Honeybank Corporation Ltd v Henderson
[1991] TASSC 185
•6 December 1991
Serial No B71/1991
List “B”
COURT: SUPREME COURT OF TASMANIA
CITATION: Honeybank Corporation Ltd v Henderson [1991] TASSC 185; B71/1991
PARTIES: HONEYBANK CORPORATION LTD
v
HENDERSON
FILE NO: 510/1990
DELIVERED ON: 6 December 1991
JUDGMENT OF: Crawford J
Judgment Number: B71/1991
Number of paragraphs: 21
Serial No B71/1991
File No 510/1990
HONEYBANK CORPORATION LTD v HENDERSON
REASONS FOR JUDGMENT CRAWFORD J
6 December 1991
By an agreement in writing made on 1 August 1989 the plaintiff agreed to sell and the defendant agreed to purchase a block of land at St Helens. The purchase price was $21,000. No deposit was to be paid. The purchase price was required to be paid "in cash on completion" and the agreement provided for completion 30 days after the land was re–zoned by the Town and Country Planning Commission and the Portland Municipality. The agreement was expressed to be conditional upon the re–zoning being from Closed Residential to Commercial within 12 weeks, that is by 24 October 1989. The agreement provided that all "rates, charges and assessments, including land tax" were to be paid by the plaintiff to the end of the current financial year in which completion should take place and to be apportioned as at the date of completion or possession which ever was the earlier.
The only clause in the agreement which contemplated a failure on the part of the defendant to complete on the due date provided that in such event the plaintiff, in addition to any other remedy it might have for the recovery of the purchase money, should be at liberty to resell the property and claim any loss on resale from the defendant as liquidated damages and retain any profit on such resale.
The plaintiff has sued the defendant for a declaration that the agreement is valid and enforceable and for an order for specific performance. He has also claimed "interest pursuant to the agreement referred to in paragraph 5" of the statement of claim "or pursuant to s34 of the Supreme Court Civil Procedure Act 1932". Paragraph 5 is in the following terms:
"5 Pursuant to a written request from the solicitors acting for the Defendant dated 23rd January, 1990, the solicitors for the Plaintiff agreed to extend the settlement date upon the basis that the Defendant would pay interest at the rate of twenty two (22) per cent per annum from the 20th day of December, 1989 on the purchase moneys monthly in arrear until settlement."
When the action came on for trial the defendant consented to the making of the declaration and the order for specific performance. The question of interest was contested. No oral evidence was presented. The evidence consisted only of the agreement and certain correspondence.
There was no evidence sufficient for the ascertainment of the due date for completion under the original agreement, taking into account its requirement for re–zoning of the land. Neither counsel referred to this aspect but dealt simply with the correspondence admitted into evidence by consent. The statement of claim asserts that the land was re–zoned on or about 30 September 1989 and the defence asserts that it occurred on or about 27 November 1989.
By letter dated 23 January 1990 the defendant's solicitors put to the plaintiff's solicitors a proposition for settlement. It was proposed that the defendant pay to the plaintiff interest on the sale price of $21,000 at the rate of 18 per centum per annum from 20 December 1989 until settlement of the matter on or before 20 December 1990. It was further proposed that the defendant would pay all interest he then owed from 20 December 1989 until the date of the letter and thereafter make monthly payments to the plaintiff of the interest until settlement. In explanation it was stated that in "essence, your client would be giving to us bridging finance until such time as he would be in a position to complete the purchase".
On 31 January 1990 the plaintiff's solicitors, having obtained instructions, wrote to the defendant's solicitors stating that their client was "willing to extend the settlement date to 21st May 1990. Your client is to pay interest at the rate of 22% from the 20th December, 1989 on the purchase moneys monthly in arrear. We require acceptance within seven (7) days. It will only be sufficient if accompanied by a cheque for the first month's interest".
On 8 February 1990 the defendant's solicitors replied as follows:
"We have received instructions to accept your client's offer to extend the settlement date to the 21st May, 1990. We enclose* herewith a cheque in the sum of $385.00, being for the first month's interest. We shall arrange for our client to make monthly interest payments through our office to you."
Notwithstanding that the reply was apparently at least one day late, no issue has been taken in this regard. It is agreed by the parties that the defendant duly paid to the plaintiff four of the monthly instalments of interest, being $385 on 8 February, 28 February, 5 March and 26 April 1990. It is therefore apparent that the interest was paid for the four month period from 20 December 1989 to 20 April 1990.
On 10 May 1990 the defendant's solicitors wrote to the plaintiff's solicitors asking for "settlement figures as at the 21st instant."
It appears that there was a telephone conversation between the respective solicitors for the next thing to occur, according to the correspondence, was a letter dated 28 May 1990 from the plaintiff's solicitors to the defendant's solicitors in the following terms:
"We refer to your telephone conversation of 18th May last. We now have our client's instructions. They are:
(a)Deposit of 10% to be paid;
(b)First mortgage over property to secure $18,900.00 for one year @ 21% with interest being paid monthly in arrear;
(c)That the purchaser pays all legal costs of the vendor and mortgagee (including our attached account of 2nd April, 1990 attached);
(d)That the purchaser pays to the vendor the Municipal rates ($90.00) and State land tax ($25.00) to 30th June, 1990;
(e)The above settlement terms must be accepted or otherwise within seven (7) days from this date."
