Jenkins v Visualeyes Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 4664 of 2002

HEATHER JENKINS	Plaintiff
v
VISUALEYES PTY LTD	Defendant

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JUDGE:	Hargrave J
WHERE HELD:	Melbourne
DATES OF HEARING:	6, 7, 8, 11-15 April 2005
DATE OF JUDGMENT:	23 June 2005
CASE MAY BE CITED AS:	Jenkins v Visualeyes Pty Ltd
MEDIUM NEUTRAL CITATION:	[2005] VSC 218

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SALE OF LAND – Purchaser’s statutory right to avoid contract of sale – Rescission by purchaser – Whether vendor entitled to relief from avoidability – ss.6, 14 Sale of Land Act 1962 (Vic).

CONTRACT – Rectification – One party to a contract a deregistered corporation – Whether deregistered corporation a necessary party to rectification proceeding - Assignment of benefit – Whether assignment agreement manifested intention to effect immediate assignment or mere intention to assign at a later unspecified date – Specific performance - Equitable assignment – Assignor a deregistered corporation – Whether assignor a necessary party to proceeding.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M. Stirling	Hicks & Oakley
For the Defendant	Ms S. Marks	Michael Sandor & Associates

HIS HONOUR:

Overview of Facts and Issues

In October 1990, the plaintiff, Heather Jenkins (“Mrs Jenkins”), was the owner of a property in Kooweerup Road, Yellingbo on which she, together with her husband Tom Jenkins (“Mr Jenkins”), conducted a reception centre and restaurant business known as “Camelot Castle”. For convenience, I will call the land and improvements thereon “Camelot Castle”.

In October 1990, Frantisek (Frank) Olgyay (“Mr Olgyay”) and his wife Helena Olgyay (“Mrs Olgyay”) were, through their company, Visualeyes Pty Ltd (“Visualeyes”), entitled to be registered as the proprietors of three unimproved blocks of land in Daniella Court, Rye in the State of Victoria (“the Rye land”).

In October 1990, George Nagy (“Nagy”), a real estate agent and good friend of Mr and Mrs Olgyay, suggested to Mr and Mrs Olgyay that they should join him in purchasing Camelot Castle and then conducting the reception centre and restaurant business. Following inspections of Camelot Castle by Mr and Mrs Olgyay and Nagy, and certain negotiations, an agreement was reached between Mr and Mrs Jenkins on the one hand and Mr and Mrs Olgyay and Nagy on the other, to the effect that:

(1)Mrs Jenkins would sell nine-tenths[1] of her interest in Camelot Castle to Visualeyes, a company representing the interests of Mr and Mrs Olgyay, and Charnock Properties Pty Ltd (“Charnock”), a company representing the interests of Nagy. The purchase consideration was $1,520,000.
(2)In lieu of the payment of a cash deposit by Visualeyes and Charnock, it was agreed that Visualeyes would transfer the Rye land to a company associated with Mr and Mrs Jenkins, Condor Pacific Consolidated Ltd (“Condor”). A notional value of $300,000 was put on the Rye land for the purpose of calculating the amount of the deposit and the balance of purchase moneys payable in order to complete the sale transaction (the “deposit agreement”).

[1]This was disputed as being part of the agreement reached prior to execution of documents, but the written agreements reflect such an agreement and nothing turns on the factual question as to whether there was a prior oral agreement. No claim of rectification is made. I accept, on the evidence, that there was an oral agreement to this effect.

By a contract of sale in writing dated 30 October 1990, Mrs Jenkins sold nine-tenths of her interest in Camelot Castle to Visualeyes and Charnock for the sum of $1,520,000 (the “Camelot contract”). The Camelot contract provided that a deposit of $300,000 was payable and had been paid, leaving a balance of $1,220,000 which was payable on 1 April 1992, some 17 months later. In the meantime, possession was to be given to Visualeyes and Charnock as purchasers.

By a contract of sale in writing dated 30 October 1990, Visualeyes sold the Rye land to Condor for the sum of $300,000 (the “Condor contract”). The Condor contract stated that the purchase consideration of $300,000 had been paid.

The Camelot contract and the Condor contract were drawn up by Nagy and contained a number of deficiencies. In particular, although the Condor contract reflects the deposit agreement, the Camelot contract does not expressly do so.

Following the execution of the contracts of sale and associated documentation, Mr and Mrs Jenkins and their family moved out of Camelot Castle into rented accommodation in Doncaster. Mr and Mrs Olgyay and their daughter, Yvette Olgyay, moved into Camelot Castle and, with assistance from Nagy, commenced operating the reception centre and restaurant business.

At this time, no money had changed hands and the Rye land was yet to be transferred to Condor on behalf of Mrs Jenkins. The contract of sale of the Rye land provided that Visualeyes, which had provided an executed transfer of land, was required to provide the titles to the Rye land within a period of nine calendar months.[2] In respect of the sale of Camelot Castle, the balance of the purchase consideration, a sum of $1,220,000, was due to be paid on 1 April 1992.
[2]It appears that the Rye land was the subject of a recent sub-division and the vendor of the Rye land to Visualeyes, Ferlow Nominees Pty Ltd, was yet to provide the certificates of title Visualeyes.

Things did not go according to plan. In about April 1991, Mr and Mrs Olgyay, Yvette Olgyay and Nagy vacated Camelot Castle. On 7 May 1991, they purported to rescind the contract of sale of Camelot Castle for non-compliance with s.6 of the Sale of Land Act and also for fraudulent misrepresentation. The Sale of Land Act issue is pursued. The fraudulent misrepresentation assertion is not. Visualeyes contends that, as it and Charnock validly rescinded the Camelot contract, it is no longer obliged to complete the Condor contract and transfer the Rye land in satisfaction of the deposit due under the Camelot contract.

Mrs Jenkins contends that the rescission by Visualeyes and Charnock of the Camelot contract was wrong in law and amounted to a repudiation of the Camelot contract. She alleges that Condor, which was deregistered on 24 June 1993 and is not a party to this proceeding, assigned all of its rights to her prior to its de-registration. Accordingly, Mrs Jenkins is entitled to treat the deposit payable in respect of the Camelot contract, constituted by the agreement of Visualeyes under the Condor contract to transfer the Rye land to Condor, as forfeited. Mrs Jenkins alleges that she is entitled, as assignee of all of Condor’s rights, to specific performance of the Condor contract or alternatively to a declaration that Visualeyes holds the Rye land on a constructive trust for her.

Although named as a defendant on the writ and subsequent court documents, Charnock was de-registered in 1993 and has not been re-registered and served. It is not a party to this proceeding and Visualeyes is the only defendant. Nagy, who was in control of Charnock at all relevant times, did not give evidence.

The oral evidence in the proceeding occupied more than five days. In large part, this was due to the fact that the events in question took place some 14 years ago, all witnesses reconstructed much of their evidence, not all documents were available and, in some cases, the integrity of some documents was in question. Furthermore, a great deal of time was taken pursuing collateral credit issues, especially in cross-examination of Mr Jenkins.

In the end, the factual issues became very narrow.

The critical factual issue in the proceeding is the determination of the time at which Condor executed the documents by which it sought to assign its interest as purchaser under the Condor contract to Mrs Jenkins. The relevant documents are dated 31 December 1991. The plaintiff submits that they were executed on or about that date and, in any event, no later than the time at which Condor was deregistered on 24 June 1993. On behalf of the defendant, it is contended that I should find that the assignment documents were not executed until after Condor was deregistered. Accordingly, the assignment documents were therefore ineffective to assign anything to Mrs Jenkins and she cannot succeed in her case to enforce the Condor contract.

On behalf of the defendant, it is also argued that the assignment documents, even if executed before Condor was deregistered, are ineffective at law to constitute an assignment of Condor’s rights under the Condor contract to Mrs Jenkins.

The remaining factual issues relate to the claim by Visualeyes that it and Charnock validly rescinded the Camelot contract. In this regard, the critical issue is the amount secured by the mortgage granted by Mrs Jenkins to the National Australia Bank over Camelot Castle, which mortgage was to remain in place until completion of the transaction in April 1992.

Facts
(1) Mr and Mrs Jenkins and Camelot Castle

It is first necessary to note that, although Mrs Jenkins is the plaintiff in this proceeding, all of the business decisions relevant to this dispute were, on the part of Mrs Jenkins, effectively made by Mr Jenkins. It was said in evidence that Mr Jenkins consulted her about all of the business decisions made in her name, and about all of the documents which she signed, and I do not doubt that this was so. However, this does not diminish the underlying truth. Mr Jenkins made all of the relevant business decisions at issue in this proceeding on behalf of Mrs Jenkins and Mrs Jenkins signed, or prepared, documents according to the wishes and directions of her husband. She trusted her husband who, she said in evidence a number of times, she believed was experienced in business matters.

In the years leading up to the events in question, it appears that Mr Jenkins was involved in the business of buying and selling properties. The Jenkins family lived at 96 Springvale Road, Donvale (the “Springvale Road property”). In addition to the principal house at the Springvale Road property, there was a large tract of land. Mr Jenkins gave evidence that he owned the land and that he intended to sub-divide it and to build homes on it. For this purpose, he arranged for Condor to obtain a builder’s licence. However, as events transpired, prices for vacant land were high and he determined to sell the lots which had been sub-divided in an undeveloped state.

With the decision to sell the Springvale Road property in an undeveloped state, it appears that Mr Jenkins looked around for a new project. In any event, in 1988 Mr Jenkins identified Camelot Castle as the next business project for the Jenkins family.

For reasons which are not clear from the evidence, and which do not matter, it was decided to purchase Camelot Castle in the name of Mrs Jenkins. This was done and, shortly prior to Christmas 1988, the Jenkins family moved into Camelot Castle and commenced conducting a reception centre and restaurant business from those premises. In addition, a substantial project of renovating and extending the existing Camelot Castle buildings was undertaken. The work was undertaken by Condor, which held a building licence, and was funded by Mrs Jenkins and another company related to the Jenkins family, Jencor Holdings Pty Ltd (“Jencor”).

Although the evidence on the issue is confusing and unsatisfactory, there seems little doubt that the moneys which were advanced to Condor to enable it to conduct the renovations and extensions were, to a substantial extent, borrowed by Mrs Jenkins and Jencor and, by reason of guarantees, became secured by the mortgage given by Mrs Jenkins over Camelot Castle to the National Australia Bank (the “NAB mortgage”).

Unfortunately, no party sought to adduce into evidence any contemporaneous record which would have disclosed the extent of the amount secured by the NAB mortgage given by Mrs Jenkins to the National Australia Bank over Camelot Castle. I note in particular that the defendant, who bore the onus of proof in respect of establishing non-compliance with s.6 of the Sale of Land Act, did not seek to obtain the relevant documentary proof from the books of account of the National Australia Bank. A subpoena to produce documents would or might have resulted in production of documents evidencing this important fact.[3]
[3]The National Bank may still retain such documents because of the litigation between Mrs Jenkins and the National Bank which is referred to hereafter.

In his evidence, Mr Jenkins said he believed that all of the moneys which had been advanced for the purposes of the renovations and extensions became, in one way or another, secured by the NAB mortgage. However, Mr Jenkins could only give broad-ranging estimates of the amount secured by the NAB mortgage at the time of the Camelot contract. These estimates ranged between $500,000 and $700,000. It is clear that Mr Jenkins was doing the best that he could from memory and reconstructing on the basis of the amount borrowed to purchase Camelot Castle in the first place, the amount borrowed to finance its renovation and extension, the extent to which funds for the extensions were contributed from available monies on hand, and taking repayments into account. This evidence is confusing and inconsistent. However it is all of the evidence which I have before me on this issue.

