Long v Hijazi
[2017] QDC 187
•7 July 2017
DISTRICT COURT OF QUEENSLAND
CITATION:
Long & Anor v Hijazi [2017] QDC 187
PARTIES:
JOSHUA STEVEN LONG
and
VANESSA MAREE WILSON
(plaintiffs)
v
MILIZE HIJAZI
(defendant)
FILE NO/S:
4934 of 2016
DIVISION:
Civil
PROCEEDING:
Trial
ORIGINATING COURT:
District Court of Queensland
DELIVERED ON:
7 July 2017
DELIVERED AT:
Brisbane
HEARING DATE:
12 June 2017
JUDGE:
Dick SC DCJ
ORDER:
1. That the contract of sale dated 19 October 2016 (the contract) for the sale of real property at 1 Hilarie Avenue, Springwood in the State of Queensland (the property) between the Defendant as Seller and the Plaintiffs as buyers ought to be specifically performed and carried into execution.
2. That subject to the other order of the court, settlement of the contract be effected on 21 July 2017.
3. That the parties agree on settlement figures to enable that settlement to be effected.
4. That the settlement be effected on 21 July 2017 at a time and place suitable to the first mortgagee of the property.
5. That there be judgment for the Plaintiffs against the Defendant in the sum of $4620.00 for claim and $90.50 for interest.
6. The parties be at liberty, upon giving reasonable notice to the other, to list the matter for ancillary orders to enable settlement to be effected.
7. The Defendant pay the Plaintiffs costs of and incidental to the Claim on standard costs.
CATCHWORDS:
CONTRACT LAW – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – whether there is a breach of contract – where there is a payment of deposit – where contract is terminated – where there is rescission of termination – whether a claim for specific performance and damages should be granted
Brien v Dwyer (1978) 141 CLR 378
Decro-Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361
Express Airways v Port Augusta Air Services [1980] Qd R 543
Foran v Wight (1989) 168 CLR 385
Hill v Sidney [1991] 2 Qd R 547
Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366
R v Preddy [1996] 3 All ER 481
Tropical Traders v Goonan (1964) 111 CLR 41
COUNSEL:
B Whitten for the plaintiffs
A Christie for the defendant
SOLICITORS:
McCarthy Durie Lawyers for the plaintiffs
Bartels Lawyers for the defendant
This is an action for a claim for specific performance and damages related to a failed sale for real estate situated at 1 Hilarie Avenue, Springwood. The parties agreed that the matter be heard on the affidavit materials before the court.
The contract provided that the timing of the payment of the deposit, expressed in the reference schedule of the contract, be “on the day the buyer signs this contract unless another time is specified below”. The words below were “acceptance of contract”.
The parties contemplated the availability of the use of electronic bank transfer for the payment of the deposit because the contract provided that the deposit holder was Pestana Realty Pty Ltd trading as Red Rocket Realty. The deposit holder’s trust account was nominated as Red Rocket Realty Trust Account. The bank was nominated as ANZ Bank Underwood. A BSB and account number was provided.
The plaintiffs were the purchasers under the contract and the defendant was the vendor. It is common ground that acceptance was communicated to the plaintiffs by the defendant’s real estate agent on 19 October 2016 at 2.08 pm.
The female plaintiff forwarded the contract to her conveyancer who responded later that evening, advising her to pay the deposit. The deposit was paid by electronic transfer to the nominated trust account at approximately 8.30 pm Brisbane time. The deposit was receipted into the real estate agent’s trust account the following business day, 20 October 2016.
There does not seem to be an argument that a contract is formed when the fact of acceptance of the contract is communicated to the purchaser and that acceptance includes the act of communication to the assent to the offer.[1] Acceptance therefore took place when the defendant’s real estate agent advised of the acceptance by email at 2.08 pm on 19 October 2016.
[1]Express Airways v Port Augusta Air Services [1980] Qd R 543; Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366.
Further, it is not argued that a clause requiring payment of the deposit is a fundamental term and failure to comply goes to the root of the contract and allows the vendor to rescind. The contract provided that the buyer would be in default if the buyer did not pay the deposit when required or pay the deposit by a post-dated cheque or paid the deposit by a cheque which was dishonoured on presentation.
The plaintiffs argue that they were not in breach of the contract by paying the deposit on the day of acceptance. The plaintiffs argue that the parties intended the deposit to be paid on the day of the acceptance of the contract. They argue that the time that the deposit was receipted was out of their hands and in control of the banking system and they argue that the same result would have ensued if a cheque had been handed to the agents after banking hours, albeit soon after the contract was accepted.
