Marminta Pty Ltd v French
[2002] QSC 423
•13 December 2002
SUPREME COURT OF QUEENSLAND
CITATION: Marminta Pty Ltd v French [2002] QSC 423
PARTIES: MARMINTA PTY LTD
(Plaintiff)
v
RUSTY FRENCH
(Defendant)
FILE NO: S187/2002
DIVISION: Trial Division
DELIVERED ON: 13 December 2002
DELIVERED AT: Rockhampton
HEARING DATE: 3,4 and 5 December 2002
JUDGE: Dutney J
ORDERS: Judgment in the action for the plaintiff in the sum of $50,000.
CATCHWORDS: CONTRACT – ABANDONMENT – whether two pieces of correspondence together constituted a binding agreement for sale and purchase of mortgages – where essentiality of time for payment of deposit by purchaser waived by vendor - whether there was a subsequent variation of the agreement – where s59 Property Law Act 1974 not satisfied – whether original agreement abandoned by vendor and purchaser
SPECIFIC PERFORMANCE – PART PERFORMANCE – where original agreement abandoned – where subsequent variation non-existent or fails for want of writing – whether purchaser performed sufficient acts of part performance to warrant an order for specific performance by the Court – whether acts unequivocally and in their own nature referable to some such contract of the general nature alleged
ESTOPPEL – EQUITABLE ESTOPPEL – whether vendor estopped from resiling from the variation (if any) – whether vendor estopped from relying on want of writing of the variation (if any) – where no identified representation by the vendor upon which the purchaser could have relied to its detriment – whether unconscionable
CONTRACT – CONSIDERATION – FAILURE OF CONSIDERATION – MISTAKE – where “non-refundable” deposit paid by purchaser - where vendor denies the existence of a binding agreement - where purchaser mistakenly believed that it was under a legal obligation to pay the money– where no honest belief on the part of the vendor that he was entitled to receive and retain the money – where no consideration was given for the payment
Property Law Act 1974 (Qld), s59
Baltic Shipping Co v Dillon (1992-1993) 176 CLR 344, applied
Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] QB 677, cited
David Securities Pty Ltd v Commonwealth Bank of Australia (1991-1992) 175 CLR 353, followed
Dowling & Others v Rae (1927) 39 CLR 363, cited
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1977-1978) 138 CLR 423, followed
Lirstis Holdings Pty Ltd v Wallville Pty Ltd [2001] NSWSC 428, followed
Louinder v Leis (1982) 149 CLR 509, cited
McPhail v Darby (1879) 2 SCR (NSW)(NS)225, cited
Masters v Cameron (1954) 91 CLR 353, discussed
Phillips v Ellison Bros Pty Ltd (1941) 65 CLR 221, cited
Regent v Millett (1976) 133 CLR 679, followed
Rover International Ltd v Cannon Film Ltd [1989] 1 WLR 912, cited
Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1956) 98 CLR 93, cited
Wacal Investments Pty Ltd v Hurley [1992] 1 Qd R 455, cited
COUNSEL:Mr JF Curran for the Plaintiff
Mr PS Hack SC for the Defendant
SOLICITORS: Robert Harris and Co for the Plaintiff
Hopgood Ganim for the Defendant
Marminta Pty Ltd and Queensland Premier Mines Pty Ltd are both companies under the control of a Mr Beckinsale. Together with some other unspecified corporations they purport to collectively entitle themselves the Beckinsale Company Group.
Queensland Premier Mines Pty Ltd (“QPM”) acquired some land at Yeppoon in about 1989. The land is almost adjacent to the existing shopping area and now has potential for development for a shopping centre. The purchase of the land was financed by borrowing from a company called Seventeenth Febtor Pty Ltd. The borrowers were QPM and Mr and Mrs Beckinsale. Mortgages were given over the land to secure the repayment.
Between 1989 and 2000 nothing was paid by QPM or the Beckinsales either for interest or capital repayments on the mortgage debt or for rates or land tax.
In about 1992 the mortgages were assigned to Mr French for a consideration of around $400,000.
To avoid a sale of the land by the Livingstone Shire Council for non-payment of rates Mr French paid a sum of $127,154.11 in 1999.
For some years prior to the beginning of 2000 Mr Beckinsale tried to sell the land. These efforts were unsuccessful. Mr French tried to sell the land himself as mortgagee. The land went to auction in about 1999 but was passed in. Our story begins in about December 1999.
