposit of $172,000; and
(3)that deposit had no connection with any alleged agreement for Mr Haseeb to purchase one or more of the lots from HSSD.
For these reasons, I am not satisfied that the 2004 agreement was made. Mr Haseeb's claim based on the 2004 agreement fails.
Events in 2009 and thereafter
It is convenient to set out my factual findings about events in 2009 before turning to the 2009 agreement and its terms.
On 2 April 2009, Mr Sayed signed a letter,[52] stating that he was a shareholder of HSSD, confirming a sale of the vacant land at 39 Totara Avenue to Mr Haseeb for the amount of $200,000, paid in full. Mr Sayed says, in effect, as follows:
(a)in early 2009 he spoke to Mr Haseeb, who told him that he had approached BGC about building and they required a letter;
(b)after that he spoke to Mr Hemat who asked him to draft and sign a letter;
(c)he put in the purchase price of $200,000 to reflect the increase in market value because he did not want BGC to query the market value;
(d)after he drafted the letter he read its text to Mr Hemat who approved it; and
(e)after that he gave the letter to Mr Haseeb.[53]
[52] Exhibit A19.
[53] Exhibit 2 [41] - [46].
Mr Haseeb gives evidence about those events, so far as they concerned him, to similar effect.[54]
[54] Exhibit 1 [33] - [35].
Mr Hemat denies any knowledge of this letter.[55]
[55] Exhibit B2 [27] ‑ [29].
I do not accept Mr Sayed's evidence that he spoke to Mr Hemat about this letter. I am satisfied that Mr Haseeb commenced the construction of a house on the Property without Mr Hemat's knowledge. When Mr Hemat discovered that construction had started, he immediately said that it must cease. I will say more about this in describing what happened on 4 December 2009. Even on Mr Haseeb's evidence, he heard a telephone conversation in September or October 2009 between Mr Hemat and Mr Sayed in which Mr Hemat was angry and said that he had not given permission for building to commence. That is unlikely to have occurred if Mr Hemat had been aware of and agreed to the letter of 2 April 2009.
The statement in the letter of 2 April 2009 that the purchase price of $200,000 had been paid was false, to the knowledge of both Mr Haseeb and Mr Sayed. Even on their version of events, which I do not accept, $70,000 had been paid for lot 25, not $200,000. Their conduct in writing and delivering this letter to BGC reflects adversely on their credit.
On or about 18 June 2009, Mr Haseeb entered into a contract with BGC for the construction of a house on the Property.[56] The effect of the contract was that BGC would construct a house, but would not install floor covers, window treatments, a driveway, external paving (apart from a porch and alfresco area), landscaping, reticulation or boundary fencing.[57]
[56] Exhibit A21.
[57] ts 213 ‑ 214.
Mr Sayed says that after the conversation with Mr Hemat already referred to, he spoke to a settlement agent, Ms Mimma Manni of Cobra Conveyancing, asking for her to prepare the documents to transfer lot 25 to Mr Haseeb.
On 19 July 2009, Ms Manni sent an email to Mr Hemat stating that Mr Sayed had asked her to prepare documents to transfer lot 25 to Mr Haseeb, and that he had indicated that no money would be changing hands but that the transaction would be for $50,000.[58] Mr Hemat responded by email the next day by asking Ms Manni not to prepare any documents, saying that he had already asked Mr Shir to give him his opinion in regard to this matter.[59]
[58] Exhibit A22.
[59] Exhibit A22.
Nothing in Mr Hemat's statement or other evidence suggests that he responded to this email by making contact with Mr Sayed. This seems somewhat surprising on Mr Hemat's version of events. His evidence in cross‑examination was that he had a conversation with Mr Shir and then with Ms Manni, although those conversations were not mentioned in his witness statement.[60]
[60] See ts 98.
Mr Hemat's evidence in his written statement is that sometime between March and July 2009, Mr Sayed told him that Mr Haseeb wanted to purchase lot 25 Totara Avenue.[61] He says this was the first suggestion of this idea. Mr Hemat responded that that could occur, but that the price would be at the full market price, which was $270,000.[62] Mr Sayed agreed to the price.[63] Mr Hemat proposed that a written contract would be prepared to which Mr Sayed agreed.[64]
[61] Exhibit B1 [40].
[62] Exhibit B1 [42] ‑ [43].
[63] Exhibit B1 [43].
[64] Exhibit B1 [44].
For reasons to be developed in section 6, I do not accept that there was any discussion between Mr Hemat and Mr Sayed about the preparation of a written contract.
In his oral evidence in cross‑examination, Mr Hemat said that in his first conversation with Mr Sayed, he had stated three conditions to his agreement that HSSD would sell the land to Mr Haseeb: (1) a price of $270,000; (2) preparation of a written contract; and (3) removal of all caveats by Mr Sayed.[65] The third of these was not mentioned in Mr Hemat's statement, or in HSSD's reply. As I have said, I do not accept that there was any discussion of a written contract being prepared. Also, for reasons explained in section 6, I do not accept that removal of caveats was mentioned in the initial discussions in which an agreement to sell lot 25 was reached. In short, that is because the agreement was reached before Mr Sayed lodged any caveats.
[65] ts 85 - 86, ts 90 ‑ 91.
On or about 10 August 2009 Mr Sayed caused caveats to be lodged over a number of lots in the Canning Vale development, including lot 25.[66] These were the first caveats lodged by Mr Sayed. Mr Sayed lodged these caveats because Mr Hemat and Mr Shir had removed him as a director of HSSD and had purported to transfer his shareholdings in HSSD.[67]
[66] Exhibit A28; exhibit A29; exhibit A30; exhibit A31; exhibit A133.
[67] Exhibit 2 [34].
