Martyniuk v King
[2000] VSC 395
•28 September 2000
| SUPREME COURT OF VICTORIA | |
| COMMERCIAL AND EQUITY DIVISION | Not Restricted |
No. 7115 of 1999
| Vladymir Martyniuk | Plaintiff |
| v | |
| Cecil King | First Defendant |
| and | |
| Illawong Retirement Living Pty Ltd | Second Defendant |
| And | |
| Illawong Retirement Equity Pty Ltd | Third Defendant |
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JUDGE: | McDonald J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 9, 13, 14 June 2000 | |
DATE OF JUDGMENT: | 28 September 2000 | |
CASE MAY BE CITED AS: | Martyniuk v King and Ors | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 395 | |
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Contract in settlement of proceedings before the court – offer and acceptance – construction of and meaning of term in contract – consideration of circumstances surrounding formation of contract – amendment of pleadings – specific performance of contract refusal.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr D. Christie | Corrs Chambers Westgarth |
| For the first Defendant | Mr P. Riches | Mahony Galvin Rylah |
| For the second Defendant | Mr P. Bornstein | Efrons |
| For the third Defendant | Mr M. M.T. Bevan-John | Peter Lustig |
HIS HONOUR:
The third defendant is and has been since 18 June 1998 the trustee of the Watts-Castlecrown Unit Trust. Before that time, the trustee of the Trust was Illawong Retirement Group Pty Ltd. The Trust was created by a Deed of Trust dated 15 September 1978 which Deed was varied by a Deed of Variation dated 31 October 1978.
The plaintiff holds 10A class units in the Trust. The first defendant holds 10C class units in the Trust. The second defendant holds 10B class units in the Trust.
The proceedings were commenced by writ filed on 6 October 1999. The plaintiff filed his statement of claim on 3 November 1999 pursuant to an order and direction of the court made on 1 November 1999. Further orders were made by the court that day to which I shall later return.
By his statement of claim in the proceedings, the plaintiff alleged that on or about 15 December 1997 the first defendant agreed to sell to him and he agreed to purchase the first defendant's 10C class units for the sum of $525,000. The plaintiff alleged that by the terms of the agreement it was agreed, inter alia, that the purchase price was payable by the payment of a deposit of $5,250 on the making of the agreement, the payment of $294,750 by 2 February 1998 and the balance of $225,000 on 30 June 1998. It is alleged that by the terms of the agreement it was further agreed that the payment of the purchase price was conditional upon registration of the transfer of units or alternatively the continued agreement of the trustee and all unit holders to register the transfer of the units to the plaintiff and further that the first defendant would do all things necessary for the plaintiff to obtain the benefit of the agreement and that the first defendant would not sell or transfer his units to anyone else.
The plaintiff by his statement of claim further alleged that on or about 15 December 1997 the unit holders in the Trust being himself, the first defendant and the second defendant agreed and consented to the waiver of the procedure for the transfer of units provided for in the third schedule to the Deed of Trust and that they agreed that it was not necessary for the plaintiff and the first defendant to follow the procedures set out in that schedule of the Deed of Trust in order for the trustee to register the transfer of the units from the first defendant to the plaintiff.
The procedure for the sale and transfer of units in the Trust is provided for in the third schedule to the Deed of Trust as amended. In summary it provides that if a unit holder desired to sell or transfer a unit or units in the Trust the holder was required to serve on the trustee a notice specifying that the unit holder desired to so sell or transfer the units and the price at which the unit holder fixed as a “fair value”. It is provided that such notice constituted the trustee as the agent for the unit holder to sell the units at their “fair value”. It is further provided that the trustee may accept the “fair value” as specified but in the event of the trustee being of opinion that the value specified was too low or too high then there was provided a procedure for the “fair value” of the unit or units to be determined independently. The third schedule further provided that the trustee should offer for purchase at the “fair value” units specified in the notice at first instance to all unit holders as nearly as maybe in the proportion to their respective unit holdings. There is further set out in the schedule the procedure for the sale of such units in the event that the offer referred to, is not accepted by the unit holders in whole or in part which includes that where an offeree unit holder does not wish to purchase the unit offered such units may be offered for sale to other unit holders. By cl. 8 of the Deed of Trust, as amended, it is provided:
“8.IF the whole or part of the transfer procedure set forth in the third schedule is by part 1 made applicable to this deed the Trustees shall not subject to clauses 7 and 9 but without prejudice to sub-clauses (b) and (c) of clause 6 refuse the registration of any transfer of the units if:
(a)The Trustees are satisfied that there has been substantial compliance with the provisions of the third schedule as are by part 1 made applicable to this deed; or
(b)The Trustees have received the consent of the unit holders to the waiver of the said transfer procedure and to the registration by the Trustees of the transfers of the units in question.”