By December 1999 Mr Beckinsale had hopes that he could achieve a sale of the land for the construction of either a Woolworths or a Franklins supermarket. He then took steps to free the land of the mortgages. This action seeks specific performance of an alleged contract under which Marminta Pty Ltd was to acquire the mortgages. In essence the issues are whether there was ever a binding contract, what it was and whether it is still on foot.
On 21 December 1999, Mr French wrote to Mr Beckinsale in these terms:
“Further to our phone conversation today I would like to give you the opportunity to match the latest offer to sell the above mentioned property.
I have had two offers of $950,000 subject to council’s conditions being acceptable to erect a shopping centre. I have had an offer for similar money from a Rockhampton Car Dealer who is very keen on the site again subject to council approval.
You indicated in your fax dated 7th November, 1999, that you and Helen would like to buy back the land. If this is the case, could you please advise me by return fax as to what your proposal would be. I would like to conclude a transaction with somebody prior to the end of January 2000.”
Apparently after some discussion with Mr French, Mr Beckinsale responded by a faxed letter dated 30 December 1999 under the letterhead of the Beckinsale Company Group as follows:
“Subject to my lawyers advice and receipt of copy of your letters of offer from Jeff Murphy and Silly Solly’s with their terms and conditions as discussed with you, I make the following offer for above land.
Buy back the mortgage for all titles held by you - $900,000
Deposit on or before 10th January, 2000 $ 50,000
(subject to contract preparation by your lawyer)
2nd payment – 30th April, 2000 $400,000
Balance – 30th July, 2000 $450,000Mortgage assignment to be in the name of
MARMINTA PTY LTD – ACN 060 701 626
26 Coolwaters EsplanadeKINKA BEACH Q 4703.
Rusty, on the assumption you would have to pay commission on the sale, would you discount the contract by that amount? I also note from your letter of 7th November, 1999 that your letters of offer are conditional to Council conditions.
Please consider $900,000 for full contract price as my offer will be unconditional.”
Mr French was in no mood to haggle in relation to the land. He faxed back on 4 January 2000:
“Thank you for your fax dated 30/12/99.
As the above property owes me in excess of $2 million, I am not prepared to transfer the mortgages to Marminta Pty Ltd for any less than what we agreed on the phone last week.
That was $950,000.00.
Non refundable deposit of $50,000.00 paid upon completion of transfer documents.
2nd payment due on 30th March, 2000 of $450,000.00
Balance prior to 30th June, 2000 of $450,000.00.
Frank I am flying to Brisbane tomorrow – 5th January, 2000 – to meet with another Estate Agent who has a Gold Coast Developer interested in the site at $1,200,000.00 which will be an unconditional contract.
Find copy of Silly Solly’s contract which I have not yet accepted.
If you want to secure the above property Mortgage Transfers @ $950,000.00, I suggest that we meet in Brisbane this week to put something formally in place.
Please advise me of your intentions as soon as possible.”
Mr Beckinsale responded the same day with a revised offer along the lines Mr French had indicated he would accept. His facsimile read:
“Please find below unconditional offer for assignment of mortgage held by you on land in our Company name Queensland Premier Mines Pty Ltd.
Buy back the Mortgage for all titles as per Item B.
Full purchase price $950,000
Non refundable deposit within 14 days $50,000
2nd payment 30th April, 2000 $450,000
Balance on or before 30th June, 2000 $450,000
Both parties are to work together to draw contract of sale.
Mortgage assignment to be in the name of
MARMINTA PTY LTD ACN 060 701 626
26 Coolwaters Esplanade,
KINKA BEACH Q. 4703
Please confirm your acceptance of our letter of offer as we must arrange transfer of funds from offshore.”
The faxed letter of acceptance was short, direct and dated 5 January 2000:
“In reference to your fax dated 4/1/2000, regarding your offer on the assignment of the mortgages on the Yeppoon Properties.
I hereby accept your offer as set out in the above mentioned fax, on the provision that your non-refundable deposit of $50,000.00 is received in my office within 14 days of this letter. Should the deposit not be received in the agreed period, this acceptance of your offer will no longer be valid.”
