Laketrend Pty Ltd v Dupen
[2010] QCAT 705
•8 December 2010
| CITATION: | Laketrend Pty Ltd v Dupen and Anor [2010] QCAT 705 |
| PARTIES: | Laketrend Pty Ltd |
| v | |
| Gary Hilton Dupen Joy Claire Dupen |
| APPLICATION NUMBER: | MCDO1736-10 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | 22 November 2010 |
| HEARD AT: | Brisbane |
| DECISION OF: | Bill LeMass, Adjudicator |
| DELIVERED ON: | 8 December 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | The respondent to repay the monies to the applicant by way of four equal payments of $5,000 at the end of February, March, April and May 2011 less the termination fee in default one payment for a period of seven days the whole amount then outstanding is payable immediately and may be recovered by the applicant. |
| CATCHWORDS: | Cooling off – Put and call option Property Agents and Motor Dealers Act 2000 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Laketrend Pty Ltd was represented by Mr Flynn |
| RESPONDENT: | Gary Hilton Dupen and Joy Claire Dupen |
REASONS FOR DECISION
The relevant facts in this matter are largely not in dispute between the parties.
The matter concerns the ability of the applicant to recover a deposit paid under an Option Deed and Contract, said to be terminated pursuant to chapter 11, section 368 of the Property Agents and Motor Dealers Act 2000 (“the Act”) (cooling off provisions).
The parties entered into a put and call option deed dated 13 November 2009 for an option period of six months.
This is a device utilised commonly by property developers to enable the identity of a purchaser to be varied during the option period without incurring double stamp duty.
It is common between the parties that the applicant is a property developer and the reason for the use of a put and call option deed was to allow the applicant to on sell the property to a second purchaser without incurring double stamp duty, within the option period.
At the conclusion of the option period a person described by the respondent as “his solicitor”, Mr Sande a conveyancer operating in South Australia gave notice of exercise of the option and, “put”, the property to the purchaser. By correspondence and notice on 22 April 2010, as was contemplated by the put and call agreement, he submitted at the same time the necessary warning statement, contract and ancillary documents.
It was apparent at this time that the purchaser had changed its mind and no longer wished to purchase the property. As a result, it entered into the contract with the seller by signing same on 22 April 2010 and returning the necessary documents to the respondent’s conveyancer.
Having then entered into the contract and received the necessary warning statements outlining the cooling off period the applicant’s solicitors by correspondence of 28 April 2010, gave notice terminating the contract pursuant to section 368 of the Act.
Despite this the respondent’s conveyancer arranged settlement for 13 May 2010, tendered settlement by town agent, the applicant did not attend the settlement. As a result the respondent says that it terminated the contract and forfeited the deposit.
The terms of the documentation are unremarkable other than this. The respondent says that as a result of early negotiations and in order to convince the respondent’s to allow the applicant a six month period within which to settle the purchase of the property the applicant offered to pay the sum of $20,000 by way of option fee to the respondent which sum would be wholly non refundable in any circumstances.
This was recorded at 4.1 of the option deed relevantly as follows:
“The call option fee is to be released to the seller and once paid to the seller will become the property and available for the use by the seller and is not refundable.
If the seller is in breach or defaults in this deed or defaults in completing the contract the owner will immediately within 2 business days upon demand by the buyer account to the buyer for the call option fee without deduction or set off.”
If either the call or the put option is exercised the call option fee will become the deposit payable under the sale contract.” (my emphasis)
It is clear from the evidence of the parties and the documentation that the parties:
a) Intended this to be a binding obligation on both parties for purchase and sale immediately from its execution in November 2009; and
b) It was the intention of the parties at all times that the option fee paid was non refundable in any circumstances other than the default of the seller.
I note at this juncture that this could have been achieved and indeed, in the ordinary course of matters in Queensland is regularly achieved, by the mechanism set out in the act for obtaining the necessary certificate and waiving the cooling off period.
Had this procedure been thought about and undertaken by Mr Sande, whom the respondent described as and thought was his “solicitor” then this matter would not be before the Tribunal at all.
The question to be decided is whether this contract was a “relevant contract” for the purposes of chapter 11 of the Property Agents and Motor Dealers Act 2000.