I intend to act on the evidence of Mr Jenkins as to the amount secured by the NAB mortgage at the time of the Camelot contract. I do so because, notwithstanding its uncertainty, it involved Mr Jenkins making concessions against the interests of his wife and, at least in this regard, he appeared to me to be doing the best he could to remember how much was owing to the National Australia Bank at the relevant time. Accordingly, I find that the amount secured by the NAB mortgage at the time of the Camelot contract was somewhere between $500,000 and $700,000.

(2) Mr and Mrs Olgyay, George Nagy and the Rye land

Mr and Mrs Olgyay emigrated to Australia from Czechoslovakia in 1968. They went back to Czechoslovakia for a short time but have lived in Australia continuously for nearly 30 years. Mr Olgyay is a spectacle maker by trade and conducted a spectacle making business in Barkly Street, St Kilda and subsequently, Acland Street, St Kilda.

Nagy is also a Czech national. He conducted a real estate business in Barkly Street, St Kilda near the Olgyay’s business. Mr and Mrs Olgyay met Nagy and became good friends. Mrs Olgyay said that she and her husband trusted Nagy because he was a good friend, and because he was a Jehovah’s Witness “and they never lie”.

By 1990, Mr and Mrs Olgyay had purchased some land at Labrador in Queensland. They were unable to keep up the mortgage payments. In this context, Nagy introduced Mr and Mrs Olgyay to Frank Romeo of Frank Romeo & Associates, solicitors. Mr Romeo said that he would “take over the mortgage repayments” in respect of the Labrador property in exchange for transferring the Rye land to Mr and Mrs Olgyay.

As a result, by contract of sale dated 15 October 1990, Ferlow Nominees Pty Ltd (a company associated with Mr Romeo) sold the Rye land to Visualeyes for a stated purchase consideration of $120,000 (the “Ferlow contract”). Settlement was stated to be 25 January 1991 or within seven days of the approval of the relevant plan of subdivision, whichever was the later. It would appear that no money changed hands, with the $120,000 being satisfied by the transfer of the Labrador land to Mr Romeo or a company associated with him.

Next, Nagy approached Mr and Mrs Olgyay with an idea. He said that he had something interesting for them to look at, involving a reception centre. He said it was hard to explain and that Mr and Mrs Olgyay should go and have a look. Mr and Mrs Olgyay, accompanied by Nagy, inspected Camelot Castle and, as a result of negotiations conducted principally between Nagy and Mr Jenkins, the Camelot contract and the Condor contract were drawn up and signed.

(3) The Contracts of Sale

According to Mr and Mrs Jenkins, the Camelot Castle business was running profitably when, in about mid-1990, Nagy approached Mr Jenkins and enquired whether Camelot Castle was for sale. I accept this evidence. There is some evidence of a prior contact between Mr Jenkins and Nagy, but it was not explored in evidence. It does not appear to have been anything other than a passing dealing, at its highest.

There was some evidence about the negotiations which followed and which culminated in the execution of the Camelot contract and the Condor contract. In particular, there was dispute as to the extent of the involvement of Mr and Mrs Olgyay in the negotiations. I do not intend to canvass this evidence or resolve this dispute. In my view, it is irrelevant in circumstances where it is common ground between the parties that, whatever involvement Mr and Mrs Olgyay had in the negotiations, the deposit agreement was reached prior to the execution of the contracts. I find that it was the common intention of Mr and Mrs Jenkins, Nagy and Mr and Mrs Olgyay that Visualeyes would convey the Rye land to Condor (as nominee of Mrs Jenkins) in lieu of the stated deposit in the Camelot contract of $300,000.

The uncontested evidence was that it was Nagy who suggested to Mr and Mrs Jenkins that it would be wise for them to put the Rye land into a corporate vehicle rather than to transfer it into the personal name of Mrs Jenkins, notwithstanding that Mrs Jenkins was the vendor of Camelot Castle and entitled to the deposit. As a result, Condor was put forward by Mrs Jenkins as the transferee of the Rye land.

As I have said, the uncontested evidence, which is supported by objective facts, is that all parties intended that the stated deposit of $300,000 under the Camelot contract would be satisfied by Visualeyes transferring the Rye land to Condor (effectively as nominee of Mrs Jenkins) for a stated consideration of $300,000. No money was to change hands and none did.

In fact, the Camelot contract does not reflect the deposit agreement. As to the deposit, it provides:

“Deposit of $300,000 by 30.10.1990 (of which $300,000 has been paid).”

On the other hand, the Condor contract does (albeit in a clumsy way) reflect the deposit agreement. Special Condition A of the Condor contract provides:

“A.This sale is subject to and conditional upon the Purchaser accept the above land, namely Lot 9-10-11 Daniella Court, Rye as full deposit for Camelot Castle, Kooweerup Road, Yellingbo.”

There is a claim by Mrs Jenkins for rectification of the Camelot contract. It is alleged that the Camelot contract should be rectified to give effect to the deposit agreement. As appears hereafter, I am satisfied that rectification should be ordered by replacing the provision of the Camelot contract concerning the deposit, set out above, with the following provision:

“That the deposit of $300,000 be paid by a transfer from Visualeyes Pty Ltd to Condor Pacific Consolidated Ltd of Lots 9, 10 and 11 Daniella Court, Rye by 30 July 1991 in accordance with the written contract between Visualeyes Pty Ltd as vendor and Condor Pacific Consolidated Ltd as purchaser dated 30 October 1990.”

Apart from the rectification issue, there are a number of respects in which it is contended on behalf of Visualeyes that the Camelot contract and the Condor contract are uncertain and unenforceable. I do not accept these submissions. I will not interrupt this factual account to deal with the relevant aspects of the contracts which are alleged to be uncertain. These uncertainty arguments are considered separately hereafter.

Mr Jenkins was concerned that the certificates of title to the Rye land were not available prior to the Jenkins family vacating Camelot Castle. He wanted some proof that Visualeyes was in fact able to transfer the Rye land to Condor. As a result, he was shown a copy of the Ferlow contract. Furthermore, Visualeyes executed a transfer of land in respect of the Rye land in favour of Condor and provided it to Mr and Mrs Jenkins at or about the time of the Condor contract. This was also dated 30 October 1990.

(4) Sale of Land Act Issues

A statement pursuant to s.32 of the Sale of Land Act was prepared in respect of the Camelot contract. A defence has been raised by Visualeyes under s.6 of that Act. Sections 6(1) and 6(2) apply to a “terms contract” for the sale of land where the land is subject to a mortgage. The Camelot contract was a terms contract because Visualeyes and Charnock were entitled to possession of the land before they became entitled to a transfer of land. Accordingly, ss.6(1) and 6(2) were applicable. They provided at the relevant time:

“6(1)Where land is subject to a mortgage the mortgagor shall not sell the land under a terms contract unless the mortgage relates only to that land and the contract provides that the consideration for the sale of the land shall be satisfied, to the extent of any mortgage money owing at the date upon which the purchaser is entitled to possession or receipt of the rents and profits of the land sold, by the purchaser assuming as from that date the obligations of the mortgagor under the mortgage.
(2)Where land is subject to a mortgage, the mortgagor shall not enter into a terms contract which relates to that land unless the contract expressly states that the land is subject to a mortgage or mortgages and gives the particulars specified in Schedule 1 of such mortgage or mortgages.”

Section 6(3) provides:
“(3)Any terms contract entered into in contravention of any of the provisions of this section shall be voidable by the purchaser at any time before the completion of the contract...”

Section 14(1) of the Act provided at the relevant time:
“14(1)Except where otherwise expressly provided any terms contract which is entered into in contravention of any of the provisions of this Act shall be voidable by the purchaser at any time before completion of the contract and any person who has paid any money under such agreement shall be entitled to recover the same: Provided that a terms contract shall not be voidable by the purchaser if a court is satisfied that the vendor has acted honestly and reasonably and ought fairly to be excused for the contravention and that the purchaser is substantially in as good a position as if all the relevant provisions of the Act had been complied with.”

There is an issue as to whether the s.32 statement forms part of the Camelot contract. In this regard, the Camelot contract expressly states that the vendor's statement required by s.32 of the Sale of Land Act "is attached to, and included in, this Contract Note." Whether or not the s.32 statement was in fact annexed, it was expressly incorporated by reference in the Camelot contract and forms part of it. In any event, given that it is conceded that the Camelot contract, including the s.32 statement, does not comply with s.6 of the Sale of Land Act, nothing turns on this issue.

It is common ground that the Camelot contract did not give all of the particulars specified in Schedule 1 to the Sale of Land Act. In particular, it is contended on behalf of Visualeyes that the s.32 statement incorrectly stated the amount secured by the NAB mortgage.

The s.32 statement relevant to the Camelot contract has been prepared on an out-of-date form. It is the version published by the Law Institute of Victoria, the Real Estate Institute of Victoria and the Victorian Stock Agents’ Association in December 1987. It does not reflect amendments made to the Sale of Land Act, and to Schedule 1, in 1989. This explains a number of the deficiencies in the s.32 statement, insofar as compliance with s.6(2) of the Sale of Land Act is concerned.

The s.32 statement for the Camelot contract provided as follows in respect of the NAB mortgage:

“1.      MORTGAGES –
Particulars of any mortgage/s (registered or unregistered) –
* which is/are not to be discharged by settlement,
* OR voluntarily supplied by the vendor pursuant to s.27(3) of the Act (optional) –
(a)       Lender/s … at National Australia Bank
(b)      Amount/s secured $300,000.00
(c)Amount now required for discharge does not exceed a total of $450,000.00
*(d)Particulars of any unremedied default/s are as follows – Nil.”

The form states “*Delete as appropriate wherever *(where an asterisk) appears.”

As I have stated, I find that the amount secured by the NAB mortgage at the time of the Camelot contract was between $500,000 and $700,000. Accordingly, the particulars given in paragraphs 1(b) and (c) of the s.32 statement are incorrect.

Whilst Mr and Mrs Jenkins were still in possession of Camelot Castle, there was discussion between Mr Jenkins and Nagy concerning the lengthy settlement period for the Camelot contract and the possible need for Mr and Mrs Jenkins to raise further funds on the security of Camelot Castle in the period before settlement. Against this background, a document titled “Consent to Mortgage” was drawn up and executed (the “consent to mortgage”). The evidence is unclear as to who prepared the consent to mortgage. It provides:

“ ’Consent to Mortgage’
Charnock Properties Pty Ltd and Visualeyes Pty Ltd being the purchasers of Lot 72E Volume 9862 and Folio 101 hereby consent to Heather Jenkins being the registered owner of title Volume 9862 and Folio 101 at her own discretion to encumber or to mortgage the property whether it is 1^st or second mortgage for fundraising purposes over the term of the contract dated 30/10/1990 with the proviso that any mortgage 1^st or second, does not exceed the purchase price and that the registered owner being Heather Jenkins will clear the debt on settlement and provide a clear title to Charnock Properties Pty Ltd and Visualeyes Pty Ltd so settlement can take place.”

The consent to mortgage bears the common seals of Charnock and Visualeyes and has been signed by Mrs Jenkins.

Although executed after the Camelot contract, and thus not relevant to s.6 of the Sale of Land Act, the consent to mortgage is of considerable relevance to the issues arising under s.14 of the Sale of Land Act.

(5) Rescission of the Camelot Contract

Some weeks after the documents were signed, Mr and Mrs Jenkins and their family moved out of Camelot Castle and moved into rented accommodation in Runymede Street, Doncaster. Mr and Mrs Olgyay and their daughter Yvette moved into Camelot Castle and, together with Nagy, commenced conducting the reception centre and restaurant business.

Yvette Olgyay moved into Camelot Castle but did not work full-time there. She had other full-time employment and helped out as a waitress at Camelot Castle in the evenings and on weekends. Yvette Olgyay said that she did not want to become involved full-time in working at Camelot Castle, and this situation did not change when her father had a stroke in February 1991.