Taking matters strictly in chronological order the first issue between the parties is whether or not the last two pieces of correspondence set out above together constitute a concluded contract between Marminta Pty Ltd and Mr French for the sale and purchase of the mortgages as Marminta contended or an agreement which was not binding in the absence of a formal lawyer-drawn agreement as Mr French contended.
Solicitors were quickly engaged and the first draft of a Deed of Assignment sent from Marminta’s solicitors to Mr French’s solicitors. This deed provided for the second payment to be made by 30th March 2000 rather than the 30th April 2000 as set out in the letters. Mr Ballment, the solicitor for Marminta, whose evidence I accept, explained that that date was simply an error on his part. Mr French appeared to be suggesting it was because of a subsequent agreement with Mr Beckinsale that the date was altered but in the end that petered out to being the subject of an inconclusive discussion.
The argument about whether the agreement evidenced by the correspondence was binding seems to be based upon the expression “both parties are to work together to draw a contract of sale”. The expectation of a formal document was said to bring the contract within the third category contemplated by the High Court in Masters v Cameron[1] where Dixon CJ, McTiernan and Kitto JJ said:
“Where parties who have been in negotiation reach agreement upon the terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different tin effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intentionof the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these the first case is more common. … Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own…”
[1] (1954) 91 CLR 353 at 360
In this case I am satisfied that the agreement evidenced by the correspondence of 4 January and 5 January 2000 is an agreement of the first type referred to in Masters v Cameron. Apart from the language of the correspondence itself which is reflective of an agreement conditional only on the payment of the deposit, the language differs noticeably from the earlier offer of 30th December 1999. In the earlier facsimile the payment of the deposit was conditional on the drawing of a contract. The later offer is expressed to be unconditional and the deposit payable within 14 days and non-refundable. The acceptance from Mr French makes plain that payment of the deposit on time was an essential condition of the contract although it is expressed in terms of the offer being invalidated if the deposit is not paid on time. The document drafted by the solicitors is not of such complexity that it is inherently likely that any agreement would be subject to it being prepared. I do not regard Mr French’s purported acceptance of the Marminta offer as a counter-offer capable of acceptance by payment of the deposit. It seems merely an informal way of making time of the essence in relation to the deposit. In view of Mr Beckinsale’s history of unfulfilled promises in relation to the mortgages this would not seem to be unreasonable.
The deposit was not paid on time. In relation to the circumstances surrounding the payment of the deposit I was impressed by the evidence of Mrs Beckinsale. I was not impressed by the evidence of Mr French.
Mrs Beckinsale gave evidence that she spoke to Mr French twice on the day the deposit was due. The first conversation was about 3:15pm local time on 19 January 2000. She told Mr French that funds to pay the deposit were being transferred into the Beckinsale’s account but had not yet arrived. She said she would let him know when they arrived. Mrs Beckinsale rang Mr French again shortly before 4:00pm. The funds had arrived but it was too late for Mrs Beckinsale to go to the bank to transfer them to Mr French’s solicitors’ trust account, the details of which Mr French had provided. Mrs Beckinsale asked if it would be okay to transfer the funds the following morning to which Mr French responded, “Yes, that will be okay.”
The $50,000 was transferred to Mr French’s solicitors’ trust account the following morning.
Mr French recalled only one conversation with Mrs Beckinsale in which she said she couldn’t pay the deposit that day but could send it the next morning. Mr French claims to have responded by saying that that would be out of time but she could forward it if she still wanted to.
The conversation in the terms recalled by Mr French was not put to Mrs Beckinsale in cross examination with the result that she was never afforded an opportunity to comment on it. Whether this was because Mr French embellished his evidence or because counsel inaccurately put his instructions is not established. In any event, as I have said, I was generally unimpressed by Mr French’s evidence. Mr French’s telephone records for the period do not bear on this issue. They show only that he was in transit between Swan Hill and Melbourne at 4:15pm and 5:00pm ESST.
The conversation between Mr French and Mrs Beckinsale constituted a waiver of the requirement that time was of the essence in relation to the deposit. Since a waiver of a stipulation as to the essentiality of time for performance relates only to the mode of performance and is not a variation of the terms of the contract, an agreement to accept late payment does not need to satisfy section 59 of the Property Law Act 1974[2].