Mr Hemat says in his written statement that he became aware of the caveats when he was told about them by Ms Manni during a telephone call on 1 September 2009.[68] In cross‑examination Mr Hemat's evidence was less than clear about when he first heard about the caveats. I will say more about this in section 6.
[68] Exhibit B1 [52].
Mr Hemat gives evidence about conversations he had with Mr Sayed about these caveats.[69] The upshot is that he says that after falsely claiming the caveats had been lodged the previous year, Mr Sayed agreed to remove them.
[69] Exhibit B1 [54] - [61].
On 2 September 2009, Ms Manni sent Mr Hemat an email attaching an authority to prepare a transfer of land. Mr Hemat returned a signed copy of the document by email of 4 September 2009.[70] Nothing in Mr Hemat's email stipulated any conditions for settlement of the transfer.
[70] Exhibit A35.
Mr Hemat says that on or about 2 September 2009 Ms Manni called him, and he instructed her to go ahead with preparing the transfer. He says that the conditions were that Mr Sayed withdrew all his caveats, that a contract be prepared, and that the purchase price be $270,000.[71] I do not accept that Mr Hemat specified these conditions in his conversation with Ms Manni. I refer to what is said in section 6 of these reasons.
[71] Exhibit B1 [65].
On 5 September 2009, Ms Manni sent a letter to Mr Sayed, enclosing a letter to Mr Haseeb and enclosing the transfer of land document for signing.[72]
[72] Exhibit A37; exhibit A38.
By letter of 11 September 2009 Ms Manni sent the transfer of land to Mr Hemat for execution by HSSD.[73] By then, it was signed by Mr Haseeb.[74]
[73] Exhibit A43; see also exhibit A40.
[74] ts 113.
The Office of State Revenue, part of the Department of Treasury and Finance, provided an assessment for stamp duty on 5 October 2009.[75] Thus it is to be inferred that the transfer had been signed and executed by all parties by then.
[75] Exhibit A48.
On 6 October 2009, Ms Manni sent an email to Mr Sayed attaching a copy of the executed transfer form.[76]
[76] Exhibit A50.
By 3 October 2009 HSSD had paid Cobra Conveyancing's fees for the settlement of lot 25.[77]
[77] Exhibit A47.
After executing the transfer, Mr Hemat says that he was waiting for notification that the caveats had been withdrawn and waiting for a written contract.[78]
[78] Exhibit B1 [70].
By letter of 24 September 2009, BGC advised Mr Haseeb and his wife that their new home at Totara Avenue had entered the construction phase.[79] Progress claims were issued in October 2009.[80]
[79] Exhibit A44.
[80] Exhibit A51; exhibit A52.
On 2 November 2009, Ms Manni wrote to Mr Haseeb enclosing the stamp duty assessment notice.[81] Duty was assessed at $6,650. The letter stated that the stamp duty must be paid by no later than 27 November 2009.[82]
[81] Exhibit A53; exhibit A54.
[82] Exhibit A54.
On 6 November 2009, Mr Haseeb provided Cobra Conveyancing with a bank cheque of $6,650 payable to the Office of State Revenue.[83] However, the cheque was never paid to the Office of State Revenue.[84]
[83] Exhibit A61; exhibit A62.
[84] Exhibit 1 [58] ‑ [59].
Sometime prior to 4 November 2009, Mr Haseeb applied for a First Home Owner Grant in respect of the Property. A grant was made on 4 November 2009 in the amount of $21,000.[85]
[85] Exhibit A56.
On 6 November 2009, Mr Haseeb signed a form confirming that there would be no rating adjustment made on the sale of lot 25 Totara Avenue.[86] This arose out of a dispute about Cobra Conveyancing's fees on the settlement.[87]
[86] Exhibit A60.
[87] Exhibit A58; exhibit A59.
On 11 November 2009, Ms Manni sent an email to Mr Hemat.[88] The email stated that she needed instructions regarding lot 25. It said all of the work was done and payment for the assessed duty had been received but that she could not lodge the documents because of Mr Sayed's caveat. Ms Manni enquired whether, it was okay if she provided all of the documents to 'them', meaning Mr Sayed and Mr Haseeb and they could sort it out for themselves. The email has a handwritten note stating, 'Hemat rang 11 November 2009. Stop Transaction'.
[88] Exhibit A68.
Late on 11 November 2009, Mr Hemat responded to the email, in the following terms:
Please keep the documents up until [Mr Sayed] has withdrawn all three caveats from both Perth projects and from the Brisbane project. Please keep all documents and do not give anyone a copy of any documents and do not lodge anything for them until I give the [okay] when they have withdrawn all caveats.[89]
[89] Exhibit A69.
A few minutes later, Mr Hemat sent another email asking that the certificate of title for lot 25 be handed back to him.[90]
[90] Exhibit A70.
Ms Manni's email of 11 November 2009 contains a statement that 'there is no money changing hands'.[91] The statement in that email is hearsay, and so not admissible evidence of its truth. Mr Hemat received the email and responded to it, without demurring on that point. However, he was not cross‑examined on this aspect of the email. Moreover, the substance of the cross‑examination on this series of emails was that the only thing preventing settlement and the transfer of the Property to Mr Haseeb in exchange for $270,000 was Mr Sayed's caveats.[92] In those circumstances it could not fairly be inferred that Mr Hemat's failure to respond to the statement in Ms Manni's email involved any admission.
[91] Exhibit A68.
[92] ts 118.
The next morning Ms Manni sought legal advice. Ms Manni's email said that the transfer of land form was at the Office of State Revenue and expressed concern about the buyer paying the duty amount and obtaining the transfer.[93]
[93] Exhibit A71; exhibit A72.