On 13 February 1991, Mr Olgyay suffered a stroke. He was severely impaired and required hospitalisation and then extended rehabilitation. It was clear that he would never be able to work at Camelot Castle again.

On 7 April 1991, Mrs Olgyay left for Czechoslovakia to sort out some personal family business relating to land which was previously owned by her family and had been seized by the communist government. Mrs Olgyay did not return to Australia until 7 May 1991.

In April 1991, Nagy sought legal advice as to whether Visualeyes and Charnock could avoid their obligations under the Camelot contract. He consulted Roberts & Roberts, solicitors. By letter dated 26 April 1991, Roberts & Roberts wrote to Mr Nagy confirming verbal advice to him that the Camelot contract was voidable by Visualeyes and Charnock because of non-compliance by Mrs Jenkins with ss.6(1) and 6(2) of the Sale of Land Act. The letter also advised that there may be a case against Mrs Jenkins for fraudulent misrepresentation as to the size of the buildings at Camelot Castle but that such a case was likely to fail. The letter concluded by seeking written instructions from both Visualeyes and Charnock before taking the “drastic step” of serving a notice of rescission of the Camelot contract.

Following the Roberts & Roberts letter, Visualeyes and Charnock each executed a written authority to Roberts & Roberts directing that firm to terminate the Condor contract for breach of the Sale of Land Act and on the grounds of fraudulent misrepresentation. The authority is undated, but was obviously executed on or before 7 May 1991. On 7 May 1991, Roberts & Roberts wrote to Mrs Jenkins giving notice on behalf of Visualeyes and Charnock that they rescinded the Camelot contract on the grounds of non-compliance with the Sale of Land Act and fraudulent misrepresentation (“the rescission notice”). The rescission notice did not state what provision of the Sale of Land Act was relied upon or give any particulars of the alleged fraudulent misrepresentation.

The written authority to Roberts & Roberts bears the common seal of Visualeyes and, adjacent thereto, the signature of Yvette Olgyay as a director. It would appear that Mr Olgyay has signed as secretary. However, it is apparent from the evidence of Yvette Olgyay that she was the one who made the decision to execute the authority instructing Roberts & Roberts to rescind the Camelot contract.

As I have said, on 7 May 1991, Roberts & Roberts wrote on behalf of Visualeyes and Charnock and rescinded the Camelot contract. Also on 7 May 1991, Mrs Olgyay returned from Czechoslovakia. She was surprised when she was collected at the airport by Yvette and Mr Olgyay and then driven from the airport to a property in Rosebud, and not to Camelot Castle. Obviously enough, she had no involvement in the decision to instruct Roberts & Roberts to terminate the Camelot contract. Nor, it would appear, did Mr Olgyay have any real involvement in this decision.

Although it does not matter as a matter of law, the inference is clear that the Olgyays and Nagy decided in early 1991 to see if they could get out of the obligations to complete the Camelot contract and the Condor contract. I infer that they were not making a success of running the business at Camelot Castle and, in any event, the stroke suffered by Mr Olgyay, coupled with the reluctance of Yvette Olgyay to work at Camelot Castle on a full-time basis, made continuing that business impractical and uneconomic.

There was much evidence, and in particular cross-examination as to credit, concerning the extent of the knowledge of Mr and Mrs Jenkins, in particular Mr Jenkins, that the Olgyays and Nagy had vacated Camelot Castle prior to the service of the rescission notice on 7 May 1991. Apart from credit issues, nothing turns on this. The fact is that Mr and Mrs Jenkins knew of the rescission notice and instructed solicitors to seek further particulars of the grounds of rescission. None were forthcoming. Further, I infer in response to the rescission notice, a caveat was lodged on behalf of Condor over the Rye land on 8 July 1991 (the “Condor caveat”).

There was evidence about Mr Jenkins seeking to telephone Camelot Castle in about mid-1991 and, after the phone rang out, Mr and Mrs Jenkins (together with one or more children) driving to Camelot Castle and then discovering, for the first time, that the Olgyays and Nagy had vacated it. Both Mr and Mrs Jenkins said that Camelot Castle had been left in a poor state of repair, making it difficult for them to re-enter possession and immediately resume conducting the Camelot Castle business. In the end, nothing turns on this evidence. It seems that it was only raised as to credit issues or, perhaps, in some unspecified way to the alternative claim of Mrs Jenkins framed in constructive trust.

(6) Condor Proceeding

In November 1991, proceedings were issued in this Court on behalf of Condor against Visualeyes. The proceeding sought specific performance of the Condor contract (the “Condor proceeding”).

Visualeyes prepared its own notice of appearance in the Condor proceeding. It stated that its address for service was 79 Laura Street, Knoxfield, Victoria.

A defence was filed to this proceeding on 19 December 1991. Thereafter the proceeding was not prosecuted. On 7 December 1999 it was dismissed pursuant to Rule 34.05 of Chapter 1 of the Rules of this Court.

(7) The Assignment Agreement

The events which occurred next are critical to the resolution of this proceeding. There are three documents dated 31 December 1991 which evidence an intention on the part of Condor to assign all of its assets, including its rights under the Condor contract, to Mrs Jenkins. On behalf of Visualeyes, it is contended that I should find that, on the balance of probabilities, these documents were in fact signed well after 31 December 1991 and after Condor was de-registered.

The three documents in question are:

(1)an agreement expressed to be made on the 31^st day of December 1991 between Condor and Mrs Jenkins (the “assignment agreement”);
(2)a “Sale of Real Estate Nomination Form” whereby Condor purported to nominate Mrs Jenkins as purchaser under the Condor contract (“the nomination”);
(3)a “Purchaser’s Declaration” under the Stamps Act 1958 in connection with the nomination (“the purchaser’s declaration”).

Both Mr and Mrs Jenkins said that the three assignment documents were signed at or about the date which they bear. They said that the assignment agreement, the nomination and the purchaser’s declaration were all signed on the one day. However, cross-examination revealed that Mr and Mrs Jenkins were themselves relying upon a presumption as to regularity. If the documents were dated 31 December 1991 then that is when they would most likely have been signed.

I find that neither Mrs Jenkins nor Mr Jenkins has an independent recollection of the day on which the assignment documents were signed. However, I accept their evidence that the three documents in question were all signed on the one day.

The assignment agreement is a curious document. Although Mr Jenkins said that he had advice from his solicitor, Marcel Alter, as to what should go into such an agreement, it is likely that the document was prepared by Mr Jenkins himself. It is a most unsatisfactory document. However, when it is read together with the nomination and the purchaser’s declaration its intent is, in my view, clear enough. It is necessary to set out the whole of the document:

“Agreement made this 31^st day of December
One thousand nine hundred and ninety one B e t w e e n
Condor Pacific Consolidated Ltd of c/o T. & H. Jenkins 96 Springvale Road, Donvale in the State of Victoria (hereinafter called (‘Borrower’) of the one part and Heather Jenkins of 96 Springvale Road, Donvale in the State of Victoria (hereinafter called ‘The Sole Secured Creditor’) or Lender of the second part
And Whereas Condor Pacific Consolidated Ltd is the owner of a business building and selling of property and any other potential business and selling of property and any other potential business acquisitions under the name of Condor Pacific Consolidated Ltd in Australia (hereinafter called ‘The Business’)
And Whereas Condor Pacific is currently in some financial difficulties in repaying back its loan to Heather Jenkins (‘Sole Secured Creditor’) or Lender
And Whereas Heather Jenkins has provided to it a loan totalling $250,000.00 repayable back by 31^st December 1991
And Whereas Condor Pacific Consolidated Ltd has agreed to and in pursuance to monies made available by Heather Jenkins to Condor Pacific Consolidated Ltd in the form of a loan and in the amount of $250,000.00 the Company hereby agrees to assign all rights and interests in the Business including registered name, trade marks, art works, equipment, and stock as stated in the meeting of 31^st December 1991. This will also include any transaction carried out in the past or in the future by the Company, to be deemed as property of Heather Jenkins, and of which it will now state that all interest held by the Company will be assigned over to Heather Jenkins who also will continue to prosecute any action past or present with all due diligence and all proceeds or assets recoverable will be transferred exclusively to Heather Jenkins.
The Parties Agree As Follows
1.Condor Pacific Consolidated Ltd will transfer to Heather Jenkins all its rights titles and interests in the Business and assets which will hold or is holding.
2.The above transfers will be in full lieu of monies outstanding to date which have been borrowed by the Company.
3.Condor Pacific Consolidated Ltd warrants that at all times while trading it only had one ‘Secured Creditor’ which is and was Heather Jenkins.

In Witness Whereof the parties hereto have set their hands and seals the day and year first hereinbefore written.
The Common Seal of Condor Pacific Consolidated Ltd     )
was hereunto affixed in accordance with its  )
Articles of Association  )
in the present of :  )
Director         [Signed by Tom Jenkins]
Secretary       [Signed by Irene Giannakos]
Signed Sealed and Delivered by the Said  )
Heather Jenkins in the State of Victoria  ) Signed
In the presence of :  ) by [Tom
  ) Jenkins]
[Signed by Heather Jenkins]  )”

The assignment agreement was executed on behalf of Condor by its common seal being affixed in the presence of Mr Jenkins and Irene Giannakos. Ms Giannakos was a director and secretary at the time. Mr Jenkins was neither. He had resigned as a director in 1986. It would appear that the view was taken that Mrs Jenkins should not sign as a director of Condor as she was the assignee under the document. There was nothing preventing her from signing in both capacities, but she did not do so. An issue is raised as to whether, as a result, the assignment agreement is ineffective. For reasons appearing hereafter, I do not believe that this is the case.

The nomination suffers from a similar defect. Mr Jenkins has signed on behalf of Condor. Once again, I do not believe that anything turns on this.

Under the terms of the nomination, Condor as purchaser nominates Mrs Jenkins as nominee in respect of the Condor contract. The nomination is clearly prepared on the mistaken basis that there is a right of nomination contained in the Condor contract. In fact, there is none. However, the nomination is still of great significance in this case. Although it is not, by itself, sufficient to give Mrs Jenkins an entitlement to specific performance of the Condor contract if it is otherwise enforceable, in the absence of Condor as a party, the nomination is nevertheless an important piece of objective evidence surrounding the assignment agreement. As appears hereafter, I believe that I am entitled to have regard to the nomination and its terms, and to the evidence that it was executed at the same time as the assignment agreement, in considering whether the assignment agreement constitutes an effective assignment of Condor’s rights under the Condor contract to Mrs Jenkins.

The nomination identifies the Condor contract in the handwritten section of it. This is in the handwriting of Mrs Jenkins. The mistaken reference to the vendors being both Visualeyes and Charnock, rather than just Visualeyes, is of no significance. It is an obvious error.

The nomination provides:

“As the property is expressed as sold to the Purchaser ‘or Nominee’ then pursuant to the conditions of the contract the Purchaser Nominates the Nominee as substitute purchaser to take a transfer or conveyance in lieu of the Purchaser.
The Purchaser and the Nominee acknowledge that they are jointly and severally liable for the due performance of the obligations of the Purchaser under the Contract and the payment of any expenses resulting from this nomination (including any Stamp Duty).”

The purchaser’s declaration is also important as a piece of objective contemporaneous evidence which may be of assistance in construing the assignment agreement. It is obviously a standard form of declaration, intended to ensure that double stamp duty is not payable where a nominee takes a conveyance under a contract of sale.

The purchaser’s declaration appears to have been signed before someone independent. It is not a document between Mr and Mrs Jenkins, as are the assignment agreement and the nomination. However, the Justice of the Peace who witnessed the declaration was not called to give evidence. Indeed, his identity could not be recalled, other than it was thought he was an accountant. Mrs Jenkins did say, however, that she recalled that the purchaser’s declaration was signed (declared) by her on the same day as the assignment agreement and the nomination. I accept this evidence.