By his statement of claim, the plaintiff further alleged that he had paid to the first defendant the deposit and the sum of $294,750 being in total $300,000. The plaintiff further alleged that the first defendant had evinced an intention that he would not transfer the units to him, that he did not do all things necessary for him to have the benefit of the agreement and further that the first defendant had purported to sell his units to the second defendant or for redemption by the third defendant. The plaintiff further alleged that the first defendant refused to transfer his units to him. Further, the plaintiff alleged that the first and second defendants had wrongfully denied that they had agreed and consented to the waiver of the aforesaid procedure for the transfer of units in the Trust by the first defendant to the plaintiff and that they now alleged that it was necessary for the plaintiff and the first defendant to follow the procedure set out in the third schedule for the sale and transfer of the units.
Specifically as against the third defendant, the trustee, the plaintiff alleged that it had, inter alia, failed or refused to act in accordance with the terms of the Deed of Trust and in particular it had refused to acknowledge the sale of the units from the first defendant to the plaintiff and it had stated that it would refuse to register any transfer of units to the plaintiff.
By his prayers for relief the plaintiff sought, inter alia, an order for specific performance of the sale agreement between him and the first defendant and of the alleged agreement between himself, the first defendant and second defendant whereby it was agreed to the waiver of the procedure for transfer of units provided in the third schedule and that it was not necessary for the first defendant and himself to follow such procedures in order for the third defendant to register the transfer of units between the first defendant and himself. In addition, the plaintiff sought against the third defendant an order for specific performance by it of its duties and obligations under the Deed of Trust. I understand that prayer for relief to be such that the plaintiff sought an order against the third defendant that it register the transfer of the first defendant's units to him in accordance with the alleged sale and purchase of the units for $525,000.
On 1 November 1999, it was ordered by the Court that on the plaintiff giving an undertaking as to damages and an undertaking to pay into an interest bearing account in the joint names of the solicitors for the plaintiff and the first defendant the sum of $225,000 to be held in trust pending further order or agreement of the plaintiff and the first defendant that:
“1.The defendants be restrained until the hearing and determination of the proceeding or further order (whether by themselves, their servants or agents and/or howsoever otherwise) from selling or transferring and/or completing any sale and/or registration of any sale or transfer of the first defendant's 10C class units in the Watts-Castlecrown Unit Trust until further order.”
By his defence in the proceedings, the first defendant admitted that on 15 December 1997, he agreed to sell his units in the Trust to the plaintiff for the price of $525,000 and that he had received payment of $300,000 under the agreement. The first defendant alleged that the plaintiff failed to pay the balance of the purchase price to him on 30 June 1998 and that although he called on the plaintiff to pay the balance to him by 27 August 1999 the plaintiff did not do so and that by not doing so the plaintiff repudiated the sale and purchase agreement which repudiation he accepted on or about 6 September 1999. The first defendant alleged that on that day he gave notice to the third defendant that he decided to sell his units in the Trust for $500,000 and requested the third defendant to communicate that offer to the plaintiff and second defendant. The first defendant did not admit that on or about 15 December 1997 that he, the plaintiff and second defendant had agreed and consented to the waiver of the third schedule procedure for the transfer of units and that it was not necessary for them to follow the procedure set out in that schedule. By way of counterclaim the first defendant alleged that by reason of the plaintiff's wrongful repudiation of the sale agreement he had been deprived of the sum of $225,000 being the balance of the sale price which he would have received under the agreement and that he had thereby suffered loss and damage. The first defendant by counterclaim claimed damages against the plaintiff.