If it is, then section 368 of the Act is clear in giving a right of termination;
“368(1) A buyer under a relevant contract who has not waived the cooling off period for the relevant contract may terminate the relevant contract at any time before the cooling off period ends by giving a signed, dated notice to the seller or the seller’s agent indicating that the buyer terminates the relevant contract.”
The consequence of which is the requirement of the seller to repay the deposit less the termination penalty.
Subsection 4 of section 368 says:
“An amount payable to the buyer under subsection(3) is recoverable as a debt.”
It is this debt that the applicant seeks to recover as a liquidated sum in this Tribunal.
Contracts of this nature were considered for some time not to be “relevant contracts” for the purposes of consumer protection set out in chapter 11. These cases whilst not completely on all fours with the facts before this Tribunal included:
Cheree-Ann Property Developers Pty Ltd v East West International Development Pty Ltd;[1] and
The decision of Justice Douglas delivered 23 December 2009 Vale 1 Pty Ltd v Delorain Pty Ltd[2].
Both of these decisions were favourable to the respondent in this matter in finding that option deeds which provided to developers stock for those developers to on sell, were never intended by the legislature to be included in the consumer protection umbrella of chapter 11 of the Act and hence were not “relevant contracts” for the purposes of that chapter.
[1] (2007) 1 Qd R 132.
[2] (2009) QSC 425.
It is most unfortunate for these respondents who were unsophisticated sellers of the property and badly advised, that the law has been very recently restated by the Court of Appeal in the appeal of the case referred to above as Vale 1 Pty Ltd v Delorain Pty Ltd (ibid). This appeal was heard on 2 August and the decision delivered on 28 September 2010 with the principle reasons being by Justice Applegarth, a decision which is clearly binding upon this Tribunal.
Relevantly commenting on the conclusions reached by Justice Mullins in Cheree-Ann at 44:
“Her Honour reached the conclusions that not withstanding the wide definition of contract for sale and chapter 11’s purpose of consumer protection a put and call option agreement that facilitated the marketing of lots to third party purchases by a property marketeer… was outside the definition of “relevant contract”
(45) There is much to commend this view as a matter of policy. It seems improbable that the parliament intended to extend the consumer protection provisions of chapter 11 to a sophisticated buyer that enters into a contract… as part of its business of property marketing.”
And at 68, “The purpose of the statute will be advanced by applying its language according to its terms, in many cases. The fact that the current broad definition permits some sophisticated parties to escape contracts on the basis of what would seem to be a technicality does not provide a sufficient justification to depart from the language of the statute by, in effect, reading into the definition of “relevant contract” a qualification that terms on an assessment of the substance of the contract. If some categories of buyers are not thought to be in need of the consumer protection which chapter 11 provides, then that assessment should be made by the legislature.”
And at (74), “Because I have reached the conclusion that Cheree-Ann should not be followed in the respect identified it’s unnecessary to determine whether the primary judge erred.”
And at (81), “The uncertainty created by Cheree-Ann and the encouragement of litigation over whether another case is materially different from it are reasons why I consider that the interpretation of “relevant contract” adopted in Cheree-Ann at (51) should not be followed.”
And at (85), “The Deed being a contract for the sale of residential property in Queensland and not being a contract formed on a sale by auction, was a “relevant contract”.
The parties accept that if the deed was a “relevant contract” then Vale was entitled to terminate it.”
Conclusion
This matter is factually similar to Cheree-Ann and Vale, indeed, factually it is not as advantageous for this respondent because it does not concern multiple lots. Nevertheless it is clear from the appeal decision of Vale that this deed and contract subsequently entered into without the parties availing themselves of the waiver provisions of the Act, is a “relevant contract” for the purposes of the Act, Chapter 11 and the cooling off provisions. As such, and without merit, the applicant is in this matter entitled to terminate that contract and recover its deposit less the termination fee.
The deposit is not held as is usual in a solicitor’s or agent’s trust account but has been released to the respondents.
The parties did not contemplate the repayment of these monies and the respondent gave evidence as to difficult financial circumstances caused by the cancellation of this contract after the six month option period. It is only reasonable that they be given sufficient time to repay.
The respondents, it would appear, have other courses of action to pursue and as such I will allow a period of two months for them to pursue those matters and thereafter to repay the monies to the applicant by way of four equal payments of $5,000 at the end of February, March, April and May 2011 less the termination fee in default one payment for a period of seven days the whole amount then outstanding is payable immediately and may be recovered by the applicant.
I make no orders as to costs.
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