Mr Sayed says, and I accept, that in November 2009 he spoke by telephone to Ms Manni. In the course of the conversation Ms Manni said that Mr Hemat had asked her to stop the settlement of the sale of the Property to Mr Haseeb. When Mr Sayed asked why, Ms Manni said that he would need to call Mr Hemat.[94]
[94] Exhibit 2 [38].
Mr Sayed then spoke to Mr Hemat who said that unless the caveats were removed he would not proceed with settlement. In response Mr Sayed said that he would remove the caveats if HSSD paid to him a dividend on the sale of each lot.[95]
[95] See exhibit 2 [39].
On 17 November 2009, Mr Sayed sent an email to Ms Manni referring to their earlier call. The email said that it was to confirm that Mr Sayed was willing to withdraw the caveat for each lot subject to one‑third of the proceeds of sale being paid into his account at settlement.[96]
[96] Exhibit A76.
Ms Manni responded to that email within an hour of receiving it. Ms Manni stated that the registered proprietor advised that there were no funds available as consideration for the withdrawal of the caveat for each lot and that he would need to resolve his position with the registered proprietor before settlement could take place.[97] Ms Manni evidently prepared that response based on earlier discussions with Mr Hemat, and without the need to call him having received the email.[98]
[97] Exhibit A76.
[98] Exhibit A76.
Following that exchange by email, Ms Manni wrote to Mr Haseeb stating that as a conflict had arisen, Cobra Conveyancing could no longer act for either party, and enclosed a cheque for the fees that had been paid and the bank cheque payable to the Office of State Revenue.[99]
[99] Exhibit A77A.
Mr Hemat's evidence is that on or just before 4 December 2009 he and Mr Sayed spoke by telephone.[100] In the course of the conversation, Mr Hemat said that because Mr Sayed had not removed the caveats, settlement of lot 25 would not go ahead.[101] Mr Sayed said that his brother had already started constructing a house.[102] Mr Hemat said that he had no authority to do that and must stop building immediately.[103] Mr Sayed said the building was almost complete.[104]
[100] Exhibit B1 [91].
[101] Exhibit B1 [91].
[102] Exhibit B1 [92].
[103] Exhibit B1 [94].
[104] Exhibit B1 [95] ‑ [97].
Mr Hemat then spoke to Ms Manni and asked her to make enquiries.
Later that day, Ms Manni sent an email to the plaintiff's solicitors, copied to Mr Hemat.[105] The email stated that Ms Manni had:
(a)contacted the City of Gosnells who advised they had issued a building licence, and stated that BGC was the builder; and
(b)spoken with an officer of BGC Residential who advised that the house slab was to be laid on the Property that day.
[105] Exhibit A78.
On 4 December 2009, HSSD's solicitors wrote a letter to BGC.[106] The letter advised of the dispute between the plaintiff and Mr Sayed and requested that work cease immediately.
[106] Exhibit A79.
Mr Sayed[107] and Mr Haseeb[108] give evidence of telephone conversations to different effect between Mr Sayed and Mr Hemat.
[107] Exhibit 2 [49] ‑ [50].
[108] Exhibit 1 [71] ‑ [72].
I accept Mr Hemat's evidence about the conversation on or just before 4 December 2009. Further, I accept that it was in that conversation that Mr Hemat first learned that Mr Haseeb had already started having a house constructed on the Property. In my view, these findings are supported by the fact that on 4 December 2009 there was a flurry of activity by HSSD's settlement agent and solicitor in relation to the construction occurring on the Property.
On 11 December 2009, BGC's solicitors wrote to Mr Haseeb.[109] The letter referred to HSSD's solicitors' letter of 4 December 2009, to BGC.[110] BGC's solicitor's letter of 11 December 2009 gave notice to Mr Haseeb that BGC was suspending all work on the Property. Mr Haseeb received this letter, and a copy of HSSD's solicitors' letter of 4 December 2009.[111] He did not make any contact with Mr Hemat.
[109] Exhibit A80.
[110] Exhibit A79.
[111] ts 187 ‑ 188.
On or about 18 December 2009, Mr Haseeb lodged caveats over the Property and also over lot 11 of the Canning Vale development.[112]
[112] Exhibit A81; exhibit A82.
Mr Hemat caused the issue of a 21 day notice under s 138B of the Transfer of Land Act 1893 (WA).[113] Mr Haseeb did not commence proceedings to extend the operation of the caveat, with the consequence that the caveat lapsed.
[113] Exhibit A97.
In early 2010 there were negotiations between the parties, but they did not resolve the dispute between them.
In May 2010, the City of Gosnells wrote to HSSD asserting that work was continuing to be undertaken at 39 Totara Avenue, without a building approval having been granted.[114] As a result, HSSD's solicitors wrote to the City[115] and to Mr Haseeb.[116] In the letter to Mr Haseeb, HSSD's solicitors asserted that building works were prohibited and indicated that HSSD was willing to sell the Property for $270,000. Mr Haseeb did not respond to the letter.
[114] Exhibit A98.
[115] Exhibit A100.
[116] Exhibit A101.
I do not accept Mr Haseeb's explanation that he left the problem to be sorted out between his brother and Mr Hemat and that once the two had got back on good terms, the letter became 'totally ... meaningless'.[117] Apart from anything else, I do not accept that Mr Hemat and Mr Sayed ever got back on to good terms after May 2010.
[117] ts 205.
On 8 July 2011, HSSD's solicitors wrote to Mr Haseeb asserting that he had no right to occupy the Property and stating that HSSD would retake possession on 15 July 2011.[118] Shortly after that, Mr Haseeb's solicitors responded, asserting that HSSD was not entitled to retake possession without a court order.[119]
[118] Exhibit 121A.
[119] Exhibit 121B.
Since then, Mr Haseeb has remained in possession of the Property.
HSSD commenced these proceedings in April 2012. Judgment in default was entered on 14 August 2012.