The second defendant by its defence alleged that the sale agreement entered into by the plaintiff and the first defendant was entered into in breach of the procedure provided by the third schedule to the Deed of Trust. It denied that it agreed or consented to a waiver of compliance with that procedure and denied that it agreed to the registration of a transfer of the units in the Trust to the plaintiff. The second defendant further alleged that on 30 June 1998, the plaintiff had not paid or tendered payment of the balance of the purchase price, further alleging that at no time had the plaintiff tendered to the first defendant a transfer of the units. It denied that the plaintiff was entitled to specific performance of the sale agreement. Further, the second defendant alleged that the third defendant trustee was obliged to refuse to register any transfer of units from the first defendant to the plaintiff pursuant to the sale agreement of 15 December 1997 or otherwise save in accordance with the procedure set out in the third schedule to the Deed of Trust.
The third defendant by its defence resisted the plaintiff's claims. It alleged that a transfer in registrable form had never been delivered to it. Further, it alleged that the plaintiff was not entitled to equitable relief.
On 8 February 2000 the proceedings were fixed for trial on 26 May 2000. Before the 26 May 2000 the second and third defendant had been represented by the same solicitor. However, on the day fixed for the trial of the proceedings they were each separately represented.
On the 26 May 2000 I was informed by counsel for the plaintiff that a settlement had been reached between the plaintiff and each of the defendants. I was informed that as to the settlement agreement that had been reached between the plaintiff and the first defendant, no orders were sought from the court nor was any assistance sought from the court in relation to that settlement agreement.
I was further informed by counsel for the plaintiff that as between the plaintiff and the second and third defendants, although the plaintiff contended that settlement had been reached by the exchange of letters, that the second and third defendants sought to resile from the agreement that had been reached. I was further informed, that the plaintiff now sought against the second and third defendant specific performance of the settlement agreement. On that day, on application of the plaintiff, it was ordered that the plaintiff have leave to amend his statement of claim to plead the matter then contended for and to amend the plaintiff's prayers for relief. It was further ordered that the defendants file and serve amended defences to the plaintiff's amended statement of claim and that the issues in the proceedings raised by the amendments to the plaintiff's statement of claim and his prayers for relief and those raised by the amended defences of the defendants be tried before the trial otherwise of the proceedings. It was further ordered that the trial of such issues be on affidavit. Orders and directions were given as to the filing and service of such affidavits.
By its amended statement of claim, the plaintiff pleaded further or in the alternative that on 8 May 2000 the second and third defendants had made offers to settle and resolve the proceedings which offers were contained in a facsimile dated 8 May 2000 from their solicitors. The plaintiff alleged that the terms of the offer were that the second defendant would compromise and settle the proceedings on the basis that it would withdraw its objection to the registration of the transfer between the first defendant and the plaintiff of the first defendant's units, that each party would bear their own costs and that the third defendant would not impede the registration of the transfer of the units to the plaintiff if the offer was accepted. The plaintiff alleged that on 19 May 2000, he accepted the settlement offers made by the second and third defendants but that subsequent to the acceptance of such offers the second defendant purported to withdraw the offer made to the plaintiff. The plaintiff alleged that in breach of “the settlement offers”, which I have taken to mean the agreement constituted by the plaintiff's acceptance of the offers made by the second and third defendants, the second defendant refused to withdraw its objection to the transfer of the units between the first defendant and the plaintiff and that the third defendant continued to refuse to register any transfer of the units of the first defendant to the plaintiff. The plaintiff alleged that he was entitled to specific performance of the “settlement offers” which again I have taken to mean the agreement as constituted by the plaintiff's acceptance of the offers of the second and third defendants. By his amended prayers for relief, the plaintiff sought specific performance, inter alia, of the agreement being that identified as the plaintiff's acceptance of the offers of settlement made by the second and third defendants.