The material part of the purchaser’s declaration is paragraph 1. It provides:

“By agreement made with the Nominee prior to the date of the abovementioned Contract I was orally appointed as Agent to execute this Contract.”

Although Condor may not have been, strictly speaking, the agent of Mrs Jenkins in connection with the Condor contract, it was her nominee or “vehicle”. It was not put to her in cross-examination that her declaration was false.

The “above mentioned Contract” referred to in paragraph 1 of the purchaser’s declaration is a reference to the contract described in the document by Mrs Jenkins completing, in her handwriting, the essential particulars of the Condor contract. I set these particulars out hereunder, with the handwritten portion completed by Mrs Jenkins in italics:

“VENDOR – Visualeyes Pty Ltd & Charnock Properties Pty Ltd
NAMED PURCHASER – Condor Pacific Consolidated Ltd
PROPERTY – Lots 9, 10, 11, Daniella Crt, Rye
NOMINEE – Heather Jenkins
DAY OF SALE – 31 December 1991”

As with the nomination nothing turns on the mistaken reference to the vendors being both Visualeyes and Charnock, rather than just Visualeyes.

The mistake as to the day of sale is not as easy to understand. It is one thing to group Visualeyes and Charnock together as vendors, in circumstances where they had a joint obligation to ensure that the Rye land was transferred to Condor in satisfaction of the deposit payable by them under the Camelot contract. It is another thing altogether to make a mistake as to the date of the Condor contract, which was also the date of the Camelot contract. As will appear hereafter, this mistake, when taken together with other facts, indicates that the three assignment documents were all back-dated. Indeed, the purchaser’s declaration itself has obviously been altered. The original purchaser’s declaration was produced in court as exhibit “M”. It contains obvious alterations to the date and also to the signature on behalf of Condor. However, notwithstanding that the original was available and had obviously been altered, there was no cross-examination on behalf of the defendant as to these alterations. Nor were any submissions directed to the fact of the alterations or their effect. It is not possible from my own examination of the original purchaser’s declaration to ascertain what date was originally written in as the date the declaration was made. The handwriting is apparently that of the Justice of the Peace who witnessed the statutory declaration. That handwriting indicates that the purchaser’s declaration was declared on the 31 day of December. As to the year, the date has been altered to 1991. It is not possible for me to reach any conclusion as to what year was originally written in by the Justice of the Peace. There is a combination of overwriting and the use of liquid paper.

The assignment agreement was clearly not intended to constitute an assignment of the rights of Condor under the Camelot contract only. On the other hand, the evidence was that this was the only asset of any value which Condor owned at the time. There is ambiguity about the time at which the assignment is to take place, given the frequent use of the future tense throughout the document – “agrees to assign”, “will be assigned over to Heather Jenkins”, “will be transferred exclusively to Heather Jenkins”, “will transfer to Heather Jenkins”. On the other hand, the document was obviously drawn without the benefit of any real legal assistance. Whatever input Mr Alter may have had appears to have been at a superficial level, by giving oral advice to Mr Jenkins as to the matters which should be contained in a proposed assignment agreement.

Furthermore, the assignment agreement cannot be construed in a vacuum. It is necessary to consider the objective surrounding circumstances and to take account of business common sense. If an immediate assignment to Mrs Jenkins was not intended, what purpose would a document such as the assignment agreement serve? Although it speaks in terms of an assignment in the future, it makes no reference to when the assignment will take place. If it is viewed as a mere statement of intention to assign, then it is no more than agreement to agree. Why would business people such as Mr and Mrs Jenkins go to all of the trouble to draw up an elaborate document such as the assignment agreement for the purpose of stating what they intended to do at some unspecified time in the future? This makes no sense.

The position is complicated by reason of the fact that it is contended on behalf of Visualeyes that there is confusion and uncertainty about the true date upon which the assignment agreement, and other related documents, were in fact drawn up and executed.

The minutes of the annual general meeting of Condor for the year ended 31 December 1991 lend support to the submission on behalf of Visualeyes that the assignment agreement was not intended to effect an immediate assignment. The relevant minutes state:

“Because of recession production is down, costs are escalating – overdraft has also been increased with Heather Jenkins’ consent and securing the loan. Considering if things don’t improve in next 12 months to close the company and to assign all assets and funds and any future interests pending in earning any capital to be exclusive property and ownership of Heather Jenkins.”

The nomination, which is also dated 31 December 1991, points the other way. It clearly states that Mrs Jenkins nominates Condor as “substitute purchaser to take a transfer or conveyance” of the Rye land in lieu of Mrs Jenkins. This is consistent with an intention by Condor to effect an immediate assignment to Mrs Jenkins at the time the assignment agreement was executed.

The purchaser’s declaration also supports an intention to effect an immediate assignment to Mrs Jenkins at the time that the assignment agreement was executed. In the purchaser’s declaration, Mrs Jenkins, who signed on behalf of Condor, declared for the purposes of the Stamps Act 1958 that she executed the Condor contract on behalf of Condor as agent for herself. The purchaser’s declaration was obviously intended to be used, in conjunction with the nomination, to achieve a transfer of the Rye land to Mrs Jenkins without the payment of additional stamp duty.

The position is further confused by the handwritten minutes of an annual general meeting of Condor dated 30 September 1992. The minutes record:

“The directors have agreed that the company will close its doors by no later than 30^th June, 1993 which will give it sufficient time to complete and finalise all transactions. The Company on that [this] day also has provided a Deed in 1991 to Heather Jenkins transferring all assets of the Company and any future moneys forthcoming from any litigation or pay outs to go direct to Heather Jenkins, from that [this] day on.”

The bold type in the excerpted passage indicates alterations appearing in the minutes. It is apparent from the photocopy minutes which are available that, as originally written, these minutes stated that Condor had “on this day” provided a deed to Mrs Jenkins and that it was intended that Condor’s assets would go to Mrs Jenkins “from this day on”. Subsequently, the minute has been altered in handwriting so that the two references to “this day” read as references to “that day” and the reference to the Deed being provided “in 1991” has been inserted.

The evidence about the circumstances of the alterations to this minute was unsatisfactory. Mrs Jenkins had no recollection of the circumstances in which the 30 September 1992 minutes were altered. Mr Jenkins, yet again, gave confusing and inconsistent evidence about this matter. Without being specific about the time, he gave evidence of a conversation with Mr Alter in which Mr Alter said that it was necessary that the minutes of Condor record that the assignment agreement had been executed on “a specific date.” He said that it was only because Mr Alter said this that the minutes were altered. Mr Alter was not called as a witness.

Notwithstanding the unsatisfactory state of the evidence in relation to the minutes of the meeting of Condor on 30 September 1992, the form in which the minutes were originally written is a strong indication that the assignment agreement, which I infer is the “Deed” referred to in the minutes, was in existence by the time the minutes dated 30 September 1992 were prepared. If that is so, and the minutes dated 30 September 1992 were prepared before Condor was deregistered on 24 June 1993, then the assignment agreement was executed well prior to deregistration of Condor. If this be correct, the assignment agreement has been backdated and, probably, the nomination and purchaser’s declaration also.

However, as I have said, there is doubt as to the reliability of the dates which are written on the critical documents, including the minutes of Condor. This doubt is added to by the final minutes of Condor. These final minutes appear on the same page of the Condor Minute book as the 30 September 1992 Minutes.[4], They state:
[4]This page of the Minute book is not in the original Minute book, and is only available as a photocopy page.

“Minutes of Last and Final Meeting of Condor Pacific Consolidated Ltd. Annual General Meeting: 30^th June 1993
Present: Tom Jenkins
Heather Jenkins

Chairman: Tom Jenkins
Meeting AGM: Consented by all directors to de-register company and to fulfill (sic) all committments (sic) as stated in the AGM Meeting of 1992. Thus Concluding the final task of the company. This meeting was then concluded after completing all the business transactions.
(illegible) Chairman (common seal affixed) (signed Tom Jenkins).”

The only part of the available photocopy of these minutes which is illegible is the date. This is a relevant gap in the evidence. Neither Mr Jenkins nor Mrs Jenkins could recall when these minutes were prepared. Condor was deregistered on 24 June 1993 as a result of it failing to file any annual returns after that due on 31 December 1990. If the date on the final minutes was after 24 June 1993, which appears likely, then it was after Condor was in fact deregistered. It would appear that these final minutes have been prepared in an endeavour to regularise the situation, in circumstances where it was intended that Condor would be de-registered by default and it was not known when this would happen. By this I mean that it was clear on the evidence that no formal application was ever made by Condor for deregistration. Rather, following consultation between Marcel Alter and Mr Jenkins, a decision was made to allow the company to be deregistered as a result of it ceasing to file any annual returns or other documents required under applicable legislation.

As there are other facts relevant to the resolution of the critical factual issue as to the date of execution of the assignment agreement, my findings on this issue appear later in these reasons.

(8) Alleged Notice of Assignment Agreement

The resolution of the factual issue as to the date on which the assignment agreement was executed is further confused by the evidence given by Mr Jenkins as to service of a copy of the assignment agreement, the nomination and the purchaser’s declaration upon Visualeyes and its directors. In his evidence, Mr Jenkins was adamant that he personally served copies of the assignment agreement, the nomination and the purchaser’s declaration in January 1992 or shortly thereafter. I do not accept this evidence.

Mr Jenkins was a most unsatisfactory witness. He gave definite evidence about matters where he was obviously reconstructing and had no independent recollection. He was non-responsive. His demeanour demonstrated disrespect for the Court, its processes and for counsel for the defendant. I am satisfied that Mr Jenkins has an honest belief that his (or, more accurately, his wife’s) cause is a just one and that he has convinced himself as to the truth of evidence which was obvious reconstruction. However, this is one issue on which the evidence of Mr Jenkins ought be rejected completely. Indeed, I am satisfied that he had no belief that it was true and that he was telling lies in order to fill up a perceived gap in his wife’s case concerning the need to give notice of the assignment agreement and nomination to Visualeyes.

The oral evidence of Mr Jenkins as to service of a copy of the assignment agreement, the nomination and the purchaser’s declaration was that he served a copy of each of those documents at 79 Laura Street, Knoxfield at approximately 7.30pm or 8.00pm on a day after the documents were executed which he could not recall, other than:

“… it could have been months. I mean it wasn’t years.”

Mr Jenkins said in his oral evidence that he served the documents by placing them in the letterbox at 79 Laura Street, and then walking away. At the time he put the documents in the letterbox, there was a man walking out of the house. He could not identify that man. He did not speak to him. He walked away because he had been told by Marcel Alter not to create any problems at the time he served the documents.

Mr Jenkins also gave evidence that, at the time he served the documents by leaving them in the letterbox it was already dark. He could not recall what day of the week he served the documents.

This evidence was inconsistent with paragraph 14 of an affidavit sworn by Mr Jenkins on 3 December 2002 in this proceeding, in order to have a default judgment set aside. In that affidavit, Mr Jenkins swore:

“14. On a Thursday in mid to late January of 1992 at approximately 7.30 p.m., I served the said Assignment, Nomination form and declaration on Visualeyes Pty Ltd by delivering the same to Frank Olgyay at 79 Laura Road, Knoxfield in the State of Victoria which was the registered address of Visualeyes Pty Ltd.”

This sworn evidence by Mr Jenkins, as recently as December 2002, was inconsistent with his sworn evidence before me, in the following ways:

(1)The Affidavit evidence was clearly intended to convey a precise recollection as to the month, day of the week and time of service. In oral evidence, Mr Jenkins could only recall the time.
(2)The Affidavit conveys the impression that the documents were delivered to Mr Olgyay. That was clearly not the case. In oral evidence, Mr Jenkins swore that he placed the documents in the letterbox of the place he believed the Olgyay’s resided at that time.
(3)Mr Jenkins did not swear in his oral evidence that 79 Laura Street was the registered office of Visualeyes. To the contrary, he said that he believed that the registered office was at an accountant’s office, and that he also served the documents at the accountant’s office.