In October 2012, Mr Haseeb applied to set aside the default judgment. His affidavit in support of that application was the first time that the alleged 2004 deed had been produced, or even mentioned, to Mr Hemat.
The 2009 agreement and its terms
The issues in this case are factual: did the parties make an agreement and, if so, on what terms? As Spigelman CJ said in County Securities Pty Ltd v Challenger Group Holdings Pty Ltd:
A need to identify the particular subject matter of the contract has often arisen, even in the case of a written agreement where there is a form of words to be interpreted. In the present case, the subject matter and the concomitant terms of the contract must be inferred from a combination of surrounding circumstances including conversations, documents and conduct none of which provide a definitive form of words. The issue is not one of interpretation, because there are no words to interpret. The issue is one of fact: what did the parties agree?[120]
[120] County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 [7].
The issue on the pleadings is not whether there was an agreement made in 2009, it is the terms of that agreement. It is common ground that in 2009 an oral agreement was made for HSSD to sell the Property to Mr Haseeb for a purchase price of $270,000.[121] There is no pleading or submission by HSSD that discussions between Mr Hemat and Mr Sayed about the purchase of the Property for $270,000 fell short of amounting to a concluded contract, except in the following respect. The issue is whether the agreement included the additional term asserted by HSSD.[122] This additional term was that there would be no settlement unless and until a formal written agreement was prepared and executed.
[121] Defence and counterclaim [15] ‑ [16]; Reply [5] ‑ [6].
[122] Reply [5].
The facts as I find them to be support the conclusion that there was an oral agreement for HSSD to sell the Property to Mr Haseeb for $270,000. Mr Hemat's evidence that he and Mr Sayed discussed Mr Haseeb purchasing the land, and that it was agreed that he would do so for the price of $270,000, was not challenged. Cross‑examination of Mr Hemat proceeded on the basis that it was accepted that the effect of the discussion with Mr Sayed was that Mr Haseeb would pay $270,000 at settlement.[123] The conduct of the parties in the period from July to November 2009, including their execution of a transfer form for the Property, is a strong indication that they had made an agreement for HSSD to sell the property to Mr Haseeb for $270,000.
[123] See, for example, ts 85, 93, 106, 118, 120.
Thus the question is the terms of that agreement.
HSSD's reply pleads that the oral agreement to transfer was subject to preparation and execution of a formal written agreement. The evidence in Mr Hemat's witness statement was to that effect.[124] As I have observed, in his oral evidence in cross‑examination, Mr Hemat went further, stating that it was also a condition of the agreement that all caveats lodged by Mr Sayed be removed.[125]
[124] Exhibit B1 [40] ‑ [44].
[125] ts 85 ‑ 86, 90 ‑ 91.
For the reasons that follow, I reject Mr Hemat's evidence to the effect that the agreement to sell the Property was subject to either of these two conditions.
Mr Hemat's assertion that the agreement was subject to Mr Sayed removing the caveats he had lodged was made for the first time in his evidence in cross‑examination. It was not pleaded. Nor was it made in his witness statement. To the contrary, Mr Hemat's witness statement expressly stated that at the time of his initial discussions with Mr Sayed, no caveats had been lodged.[126]
[126] Exhibit B1 [49].
Mr Hemat's evidence is that his discussions with Mr Sayed in which it was agreed that Mr Haseeb would buy the Property for $270,000 occurred in the period March to July 2009. I accept that that is so. It is consistent with the fact that by July 2009 a settlement agent became involved in relation to the Property.
No caveat was lodged until August 2009.
Mr Hemat's evidence in relation to when he first became aware of a caveat on the Property was unsatisfactory, and detracted from his credibility generally. Often, he would not answer a question responsively, but insisted on arguing his position.[127] I am satisfied that this was not because of any linguistic difficulties in understanding the questions. Eventually, Mr Hemat admitted that he was wrong in saying that any caveats had been lodged at the time of the first conversation.[128] Then Mr Hemat asserted, for the first time, that in his discussion with Mr Sayed, Mr Sayed had said that if Mr Hemat did not accept the proposal for Mr Haseeb to buy the Property, Mr Sayed would put caveats on all of the properties.[129] I find that that evidence was manufactured in an attempt to reconcile the inconsistency in his evidence that had been exposed in the course of cross‑examination. Later again, Mr Hemat asserted that his memory was not clear enough to say whether caveats had been discussed in the first conversation.[130]
[127] ts 87 ‑ 90.
[128] ts 91, 93.
[129] ts 93, 107.
[130] ts 106 ‑ 107.
I find that:
(1)the agreement to sell the Property for $270,000 was made in the months leading up to and including July 2009;
(2)at that time, no caveats had been lodged (and none had been threatened);
(3)caveats were not mentioned in the discussions giving rise to the agreement; and
(4)the oral agreement to sell the Property did not include any term relating to the removal of caveats.
In my view, Mr Hemat's written communications and conduct in the period of September 2009 to November 2009 sustain the conclusion that the oral agreement to sell the Property did not include any term that it was subject to preparation and execution of a formal written agreement. HSSD through Mr Hemat:
(a)requested Cobra Conveyancing prepare a transfer form for the Property;[131]
(b)signed the transfer;[132]
(c)provided the certificate of title for the Property to Cobra Conveyancing; and
(d)paid Cobra Conveyancing's fee for the settlement and sale of the Property.[133]
[131] Exhibit A35; ts 109 ‑ 110.
[132] Exhibit A40.
[133] Exhibit A45; exhibit A47.