[2] Dowling & Others v Rae (1927) 39 CLR 363; McPhail v Darby (1879) 2 SCR (NSW)(NS) 225
The plaintiff’s case is that on 24 March 2000 Mr Beckinsale spoke to Mr French. By that time Mr Beckinsale knew he could not resell the property in time to pay the next instalment of the purchase price. I am satisfied that there was little real prospect of getting the money on time otherwise. Mr Beckinsale said that Mr French was concerned about capital gains tax liability on the sale proceeds since they substantially exceeded what he had paid Seventeenth Febtor Pty Ltd to acquire the mortgages. Mr French denies the latter concern. In any event a meeting was set up in Melbourne for 10 April 2000 between Mr Beckinsale, Mr French and a Mr Wharton who was a tax adviser and accountant with a somewhat chequered history.
Mr Beckinsale and Mr Wharton both gave evidence that at that meeting it was agreed to vary the contract by postponing payment until the 2000/2001 financial year. Payment was to be in one lump sum out of the proceeds of resale of the land. Mr French denied any such agreement although agreeing that such matters were discussed. Mr French said he was at the meeting to listen and neither agreed nor disagreed with the matters which were put to him. Neither Mr Wharton nor Mr Beckinsale were able to give detail of any of the relevant conversation in which the contract was said to have been varied. It is not surprising that they could not recall the actual conversation. It would be more surprising if they had a clear recollection of the conversation almost three years later. It makes it more difficult, however, when their best recollection is only as to their impression of the outcome of the conversation. Without even a general outline of the conversation on the basis of which Mr Beckinsale and Mr Wharton concluded that an agreement had been reached, I am not persuaded that any binding agreement was in fact entered into on 10 April 2000. Mr French’s failure to disagree with what was put to him during the conversation may well have been taken by Mr Wharton or Mr Beckinsale to amount to acceptance of the proposed variations or substitute contract. On the evidence as it stands I cannot be satisfied that there was any actual concluded agreement.
In any event, it does not seem to me to matter very much whether there was an agreement on 10 April 2000 or not. Nothing was in writing so as to satisfy the requirements of s59 of the Property Law Act. Any such contract would be unenforceable unless Marminta could establish part performance. It cannot.
The acts of part performance relied on are releasing the deposit to Mr French to put towards rates owing by QPM, the taking possession of the land by slashing it, the keeping of Mr French informed as to progress in relation to the land and the continued attempts by Mr Beckinsale to market it.
The matters which must be established to show part performance are acts which “are unequivocally and in their own nature referable to some such contract of the general nature alleged”[3].
[3] Regent v Millett (1976) 133 CLR 679, 683.
The acts relied upon fail this test. Everything done was done by Mr Beckinsale. Apart from being a director of Marminta he was also a director of QPM, the registered proprietor. The slashing and marketing of the land does not point to the existence of a contract on the part of Marminta as opposed to being normal incidences of being the mortgagor. The land has now been sold but by QPM. Keeping Mr French informed of progress does not take the matter further. Apart from QPM being indebted to Mr French, the Beckinsales were also indebted under their loan agreements. Again, objectively, this is no more than might be expected of a defaulting debtor.
Whatever may or may not have been agreed in Melbourne on 10 April 2000 is unenforceable for want of writing. The effect of a variation to a contract being unenforceable is that the original contract remains enforceable[4]. If what was agreed amounts to a new contract the old one is rescinded even though the new one is unenforceable[5].
[4] Phillips v Ellison Bros Pty Ltd (1941) 65 CLR 221.
[5] Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1956) 98 CLR 93 at 112-113, 122-124, 143-144.
After 10 April 2000 neither party treated the original agreement as being still on foot. No more money was paid. Mr Beckinsale maintains that the contract was superseded by the April agreement. Mr French also denies the existence of the earlier agreement for a number of reasons including that it ever existed, that it survived late payment of the deposit or that it was not abandoned by Mr Beckinsale when he could not sell the land.