By its amended defence, the second defendant alleged that the offer to withdraw its objection to “the registration of the transfer of units” was a reference to a transfer in consideration for the purchase price of $525,000 pursuant to the agreement entered into between the plaintiff and the first defendant referred to in the statement of claim, or alternatively it was a term of the settlement offer that the transfer of the first defendant's units to the plaintiff would be in consideration for a purchase price of $525,000 pursuant to and in accordance with the sale agreement and would not be subject to any conditions more favourable to the plaintiff than those contained in the sale agreement. It admitted that the plaintiff purported to accept the settlement offers made by it but alleged that it did not do so as the plaintiff sought to register a transfer which was not a transfer in consideration for a purchase price of $525,000 pursuant to and in accordance with the sale agreement, but a transfer in consideration for a purchase price of a less sum. It was further contended by the second defendant that the plaintiff had not accepted its settlement offer and that the second defendant withdrew its offer before the same was accepted. The second defendant further admitted that it objected to a transfer of the first defendant's units to the plaintiff alleging that it was entitled to do so. Further, the second defendant alleged that if the offer of settlement was accepted, which it did not admit and an agreement was thereby formed, which it further did not admit, the plaintiff had repudiated that agreement by seeking to register a transfer of the units of the first defendant otherwise than for the price and pursuant to and in accordance with the sale agreement, which repudiation it accepted. The second defendant further contended that if the offer made was accepted by the plaintiff the court should not grant specific performance of the agreement thereby formed.
By its amended defence the third defendant, in substance, admitted that it objected to a transfer of the first defendant's units to the plaintiff until such time as the provisions of the Deed of Trust had been complied with. It denied that the plaintiff was entitled to specific performance against it, alleging further that it had not been asked by the plaintiff or any other party to the proceeding to register a transfer of the first defendant's units.
The proceeding before the court arose out of the amendments to the plaintiff’s statement of claim wherein the plaintiff seeks to enforce against the second and third defendants an agreement which he alleges was entered into between him and the second and third defendants in a settlement of his claim against those defendants in the action. The plaintiff seeks specific performance of that agreement.
The trial of the issues raised by the amended pleadings was on affidavit, however, opportunity was given to the parties to cross-examine any deponent to an affidavit relied on in the proceedings. Advantage of that opportunity was taken with respect to some deponents.
The proceeding before the court is of a nature which the court is able to entertain within a proceeding between the parties to that proceeding wherein it is alleged that agreement has been entered into between parties to the proceedings in settlement of part or all of the proceedings and the court is able to ascertain whether such agreement has been entered into and, if so, what are its terms and whether it should be enforced. By the court entertaining such a proceeding as present, it avoids the necessity of fresh proceedings being instituted. In my view the present proceeding before the court is able to be entertained by the court within the proceedings otherwise before the court.[1]
[1]Roberts v Gippsland Agricultural & Earth Moving Contracting Co Pty Ltd [1956] VLR 555, Smith J at pp.558-567
From the evidence before the court in these proceedings I am satisfied that the following exchange of letters took place between the parties. On 8 May 2000, the solicitors for the plaintiff received by way of facsimile transmission from the solicitors acting for the second defendant and also at that time, for the third defendant, a letter marked “without prejudice” which, omitting the formal parts, read as follows:
“Re Martyniuk v King and Ors
We refer to the above matter.
We are instructed to make the following without prejudice offer which we note is made without any admission of liability or acceptance of the plaintiff’s proposition that the correct procedure was followed by the plaintiff.
That is, our client, Illawong Retirement Living Pty Ltd is willing to compromise the proceedings on the basis that each party walk away and bear their own costs and withdraw their objection to the registration of the transfer of units.
We note that we are instructed to advise that on that basis our client, Illawong Retirement Equity Pty Ltd will not impede the transfer of the units to your client if the above offer is accepted.”
Before receiving that letter on 8 May 2000, the solicitor for the plaintiff had, on 2 May 2000, received a letter from the solicitors for the first defendant which, omitting the formal parts, read as follows:
“King and Ors –ats- Martyniuk
Mr Efron on behalf of Illawong Retirement Living Pty Ltd and Illawong Retirement Equity Pty Ltd informs us and we note that it has been confirmed by you that each of those parties are prepared to withdraw their respective objections to the Registration of a Transfer of Units from our client to your client on the basis that each party pays their own costs of the litigation to date.
On the basis of the above, our client has no reason to contest your client’s claim and will deliver to your client a signed Transfer of Units and the Units Certificate with respect to the units upon payment of the balance of the moneys due under the original agreement. Further, our client undertakes to pay his own costs in respect of the proceedings on foot on the understanding that your client will pay his own costs.”
On 19 May 2000 at 11.56 am the solicitors for the plaintiff sent by facsimile transmission the following letter which, omitting the formal parts, read as follows:
“Watts Castlecrown Unit Trust
Martyniuk v King and Ors - Supreme Court Litigation
We refer to your facsimile dated 8 May 2000. We are instructed that Mr Martyniuk accepts the respective offers made by Illawong Retirement Living Pty Ltd (IRL) and Illawong Retirement Equity Pty Ltd (IRE).