The only specific evidence about service which Mr Jenkins was able to give was that he left the documents at the letterbox at 79 Laura Street at approximately 7.30pm and that it was dark. When faced in cross-examination with the obvious proposition that, with daylight saving, it could not have been dark at 7.30pm in Melbourne in January or February, Mr Jenkins became evasive and even questioned whether daylight saving was in place in 1992.

I do not accept the evidence of Mr Jenkins that he served the registered office of Visualeyes with copies of the assignment documents. In my opinion, Mr Jenkins was deliberately vague about the place at which he believed he served the registered office of Visualeyes. His evidence that the registered office at which he served the assignment documents was:

“… to the best of my recollection I believe the office was around either Malvern – between Malvern and Vermont, all in that area – I don’t know specifically where it was but it was in that jurisdiction in the Eastern side of Melbourne”

is simply not credible. Further, I reject his evidence that he spoke with an accountant at the registered office which he served.

The oral evidence of Mr Jenkins is also inconsistent with the further and better particulars given by the plaintiff of the allegation that the nomination was served on Visualeyes. In the further and better particulars dated 18 June 2003, the plaintiff has relied upon paragraph 14 of the affidavit sworn by Mr Jenkins.

Particulars were also given of service of the nomination upon Charnock by being handed to Nagy at 83 Iona Street, Rye. There was no need to serve Charnock. Mr Jenkins acknowledged this in his evidence. He said that he did not serve a copy of the nomination on Charnock. His only explanation was that the solicitors had made a mistake for unspecified reasons. He acknowledged that he had instructed the solicitors. I infer that Mr Jenkins believed, at the time that he gave instructions for these further and better particulars, that it was a necessary part of the plaintiff’s case that she establish service of the nomination upon Charnock. I find that Mr Jenkins deliberately gave false instructions to the solicitors who were then acting about service on Charnock, because he mistakenly believed that it was an essential part of the case of Mrs Jenkins that she establish service of the nomination on Charnock.

During 1992, there was correspondence written by Finkelstein, Lipschutz & Alter, on behalf of Condor with respect to the Rye land. At no time in this correspondence did Finkelstein, Lipschutz and Alter refer to the fact, if it was the case, that the rights of Condor under the Condor contract had been assigned to Mrs Jenkins.

(9) 1992-2000

Nothing happened of any significance in relation to the Camelot contract or the Condor contract in the period to March 1999. The Ferlow contract remained uncompleted and Ferlow continued as registered proprietor of the Rye land.

Yvette Olgyay gave evidence that, from the Olgyay’s perspective, they could simply not afford to engage a solicitor to advise them about a matter which seemed very complicated. In 1996 she approached the firm of solicitors who presently act for Visualeyes. However, no action seems to have been taken until March 1999.

From the perspective of the Jenkins, they were otherwise occupied. The National Australia Bank had taken possession of Camelot Castle in January 1992 and proceeded to sell it by mortgagee’s sale. Thereafter, there were proceedings between the National Australia Bank on the one hand and Mr and Mrs Jenkins and an associated company, Harvord Pty Ltd, on the other. The details of these proceedings are not relevant to the determination of the case before me. Apart from a brief description of their nature, and some cross-examination of witnesses by reference to some findings of fact at both first instance and on appeal, there is no evidence before me as to the outcome of those proceedings. In any event, any findings of fact made in those proceedings would not, absent an admission, be admissible as evidence in this proceeding.[5] The relevant matter to note here is that it was not until April 1999 that the Court of Appeal of this Court delivered its judgment in the appeals instituted by Mr and Mrs Jenkins. I infer that the time and resources of Mr and Mrs Jenkins were, in the period until 1999, devoted to their disputes with the National Bank. In the meantime, their position in respect of the Rye land was protected by the Condor caveat.
[5]Hollington v Hawthorn & Co Ltd [1943] KB 587.

In March 1999, the Assistant Registrar of Titles gave notice to Condor pursuant to s.89A(3) of the Transfer of Land Act 1958 that the Condor caveat would lapse on 22 April 1999 unless written notice was given which satisfied the requirements of s.89A(3) of the Transfer of Land Act. Those requirements included the need to specify that proceedings are on foot in a court of competent jurisdiction to substantiate the claim of the caveator. There is no evidence as to whether any such notice was given.

By letter dated 12 April 1999 from Marcel Alter, who had by this time moved from Finkelstein, Lipschutz & Alter to the firm of Tischer Liner & Co, asserted that he acted on behalf of Condor and referred to the Condor proceedings. No mention was made in the letter of any assignment to Mrs Jenkins of the rights of Condor under the Condor contract.

In any event, the caveat did not lapse as a result of the operation of s.89A of the Transfer of Land Act. In fact, the Condor caveat was not removed until an order was made to this effect by the County Court in September 2001. In the meantime, as appears hereafter, Mrs Jenkins lodged a caveat to protect her interest.

(10) County Court Proceedings

On 19 September 2000, Visualeyes commenced proceedings in the County Court of Victoria against Ferlow, the Australian Securities and Investment Commission (“ASIC”) and the Registrar of Titles (“the Registrar”) (“the County Court proceedings”).

Visualeyes made the following claims in the County Court proceedings:

(1)As against Ferlow, Visualeyes claimed, in effect, specific performance of the Ferlow contract. This was necessary because Visualeyes was still not registered as the proprietor of the Rye land.
(2)As against ASIC, Visualeyes claimed that, pursuant to s.576(1) of the Corporations Law as at 24 June 1993, all of the property previously owned by Condor before its deregistration was vested in ASIC. Visualeyes sought against ASIC declarations that:
(a)it had no right title or interest in the Rye land; and
(b)the Condor contract was void and unenforceable.

The claims for declarations against ASIC (as successor in title to Condor) were based upon the deposit agreement and an allegation that the Camelot contract had been validly rescinded. There was also a claim that the Condor contract was void for uncertainty. There was no allegation that the Camelot contract was void for uncertainty. In relation to the deposit agreement, Visualeyes pleaded as follows:
“8. Further, Heather Jenkins (“Jenkins”) was at all relevant times:
(a)prior to 30 October, 1990 the registered proprietor of the reception centre known as Camelot Castle (‘Camelot’);
(b)a director and shareholder of Condor.

9.On or about 30 October, 1990 Jenkins agreed to sell to Visual and Charnock Properties Pty Ltd (‘Charnock’) a nine-tenths interest in Camelot, and Visual and Charnock agreed to purchase such interest (‘the Camelot contract’).
Particulars

The Camelot contract is in writing and dated 30 October 1990 and executed by both parties. A copy of the Camelot contract is in the possession of the solicitors for the plaintiff and may be inspected by appointment.
10.There were terms of the Camelot contract, amongst others, as follows:
(a)that Visual and Charnock would pay consideration of $1,520,000;
(b)that an initial deposit of $300,000 by Visual and Charnock would be satisfied by the transfer of the Rye blocks to Jenkins (‘the Camelot deposit’);
(c)that the balance of $1,220,000 would be paid on or about 1 April, 1992;
(d)that at the time the balance was paid, Visual and Charnock would become the registered proprietor of a nine-tenths interest in Camelot as tenants in common, and Jenkins would become the registered proprietor of a one-tenth interest as tenant in common in Camelot.

11.Pursuant to the Camelot contract or otherwise, on or about 30 October 1990 Condor agreed to purchase the Rye blocks from Visual for consideration of $300,000 and Visual agreed to sell them (‘the Condor contract’).
12.It was a term of the Condor contract that the sale was subject to and conditional on Condor accepting the Rye blocks as full deposit for the purchase of Camelot pursuant to the Camelot contract.”

(3)As against the Registrar, Visualeyes claimed an order for removal of the Condor caveat.

On 24 September 2001, the County Court proceeding came on for trial. There was no opposition to the orders sought. Ferlow had already provided the transfers of land and certificates of title in respect of the Rye land and neither ASIC nor the Registrar opposed any of the relief which was sought. Accordingly, perhaps based on a reading of some of the contractual documents and some submissions, the County Court declared that ASIC (as successor in title to Condor) had no right, title or interest in the Rye land, declared that the Condor contract was void and unenforceable and ordered that the Condor caveat be removed (the “County Court judgment”).

I was troubled by the fact that Visualeyes did not join Mrs Jenkins as a party to the County Court proceeding. Although it was strictly true as a matter of law that the assets of Condor had vested in ASIC, the Olgyays well knew that Mrs Jenkins was the vendor under the Camelot contract and that she had put Condor forward as, in effect, her nominee to receive the deposit consideration. As recently as April 1999, Mr Alter (who was known to be the solicitor representing Mr and Mrs Jenkins and Condor in relation to the matter) had written seeking to maintain the Condor caveat. Furthermore, Yvette Olgyay gave evidence of sporadic telephone contact from Mr Jenkins in which he told her, in effect, that the Olgyays would never get the Rye land. Obviously enough, the dispute was and remained one between the Jenkins family and the Olgyay family. On the other hand, it was submitted on behalf of Visualeyes that it was entitled to proceed without joining Mrs Jenkins as a party to the County Court proceedings. The rescission notice had not been met with any substantive response, Condor had been de-registered for seven years and no notice had been received of any assignment to Mrs Jenkins. In the end, nothing turns on the issue. In final address, counsel for Visualeyes abandoned any reliance upon an issue estoppel or res judicata arising from the judgment in the County Court proceeding. It is accepted by Visualeyes that, if Mrs Jenkins can establish her claim as assignee from Condor, the County Court judgment is not capable of founding an issue estoppel or res judicata against Mrs Jenkins as she was not a party. Further and in any event, the County Court judgment was obtained as a result of consent or non-opposition and not after a trial on the merits.

(11) The Jenkins Caveat

Unfortunately for the Olgyay interests, the County Court judgment did not bring an end to the matter. Prior to the trial of the County Court proceeding, Ferlow had already provided transfers of land and certificates of title in respect of the Rye land. As a result of these documents being lodged with the Registrar, I infer that notice was given under s.89A of the Transfer of Land Act to Condor and came to the attention of Mr and Mrs Jenkins. On 27 August 2001, which was prior to the County Court judgment, Mrs Jenkins lodged a caveat over the Rye land in her own name (the “Jenkins caveat”). She stated the grounds of her claim:

“As nominated purchaser under a Contract of Sale from Visualeyes Pty Ltd and dated the 30^th day of October 1990.”

The Jenkins caveat remains on the titles to the Rye land.

On 5 March 2002, this proceeding was commenced by Mrs Jenkins.

Curiously, on 2 July 2003, Mr Jenkins wrote to the Registrar on the letterhead of “Condor Pacific Consolidated” (a business name which he had registered by this time) in respect of the Condor caveat and the application to remove it. It must be remembered that, by this time, the Condor caveat had been removed by the County Court judgment. However, the position of Mrs Jenkins was protected by the Jenkins caveat. For some reason, Mr Jenkins was motivated to write to the Registrar about an application to remove the Condor caveat and, in the course of doing so, referred to the Condor proceedings which had been commenced in 1991 and dismissed in 1999. This conduct by Mr Jenkins shows his confused thinking and, in my view, demonstrates his continuing failure to appreciate that Condor had no rights after its de-registration.

Pleadings, Concessions and Remaining Issues for Determination

Fortunately, there are few contested factual issues which must be determined in order to resolve this difficult case. Furthermore, as a result of concessions made on both sides during the course of final address, some of the pleaded issues have evaporated.