The defendant argues that there is a difference between an internet banking transfer, which is essentially a transaction between an account holder and his or her bank, and the payment by cheque because a cheque is a chose-in-action capable of negotiation with a value worth a lot more than the paper upon which it is written.
The nature of electronic funds transfer was discussed by the House of Lords in R v Preddy [1996] 3 All ER 481. The accused in that case had made false representations to obtain mortgage advances from various lenders to buy property with a view to reselling the property for a profit in a rising market. Some of those mortgage advances were transferred to the accused’s accounts by electronic transfer, while others were transferred by cheque. The court had to consider whether there had been on the facts, a taking of “property of another.” The Lords held at p 490 that under an electronic transfer there is no actual transfer of property belonging to another. Rather, there is an extinction of one chose in action (the amount debited to the transferrer’s account) and the creation of a new chose in action (the amount credited to the transferee’s account).
The defendant also argues that in a letter of 18 October 2016 from Red Rock Realty to the purchasers there was a warning:
“If you are paying your deposit via internet banking or credit card please ensure this is paid 48 hours before the due date for this to arrive into our bank. If you do not allow this time your deposit will arrive late and you will be in breach of contract.”
This was obviously not part of the contract. In addition, the letter being sent on 18 October 2016, even if the deposit was paid immediately on the letter and before acceptance, would not allow for 48 hours to arrive into the bank.
The defendant relies with some force on Brien v Dwyer (1978) 141 CLR 378 as authority for the proposition that the earliest practical time after communication of acceptance on 19 October 2016 was that afternoon.
The plaintiffs argue that this case is not on all fours with Brien v Dwyer[2] because this contract did not include the words “upon” or “on.” Instead, the reference schedule referred to the deposit being payable on the “day” the buyer signs it, unless another time is specified. The plaintiffs argue that the time specified is not a time of day but the occurrence of an event, namely the acceptance of the contract. The plaintiffs argue that given the plaintiffs would have no idea when the defendant accepted the contract, any requirement for payment of the deposit simultaneously with that acceptance would be absurd and the plaintiffs adopted the words of Gibbs J in Brien v Dwyer:
“The contract should be construed in the light of what is likely to be the practice usually followed, so as to render its operation practicable and convenient”.[3]
[2](1978) 141 CLR 378.
[3](1978) 141 CLR 378, 393.
The plaintiffs argue that the practical difficulties in the construction urged by the defendant can be illustrated by an example that if the seller signed the contract and thereby accepted it at 11.59 pm, it would be absurd to require the deposit to be paid by midnight, not only because the agent’s office would normally not be open at that time, but as a matter of practicality there would be insufficient time to make the payment. Therefore, the better view is similar to the one espoused by Jacobs and Stephen JJ in Brien v Dwyer[4] and that is that the requirement meant for the payment to be made at the earliest practicable time after acceptance. There is some force in the argument because the plaintiffs would not know that the defendant had ‘accepted’ the contract until notified. In addition, the contract did not specify that the deposit must be paid “by close of business” or “in banking hours” or the like.
[4](1978) 141 CLR 378.
The plaintiffs also refer to Hill v Sidney [1991] 2 Qd R 547 per de Jersey J (as his Honour then was) where he held that in the context of a deposit being required to be paid “forthwith” upon execution of the contract by the purchaser, that should be read as meaning “as soon as reasonably practicable” and envisage “speed rather than tardiness”.[5]
[5][1991] 2 Qd R 547, 567.
The plaintiffs argue therefore that the defence, which relied solely on the fact that the payment of the deposit was not made when required, should be rejected and in the absence of a defence, judgment should be given for specific performance.
I find this argument persuasive. In my view, the purchasers were “ready, willing and able” to complete the contract of sale[6] and indicated that by the payment of the deposit on the evening of 19 October 2016. I reject the argument that the deposit was not made in accordance with the contract and in my opinion, judgment should be given for specific performance.
[6]Foran v Wight (1989) 168 CLR 385, 402.
Defendants purported termination
On 21 October 2016, the defendant’s conveyancer wrote to the purchasers by email:
“We refer to the above and advise we act for the seller. We are informed by the real estate agent that as at the morning of 20 October 2016 the deposit still had not shown as being deposited into their trust account.
We note that the deposit under the contract was to have been paid on 19 October 2016, the day the contract was signed. Payment is not deemed to have been made until the payment has been received. Accordingly you are in breach of your obligations under the contract and our client elects to hereby terminate the contract.