We confirm that the proceedings are now settled on the basis that:
1.IRL withdraws its objection to the transfer between Mr King and Mr Martyniuk;
2.IRE will register and will not otherwise impede the transfer between Mr King and Mr Martyniuk of Mr King’s units;
3.Each party bear their own costs.
We will advise the court of the settlement of the proceeding.”
That transmission was received at the offices of the second and third defendant’s solicitors at 11.57 am on 19 May 2000.
Following the sending by the plaintiff’s solicitors of the last referred to transmission and on the same day, but at 12.01 pm, there was received at the office of the plaintiff’s solicitors a further facsimile transmission from the solicitors for the second and third defendants. That transmission, omitting the formal parts, read:
“Re Martyniuk v King and Ors
We refer to the above matter.
The without prejudice offer made by Illawong Retirement in respect to the Martyniuk litigation is hereby withdrawn.”
It was by the amended defence of the second defendant, as previously referred to, that it alleged that the offer to withdraw the objection to “the registration of the transfer of units” was a reference to a transfer in consideration of a purchase price of $525,000 pursuant to the agreement referred to in the statement of claim.
On 19 May 2000, the solicitors for the plaintiff sent a further letter to the solicitors for the second and third defendants. Omitting the formal parts that letter, in part, read as follows:
“We refer to the facsimile passing between our offices today regarding the resolution of the above litigation and the recent telephone conversation between Ben Davidson [the solicitor for the plaintiff] and Graham Efron [the solicitor for the second and third defendants].
We confirm the following:
1.Your client offered to resolve the proceedings on the following basis:
‘Illawong Retirement Living Pty Ltd is willing to compromise the proceedings on the basis that each party walk away and bear their own costs and withdraw their objection to the registration of the transfer of the units.
We note that we are instructed to advise that on that basis our client, Illawong Retirement Equity Pty Ltd, will not impede the transfer of the units to your client if the above offer is accepted.’
2.At 11.56 today Mr Martyniuk accepted your client’s offer of settlement by facsimile. Our facsimile report confirms that that acceptance was received by your office at 11.57;
3.At 12.01 we received a short facsimile from your office suggesting that that the offer by IRL was to be withdrawn;
4.Acceptance was communicated prior to your client’s withdrawal of its offer. In the circumstances, the law on this issue is clear and we ask that you confirm that IRL will abide by the agreement that has been reached;
5.We have put you on notice that if IRL does not intend to honour the agreed settlement we will raise the resolution of this matter as a preliminary point before the judge in the Supreme Court on Friday 26 May 2000 and will seek indemnity costs;
6.There does not appear to be any suggestion that IRE’s offer was withdrawn. We require the trustee to indicate its position to us. We consider that there has always been a conflict between IRE and IRL and that it was not appropriate for Efron and Associates to act for both. This conflict is more clear than ever now. We require the trustee to obtain independent advice.
…”
In an affidavit sworn by the solicitor for the first defendant, Peter Riches, on 5 June 2000 he deposed, in part, that during the morning of 19 May 2000 he had a telephone discussion with Efron, the solicitor for the second and third defendants, in which he indicated that a settlement had been reached on the claim by the plaintiff against the first defendant and that Efron’s immediate response was that his client, the second defendant, Illawong Retirement Living Pty Ltd, would not consent to a transfer of the units as it did not want to be a minority unit holder in the trust. During the course of the cross-examination of Efron, on this proceeding, Efron said that the telephone conversation that he had with Riches was in the afternoon of 19 May but otherwise he did not challenge that which Riches had deposed to in his affidavit. Efron said that that was his personal reaction and immediate reaction to the telephone conversation that he had had with Riches. This evidence cannot be had regard to by me in determining whether, before that conversation, there had been an agreement entered into between the plaintiff and the second defendant in settlement of the proceedings and, if so, what were the terms of the same.