By her statement of claim, Mrs Jenkins alleges the Camelot contract, the deposit agreement and the Condor contract. As a result of the deposit agreement, she alleges that there is a disconformity between the agreement as to the deposit contained in the Camelot contract and the common intention of the parties constituted by the deposit agreement. She claims rectification of the Camelot contract as a result. In its defence, Visualeyes, in substance, admits the making of the Camelot contract, the Condor contract and the deposit agreement. However, it pleads that each of the Camelot contract and the Condor contract is void for uncertainty and denies that Mrs Jenkins is entitled to rectification of the Camelot contract to accord with the deposit agreement. Alternatively, if a right to rectification is otherwise established, it is alleged that the Court has no power to order rectification in the absence of Charnock as a party to the proceeding.

Next, Mrs Jenkins pleads that Visualeyes and Charnock have repudiated the Camelot contract by failing to complete it, abandoning possession of Camelot Castle and wrongfully purporting to rescind the Camelot contract. Mrs Jenkins alleges that, as a result, the deposit constituted by the Rye land has been forfeited. In response, Visualeyes pleads that it and Charnock were entitled to rescind the Camelot contract pursuant to s.6(3) of the Sale of Land Act due to non-compliance by Mrs Jenkins with the provisions of ss.6(1) and 6(2) of that Act.

Next, Mrs Jenkins pleads that Condor nominated her as substitute purchaser under the Condor contract and that, for this reason, she is entitled to enforce it. In final submissions, it was conceded that this claim could not succeed in the absence of Condor being a party and seeking to enforce the Condor contract for the benefit of Mrs Jenkins. Accordingly, this basis of the claim by Mrs Jenkins was abandoned.[6]
[6]This concession was properly made. See Commissioner of State Revenue v Politis [2004] VSC 126 at [15] per Nettle J.

Next, Mrs Jenkins alleges that, by the assignment agreement, Condor assigned all of its right title and interest in its assets, undertakings and choses in action to her. Accordingly, it is alleged that Mrs Jenkins is entitled to have the Condor contract completed and to become the registered proprietor of the Rye land. In effect, Mrs Jenkins pleads that she is entitled to specific performance of the Condor contract as assignee of the rights of Condor. The case was conducted on this basis.

In its defence, Visualeyes contends that the assignment agreement was not entered into, that if it was it was not effective to assign Condor’s rights under the Condor contract to Mrs Jenkins and that, in any event, no notice was given to Visualeyes of the assignment agreement. It is alleged that the absence of notice has the result that, if the assignment is proved, Mrs Jenkins cannot succeed in her claim in the absence of Condor as a party to the proceeding.

In oral argument, counsel for Visualeyes conceded that, if I was satisfied that the assignment agreement was entered into prior to deregistration of Condor and that it was, on its proper construction, effective to assign the rights of Condor under the Condor contract to Mrs Jenkins, that it was unnecessary that Condor be made a party to the proceeding. Accordingly, this aspect of the defence was abandoned.[7]
[7]This concession seems to have been properly made, especially in circumstances where Condor has been deregistered. See Spry, Equitable Remedies, 6^th ed. at 80-3; Long Leys Co Pty Ltd v Silkdale Pty Ltd [1991] 5 BPR 11,512; Thomas v National Australia Bank Ltd. [2000] 2 Qd R 448 at para [29]; Hume v Munro (No. 2) (1943) 67 CLR 461 at 482; Tolhurst v Associated Portland Cement Manufacturers Ltd. [1903] App Cas 414 at 420-1 and 424-5.

As to the denial that the assignment agreement was entered into, it is alleged that the assignment agreement was not properly executed by Condor because it was signed on its behalf by Tom Jenkins who was not, at the time, a director of Condor.

In oral argument, counsel for Visualeyes sought to add a further defence. She submitted that I should find that the assignment agreement was not executed on the date it bears (31 December 1991) but was in fact executed after deregistration of Condor on 24 June 1993.

Finally, it is pleaded on behalf of Mrs Jenkins that Visualeyes holds the Rye land on a resulting trust, or as a constructive trustee, for her. The resulting trust claim was abandoned in final address. The constructive trust claim is a difficult one and all aspects of it are denied on behalf of Visualeyes.

Alleged Uncertainty of the Camelot Contract

If the Camelot contract is void for uncertainty then the associated Condor contract will also fail. The only purpose of the Condor contract is to provide the deposit due under the Camelot contract.

On behalf of Visualeyes, it is contended that the Camelot contract is uncertain for a number of reasons. In the first place, it is contended that there is a disconformity between the description of the property being sold on the first page of the Camelot contract and the description given in Special Condition B on p.2 of the Camelot contract. I do not accept this submission. On p.1 of the Camelot contract, the property being sold is described in the following terms:

“THE PROPERTY Camelot Castle – On 10 Acres of Land
Kooweerup Road – Yellingbo
Victoria3139.”

This describes the property with sufficient certainty. However, also on the first page of the Camelot contract, it is expressly stated that the sale of the property is subject to:
“4.Any special conditions set out on the back of this Contract Notice.”

Accordingly, the description of the property quoted above is subject to the special conditions on p.2. Special Condition B states:
“The Vendor is to remain as registered proprietor as to 1/10 of the equity in the real property being the land contained in Certificate of Title Volume 9862 Folio 101 with the purchaser being the registered proprietor of the remaining 9/10 of the property as tenants-in-common.”

In my view, there is no need to resort to any special rule of construction, such as the need to give a beneficial construction to contracts prepared by businessmen without legal assistance[8], in order to give certainty to the description of the land being sold. Quite clearly it was only 9/10ths of the real estate.
[8]The Council of the Upper Hunter County District v Australian Chilling and FreezingCo Ltd (1967) 118 CLR 428 at 436-7; Meehan v Jones (1981-82) 149 CLR 571 at 589.

Second, it is contended on behalf of Visualeyes that there is uncertainty as to the chattels being sold under the Camelot contract. It was submitted that, as with the description of the real estate being sold, there is no mention on the first page of the Camelot contract of any equity in the chattels being retained by Mrs Jenkins as vendor. I do not accept this submission. The description of the chattels on the first page of the Camelot contract is certain. It is limited to an inventory attached to the Camelot contract. Further, the second part of Special Condition B provides:

“The Vendor is to retain a 10% equity in the business of Camelot Castle only as to plant and equipment, if and when sold. The Vendor is not to be liable for any liabilities or expenses in connection with the ongoing operation of the business from the date hereof.”

I do not accept that this clause is uncertain. The use of the word “retain” demonstrates, I think, that the parties intended that the retention of a 10% equity should only apply to the plant and equipment which was in fact being sold by Mrs Jenkins, and not to any after-acquired plant or equipment utilised in the business conducted at Camelot Castle.

In any event, the retention of a 10% equity in the plant and equipment could, in my view, be severed if it was found to be uncertain and therefore unenforceable. It was not so fundamental to the Camelot contract that the parties should be taken to have intended it should become unenforceable if that aspect of it was struck down by a court.[9]
[9]See, for example, McFarlane v Daniell (1938) 38 SR (NSW) 337 at 345.

Alleged Uncertainty of the Condor Contract

If the Condor contract is so uncertain that it is unenforceable, then the claim by Mrs Jenkins will fail. It was submitted on behalf of Visualeyes that the Condor contract was void for uncertainty on a number of grounds.

In the first place, it was submitted that Special Condition A is uncertain. Special Condition A states:

“This sale is subject to and conditional upon the Purchaser accept the above land, namely Lot 9-10-11 Daniella Court, Rye, as full deposit for Camelot Castle, Kooweerup Road, Yellingbo.”

It was submitted that the reference to Condor accepting the Rye land as a deposit under a contract to which it was not a party does not make sense and is uncertain. Further, it was submitted that it is uncertain to state that the sale of the Rye land “is subject to and conditional” upon such acceptance. I do not accept these arguments. The Condor contract was not made in a vacuum. It was made as part of the Camelot contract and the associated deposit agreement. Special Condition A, although clumsily worded, means that Visualeyes is only entering into the Condor contract on the condition that Condor (on behalf of Mrs Jenkins) acknowledges that the sale of the Rye land to Condor is by way of satisfying the obligation of Visualeyes to pay the deposit due under the Camelot contract.

Secondly, it was argued on behalf of Visualeyes that Special Condition B of the Condor contract is uncertain. Special Condition B states:

“BThe title will be provided within the period of nine calendar months.”

It was submitted that Special Condition B made it uncertain as to the time at which Condor was required under Special Condition A to accept the Rye land as the deposit under the Camelot contract. I do not accept this submission. The clear intent of the Condor contract, when read in the light of the Camelot contract and the deposit agreement, was to give effect to the deposit agreement. The provision of a nine month time period to enable Visualeyes to obtain the Certificates of Title to the Rye land and complete the Condor contract is not inconsistent with that intention.
Rectification of the Camelot Contract

As I have said, one thing which is certain in the ocean of disputed, confused and incomplete facts relevant to this dispute is the existence of the deposit agreement. In these circumstances, it is surprising that the claim for rectification of the Camelot contract was opposed.

On behalf of Visualeyes it was argued that rectification was not available because, at the time Mrs Jenkins signed the Camelot contract, she was not labouring under any misunderstanding as to what the Camelot contract in fact said on the question of the deposit. Nor, it was submitted, was there any evidence of Visualeyes or Charnock being mistaken as to the words used in the Camelot contract. Counsel for Visualeyes sought to rely upon the High Court decisions in Maralinga Pty Ltd v Major Enterprises Pty Ltd[10] and Pukallus v Cameron[11]. It was submitted on behalf of Visualeyes that, based on these authorities, rectification could not be ordered where there was no mistake as to the contents of the contract which was signed and the parties had intended the written instrument to say what it did.
[10](1973) 128 CLR 336.
[11](1982) 180 CLR 447.

It was submitted on behalf of Visualeyes that there was evidence that Mrs Jenkins knew that the Camelot contract did not record the deposit agreement but signed it anyway, intending to be bound by the form of the Camelot contract as signed. The factual basis for this submission is not made out. There is no evidence that, at the time the Camelot contract was signed, any of the parties to it intended that contract to say what it did on the question of the $300,000 deposit and its payment. The only evidence which was relied upon by Visualeyes was the following evidence of Mrs Jenkins in examination-in-chief:

“Are you able to say why it was that two contracts were drawn up?---Well, it was because the deposit was not just a normal deposit as put on here and just stated as cash deposit, we had to actually sign another contract to purchase that land.
Was this something that was your understanding or was this something that was said to you?---Well, it’s something that happened on that day that was suggested by Mr Nargey (sic) that that’s how we would be best to do it, as to make the two contracts.”

This evidence falls far short of establishing that Mrs Jenkins turned her mind to the actual words of the Camelot contract at the time that she signed it and intended it to say what it did about the deposit of $300,000 having been paid.

As I have said on numerous occasions in the course of these reasons, I am entirely satisfied that there is a want of correspondence, or a disconformity, between the clear intention of the parties to the Camelot contract, as evidenced by the deposit agreement, and the words actually used in the Camelot contract concerning the deposit. I am also satisfied that the parties intended that each of the Camelot contract and the Condor contract would reflect the deposit agreement. This is sufficient to make out a case for rectification.[12]
[12]Maralinga (1973) 128 CLR 336 at 350-1 per Mason J; Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 331-2 per Mahoney AP, 338-9 per Sheller JA, 345 per McLelland AJA; The Club Cape Schank Resort Co Ltd v Cape Country Club Pty Ltd [2001] 3 VR 526 at [7] per Tadgell JA, [30], [39] per Phillips JA, [44] per Chernov JA.

The form of rectified wording put forward on behalf of Mrs Jenkins is in accordance with, and will give effect to, the common intention of the parties as evidenced by the deposit agreement. To the extent that it is necessary to do so, I will order rectification of the Camelot contract.