As a matter of common experience, an instrument of transfer of land is signed after, not before, any written contract. That was also Mr Hemat's experience. In relation to the other 37 lots the subject of the Canning Vale development, he signed the transfer forms only after a contract had been executed.[134] Providing the signed transfer and certificate of title to the settlement agent was the last thing that HSSD needed to do as seller. After that, the settlement was left in the hands of the settlement agent to collect settlement funds.[135]
[134] ts 95 ‑ 96, 111 ‑ 112, 121 ‑ 122.
[135] ts 114 ‑ 115.
Further, the transfer itself stated the consideration as being 'by verbal agreement'. In my view, that reveals and reflects the true position: the land was being transferred pursuant to an oral agreement. Mr Hemat's attempts during cross‑examination to avoid this conclusion were unconvincing.[136]
[136] ts 113 ‑ 114.
These conclusions are further reinforced by the email exchange between Ms Manni and Mr Hemat on 11 November 2009.[137] In my view, that exchange demonstrates that Mr Hemat was not waiting for or expecting a written contract. The only thing that was, as at 11 November 2009, providing an impediment to settlement was Mr Sayed's caveats.[138]
[137] Exhibit A69; exhibit A70.
[138] ts 117 ‑ 118.
For these reasons I reject Mr Hemat's evidence insofar as it asserts that in his discussions with Mr Sayed he said words with the effect that the agreement he made with Mr Sayed for HSSD to sell the Property to Mr Haseeb for $270,000 was subject to preparation of a written contract or subject to Mr Sayed removing his caveats. I find that the agreement for HSSD to sell the Property to Mr Haseeb for $270,000 contained no such terms.
The evidence of Mr Sayed and Mr Haseeb provide little or no support for any conclusion that there was an agreement in 2009 for the sale of the Property for a price of $270,000. For example, Mr Haseeb denied that he agreed that he would pay $270,000 in 2009.[139] Mr Haseeb and Mr Sayed's evidence about discussions in 2009 is to be understood in light of their evidence that an agreement had already been made in 2004, and that payment was made under it. As I have said, I do not accept that evidence.
[139] ts 186 ‑ 187.
I find, based on so much of Mr Hemat's evidence as was not challenged, and as I accept, and based on the parties' conduct in the second half of 2009, that:
(1)in the months leading up to and including July 2009, Mr Hemat on behalf of HSSD and Mr Sayed on behalf of Mr Haseeb agreed that HSSD would sell the Property to Mr Haseeb for $270,000;
(2)nothing was said in those discussions about a written contract being prepared or about caveats being removed; and
(3)there were no terms of that agreement requiring preparation of a written contract, or relating to caveats lodged by Mr Sayed.
There are minor differences between that agreement and the agreement alleged in the defence and counterclaim, as to the conduct by which it is constituted. However, in substance the agreement I have found is the same as the pleaded 2009 agreement, and is comprised by a subset of the material relied upon in the defence and counterclaim. In those circumstances, my findings are fairly open on the pleadings.[140] In closing, counsel for HSSD accepted that that was so.[141]
[140] Fazio v Fazio [2012] WASCA 72.
[141] ts 296 ‑ 298.
HSSD does not plead or contend that any contract made between it and Mr Haseeb has been terminated or discharged by mutual abandonment. Nor does HSSD plead or rely on laches or any other discretionary reason why any unconditional agreement ought not to be specifically enforced.
For these reasons, I would order specific enforcement of the 2009 agreement, requiring HSSD to transfer title to the Property in exchange for payment of $270,000. I would hear from the parties as to the precise terms on which specific performance should be ordered.
Other issues
In light of my upholding of Mr Haseeb's claim in relation to the 2009 agreement, the other issues in the action do not arise. Nevertheless, for the sake of completeness I will briefly state my conclusions in relation to those issues.
Insofar as Mr Haseeb claims to have had a licence from HSSD, on the basis of the factual findings I have made, such a claim must fail. I have found that HSSD was unaware that Mr Haseeb caused the construction of a house on the Property to commence, and as soon as it became aware, it demanded that construction cease. Further, since then HSSD has never consented to Mr Haseeb being in possession of the property.
Mr Haseeb's claim based on an estoppel would arise only in the event that the claim in contract had failed. It would then be necessary to understand the reason that the contract claim had failed in order to assess whether a claim based on estoppel was available. An equitable estoppel claim may fail for the same reasons that a contract claim fails.[142] If, contrary to my findings, the 2009 agreement had contained a term that it was subject to preparation and execution of a written contract, then in my view no claim in estoppel would have arisen. Mr Haseeb's conduct in causing the construction of a house on the Property could not, in light of the factual findings I have made, found an estoppel entitling him to a transfer of the Property. Most of the construction of the house occurred after HSSD had made it plain to Mr Haseeb that it required construction to cease.
[142] See, for example, Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582, 584 ‑ 585 (Kirby P), 602 (Priestley JA).
If, contrary to my findings, no agreement had been established, Mr Haseeb's alternative claims for compensation for his expenditure in having a house constructed, and for restitution of the benefit thereby conferred on HSSD would arise. As I have said, HSSD conceded, in its reply, that Mr Haseeb was entitled to just and reasonable compensation for the costs he incurred in constructing a residence on and affecting improvements to the Property.[143] Given the factual findings I have made, none of Mr Haseeb's alternative claims could produce a better result for him than an award of what was conceded in the reply.
[143] Reply [10].
Mr Haseeb claims that he should be awarded compensation in the amount of his actual expenditure. He says that that expenditure was a total of just over $250,000, comprising of just over $60,000 paid to BGC and $190,000 which, on his best estimate, he spent on contractors completing the house after BGC ceased work.