In my view the best that can be said of the January contract is that it has been mutually abandoned. The only occasion when it might have been thought that the original agreement was ever referred to or acknowledged by either party after 10 April 2000 was in the letter enclosing the draft heads of agreement of 12th July, 2000 where there was a reference to the new agreement, if signed, making “the other contract obsolete”. Mr Beckinsale in his oral evidence made plain, however, that the “other contract” to which he referred was not the agreement evidenced by the January correspondence but the agreement he alleged was made on 10 April 2000. The draft heads of agreement related to a third potential agreement. It appears to me that the original agreement falls within the description given by the majority in the High Court of the contract in DTR Nominees Pty Ltd v Mona Homes Pty Ltd[6] where it was said:
“Neither party had effectively rescinded. But there can be no doubt that …when these proceedings commenced, neither party, whatever may have been their reasons, regarded the contract being still on foot. Neither party intended that the contract should be further performed. In these circumstances the parties must be regarded as having so conducted themselves as to abandon or abrogate the contract. The position is similar to that with which Isaacs J dealt in Summers v The Commonwealth. The plaintiff did not succeed in his action for damages for breach of contract, but on the other hand the defendant had not rescinded. Time passed during which neither party took any steps to perform the contract. It was held that the parties had so conducted themselves as to mutually abandon or abrogate the contract.”
[6] (1977-1978) 138 CLR 423 at 434
Neither party was in a position to rescind the contract. Since time was not of the essence in relation to the second and third payments[7] and no notice to complete was ever given[8], Mr French could not rescind the contract. Marminta Pty Ltd had no basis for rescission. However, since neither party regarded the original contract as still on foot and any substituted contract is unenforceable the conclusion of abandonment is, in my view, inescapable. It follows that specific performance of that contract is no longer available. Even if there were an April agreement it is unenforceable for want of writing so that specific performance is unavailable.
[7] Wacal Investments Pty Ltd v Hurley [1992] 1 Qd R 455 at 456
[8] Louinder v Leis (1982) 149 CLR 509 at 514
There is in the reply and answer a claim which in my view amounts to a claim for an estoppel preventing Mr French from resiling from the 10 April agreement. Since I am not persuaded that there was in fact any such agreement it follows that the basis for an estoppel cannot be made out. There is no identified representation by Mr French upon which Marminta could have relied to its detriment to found the estoppel.
An argument was also advanced that Mr French should be estopped from relying on the want of writing in relation to the alleged April contract because of a conversation he had with Mr Beckinsale on 24 March 2000. Mr Beckinsale’s version of the relevant part of that conversation runs as follows:
“Mr French suggested if we go looking for some variation that we, shouldn’t document the thing any further and we, in due course, get our documents back from our lawyers …”
I cannot see how it can be unconscionable for Mr French to rely on the want of writing on the basis of this conversation. Presumably, the version given by Mr Beckinsale is the highest it can be put. In my view it amounts to no more than a suggestion which, if I am wrong about any agreement being reached on 10 April 2000, Mr Beckinsale appears to have adopted. If he chooses not to insist on writing, then even assuming Mr French would have put anything in writing had it been insisted upon, it seems to me that Mr Beckinsale leaves himself in the position that he cannot have the agreement specifically enforced. The conversation suggests nothing improper on Mr French’s part in relation to this issue.
Marminta has an alternative claim for repayment of the $50,000 deposit. Ordinarily, on the basis I have decided this case that sum is repayable[9]. This is subject to the authorisation to use the money in payment of rates with which I shall deal separately. The issue here is whether the designation of the deposit as “non refundable” by the parties in their correspondence alters the ordinary position.
[9] DTR Nominees Pty Ltd v Mona Homes Pty Ltd, supra at p434-435; Summers v The Commonwealth (1918) 25 CLR 499 at 153
Neither side advanced any argument as to the construction of the expression “non refundable” as it appears in this contract or generally. A standard deposit is liable to forfeiture if the contract fails to settle because of a breach by the purchaser. Where it is described as “non refundable” the meaning must be considered in the context of the particular contract. I consider it unlikely that the intention o the parties would be that the deposit be retained irrespective of any breach by the vendor. The relevant extrinsic facts here are that interests associated with Mr Beckinsale had made previous offers to acquire Mr French’s interest in the land but had apparently never been able to make payment. Mr French was trying to sell the land and, according to the earlier correspondence set out above had received some conditional offers for it. Plainly, it seems to me that Mr French was not prepared to treat with Mr Beckinsale unless he received some serious indication of commitment. Looked at in this context I consider that the deposit, in addition to being an earnest of performance by Marminta, should be treated as being in implied consideration of Mr French foregoing his attempts to sell to interests other than Mr Beckinsale’s such that, even were the contract entered into to fail to settle for reasons not connected with breach on the part of either party, such as, in this case, abandonment, this consideration for the deposit would remain and Mr French would be entitled to retain it.