On 31 May 1990 the defendant's solicitors replied confirming "that our client is prepared to accept settlement on the terms and conditions contained in your letter dated the 28th instant. We would therefore be obliged if you could prepare the necessary documents and forward the same to our offices for execution and provide us with fresh settlement figures".
It is to be noted that notwithstanding the previous agreement for interest at the rate of 22 per centum per annum, it was agreed that following settlement the money secured by mortgage was to bear interest at the rate of 21 per cent. The last two letters made no reference to the previous agreement.
By letter dated 5 June 1990 the plaintiff's solicitors responded to the defendant's solicitors in the following terms:
"We now enclose herewith the Memorandum of Mortgage in duplicate.
We advise that the amount required to complete this matter as at 19th June next is as follows:
Sale Price 21,000.00
less: Mortgage advance 18,900.00
2,100.00
less: Four instalments made of
$385.00 ea. 1,540.00
560.00
add: Municipal rates to 30.6.1990 90.00
Land Tax to 30.6.1990 25.00
Interest @ 22% from 20.12.89
to 19.6.90 on $21,000 2,291.01
Stamp duty on the Mortgage 56.15
Registration fee thereon 56.00
Our costs as previously advised 626.50
Additional facsimile fee 1.50
Our additional costs for vendor
($60.00) and one–half scale
mortgagee's costs ($102.00) 162.00
$ 3,868.16
How do you propose to settle? As we will be registering, please also let us have stamp duty and fees on the Transfer. Please note that the registration fee on the Transfer will be $66.00."
For completeness I mention, although the information does not assist me in determining what binding agreement was made by the parties, that on 7 June 1990 the defendant's solicitors wrote to the defendant with settlement figures and requested a cheque to enable completion on 19 June 1990. The figures communicated to the defendant were based on the figures contained in the letter from the plaintiff's solicitors of 5 June.
On 11 July 1990 a further letter was sent by the plaintiff's solicitors to the defendant's solicitors in the following terms:
"We refer to our letter of 5th June last.
We advise that the amount required to complete this matter as at 13th July next is as follows:
As per our letter of 5.6.1990 3,868.16
Additional facsimile & photostating
outlays 7.00
Additional interest @ 22% on $21,000
from 19.6.1990 to 13.7.1990 (24 days) 303.78
$ 4,178.94
If not settled on 13th instant, the daily rate is $12.66.
Your client will be responsible for the 19901991 Municipal rates and State land tax."
The final item of correspondence put before me was a letter from the plaintiff's solicitors to the defendant's solicitors dated 9 October 1990:
"We refer to our letter of 8th instant. We now advise that the amount required to settle this matter as at 23rd October next is as follows:
Sale price 21,000.00
add: Interest @ 22% on $21,000
from 20.12.89 to 23.10.90 3,885.86
less: Four instalments
of $385 ea. 1,540.00 2,345.86
Municipal rates to 30.6.1990 90.00
Municipal rates to 30.6.1991 115.00
State land tax to 30.6.1990 25.00
State land tax to 30.6.1991 25.00
Our costs as previously advised 626.50
Our costs as re: Proposed mortgage 162.00
Additional vendor's legal fees
since 2490 endeavouring to
settle the transaction 150.00
Additional facsimile fees 11.00
Additional photostating 8.45$ 24,558.81
We undertake to pay the current Municipal and State land tax to 30th June, 1991 following settlement."
The primary submission of counsel for the plaintiff was that interest on the unpaid purchase money at the rate of 22 per centum per annum must be paid to the date of eventual settlement of the sale. Counsel for the defendant did not seek to dispute that one month's interest at that rate was due taking into account that it was agreed, as evidenced by the letters of 31 January and 8 February 1990, that that rate would apply to the extended settlement date of 21 May 1990 and that the interest payments made only applied to the period of 20 April. But the defendant's counsel submitted that the agreement to pay interest only applied until the extended completion date and no further. Thereafter, he submitted, there was no agreement for interest, the agreement for 21 per cent containing only an agreed interest rate to be included in the proposed mortgage.
I have come to the following conclusions on the evidence. The agreement dated 1 August 1989 provided for no interest. In consideration of the plaintiff agreeing to extend the completion date to 21 May 1990 (time not being made of the essence of the agreement) the defendant agreed to pay interest on the sale price at 22 per centum per annum from 20 December 1989. The terms of the correspondence did not limit the defendant's obligation to pay that interest to the period ending on 21 May and there is no justification for implying such a limitation. In fact, the clear inference from the correspondence is that the parties were agreeing that the defendant could have further time in which to complete the purchase in return for his undertaking to pay the interest to the date of settlement. I have no doubt that if they had been asked at the time they would both have unhesitatingly agreed that the interest would stop running on completion of the purchase by the defendant no matter whether it occurred before, on or after 21 May 1990.
The agreement for 21 per cent interest contained in the correspondence of 28 and 31 May 1990 expressly related to the interest rate to be contained in the proposed mortgage and should be restricted to what was so expressly agreed. It did not affect the previous agreement that 22% interest would be paid from 21 December 1989 until, it should be implied, settlement of the sale.
Accordingly, I hold that the plaintiff is entitled to interest on the purchase price of $21,000 from 21 December 1989 until completion by the defendant of his agreement to purchase the land.
0
0
0