On the very limited material available, I am not persuaded that an award of the whole of Mr Haseeb's actual expenditure reflects what is reasonable. Mr Haseeb engaged BGC, with a contract price of $159,586, taking into account contractual variations. He spent a further $11,400 on work that was in addition to the scope of the BGC contract. I accept HSSD's position that the total of those sums ($170,986) reflects reasonable compensation in the circumstances of this case. In circumstances in which Mr Haseeb engaged a builder without the consent of the registered proprietor, where the builder terminated the building contract on that ground, leaving Mr Haseeb to make alternative arrangements to complete the work, to the extent that Mr Haseeb's actual costs exceeded the sum of $170,986, I am not satisfied such costs were reasonable.
Conclusion
For the reasons I have given:
(1)I reject Mr Haseeb's claim under the 2004 agreement;
(2)I uphold Mr Haseeb's claim under the 2009 agreement; and
(3)consequently, I would dismiss HSSD's claim, and order specific performance of the 2009 agreement, by transfer by HSSD of the Property to Mr Haseeb in exchange for payment of the sum of $270,000.
I will hear from counsel as to the precise terms of the orders that should be made, and as to costs.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: HEMAT SHIR & SAYED DEVELOPMENTS PTY LTD -v- HASEEB [2014] WASC 485 (S)
CORAM: BEECH J
HEARD: ON THE PAPERS
DELIVERED : 12 FEBRUARY 2015
FILE NO/S: CIV 1613 of 2012
BETWEEN: HEMAT SHIR & SAYED DEVELOPMENTS PTY LTD
Plaintiff
AND
SAIED AKBAR HASEEB
Defendant
Catchwords:
Costs - Defendant successful on plaintiff's claim and on an alternative counterclaim - Defendant unsuccessful on primary counterclaim - Primary counterclaim founded on false evidence - Appropriate costs orders
Legislation:
Rules of the Supreme Court 1971(WA), O 66 r 1(1)
Result:
Defendant pay plaintiff's costs of application to set aside default judgment, otherwise no order as to costs
Category: B
Representation:
Counsel:
Plaintiff: No appearance
Defendant: No appearance
Solicitors:
Plaintiff: Lewis Blyth & Hooper
Defendant: Solomon Brothers
Case(s) referred to in judgment(s):
Brookvista Pty Ltd v Meloni [2009] WASCA 180
Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1
Hemat Shir & Sayed Developments Pty Ltd v Haseeb [2014] WASC 485
McKay v Commissioner of Main Roads [No 7] (S) [2011] WASC 223
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Singh v Kaur Bal [2011] WASC 303 (S)
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S)
BEECH J:
Introduction
On 19 December 2014, I published reasons for decision in this action.[144] These reasons should be read with those reasons. I will use the same abbreviations. In summary, I:
[144] Hemat Shir & Sayed Developments Pty Ltd v Haseeb [2014] WASC 485.
(1)dismissed HSSD's claim for possession;
(2)rejected Mr Haseeb's claim under the 2004 Agreement;
(3)upheld Mr Haseeb's claim under the 2009 Agreement; and
(4)ordered specific performance of the 2009 Agreement by transfer by HSSD of the Property to Mr Haseeb in exchange for payment of the sum of $270,000.
On 19 December 2014, I made orders giving effect to those conclusions. I also made orders for the exchange of submissions and affidavits on the question of costs.
Both parties claim to be entitled to costs orders in their favour.
HSSD's position
HSSD seeks orders that:
(1)Mr Haseeb pay its costs on an indemnity basis from May 2014 onward;
(2)in any event, Mr Haseeb pay HSSD's costs in respect of the 2004 Deed on an indemnity basis;
(3)alternatively, Mr Haseeb pay 75% of HSSD's costs of the action to be taxed if not agreed; and
(4)in any event, Mr Haseeb pay HSSD's costs in respect of his application to set aside default judgment on an indemnity basis, alternatively to be taxed if not agreed.
In support of the first proposed order, HSSD relies upon an offer made by email of 16 May 2014.[145] The offer was made without prejudice save as to costs. The terms of the offer included:
[145] Affidavit of Christopher Michael Townsend sworn 21 January 2015 Annexure CMT1.
(1)Mr Haseeb paid to HSSD $270,000 to purchase the Property;
(2)Mr Haseeb also pay a maximum sum of $15,000 by way of reimbursement of local authority and Water Corporation rates and taxes incurred by HSSD from 1 July 2009 through to settlement subject to proof by HSSD that such costs had been incurred; and
(3)upon settlement in accordance with the agreement, the action and counterclaim be dismissed and each party bear their own costs.
In support of alternative orders 2 and 3, HSSD points to Mr Haseeb's failure in respect of the 2004 Agreement, and the court's finding that Mr Haseeb (and his brother) gave deliberately false evidence in relation to the 2004 deed, in support of the claim of the 2004 Agreement.
As to proposed order 4, HSSD points to the fact that Mr Haseeb's application to set aside default judgment was based on his affidavit which referred only to the 2004 Agreement and not to the 2009 Agreement.
Mr Haseeb's position
Mr Haseeb applies for an order that HSSD pay his costs of the proceedings on a party‑party basis up to 3 November 2014 or 25 November 2014, and that his costs be paid on an indemnity basis thereafter.
In support of his contention that he should generally have the costs of the action, Mr Haseeb submits that:
(1)He is the successful party. He successfully defended HSSD's claim for possession. Although he failed on his primary counterclaim for the 2004 Agreement, he succeeded in relation to his first alternative claim under the 2009 Agreement, and would have succeeded on his second alternative claim.
(2)There is no sufficient justification for departing from the general rule that the successful party should have its costs. It is to be expected that a successful party will fail on some issues. The evidence relating to the two alternative claims was 'interconnected';[146] it provided necessary background.
[146] Defendant's submissions on costs dated 22 January 2015 [16].