I thus find that the practical effect of the designation of the deposit as “non refundable” is to allow Mr French to retain it in circumstances where an ordinary deposit would be refundable because of the existence of an independent consideration for its retention. This seems to me to coincide with the basis on which the deposit was regarded as “non refundable” by Barrett J in Lirstis Holdings Pty Ltd v Wallville Pty Ltd[10]. Mr French, however, did not act in the manner the making of the deposit “non refundable” contemplated. Mr French did not ever acknowledge any binding agreement to sell the mortgages to Marminta. Moreover, he never withdrew the land from the market. Mr French’s evidence on the point was as follows:
“So am I right in thinking that up till – from January to the 4th November 2000, you had not the property on the market? – I had continually offered the property to various agents…
Please, Mr French, during the specific period from January 2000 to the 4th November 2000, did you or did you not have the property on the market? – Yes, I did.
[10] [2001] NSWSC 428
With agents? – Yes.”
Because Mr French always denied the existence of the contract with Marminta and regarded himself, at best, as still in negotiation and because he failed in consequence to take the property off the market he was always unwilling to perform either the contract or the separate implied agreement which would otherwise have supported his retention of the deposit. In those circumstances the deposit is recoverable on the basis of total failure of consideration or unjust enrichment. The party claiming the total failure of consideration, in this case, Marminta, has not received anything for which it bargained because the land remained on the market for sale and Mr French never accepted that he had any obligation under the contract[11].
[11] see Rover International Ltd v Cannon Film Ltd [1989] 1 WLR 912 at 923 which was approved by the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia (1991-1992) 175 CLR 353 at 382; Baltic Shipping Co v Dillon (1992-1993) 176 CLR 344 at 350-351, 376-377.
Even if I were wrong about the existence of the January contract the position would be the same. A deposit paid in anticipation of the parties entering into a contract which is never entered into cannot be retained.
Because, in my view, the original contract has been mutually abandoned there is, and has not been since 10 April 2000 when the contract was abandoned, no liability as between Marminta Pty Ltd and Mr French in relation thereto. On 26th April 2000, Mr Beckinsale on behalf of Marminta Pty Ltd authorised payment of the $50,000 to Mr French in part satisfaction of the rates Mr French had paid on the property. At that time I accept that Mr Beckinsale genuinely believed he had entered into the April varied agreement with Mr French under which the deposit paid by Marminta Pty Ltd to Mr French was still non-refundable and that Mr French was entitled to it. This was not the case. A payer is prima facie entitled to recover money paid under a mistake if it appears that the money was paid in the mistaken belief by the payer that he was under a legal obligation to pay it or that the payee was legally entitled to payment unless, for present purposes, the payee honestly believed that he was entitled to receive and retain the money or unless consideration was given for the payment[12]. Mr Beckinsale said in evidence, and I accept, that he would not have released the money if he had not thought there was a contract. He also said and I accept that he believed Marminta was obliged to pay the rates as a result of the April discussion. At that time the only contract he believed existed was the April version which I have found was never in fact made.
[12] David Securities Pty Ltd v Commonwealth Bank of Australia (1991-1992) 175 CLR 353.
There can be no corresponding honest belief on the part of the payee here. Mr French swore that he never believed he was bound by any contract. He could thus never believe he was entitled to retain the deposit. In the absence of any agreement with or liability on the part of Marminta, Mr French could not have an honest belief that he was entitled to receive or retain any money from that company. The only evidence from Mr French on the topic when examined in chief was that he “asked Mr Beckinsale whether he would agree to the $50,000 that had been paid into Norton Gledhill’s trust account, whether he would agree to releasing that to me to reimburse me for the rates on the QPM site.” Where payment under a mistake is established, the onus is on the defendant to show that his retention of the money is not “unjust”[13]. It is equally for the defendant to show, when consideration is relied on and the consideration is the satisfaction of a third party liability, that the payer is authorised to make payment[14]. There is no such evidence of authorisation. There is no suggestion here that Mr French has altered his position in any respect on the basis of the payment.
[13] ibid at 379.
[14] see also Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] QB 677 at 695
It follows from the above that Marminta Pty Ltd is entitled to recover the $50,000 deposit paid under the contract in January 2000.
In all the circumstances I give judgement in the action for the plaintiff in the sum of $50,000. I will hear the parties on costs.
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