Efron, the solicitor for the second defendant, was cross-examined by counsel on behalf of the plaintiff in some detail about the conversation that he had with Riches, the solicitor for the plaintiff, on 19 May 2000. At one point he was asked, “Are you saying that the offer was withdrawn because $525,000 wasn’t being paid or because your client did not want to be a minority unit holder?” He replied, “Both would be the answer to that question. My client did not want to be a minority unit holder, and if the units were being offered for a lesser sum than $525,000 then my client wanted to be in a position to consider that offer and perhaps find himself in a position where he would be a 50/50 unit holder which was the whole purpose of the litigation in the first place. As soon as it was suggested that Martyniuk may pay less then that was the immediate reaction of my client and the immediate instructions which I acted on”.
Before dealing with the issue as to whether an agreement in compromise of the proceedings between the plaintiff and second defendant was entered into and if it was, what were the terms of the same, it is necessary that I deal with that which is alleged to be an offer made on behalf of the third defendant by the letter of 8 May 2000. It was submitted on behalf of the third defendant that that contained in the last paragraph of that letter was not capable of constituting an offer on behalf of the third defendant to the plaintiff.
The obligations and duties of the third defendant were those of a trustee and in particular those provided for by the Deed of Trust. In my view the last paragraph in the letter of 8 May 2000 from the solicitors for the second and third defendants to the solicitors for the plaintiff, states no more than if the plaintiff and first defendant have agreed to the transfer of the first defendant’s units to the plaintiff and the second defendant has agreed to the transfer then the trustee, “will not impede the transfer of the units” which I understand to mean that it would not refuse to register the transfer of the units.
Pursuant to the terms of the Deed of Trust, if all unit holders consented to a waiver of the transfer procedure, such transfer is able to be registered notwithstanding that the procedure set out in the third schedule to the Deed of Trust has not been complied with and the trustee should then not refuse to register that transfer. The last paragraph of the letter of 8 May 2000, in my view, contained no more than a statement as to what the trustee would do in the event of each of the unit holders, the plaintiff and the first and second defendants agreeing to transfer the first defendant’s units to the plaintiff. This statement, not being an offer made on behalf of the third defendant, was not capable of being accepted so as to constitute a binding agreement which could be enforced by action against the third defendant.
Davidson, the solicitor for the plaintiff, said in evidence that he was not aware of King, the first defendant, giving a transfer in respect of his units in the Trust to the plaintiff or to him. He said that no transfer had ever been submitted by him or the plaintiff to the third defendant trustee to register any change of ownership. In this case, where the procedure provided by the third schedule to the Deed of Trust for the transfer of units has not been complied with, no obligation is imposed on the third defendant to register any transfer of units. That requirement would not arise until the trustee receives the consent of the unit holders in the Trust to the waiver of the transfer procedure for the registration by it of the transfer of units in question. Such consents have not been furnished to the third defendant to this point and, accordingly, no obligation has arisen for the third defendant to register any transfer of the first defendant’s 10C class units in the Trust to the plaintiff.
The offer made on 8 May 2000 by the second defendant to the plaintiff, by and to their respective solicitors, was made as an offer in compromise of the plaintiff’s claim in the proceedings against the second defendant in which the second defendant had denied the plaintiff’s allegation that it had, together with the plaintiff and first defendant, agreed and consented to a waiver of the procedure provided in the Deed of Trust for the transfer of the first defendant’s 10C class units to the plaintiff and that it and the other parties had consented to the registration of the transfer of those units. The transfer, the subject of that alleged agreement, was the transfer of the first defendant’s 10C class units in the Trust which the plaintiff alleged the first defendant had agreed to make to him pursuant to his agreement with the first defendant to purchase the same for the sum of $525,000. Notwithstanding that being the issue in the proceedings as between the plaintiff and the second defendant, it was the plaintiff’s case, in the present proceeding before the court, that by the plaintiff’s acceptance of the second defendant’s offer, before it was withdrawn, that there had been entered into an agreement between the plaintiff and the second defendant in compromise of the proceedings whereby it was agreed that the second defendant would withdraw its objection to the registration of the transfer of the first defendant’s units in the Trust to him. It was submitted on behalf of the plaintiff that the transfer, the subject of this agreement, was not the transfer the subject of the alleged agreement between the plaintiff and first defendant in consideration for the agreement to pay $525,000, but was a transfer of such units to him, no matter on what terms the first defendant had agreed to transfer such units to the plaintiff and no matter whether the consideration for such transfer was less than $525,000 or that the terms of any agreement between the plaintiff and first defendant whereby the first defendant agreed to transfer the units to him was more favourable to the plaintiff than the agreement alleged to have been entered into on 15 December 1997.