Our client instructs that when the real estate agent receives the deposit it is to be refunded to you in full”.
The deposit was not refunded.
On 25 October 2016, the plaintiffs’ conveyancer emailed the vendor’s conveyancer as follows:
“Please, find attached a copy of trust receipt from the agent’s office confirming that the initial deposit was received on 20th October 2016. As no breach of the contract has occurred the contract of sale is still on foot. Please, confirm as a matter of urgency”.
On 25 October 2016, the defendant’s conveyancers responded at 10.58 am:
“Our client instructs that she agrees that the contract is still on foot between the parties and that she withdraws her termination”.
The defendant argues that communication at 10:58 am on 25 October 2016 was equivocal and made in circumstances where the plaintiffs have incorrectly informed the defendant that there was no failure to pay the deposit by the due date. In my view, that argument cannot stand because the defendant then knew when the deposit had been received.
At 4.21 pm on the same day the conveyancer wrote a without prejudice email:
“Our client now instructs that she cannot proceed with the contract due to the fact she will suffer financial hardship if she proceeded and will not settle. She further instructs that she does not agree to the building and pest inspections being carried out tomorrow”.
The plaintiffs argue that the unequivocal withdrawal of the termination and affirmation in the circumstances here meant that the contract continued on foot such that thereafter the defendant lost the right to rely on the termination again.[7] Further, the plaintiffs state that the representation was relied on by them and they incurred costs as a result thereof. The plaintiffs argue that by that stage the vendor well-knew when the deposit had been paid and waived any rights to rely on the purported termination.
[7]Cf. Tropical Traders v Goonan (1964) 111 CLR 41, 55.
On 27 October 2016, lawyers for the plaintiffs advised the vendor’s conveyancer that they had been retained to act on behalf of the purchasers. They maintained that their client’s position was that the contract of sale remained valid and enforceable notwithstanding the vendor’s apparent unwillingness to proceed. The letter advised that if the vendor did not comply with the obligations under the contract, the purchasers would seek specific performance and compensation and advise that a caveat had been lodged in the Queensland Titles Registry.
On 28 November 2016, lawyers for the vendor responded advising that the vendor had been pressured into selling the property, she had no independent legal advice, or the opportunity to obtain advice from her family or from any independent legal service.
It should be pointed out that the Form 6 Appointment of a Property Agent in Part 9 did contain a warning, “the client is advised to seek independent legal advice before signing this form” and includes the warning:
“If you are unclear about any aspect of this form or the fees you will be charged do not sign it. Seek legal advice. If you need more information about this form including what an agent needs to disclose you can visit the Office of Fair Trading website at or phone 13 QGOV (13 7468)”.
In any event, the plaintiffs argue that the reasons given in that letter did not amount to an allegation of a breach on their part. The plaintiffs argue that the first letter of 25 October 2016 was not an ambiguous letter, used specific words, was in clear terms and was sent with the benefit of legal assistance.
Withdrawal of a termination by agreement, thus reinstating performance, is not unknown to the law. In Decro–Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361, Buckley J said:
“A repudiation may be withdrawn at any time before acceptance: a notice of determination validly given cannot thereafter be withdrawn without agreement”.[8]
[8][1971] 1 WLR 361, 382.
In my opinion, the purported termination was clearly and unambiguously withdrawn and the contract, therefore, remained on foot. I agree that it would be unconscionable to allow the defendant, having withdrawn the termination, to rely upon the breach founding the original purported termination in order to avoid the contract.
In conclusion, I find the deposit was paid in accordance with the contract. If I am wrong in that, I find the termination on 21 October 2016 was rescinded. For those reasons, I order:
1. That the Contract of Sale dated 19 October 2016 (the contract) for the sale of real property at 1 Hilarie Avenue, Springwood in the State of Queensland (the property) between the Defendant as Seller and the Plaintiffs as buyers ought to be specifically performed and carried into execution.
2. That subject to the other order of the court, settlement of the contract be effected on 21 July 2017.
3. That the parties agree on settlement figures to enable that settlement to be effected.
4. That the settlement be effected on 21 July 2017 at a time and place suitable to the first mortgagee of the property.
5. That there be judgment for the Plaintiffs against the Defendant in the sum of $4620.00 for claim and $90.50 for interest.
6. The parties be at liberty, upon giving reasonable notice to the other, to list the matter for ancillary orders to enable settlement to be effected.
7. The Defendant pay the Plaintiffs costs of and incidental to the Claim on standard costs.
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