In support of his claim for indemnity costs, Mr Haseeb relies on two offers of settlement made in the month preceding trial. On 3 November 2014, he made an offer to settle on terms that:
(1)the Property was to be placed on the market for sale;
(2)at settlement of the sale of the Property;
(a)expenses of sale and marketing would be paid;
(b)the plaintiff was to be paid the sum of $270,000 and rates and taxes paid, not exceeding $15,000; and
(c)Mr Haseeb was to be paid the balance of the purchase price.
(3)each party would bear its own costs of the action.
On 25 November 2014 Mr Haseeb made a second settlement offer on the same terms, except that the primary amount was increased from $270,000 to $285,000.
Mr Haseeb submits that HSSD's failure to accept these offers was unreasonable, assessed at the time that the offers were made, justifying an order for indemnity costs.
Costs - general principles
The following principles were outlined in Singh v Kaur Bal.[147]
[147] Singh v Kaur Bal [2011] WASC 303 (S) [9] ‑ [15].
The court's costs discretion under s 37 of the Supreme Court Act 1935 (WA) and O 66 of the Rules of the Supreme Court 1971 (WA) is broad.
Order 66 r 1(1), r 1(2) and r 1(3) are in the following terms:
'1.General rules as to costs:
(1)Subject to the express provisions of any statute and of these Rules the costs of and incidental to all proceedings including the administration of estates and trusts shall be in the discretion of the Court but, without limiting the general discretion conferred on the Court by the Act, and subject to this Order, the Court will generally order that the successful party to any action or matter recover his costs.
(2)If the Court is of opinion that the conduct of a party either before or after the commencement of the litigation or that a claim by a party for an unreasonably excessive amount has resulted in costs being unnecessarily or unreasonably incurred it may deprive that party of costs wholly or in part, and may further order him to pay the costs of an unsuccessful party either wholly or in part.
(3)Where a party though generally successful in an action has, by the introduction of some issue or issues on which he has failed, increased the costs the Court may order such party to pay the costs of such issue or issues.'
In Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S) [5] ‑ [8], the Court of Appeal said as follows:
'It is clear that while the court has a broad discretion as to costs, generally costs will follow the event: Rules of the Supreme Court 1971 (WA), O 66 r 1(1). It is incumbent upon the unsuccessful party to satisfy the court that there are good reasons why it should not pay the other party's costs: Nikolaou v Papasavas, Phillips & Co (No 2) [1989] HCA 11; (1989) 166 CLR 394, 407.
The court may, in the exercise of its discretion, order that a successful party recover only a portion of its costs where that party has been unsuccessful in respect of certain discrete issues. But that should not be done as a matter of course. To embark as a general practice upon an analysis of which party was successful on each issue, or necessarily to deprive a successful party of some portion of its costs if it has lost on a particular issue, would be likely to add further uncertainty and complexity to the outcome of litigation, derogate from the prospect of settlement, and oblige the court to hear lengthy and frequent arguments in relation to costs as an additional burden on its resources and the costs of the parties: see MacKinnon v Petersen (Unreported, NSWSC, 19 April 1989) (Cole J); Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [67] ‑ [68] (McHugh J). Litigation is time‑consuming, expensive and burdensome enough already.
In addition, while parties should be encouraged to consider carefully what matters they put in issue, justice may not be served if by too ready a resort to deciding questions of costs according to success on particular issues, parties are dissuaded by the risks of costs from canvassing all issues which might be material to the decision in the case: Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2002] FCA 282; NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 at [24].
In Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S), the position was put as follows:
"[T]he power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the cost of the proceedings in a significant and readily discernible way [7]." '
Order 66 r 2(a) provides:
'In the absence of any special order
(a)where the statement of claim contains more than one cause of action and the plaintiff succeeds on one or more causes of action and the defendant succeeds on another or others, costs shall be allowed to the plaintiff on the cause or causes of action on which he succeeds and to the defendant on that or those on which he succeeds, in the same manner as if separate actions had been brought.'
The effect of O 66 r 2(a) is that a defendant is prima facie entitled to its costs on causes of action on which the plaintiff fails. However, such an order is not made as of course. The court looks at the realities of the case and attempts to do justice. Where all causes of action arise out of the one course of dealings with the same facts, there would usually be one order for the general costs of the action, 'moulded as necessary to ensure that, however rough and ready it may be, substantial justice is done': Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569, 574 ‑ 575. That is the approach which I propose to take in relation to this action.
The following propositions, relevant to O 66 r 2(a), were stated by the Court of Appeal in Keet v Ward [2011] WASCA 139 [24]:
'(a)the expression "cause of action" in O 66 r 2(a) is a reference to a factual situation, the existence of which entitles the plaintiff to obtain a remedy: Letang v Cooper [1965] 1 QB 232 at 242 (Diplock LJ); Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569 at 572 (Anderson J);
(b)the rule does not provide an inflexible rule which prescribes a mandatory approach to the awarding of costs in cases where there are multiple causes of action. The opening words "in the absence of any special order" indicate that the court retains the discretion to make a special order departing from the rule in O 66 r 2(a): Kimpura Pty Ltd v JWH Group Pty Ltd [2004] WASCA 134 [12] ‑ [15];
(c)however, where there are multiple causes of action and a party has succeeded on only one or some, the other party is prima facie entitled to costs on the others but the court will always attempt to do substantial justice in the circumstances: Permanent Building Society v Wheeler (No 2) (574 ‑ 575) (Anderson J);
(d)it may not be appropriate to make a costs order in accordance with O 66 r 2(a) where there is in substance one contest, that is, where the causes of action arise from the one course of dealings, the one transaction or the same facts: Permanent Building Society v Wheeler (No 2) (574 ‑ 575); R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206 (S); Witcombe v Talbot & Olivier [No 2] [2009] WASC 173 (S) (Beech J).'
I also apply the following principles stated by the Victorian Court of Appeal in Chen v Chan [2009] VSCA 233 [10].
'(1)The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim.