The primary defence of the secondnamed defendant to the plaintiff’s claim in this proceeding was that no agreement had been entered into between it and the plaintiff by the plaintiff’s solicitors communicating the acceptance of the second defendant’s offer on 19 May 2000 because “the transfer” which the second defendant offered to withdraw its objection as to the registration of it, was the transfer of the first defendant’s units to the plaintiff in consideration of the plaintiff paying $525,000 as was the term of the agreement entered into between the plaintiff and the first defendant on 15 December 1997. It was submitted on behalf of the second defendant that as at the time that the plaintiff purported to accept the second defendant’s offer on 19 May 2000 there was no agreement between the plaintiff and the first defendant for the latter to transfer to the plaintiff its units in the Trust and therefore, the plaintiff was not able to and did not accept the offer made by the second defendant. By its amended defence the second defendant contended that the offer made on 8 May 2000 was withdrawn by it before being accepted. The final position taken by the second defendant by its amended defence was that if the plaintiff did accept its offer on 19 May 2000 and an agreement was thereby entered into between it and the plaintiff the court should not grant specific performance of the same.
In my view the starting point in determining the conflicting contentions of the plaintiff and the second defendant in these proceedings is first to determine whether the offer made on 8 May 2000 by the second defendant to the plaintiff was accepted by the plaintiff thereby causing there to be constituted an agreement between the plaintiff and second defendant. The next matter to then be address is, insofar as there exists dispute as to a term of that agreement, what is its proper meaning and what was the agreement thereby entered into between the plaintiff and second defendant in compromise of the plaintiff’s claim against the second defendant in the proceedings.
The offer made by the second defendant on 8 May 2000 was made on its behalf by its agent, its solicitors. That offer was capable of being accepted by the plaintiff by communicating such acceptance to the second defendant's solicitors. I am satisfied that on 19 May 2000 at 11.57 am the second defendant's solicitors received by way of facsimile transmission the letter from the plaintiff's solicitors accepting the offer previously made on behalf of the second defendant. At the time of the receipt of that acceptance, this offer was open to be accepted. It had not at that time been withdrawn. The acceptance of this offer as communicated to the second defendant's solicitor caused a contract to come into being between the plaintiff and the second defendant in compromise of the plaintiff’s action against it.
By that contract it was agreed between the plaintiff and the second defendant that the second defendant would withdraw its objection to the registration by the third defendant of the transfer of the first defendant’s 10C class units in the Trust to the plaintiff.
The issue in dispute in this proceeding is whether it was agreed between the plaintiff and the second defendant that the second defendant would withdraw its objection to the registration of the transfer of the first defendant’s 10C class units in the Trust in consideration of the plaintiff paying to the first defendant $525,000 or was the transfer in consideration of an amount less than that amount or a transfer on any terms which may be agreed between the plaintiff and the first defendant. In resolution of that question it is appropriate for the court to have regard to evidence of circumstances surrounding the formation of the contract.[2]
[2]Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 157 CLR 337 per Mason J at 352
The first circumstances surrounding the formation of the contract by the terms of the Deed of Trust that I have regard to relating to the transfer of units in the Trust and in particular the procedure that controlled the transfer of units in the trust, provided for a transfer at a “fair value” unless the unit holders agreed to the waiver of the transfer procedure as provided by the third schedule to the Deed of Trust.
The next circumstance that I consider as relevant for this purpose was the fact that the agreement entered into between the plaintiff and the second defendant was in compromise of the proceedings which were on foot between the parties to the Deed of Trust. Central to those proceedings was the allegation made by the plaintiff that the first defendant had agreed with him to transfer his 10C class units in the Trust to the plaintiff for a purchase price of $525,000 and that the plaintiff and the first and second defendants had agreed to consent to a waiver of the transfer procedure as provided in the third schedule of the Deed of Trust and that the plaintiff and first and second defendants had agreed that it was not necessary for the plaintiff and the first defendant to follow such procedure, for the third defendant to register the transfer of the first defendant’s 10C class units to the plaintiff.