As to the argument that rectification cannot be ordered in this proceeding because Charnock, a party to the Camelot contract, has not been joined as a party, no authority has been put to me which establishes that I have no power to order rectification unless all of the parties to the relevant contract are before the Court as parties to the proceeding. In my view, in the circumstances of this case, it is unnecessary for Charnock to be joined as a party in order for rectification to be ordered. Charnock has been deregistered for some 12 years. There is no useful purpose to be served by reviving it for the purposes of joining it as a party to a proceeding in which no relief is sought against it. In circumstances where the evidence of common intention is sufficiently clear and convincing, even in the absence of Nagy as a witness on behalf of Charnock, there is no utility in joining Charnock as a party for the sole purpose of ensuring that all parties to the Camelot contract are before the Court.

Rescission or Repudiation of the Camelot Contract? Sale of Land Act Issues

As I have said, it is contended on behalf of Visualeyes that the Camelot contract was validly rescinded by it and Charnock as a result of Mrs Jenkins’ breach of s.6 of the Sale of Land Act. If this contention is correct, then Mrs Jenkins must fail in her case. This is because her claim for completion of the Condor contract, depends upon her establishing a right to enforce the deposit obligation (as rectified) under the Camelot contract.

On the other hand, if the Camelot contract has been repudiated, Mrs Jenkins is entitled to treat the deposit, once “paid” or provided, as forfeited by reason of a repudiation of the Camelot contract constituted by the failure of Visualeyes and Charnock to complete it.

It is common ground between the parties that the Camelot contract is a terms contract and that Camelot Castle was subject to the NAB mortgage at the time of execution of the Camelot contract. Although not admitted, I find that the Camelot contract (by incorporating the s.32 statement) expressly states that Camelot Castle is subject to a mortgage. It is common ground between the parties that the Camelot contract (and associated s.32 statement) does not give all of the particulars of the NAB mortgage which are specified in Schedule 1 to the Sale of Land Act as it stood at the relevant time.

Accordingly, by s.6(3) and s.14(1) of the Sale of Land Act, the Camelot contract is voidable at the option of Visualeyes and Charnock at any time before completion, subject to the proviso in s.14(1). That proviso provides:

“Provided that a terms contract shall not be voidable by the purchaser if a court is satisfied that the vendor has acted honestly and reasonably and ought fairly to be excused for the contravention and that the purchaser is substantially in as good a position as if all the relevant provisions of the Act had been complied with.”

In Australian Horizons (Vic) v Ryan Land[13] Hedigan J considered s.14(1) of the Sale of Land Act. His Honour held that:

(1)Section 14(1) requires that each of the relevant matters must be established, although a court may express itself compendiously in relation to them, having considered each one.[14]
(2)Section 14(1) requires a consideration of the factual matrix against which the conduct of the vendor, and the position of the purchaser, is to be evaluated.[15]

[13][1994] 2 VR 463

[14][1994] 2 VR 463 at 487

[15][1994] 2 VR 463 at 487, 489

In evaluating the conduct of the vendor in that case, Hedigan J considered it relevant that the purchase monies payable under the contract of sale would, if paid, have been sufficient to discharge the mortgage which was the subject of the breach of s.6.[16] Further, Hedigan J considered that this fact was highly relevant to his assessment that the purchaser was substantially in as good a position as it would have been if s.6 had been complied with.[17]
[16][1994] 2 VR 463 at 490
[17][1994] 2 VR 463 at 492

In final submissions, both counsel were content to label the non-compliance with s.6(1) and s.6(2) of the Sale of Land Act as “technical”[18], with one exception. On behalf of Visualeyes, it was submitted that there was a material mis-statement of the amount secured by the NAB mortgage as at the date of the Camelot contract. It was submitted that the discrepancy between the amount stated in the s.32 statement was so great that I could not be satisfied that Mrs Jenkins had acted honestly in all the circumstances. Put simply, it was submitted that it was dishonest to put forward, in the s.32 statement, a statement that the amount secured by the mortgage was $300,000 when, on the evidence, the amount secured at that time was in the order of double that amount according to Mr Jenkins.
[18]In the sense that the non-compliance was honest, reasonable and did not affect the position of Visualeyes and Charnock as purchasers under the Camelot contract.

As I have said, I find that the amount secured by the NAB mortgage at the time of the Camelot contract was between $500,000 and $700,000. It is true that this is in the order of double the amount stated in the s.32 statement as being presently secured. However, I note that the s.32 statement estimates that the amount required to discharge the NAB mortgage at settlement could be as high as $450,000. Of course, it was the amount of the mortgage at the time when settlement was due which was most relevant to the parties.

On behalf of Mrs Jenkins, it was submitted that, notwithstanding an express plea in the reply, to the effect that Mrs Jenkins acted honestly and reasonably in connection with any contravention of the Sale of Land Act, no rejoinder alleging dishonesty was filed. In my view, matters such as dishonesty should have been expressly pleaded.

It was also submitted on behalf of Mrs Jenkins that, not only was dishonesty not pleaded, but it was not put directly to either Mr or Mrs Jenkins that they acted dishonestly in understating the amount secured by the mortgage in the s.32 statement. I also accept this submission.

The fact that dishonesty was not expressly pleaded or put is, in my view, a sufficient answer to the submissions made on behalf of Visualeyes that I should find that Mrs Jenkins acted dishonestly.

Further and in any event, on the evidence, I find that Mrs Jenkins acted honestly in connection with the disclosure of the NAB mortgage and the amount secured by it.

In the first place, there is no evidence that Mrs Jenkins was involved in providing the information concerning the amount secured by the NAB mortgage which appears in the s.32 statement. I infer that Mr Jenkins provided this information to Mr Nagy. Mrs Jenkins swore that the s.32 statement was provided to her by Nagy and signed by her on the day that the Camelot contract was signed. I accept this evidence.

Secondly, the consent to mortgage is a strong indication that Mr and Mrs Jenkins acted honestly in relation to the amount secured by the NAB mortgage. The evidence is canvassed above. By the consent to mortgage, executed only a few days after the Camelot contract, the parties agreed that Mrs Jenkins would be free to further mortgage Camelot Castle as long as the extent of the mortgages, including the NAB mortgage, did not exceed the purchase price. This was expressly so that Mrs Jenkins would be in a position to “clear the debt on settlement and provide a clear title to Charnock … and Visualeyes … so settlement can take place.”

Thirdly, there is no evidence that, relying upon the consent to mortgage, Mrs Jenkins borrowed further sums secured by the NAB mortgage, or otherwise further encumbered Camelot Castle, after execution of the Camelot contract.

Fourthly, and perhaps most importantly, the conduct of Mrs Jenkins must be viewed in circumstances where the unpaid balance of the purchase price under the Camelot contract far secured the amount secured by the NAB mortgage. In these circumstances, there was no reason to dishonestly understate the amount secured by the NAB mortgage in the s.32 statement. There was no evidence that a correct statement of the amount secured would have made any difference to Visualeyes or Charnock. The fact that they signed the consent to mortgage supports this.

For the same reasons that I have found that Mrs Jenkins acted honestly in relation to the disclosure of the NAB mortgage and the amount secured by it, I find that Mrs Jenkins acted reasonably and ought fairly to be excused from her contraventions of s.6 of the Sale of Land Act.

The question remains as to whether Visualeyes and Charnock are and were at relevant times in substantially as good a position as if all the relevant provisions of the Sale of Land Act had been complied with. I find that they are and were. On any view of the evidence, the amount secured by the mortgage was nowhere near the amount of the purchase price, even when a $300,000 credit is given for the Rye land. The clear intention of the parties was that the mortgage would be discharged at settlement, upon payment of the purchase price. In final submissions, it was conceded on behalf of Visualeyes that there was no evidence of any imminent action by the mortgagee to take possession of Camelot Castle.

It follows that the Camelot contract was not validly rescinded. It was repudiated. Mrs Jenkins, if she can establish an assignment of Condor’s rights, is entitled to enforce the Condor contract as the deposit under the Camelot contract has been forfeited.

Was the Assignment Agreement Executed Before Deregistration of Condor?

The assignment agreement is dated 31 December 1991. This is also the date of the nomination and the purchasers’ declaration. I start with the presumption, which was accepted by both parties, that a document was executed on the date that it bears.[19] Accordingly, the onus is on Visualeyes to establish that these documents were not executed on the date which they bear.[20] If this onus is satisfied, the onus of establishing the date by which the assignment agreement was executed will shift to Mrs Jenkins.
[19]Dillon v Gange (1941) 64 CLR 253 at 261 per Starke J and 264-5 per Williams J.
[20]Dillon at 265.

It is contended on behalf of Visualeyes that it has discharged the onus of proof on it and that I should infer that the assignment agreement (and also the nomination and the purchasers’ declaration) were executed after deregistration of Condor on 24 June 1993.

Before returning to the evidence on this critical issue, it is necessary to record that no case of fraud is put by Visualeyes. In her closing address, counsel for Visualeyes expressly stated that, although I ought to find that the date on the assignment agreement is at least 18 months before it was in fact executed, no case of fraud was being put forward against Mrs Jenkins or, indeed, Mr Jenkins. To the contrary, it was put that I ought to find that the assignment agreement was in fact created after 30 June 1993 in an attempt by Mr and Mrs Jenkins to “regularise things” consequent upon, or in anticipation of, deregistration of Condor. This concession and submission were made in response to the submission put on behalf of Mrs Jenkins, which submission I accept, that fraudulent backdating of the assignment agreement was not pleaded or put to Mrs Jenkins.

I turn to the evidence about the time at which the assignment agreement was executed. The evidence is inconsistent, confusing and unsatisfactory.

The first question is whether Visualeyes has been able to displace the presumption that the assignment agreement was executed on 31 December 1991, being the date that it bears. Given the length of time which has elapsed since the relevant events occurred, and the consequent failure of Mr and Mrs Jenkins to have any independent recollection, this is a most difficult factual issue to resolve. In the end, I must follow the probabilities on the face of the documents. On this basis, I am satisfied, on balance, that Visualeyes has satisfied the onus on it and that the presumption as to the date of the assignment agreement being the date that it was in fact executed has been displaced.

In reaching this conclusion, I have relied upon the following documents which indicate that the assignment agreement was not executed on 31 December 1991. In the first place, I refer to the Condor minutes of 31 December 1991. They speak of an assignment to Mrs Jenkins taking place in the future “if things don’t improve in the next twelve months”.

Second, the Condor minutes of 30 September 1992, which have obviously been altered since they were first written, indicate that it was only at that time that a decision was made for Condor to cease trading. As I have said the alterations to these minutes were obviously made after they were initially written, so as to give the impression that the assignment agreement had been executed in 1991. However, in their unaltered state, the minutes unambiguously refer to the execution “on this day” of “a Deed to Heather Jenkins transferring all assets of the company and any future moneys forthcoming from any litigation or payouts to go direct to Heather Jenkins, from this day on.” Putting to one side the date on which the 30 September 1992 minutes of Condor were in fact prepared, and whether they record the business transacted at a meeting on or about 30 September 1992, these minutes in their unaltered form are inconsistent with the assignment agreement having been executed on 31 December 1991. I do not accept the evidence of Mr Jenkins that the amendments to these minutes were made at the suggestion of Mr Alter so as to ensure that the minutes correctly reflected that the assignment agreement had previously been executed on a specific day.

As I have said, in these circumstances, the onus then shifts back to Mrs Jenkins to establish that the assignment agreement was executed before deregistration of Condor. This is a difficult question, given the state of the evidence. However, on balance, I find that Mrs Jenkins has satisfied this onus. I find that the assignment agreement was executed on or about 30 September 1992 and thus prior to the de-registration of Condor.