(2)The Rules of Court permit significant flexibility in determining questions of costs. In particular, the court is entitled to examine the realities of the case and will attempt to do 'substantial justice' as between the parties on matters of costs.
(3)Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount.
(4)A court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice.
(5)Where a court determines to make an order apportioning costs, then it does so primarily as 'a matter of impression and evaluation', rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.
(6)Where a number of parties have had the same representation, there is a 'rule of thumb' as to the apportionment of costs, namely that, where some of those parties have been successful and others have not, each successful party is only entitled to his or her proportion of the costs incurred on behalf of all, plus the costs, if any, incurred exclusively on his or her behalf. The primary issue for determination in such a case is that of fairness as between the parties, having regard to the manner in which the trial, or appeal, has been conducted. (footnotes omitted)'
A Calderbank offer, made without prejudice save as to costs, may justify an award of indemnity costs if its rejection was unreasonable, assessed at the time of the offer.[148] Some of the factors relevant to assessing the reasonableness of rejection of a Calderbank offer were stated by Buss JA in Ford Motor Co.[149]
[148] Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 [16], [23], [28], [89] (Buss JA, Wheeler JA agreeing).
[149] Ford Motor Co [19].
A Calderbank offer that provides an outcome for the recipient that is at least as favourable as the result of the trial may also be relied upon to justify an order for party‑party costs. A finding that a Calderbank offer was unreasonably rejected, judged at the time of the offer, is not a precondition to the power to award party‑party costs based on a Calderbank offer.[150]
[150] McKay v Commissioner of Main Roads [No 7] (S) [2011] WASC 223 [128].
The exercise of the costs discretion
I accept Mr Haseeb's submission that the starting point is that he is the successful party in the action. He successfully defended HSSD's claim for possession. While he failed on his primary claim under the 2004 Agreement, he successfully obtained an order for specific performance to enforce the 2009 Agreement. In ordinary circumstances, putting aside any offers of settlement, Mr Haseeb would be entitled to his costs, subject to a possible reduction of a portion of his costs to account for his failure on the issue of the 2004 Agreement.
However, in this case, Mr Haseeb's primary claim under the 2004 Agreement was founded on the deliberately false evidence of Mr Haseeb and his brother about that agreement, and in particular, the 2004 deed. I have made specific findings to that effect.[151]
[151] Hemat Shir & Sayed Developments Pty Ltd v Haseeb [48].
I do not accept Mr Haseeb's submission that the evidence concerning the 2004 Agreement and the evidence concerning the 2009 Agreement was 'interconnected'. To the contrary, Mr Haseeb's two alternative claims were inconsistent. Moreover, no part of the evidence of Mr Haseeb or his brother supported the 2009 Agreement. My findings in relation to the 2009 Agreement were based upon the contemporaneous documents and those parts of Mr Hemat's evidence that I accepted.
The defendant's advancing of the claim of the 2004 Agreement, founded on evidence he knew to be false, is conduct deserving of sanction. Had the case been solely about whether the 2004 Agreement was made, I may well have ordered Mr Haseeb to pay costs on an indemnity basis.[152]
[152] See Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; Brookvista Pty Ltd v Meloni [2009] WASCA 180 [32] (Newnes JA, Buss JA agreeing); Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) [10] (Pullin JA & Kenneth Martin J).
However, this action was not only about the 2004 Agreement. HSSD defended Mr Haseeb's claim in relation to the 2009 Agreement. The defence of that claim was a not insubstantial element of the trial, notwithstanding that the majority of the trial was occupied by issues relating to the 2004 Agreement. Mr Hemat gave evidence in defence of the claim based on the 2009 Agreement. I rejected important elements of his evidence in that respect.
In these circumstances, in my opinion, the substantial justice of the case favours an order that there be no orders as to costs, except in relation to the application to set aside default judgment, to which I will come.
Offers of settlement
I am not persuaded that any of the settlement offers made by the parties justify any different order for costs.
The offer of 16 May 2014 made by HSSD did not provide an outcome that was at least as favourable to Mr Haseeb as he ultimately obtained at the trial. At trial he obtained an order for specific performance involving payment by him of $270,000. The offer made by HSSD in May 2014 required him to pay an amount of up to $15,000 on top of the purchase price of $270,000.
Likewise, the offers made by Mr Haseeb in November 2014 do not sustain a favourable exercise of the costs discretion. The terms of those offers were, from the perspective of HSSD, unsatisfactorily silent or vague in significant respects. There was no specification of the price at which the property was to be sold, nor was anything said as to the timing or process of the sale.
Further, none of these offers made any positive provision for the costs of the action up to the point of the offer, providing only that each party bears its own costs. While, in the end, I have determined that no costs orders should be made, to the extent that the questions of whether rejection of the offer was unreasonable, the absence of a term of the offer providing any allowance for the costs of the recipient is a factor suggesting that the rejection of the offer was not unreasonable.
Application to set aside default judgment
The costs of Mr Haseeb's application to set aside default judgment were reserved.
Mr Haseeb was served with the writ pursuant to the orders for substituted service. In his affidavit in support of his application to set aside default judgment, he did not provide any reasonable explanation for his failure to file an appearance. Further, Mr Haseeb's affidavit in support of the application to set aside default judgment relied solely on the 2004 Agreement including the 2004 Deed, and did not refer to the 2009 Agreement.
In the circumstances, notwithstanding Mr Haseeb's submissions to the contrary,[153] it is appropriate that Mr Haseeb pay the costs of the application to set aside default judgment.
[153] Defendant's submissions on costs dated 22 January 2015 [32] ‑ [34].
Conclusion
For these reasons I order that:
(1)Mr Haseeb pay HSSD's costs of the application to set aside default judgment; and
(2)otherwise there be no order as to costs.
23
1