It was submitted on behalf of the plaintiff that “the transfer” in respect of which the second defendant agreed to withdraw its objection to the registration by the third defendant was not be limited to “the transfer”, the subject of the proceeding between the plaintiff’s and defendants, for at the time that the offer of the second defendant was accepted by the plaintiff he was then negotiating to purchase the units of the first defendant for a sum less than $525,000 which were on terms different to that alleged in the sale agreement of 15 December 1997. For the purpose of argument I assume that it is established that at the time of acceptance of the second defendant’s offer by the plaintiff, negotiations were being conducted by him with the first defendant to purchase the units of the first defendant for a sum less than the original consideration for the sale and purchase. Even on such basis I do not accept this argument on behalf of the plaintiff for to do so would be to ignore the proposition of law stated by the Denning L.J. in Solle v Butcher[3] where his Lordship at p 691 said:
“Once a contract has been made, that is to say, once the parties, whatever their innermost state of mind, have to all outward appearances agreed with sufficient certainty in the same terms on the same subject matter, then the contract is good unless and until it is set aside for failure of some condition on which the existence of the contract depends or for fraud or on some equitable ground. Neither party can rely on his own mistake to say it was a nullity from the beginning no matter that it was a mistake which in his mind was fundamental, and no matter that the other party knew that he was under a mistake.”
[3](1950) 1 KB 671
In Taylor v Johnston[4] Mason ACJ, Murphy and Deane JJ cited, with approval, that stated by Denning LJ in Solle v Butcher that I have referred to. There Honours at p.429-30 said:
“While the mistake in Solle v Butcher was a mistake of fact which affected the operation of a formal written contract, it is plain that the remarks of Denning LJ were intended to extend to a mistake as to the existence or content of an actual term of such contract.”
[4](1983) 151 CLR 422
In my view the offer made on behalf of the second defendant in compromise of the plaintiff’s action against him that on the “basis that each part walk away and bear their own costs and withdraw their objection to the registration of the transfer of units” was a direct reference to the transfer of the units the subject of the proceedings between the plaintiff and the defendants. The offer made on behalf of the second defendant was not an offer to withdraw its objection to the registration of any transfer of such units on whatever terms or in consideration for the payment of any sum of money. The transfer which the second defendant offered to withdraw its objection to the registration by the third defendant was the transfer the subject of proceedings being that in consideration for the payment of $525,000. It was by acceptance of that offer on behalf of the plaintiff that agreement was reached between the plaintiff and defendant that the second defendant would withdraw its objection to the registration of the transfer of the first defendant’s 10C class units to the plaintiff for the purchase price of $525,000 to be paid by the plaintiff to the first defendant.
On these present proceedings the plaintiff did not contend or lead any evidence to establish that it had reached agreement with the first defendant in compromise of the action to purchase the first defendant’s 10C class units in the Trust for $525,000. Not only was that the case but in evidence, the solicitor for the plaintiff, Davidson, stated that there still remained an outstanding issue between the plaintiff and first defendant which had not been resolved and there was no settlement of the proceeding between the plaintiff and first defendant because there were outstanding issues which had not been resolved. In those circumstances there existed at the trial of this proceeding no agreement between the plaintiff and first defendant, on any terms, whereby it was agreed that the first defendant would transfer his units to the plaintiff. In such circumstances there existed no basis at all for the plaintiff to obtain an order for specific performance of its agreement with the first defendant as constituted by the plaintiff’s acceptance on 19 May 2000 of the offer of the second defendant. On the evidence, the plaintiff is not in any position to have the court order that his agreement with the second defendant be specifically performed.
In the circumstances as existing, as established on the evidence, the plaintiff’s claim that the court grant to him specific performance of his agreement with the second defendant in compromise of the proceedings fails.
In the result, the proceedings by the plaintiff against the second and third defendants as constituted by paragraph 28-33 of the plaintiff’s amended statement of claim and by the amendment to paragraph ‘B’ of the amended prayers for relief must be dismissed.
Accordingly, it is ordered that the proceedings by the plaintiff against the second and third defendants as constituted by paragraphs 28-33 of the plaintiff’s amended statement of claim and by the amendment to paragraph ‘B’ of the amended prayers for relief are dismissed.
In such circumstances it is appropriate to order that the proceedings be referred to the Listing Master for her to fix a date for the trial of the plaintiff’s proceedings against the defendants.
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