The assignment agreement has obviously been backdated, I infer because Mr Jenkins was uncertain as to whether Condor may have already been de-registered at that time, given the fact that it had not lodged any documents with ASIC, or its predecessor, since December 1990. Given the decision by Mr Jenkins to allow Condor to be de-registered by default, by reason of it failing to lodge annual returns, Mr Jenkins could not have known when deregistration would occur. There was every motivation for him to backdate the assignment agreement. I infer that Mr Jenkins chose 31 December 1991 because that was the last date upon which Condor ought to have filed its annual return for the year ended 30 June 1991. It appears to me likely that this date was chosen because Mr Jenkins believed that deregistration based on a failure to lodge an annual return could not occur during the period when it was permissible for Condor to lodge its annual return.

Although it was not pleaded, the trial was conducted on the basis that the assignment agreement, the nomination and the purchaser’s declaration had all been backdated. However, it was not pleaded or submitted on behalf of Visualeyes that the mere fact of backdating, if established, was sufficient to disentitle Mrs Jenkins to the relief which she seeks. The case was conducted on the basis that, if Mrs Jenkins could establish that the assignment agreement was executed prior to deregistration of Condor and that the assignment agreement was legally effective to assign Condor’s interest in the Condor contract to Mrs Jenkins, that Mrs Jenkins would be entitled to succeed.

On behalf of Visualeyes, it was submitted that I should find, on the balance of probabilities, that it was “possible” that the assignment agreement was not executed until after 30 June 1993. It was put that I should infer that the minutes of the “last and final meeting of Condor” for the year ended 30 June 1993, and the minutes of the annual general meeting for 30 September 1992, which appear on the same page of the minute book, were prepared at the one time after 30 June 1993 or, in any event, after 24 June 1993 when Condor was deregistered. I do not accept this submission. There are a number of pages of the Condor minute book where more than one meeting appears on the same page. It seems to have been the practice of Mrs Jenkins, who wrote up the handwritten minutes, to complete each page before starting another, at least if it was possible that the subsequent minute would fit on the same page as the previous minutes.

There is also the concession by counsel for Visualeyes that fraud had not been pleaded, and was not alleged, against Mrs Jenkins or, indeed, Mr Jenkins.

I am in part agreement with the submission made by counsel for Visualeyes. I accept, as stated above, that the purpose of backdating the assignment agreement was to guard against the possibility that, by 30 September 1992, Condor had already been deregistered. After all, the last annual return which had been lodged for Condor was on 8 December 1990 in respect of the year ended 30 June 1990. The annual return for the year ended 30 June 1991 was due to be filed on 31 December 1991, but was not filed. I infer that Mr Jenkins considered the possibility that Condor could have been de-registered at any time after 31 December 1991. Accordingly, the date 31 December 1991 seems to have been chosen as the date for backdating. However, I do not accept the submission that I should infer that the assignment agreement was in fact executed after de-registration of Condor. As I have said, the documents indicate that the most likely date is 30 September 1992.

I find that the assignment agreement, the nomination and the purchaser's declaration were all signed on or about 30 September 1992. It follows that the assignment agreement was executed at a time when Condor had the capacity to execute it.

I am not persuaded that the fact that Mr Jenkins, together with Irene Giannakos, witnessed the affixation of the Condor common seal on the assignment agreement rendered it invalid or ineffectual. In my view, although not formally occupying the position of a director of Condor, Mr Jenkins was nevertheless acting in the position of a director of Condor at all material times. The evidence is clear that he made all of the important business decisions for Condor. Once he ceased to be a director, this continued. Mrs Jenkins and Irene Giannakos, as directors, implemented all of the decisions which Mr Jenkins made. In these circumstances, I am satisfied that Mr Jenkins was acting with the authority of Condor at the time he witnessed the affixation of its common seal to the assignment agreement.[21] Furthermore, although not formally occupying the position of a director of Condor, I have no doubt that Mr Jenkins acted in the position of a director of Condor at all material times.[22] As a de facto director, the signature of Mr Jenkins adjacent to the common seal of Condor on the assignment agreement should be considered that of a director. Ms Giannakos was a director at the time.
[21]Section 126(1) Corporations Act 2001 (Cth); see also, s.182(1) Corporations Act 1989 (Cth).
[22]See definition of “director” in s.9(b)(i) Corporations Act 2001; see also, s.60(1)(a) Corporations Act 1989 (Cth).

I turn then to the question of whether, as a matter of law, the assignment agreement was effective to assign to Mrs Jenkins the interest of Condor under the Condor contract.

Was the Assignment Agreement Effective?

On behalf of Visualeyes, it is conceded that, although there may be doubt as to the amount of money owing by Condor to Mrs Jenkins, there is evidence that there were debts from Condor to Mrs Jenkins at relevant times. Accordingly, the forgiveness by Mrs Jenkins of those debts, in return for Condor transferring its assets to her, constituted sufficient consideration for the assignment agreement.

The principal argument advanced on behalf of Visualeyes in relation to the efficacy of the assignment agreement was that, on its proper construction, the assignment agreement is a mere expression of an intention on the part of Condor to assign its rights at some unspecified time in the future. Accordingly, so it was submitted, the assignment agreement does not amount to an assignment in law or equity.

Counsel for Visualeyes placed reliance upon the fact that the assignment agreement uses the future tense throughout the document by the use of phrases such as "agrees to assign", "will be assigned over to Heather Jenkins", "will be transferred exclusively to Heather Jenkins", "will transfer to Heather Jenkins" and so on. It was submitted that, in order for there to be an effective assignment, the assignment agreement must evince a clear, manifest intention to immediately divest Condor of its property and to vest it in Mrs Jenkins.

I accept that, in order for there to be an effectual assignment, the instrument of assignment must manifest an intention for an immediate assignment or for an assignment to occur at some future date which is capable of ascertainment.

Next, on behalf of Visualeyes, it was contended that the assignment agreement does not make a sufficient reference to the rights of Condor as purchaser of the Rye land and that, accordingly, there was no sufficient note or memorandum in writing to satisfy s.53 of the Property Law Act (Victoria) or s.126 of the Instruments Act 1958 (Victoria).

On behalf of Mrs Jenkins, it was submitted that this approach to the construction of the assignment agreement was overly-technical and failed to take account of the surrounding circumstances and commercial realities. It was submitted that I was entitled, in considering the surrounding circumstances, to have regard to the nomination and the purchaser's declaration and that, when this was done, the assignment agreement evinced a clear intention on the part of Condor to effect an immediate assignment of the interest of Condor in the Rye land arising under the Condor contract.

I accept the submissions on behalf of Mrs Jenkins. As I have said, the assignment agreement makes no sense if it was intended to do no more than record an intention to assign the assets of Condor to Mrs Jenkins at some unspecified future time. In my view, the use of the future tense in the assignment agreement is to be explained by reference to the fact that the assignment agreement was prepared by Mr Jenkins. As counsel for Mrs Jenkins colourfully put it in final submissions:

"Tom Jenkins' fingerprints are over this document. He is not a lawyer. He's obviously tried to express it in legal jargon. He hasn't been overly successful doing it."

The approach to the interpretation of a commercial contract, especially one drawn up by businessmen without any meaningful legal assistance, is not in doubt. In CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd[23] Nettle JA summarised the relevant authorities in the following way:

"Authority makes plain that elliptical expressions in mercantile contracts are to be read in no narrow spirit of construction but as the Court would suppose two honest business men would understand the words they have actually used with reference to their subject matter and the surrounding circumstances. One is thus to approach the crucial issue of construction by making the inquiry as to what reasonable business people in the position of the parties would have intended the clause to mean."

[23][2004] VSCA 232 at [9]

As authority for this summary of the relevant approach, Nettle JA cited Cohen & Co v Ockerby & Co[24], Shenker & Co (Aust) Pty Ltd v Maplas Equipment[25] and Di Dio Nominees Pty Ltd v Brian Mark Real Estate Pty Ltd[26].
[24](1917) 24 CLR 288 at 300
[25][1990] VR 834 at 840-5
[26][1992] 2 VR 732 at 740-2

Applying these accepted principles of construction of commercial contracts to the assignment agreement, it is in my view plain that Condor and Mrs Jenkins intended that all of the assets of Condor, including Condor's rights under the Condor contract to have the Rye land conveyed to it, were thereby assigned by Condor to Mrs Jenkins. In these circumstances, cl.1 of the assignment agreement which reads as follows:

“Condor Pacific Consolidated Ltd. will transfer to Heather Jenkins all its rights titles and interests in the Business and assets which will hold or is holding”

should be construed as effecting the immediate assignment of all of the rights, titles, interests and assets of Condor to Mrs Jenkins on the date the assignment agreement was executed. The words “will transfer” should be read as meaning “transfers”. This is the only construction which accords with business common sense and, as such, should be preferred over a literal construction of the use of the word “will” which leaves the assignment agreement with no purpose whatsoever. Businessmen acting reasonably could not have intended this to be the case.

As Lord Diplock said in Antaios Compania Narieva S.A. v Salen Rederiema A.B[27]:

“ … if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.”

In my view, this statement is apposite to the construction of the assignment agreement.

[27][1985] AC 191 at 201.

This conclusion is reinforced by the nomination and the purchaser's declaration, each of which only makes sense in the context of an intention to effect an immediate assignment of the rights of Condor under the Condor contract to Mrs Jenkins. Furthermore, the clear evidence was that, at the time, Condor's only asset was its right to a conveyance of the Rye land under the Condor contract.

As to the argument that neither the Condor contract nor the Rye land are mentioned in the assignment agreement, I am not satisfied that this causes Mrs Jenkins any difficulty. In the first place, cl.1 of the assignment agreement applies to all of Condor's assets – "… all its rights, titles and interests in … assets which … (it) is holding." The rights of Condor under the Condor contract are properly to be described as an asset. Those rights gave it an equitable interest in the Rye land. Secondly, the surrounding circumstances include the nomination and the purchaser's declaration. Each of these is specifically referable to, and identifies, the Condor contract. In my view, these documents provide sufficient evidence of the intention to assign Condor's rights under the Condor contract to Mrs Jenkins by the assignment agreement executed on the same day.

It follows that, before it was deregistered, Condor assigned all of its rights under the Condor contract to Mrs Jenkins. That assignment takes effect in equity, even without notice of it being given to Visualeyes. This was conceded by counsel for Visualeyes. Furthermore, it was conceded that it was not necessary for Condor to be joined as a party to the proceeding in order for Mrs Jenkins to enforce her rights as assignee.

In any event, I find that there has been a valid legal assignment by Condor to Mrs Jenkins. In order for there to have been a valid legal assignment, it was necessary for Mrs Jenkins to prove that notice of the assignment agreement was given to Visualeyes. I have held that the evidence of Mr Jenkins in this regard should be rejected. However, that is not an end of the matter. Section 134 of the Property Law Act provides:

“134    Legal assignments of things in action
Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, shall be and shall be deemed to have been effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice—
(a)       the legal right to such debt or thing in action;
(b)      all legal and other remedies for the same;
and
(c)the power to give a good discharge for the same without the concurrence of the assignor:

Provided that, if the debtor, trustee or other person liable in respect of such debt or thing in action has notice—
(a)that the assignment is disputed by the assignor or any person claiming under him; or
(b)of any other opposing or conflicting claims to such debt or thing in action—

he may, if he thinks fit, either call upon the persons making claim thereto to interplead concerning the same, or pay the debt or other thing in action into court under the provisions of the Trustee Act 1958.”

There is nothing in s.134 which requires that the notice in writing must be given within any time period. In my opinion, sufficient notice in writing was given by the Jenkins' caveat or, at latest, by the pleadings in this proceeding. Accordingly, there has been a legal assignment by Condor to Mrs Jenkins of the chose in action constituted by Condor's rights under the Condor contract.

It follows that Mrs Jenkins is entitled to judgment for specific performance of the Condor contract. There will be judgment accordingly.

Constructive Trust Claim

Having regard to my finding that Mrs Jenkins is entitled to specific performance of the Condor contract, it is unnecessary to consider the constructive trust claim.

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[2005] VSC 218

23 June 2005